Highlights: 

• Saudi oil minister says OPEC is not willing to bear the burden of falling oil prices alone.
• Oil prices unlikely to return to $100-$120 any time soon, according to OPEC governor.

Global crude prices declined on Monday, after Saudi Arabia’s oil minister said OPEC was prepared to ride out the protracted market slump that has halved prices over the past ten months.

Brent for May delivery declined 1.1 percent to $54.72 a barrel. US benchmark West Texas Intermediate (WTI) tumbled 1.3 percent to $45.98 a barrel.

A weaker US dollar helped prop up commodities last week, with oil being one of the biggest benefactors. US crude climbed around 4 percent last Friday, posting its first weekly gain in more than a month.

Crude’s investment appeal has waned this month after prices rose by around a third between January and February. The rally has been held back by record-high US inventories, which have climbed at a relentless pace over the past ten weeks. The Energy Information Administration (EIA) is expected to show another large increase in stockpiles on Wednesday when it releases its weekly report.

The Organization of the Petroleum Exporting Countries (OPEC) is preparing to ride out the global supply glut, even if it means cheaper gas prices. On Sunday Saudi Arabia’s oil minister Ali al-Naimi said that the 12-member cartel was looking for support from non-OPEC producers to minimize the supply glut. Those efforts appear to have failed.

“We tried, we held meetings and we did not succeed because countries were insisting that OPEC carry the burden and we refuse that OPEC bears the responsibility,” al-Naimi said.

Last November OPEC vowed to keep production levels above 30 million barrels per day, sending shockwaves throughout the market. Investors were expecting the cartel to reduce output to mitigate a steeper fall in prices, which later materialized in late-2014 and early-2015. In fact, the cartel has exceeded its production target for nine consecutive months. Iran, which is a member of the 12-nation group, is looking to increase exports following an agreement with the United States on its nuclear program.

Al-Naimi added that “everybody is supposed to participate if we want to improve prices.”

OPEC is responsible for approximately 30 percent of the global petroleum market.

US production is expected to slow in the latter half of the year. Prices are expected to remain low for the foreseeable future, with WTI forecast to fall to as low as $40 a barrel. According to a recent forecast by Bank of America Merrill Lynch, Brent will average around $52 a barrel this year.

A price recovery north of $100 a barrel will be very difficult to come by, according to OPEC governor Mohammad al-Madi.

“I think it’s difficult to reach $100 or $120 another time,” al-Madi said at an energy conference in Riyadh.

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Highlights:

• WTI and Brent decline on news of an Iran nuclear deal.
• US crude oil stockpiles reached a new record high of 471.1 million barrels last week, according to the EIA.

Crude oil suffered a setback on Thursday amid news that Iran and six world powers reached a tentative agreement over Tehran’s nuclear program, a sign the United States may be preparing to lift sanctions that could exacerbate the global oil glut.

The price of West Texas Intermediate (WTI) for May delivery fell nearly 3 percent to $48.36 a barrel. The US benchmark has been unable to hold the $50 mark for very long, despite the rebound in crude prices earlier this year.

Global benchmark Brent crude declined more than 4 percent to $54.26 a barrel.

On Thursday the Associated Press said that Iran and the P5+1 – a group of six world powers that includes the United States, United Kingdom, Russia, China and France, plus Germany – had struck a tentative accord over Tehran’s uranium enrichment program. Both sides reportedly agreed on a framework to allow for a final round of negotiations in June.

The news suggested to some observers that the US may be moving closer to lifting sanctions on Iran, which would allow the Islamic Republic to boost its oil exports. This could exacerbate the global supply glut that has halved oil prices since June 2014.

Meanwhile, US crude stockpiles reached a new record high last week, the US Energy Information Administration (EIA) reported on Wednesday. Crude oil inventories increased by 4.8 million barrels to 471.4 million barrels in the week ended March 28, the highest level in 80 years. Total US crude oil production for the same week was nearly 9.4 million barrels per day, which represented an annual increase of 14.6 percent.

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Greece was back at the negotiating table with international creditors on Saturday, as Europe’s most indebted nation races to iron out a a solution by Sunday in order to facilitate a final agreement at this month’s ministerial meetings.

The Greek government has shown greater resolve in the days leading up to the weekend talks, as the prospect of a default hangs in the balance. The Hellenic Republic of 12 million could face default as early as this month should it fail to reach new bailout terms with its troika of creditors – the European Union, European Central Bank and International Monetary Fund.

Greek finance minister Yanis Varoufakis, who was sidelined as head negotiator earlier this week, said Athens would not request a new bailout on the condition that the troika restructure the current debt agreement.

Varoufakis has taken a hardline approach in negotiating Greece’s new bailout terms, having described the Eurozone as a “shaky monetary system” that “if not changed, will die.” The Greek finance minister was much more diplomatic on Saturday, dismissing the possibility of Greece leaving the euro. Such a “Grexit” scenario is more likely to materialize than ever before, according to a recent poll by Bloomberg Markets.

A clear majority of investors (52 percent) polled by Bloomberg said Athens will exit the Eurozone, compared to just 31 percent who said the same in January. The percentage of investors saying Greece would remain in the euro fell to 43 percent from 61 percent in January.

May 11 Eurogroup Meetings

Greece and European Union finance ministers are racing to iron out a tentative agreement by Sunday to leave enough room for final ratification at this month’s Eurogroup meetings, which will be held in Brussels. A failure to finalize an agreement by the next ministerial meetings could push Greece dangerously close to a default.

“They’re working hard now and that’s what we’ve gained,” Dutch finance minister and Eurogroup head Jeroen Dijsselbloem told reporters. “But in the end we only look at the results and we’re not that far yet.”

The Greek government has sent mixed signals about its willingness to implement reforms that would unlock future bailout aid. Prime Minister Alexis Tsipras expressed optimism at the prospects of an agreement earlier this week, a sign the leader was prepared to compromise on his far-left Syriza party’s political platform.

Syriza swept to power in January on the platform of “anti-austerity.” Public opinion of Syriza’s handling of the debt negotiations declined last month, according to latest polls.

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Highlights:

• S&P 500 Index closes at 2,114.49, up 0.3%.
• Markets turn their attention to April nonfarm payrolls as earnings season continues.
• Rate hike not appropriate until next year, according to Fed Bank of San Francisco President Charles Evans.

US stocks rallied on Monday, with the benchmark S&P 500 extending Friday’s record high as investors turned their attention to economic data and quarterly earnings.

The S&P 500 Index climbed 0.3 percent or 6.2 points to 2,114.49, as eight of its ten main sectors reported gains. The large-cap benchmark closed at an all-time record high on Friday.

The Dow Jones Industrial Average (DJI) climbed 0.3 percent or 46.34 points to 18,070.40 after rallying more than 100 points on Friday. The NASDAQ Composite Index was up 0.2 percent or 11.54 points to 5,016.93 after closing above 5,000 at the end of last week.

Economic Data

US factory orders rose for the first time in eight months, the Commerce Department reported on Monday. Factory orders rose 2.1 percent, slightly above forecasts, following a drop of 0.1 percent in February that was originally reported as a gain.

Investors are quickly turning their attention to Friday’s nonfarm payrolls report, which is expected to show the creation of more than 200,000 jobs in April. The ADP Institute will release an advance estimate of private payroll growth on Wednesday.

Earnings Season Continues

EOG Resources (NYSE: EOG) and Tenet Healthcare (NYSE: THC) are among the companies that will report quarterly earnings after the bell.

Federal Reserve

Chicago Fed President Charles Evans said on Monday that raising interest rates would not be appropriate until next year, as a weak first quarter provides enough scope for policymakers to keep monetary policy highly accommodative for the time being. Economic growth slowed to just 0.2 percent annually in the first quarter, official data showed last week.

Fed Bank of San Francisco President John Williams will also deliver a speech later in the day. Federal Reserve Bank of Minneapolis head Narayana Kocherlakota is also scheduled to speak on Wednesday, followed by Dennis Lockhart (Atlanta) later in the week.

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Highlights:

• Benchmark indices each rise more than 1 percent; Dow Jones posts triple-digit gain.
• US stocks supported by “goldilocks” jobs report.
• US wholesale inventories rise 0.1% in March.

US stocks surged across the board on Friday, as the Dow Jones Industrial Average posted a triple digit gain after an upbeat nonfarm payrolls report pointed to moderate economic growth in the months ahead.

The benchmark indices each gained more than 1 percent on Friday, with the Dow Jones rising 1.5 percent or 270.96 points to 181,95.02.

The S&P 500 rose 1.3 percent or 26.70 points to 2,114.70.

The technology-heavy Nasdaq Composite Index climbed 1.1 percent or 53.87 points to 4,999.42.

Nonfarm Payrolls Rise by 223,000

US employers added 223,000 jobs in April, a sign economic activity was on the rebound following a disappointing month of March, but in the eyes of many, not progressing fast enough to warrant an immediate rate-hike by the Federal Reserve. The “goldilocks” report struck a perfect tone with investors, who rallied behind a solid jobs recovery that would not lead to immediate rate tightening.

The Federal Reserve is expected to remain on the sidelines until the fall at the earliest.

March Figures Revised

The economy added just 85,000 jobs in March, the slowest pace of hiring since June 2012. The Labor Department had previously reported a gain of 126,000.

Wholesale Inventories Reaffirm Slow Q1 Growth

US wholesale inventories, which measure how quickly businesses are adjusting stockpiles and are used to calculate gross domestic product, rose just 0.1 percent in March, the Commerce Department reported on Friday. That followed a gain of 0.2 percent in February.

Today’s report likely reaffirms the Commerce Department’s very low estimate of first quarter GDP. Preliminary data showed GDP expansion of just 0.2 percent annually in the first quarter.

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Greece will default on its bailout loan on June 5 if policymakers fail to reach a new accord in the coming weeks, a leaked document from the International Monetary Fund showed on Saturday. The specter of a Greek default has grown since Athens was granted a four-month extension back in February, as talks have broken down repeatedly over demands for economic reforms.

Greece and its Eurozone partners failed to reach a deal that would lift the impasse at last week’s Eurogroup meetings, where talks were aborted over demands that crossed Syriza’s “red lines.” Those red lines included cutting state wages and pensions.

Greek Prime Minister Alexis Tsiprias said on Friday his government wwas not prepared to strike a deal at any cost.

“There’s no doubt that an agreement must be reached,” Tsipras said on Friday according to Bloomberg News. “But those who think that the Greek side’s resistance can be tested or that its red lines will fade as time passes, would do well to forget it.”

As the clock ticks down to the widely reported end-of-June deadline, the International Monetary Fund has given clear indication it refuses to be part of any future bailout program with the Greek government. A leaked document on Saturday acknowledged that Greece would not be able to meet its loan obligations to the international lending institution, despite the government’s repeated assurance that it would repay its loan in full.

In a memo dated May 14, the IMF’s staff acknowledged that, “There will be no possibility for the Greek authorities to repay the whale amount unless an agreement is reached with international partners.”

IMF staff have said that the June 5 commitment of €1.5 billion was the first payment that could be missed, leading to a technical default in early June as opposed to the end of the month. With such a tight timetable, next week’s European Union summit in Riga could be the last chance to reach an agreement before Greece faces the prospect of default.

Probability of Default Rises

Analysts have raised the probability that Greece will default on its loans and exit the euro area. Last month economists at UBS said there was a 50-60 percent chance of default and 20-30 percent chance of a Grexit.

Analysts at Bloomberg last month said the chances of Greece missing some of its payments was 40 percent and the likelihood of a Grexit scenario was 40 percent.

A recent poll by Reuters suggested that a quarter (23 percent) of traders expect Greece to leave the euro.

However, these prognostications do not factor in the latest round of hostilities between Greece and the IMF and Athens’ growing defiance over its red lines.

The cash-strapped Greek government faces a daunting repayment schedule in June after tapping into emergency reserves last week to secure a €750 million debt payment to the IMF.

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Greece’s attempt to negotiate a quick deal with international creditors has been shot down, with Germany and the International Monetary Fund acknowledging there was still a lot of work to do before the June 5 payment deadline.

Talks between Greece and its Eurozone partners broke down at last week’s European Union summit in Riga, with Germany and the IMF dismissing Athens’ optimism that a deal would be finalized shortly.

IMF managing director Christine Lagarde warned against a “quick and dirty” deal for Athens on Friday, stating that both sides were still far apart on a deal.

“I know there is a lot of work to be done,” the IMF head said in Rio. “Parties are now working, receiving proposals, working in cooperation and we will continue to do so as fast as we can.”

She added, “It has to be a comprehensive approach, not a quick and dirty job.”

German Chancellor Angela Merkel described the latest round of negotiations as “constructive,” but said there was still a lot of work to do.

“France and Germany have offered Greece and the Greek Prime Minister that whenever there are questions to be discussed, whenever there is help to be given, to do so but the conclusion needs to be found with the three institutions and there needs to be very, very intensive work,” she said.

The IMF, which shoulders the bulk of Greece’s €240 billion bailout package, is opposed to giving Athens more emergency loans. The troika of creditors has withheld a critical €7.2 billion payment as for Greece’s refusal to sign off on tough economic reforms related to pensions, public sector workers and taxes. Greece faces a tough payment schedule next month, including a €1.5 billion commitment on June 5. While Greece has until the end of June to extend its bailout agreement or reach a new deal, June 5 is considered the more tangible deadline.

Greece is unlikely to pay the “whale amount” of its bailout loans should it fail to make the June 5 deadline, according to an IMF memo dated May 14.

Redrawing Red Lines

With creditors failing to share Greece’s optimism that a comprehensive deal could be reached any time soon, the Greek government is back to the drawing board. Greek officials have made it abundantly clear that they are unwilling to negotiate beyond their “red lines,” which consist of campaign promises related to pensions and public sector jobs. However, with the IMF unlikely to budge in its negotiations, Greece may have to choose between keeping its campaign promises and avoiding a bigger liquidity crunch.

The IMF has already prepared a contingency plan for a Greek default. This was confirmed by a senior IMF official, who said earlier this month that the international lending institution “is working with national authorities in southeastern Europe on contingency plans for a Greek default.”

This Plan B would require cooperation from regional neighbours as well as Greek banks, according to IMF deputy director Jorg Decressin.

“Parallel Currency”

German finance minister Wolfgang Schaueble, an outspoken critic of Athens’ bailout negotiations, is reportedly pressing for a “parallel currency” to be introduced in Greece. The idea, as reported by Bloomberg News, would be for Greece to issue an IOU program to cover public pensions and salaries. In order for this to work, this “parallel currency” would likely have to be given the same value as the euro.

The latter provision has been flagged by economists as a dangerous step because it could open up a massive black market should the public not buy-in to the second currency.

Schaueble’s notion of a “parallel currency,” which has been floated around before, is a clear sign that Eurozone member-states are less concerned about a Grexit as they were before. Some German officials have reportedly compared Greece to a “gangrenous leg” that should be cut off. If these views hold sway, it is difficult to argue that Greece holds any real leverage in its negotiations.

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Depositors have pulled €800 million out of Greek banks in less than 48 hours, as Athens continued to teeter dangerously close to default less than one week before a critical payment deadline to the International Monetary Fund.

“Embattled Greek banks were hit with more damaging data Friday that showed deposit outflows accelerating at a rapid clip,” The Wall Street Journal reported on Friday. “Deposits at Greek banks are at their lowest level in more than ten years amid broad concerns about the country’s economic prospects that have hammered shares in Greek lenders this year.”

The latest outflows followed a staggering €5 billion that was pulled out of Greek banks in April, leaving deposits at their lowest level in more than a decade and fueling concerns of a bigger bank run.

Household and business deposits declined to around €133 billion in April from €138 billion in March. That put bank deposits more than €100 billion below the pre-recession peak in September 2009.

Greece and its European creditors are still divided on a new bailout agreement, which Athens desperately needs to secure this week in order to meet its payment obligations and remain part of the euro. The outflow of cash over the past two days suggests that the ominous “Grexident” scenario – Greece’s unintentional exit from the Eurozone – was slowly materializing. With both sides still far apart on a deal to break the loan impasse, the IMF has already prepared a contingency plan that includes Greek banks and regional partners.

The international lending institution recently hinted at Greece’s departure from the 19-member currency bloc should negotiations fall apart in June. The IMF has repeatedly said any future agreement with Greece would not include additional bailout funds.

The four-month bailout extension that was negotiated in February expires on June 30. Without a new agreement, Greece will run out a cash, which could be a precursor for exiting the Eurozone. According to the IMF, the real deadline is June 5, when Athens is due to pay back €310 million. Without an agreement by Friday, it is unlikely that Greece would be able to repay the “whale amount” of its loan obligations, the IMF says.

Greece is on the hook for another €348 million payment to the IMF on June 12, followed by €929 million in payments the following week, including an €85 million interest payment to the European Central Bank.

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The USD/JPY finally triggered stops above the 124.45 strong static resistance level, and advanced to a fresh 2-month high of 125.00 before retreating some, holding anyway well into the green by the end of the day where the price of Cable finally recovered after the Market Services News.

Having been consolidating below the mentioned 124.45 for most of the first two sessions of the day, the USD/JPY pair fell down to 124.01 after the release of poor US data, from where the pair bounced sharply higher and extended to the mentioned daily high.

The 1 hour chart shows that the price remains well above its 100 and 20 SMAs, whilst the technical indicators are resuming their advances after correcting overbought readings, pointing for a continued advance.

In the 4 hours chart, the Momentum indicator has turned lower, but holds above its 100 level, whilst the RSI indicator corrects overbought readings, heading lower around 65, supporting a short term corrective movement, but far from suggesting a stronger bearish move. Should the price accelerate beyond 125.00, the logical target comes at 125.85, the year high posted last June.

Meanwhile, the GBP/USD pair recovered from a daily low set at 1.5525, with the Pound recovering ground, despite the UK service sector resulted worse-than-expected. The Markit Services PMI fell to 57.4 in July from 58.5 in June, although the most disturbing reading was the employment sub-component showing that hiring hit a  16-month low, which may result in a more conservative decision from the BOE this Thursday.

The Central Bank will not only have its monthly economic policy meeting, but will also release the Minutes of the meeting right afterwards. Given the latest comments from some MPC members suggesting the time for a rate hike is getting closer, market expectations are of a change in the vote, which may boost the pair beyond the 1.5700 level.

In the meantime, the 1 hour chart shows that the price is holding above  a bullish 20 SMA, whilst the technical indicators are losing their upward strength near overbought territory.

In the 4 hours chart, the pair is now above a horizontal 20 SMA, whilst the Momentum indicator is crossing its mid-line towards the upside, showing no actual strength at the time being, but enough to keep the downside limited around the strong static support placed at 1.5560.

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Technical Bias: Bearish

Key Points

• Euro recovered against the Canadian Dollar recently, but found resistance around 1.4400 resistance area.
• German Factory orders released by the Deutsche Bundesbank posted an increase of 2% in June 2015, more than the forecast of 0.2%.
• In terms of the yearly change, the German Factory orders rose 7.2%.

Technical Analysis

The EURCAD pair tested an important resistance area around 1.4400 twice, but failed to clear it. It resulted in a downside reaction, which pushed the pair below the 100 hourly simple moving average. There are a couple of bearish trend lines formed on the hourly chart, which are acting as a barrier for an upside move. As long as the pair is below the trend line confluence area more declines are likely.

The failure to move higher was also due to the 76.4% Fib retracement level of the last drop from 1.4431 to 1.4282. Overall, there can be a downside move if sellers remain in control.

On the downside, the next level of support can be seen around the 200 SMA.

German Factory Orders

Today in the Euro Zone, the German Factory orders, which is an indicator that includes shipments, inventories, and new and unfilled orders was released by the Deutsche Bundesbank. The market was expecting an increase of 0.2% in orders in June 2015, compared with the preceding month. However, the outcome was way above the forecast, as the German Factory orders rose by 2%.

In terms of the yearly change, the German Factory orders increased 7.2% in June 2015, compared with the same month a year ago. It was also higher, when compared with the last gain of 4.5% (revised).

Overall, the data was on the positive side, and helped the Euro to gain traction. However, there was no reaction in EURCAD, as the pair was seen under the bearish pressure all the time.

Trade Idea

Selling rallies closer to the highlighted trend line resistance area is a good option.

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Technical Bias: Bearish

Key Points

• Euro traded higher against the Aussie Dollar, but facing a major barrier on the upside.
• The Australian HIA/AiG Performance of Construction Index, released by the Australian Industry Group and the Housing Industry Association posted a minor rise from 46.4 to 47.1 in July 2015.
• Australian Home Loans released by the Australian Bureau of Statistics registered an increase of 4.4% in June 2015, which was lower when compared with the forecast of +5%.

Technical Analysis

The Aussie Dollar suffered losses against the Euro yesterday, as the employment report released in Australian ignited bearish pressure. The EURAUD pair traded higher, but faced a major resistance around an important bearish trend line on the hourly chart, which stopped the upside move.

One key point to note is that the upside was stalled around the 50% Fib retracement level of the last drop from the 1.5093 high to 1.4730 low. The bearish trend line is coinciding with the 100 hourly simple moving averages, pointing towards the significance of the trend line.

Moreover, the hourly RSI is below the 50 level, and showing a lot of bearish signs. So, if the pair corrects higher, it might find resistance on the upside.

On the downside, the last swing low of 1.4730 could be tested one more time.

Australian HIA/AIG Performance of Construction Index

Today during the Asian session, the Australian HIA/AIG Performance of Construction Index, which is considered as an indicator that measures the conditions on the short and medium term in the construction market was released by the Australian Industry Group and the Housing Industry Association. The outcome was way above the market expectation, as the Australian HIA/AIG Performance of Construction Index climbed to 47.1, up from the last reading of 46.4.

The report stated that “the three-month moving average of The Australian PCI was unchanged in July, at 47.1 points“.

Trade Idea

Selling rallies closer to the 100 hourly SMA area is a good option.

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Technical Bias: Bullish

Key Points

• British Pound continued to find bids against the Japanese Yen, as there is a monster support formed around 193.20-00.
• UK trade balance released by the National Statistics registered a trade deficit of £-9.184B in June 2015, compared to the forecast of £-9.200B.
• UK total trade balance posted a deficit of £-1.601B, compared to the forecast of £-0.885B.
• GBPJPY showed bearish signs, but it found support around 193.50-40 area.

Technical Analysis

There was a sharp downside move in GBPJPY recently, which resulted in 200 pips loss taking the pair towards 193.20. However, the pair found support around the mentioned area, as there are several hurdles aligned around the stated area. First, it represents the previous swing low. Moreover, there is a bullish trend line formed on the hourly chart of the GBPJPY pair, i.e. acting as a support for the pair.

Currently, the pair is making an attempt to correct higher, but facing a barrier around the 23.6% Fib retracement level of the last drop from the 195.26 high to 193.13 low. Moreover, the 100 hourly simple moving average is also positioned above it.

A break above the 100 SMA could set the pair for more upsides in the near term.

On the downside, the recent low and the trend line support area is very crucial.

UK Trade Balance

Earlier during the London session, there was a major release, as the UK trade balance data, highlighting the balance between exports and imports of goods was released by the National Statistics. The forecast was lined up for a £-9.200B deficit in June 2015, compared to the preceding month. However, the outcome was better than the forecast, as the trade balance registered a deficit of £-9.184B. Furthermore, the total trade balance came in at £-1.601B.

Trade Idea

Buying dips around the trend line and support area is a nice deal in the near term.

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The US created 215K new jobs in July, whilst the unemployment rate stood steady at a 7-year low of 5.3%. Wages posted a tepid advance, up 2.1% from a year early, missing expectations but in line with the quarterly wages report released a week before. Market initially bought the greenback, but the lack of follow through in dollar’s rally triggered some profit taking with mixed results across the board.

As for the EUR/USD the pair surged by the end of the day, closing the week flat around the 1.0970 level. The daily chart shows that the technical indicators are aiming slightly higher in neutral territory, lacking directional momentum at the time being, whilst the price stands above a horizontal 20 SMA.

The short term technical picture, according to the 4 hours chart, presents a positive tone, although the technical indicators are losing their upward momentum well above their mid-lines.

The 20 SMA holds flat around 1.0900, while a daily descendant trend line, coming from 1.1435, stands today around 1.1045, acting as a strong resistance level in the case of an extension beyond the 1.1000 figure. Should the price ease below 1.0950 on the other hand, the pair can test the mentioned 20 SMA around 1.0900.

The British Pound closed the week below the 1.5500 level for the first time since early June against the greenback, weighed by the latest BOE’s economic policy meeting result, as only one out of the nine MPC members voted for a rate hike.

Also, Britain’s inflation report showed that they lowered their inflation forecast in the near term, spooking those pricing in the soon to come rate hike announced during July. The pair closed the week with a clear bearish tone in its daily chart, as the price has extended further below a bearish 20 SMA whilst the technical indicators head sharply lower below their mid-lines.

Shorter term, the 4 hours chart is also presenting a strong bearish tone, with the 20 SMA extending below the  200 EMA and the technical indicators maintaining their sharp bearish slopes near oversold levels. The pair bottomed around 1.5420 on Friday, now the level has to be broken to confirm a new leg lower.

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Technical Bias: Bullish

Key Points

• Euro remained higher against the Swiss Franc and looks set for more upsides in the near term.
• Euro Zone Sentix Investor Confidence released by the Sentix GmbH declined to 18.4 from 18.5 in August 2015.
• Greece Industrial Production released by the National Statistics Service declined by 4.5% in June 2015, more than the market expected.
• EURCHF has a major support area formed around 1.0750, which must hold for more gains.

Technical Analysis

The EURCHF pair continued to move higher, as buyers were in control. There are a couple of bullish trend lines formed on the hourly chart, which are acting as a catalyst in the near term. Moreover, the pair is comfortably placed above the 100, 200 and 50 hourly simple moving averages, which is a positive sign for buyers.

If the pair corrects lower from the current levels, then it might find support around the highlighted trend line support area. Moreover, the 23.6% Fib retracement level of the last wave from the 1.0621 low to 1.0790 high may also come into play. The 50 SMA is positioned just below it to serve as a support.

On the upside, a break above the last high is needed to set the path for more gain towards the next hurdle of 1.0840.

Euro Zone Sentix Investor Confidence

Earlier during the London session, the Sentix Investor Confidence, which is a monthly survey and points the market opinion about the current economic situation and the expectations for the next semester was released by the Sentix GmbH. The forecast was lined up for an increase from the last reading of 18.5 to 20.2 in August 2015. However, the outcome was just below the forecast, as the Sentix Investor Confidence came in at 18.4.

Trade Idea

We can attempt a buy trade as long as the EURCHF pair is above the 50 hourly SMA.

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There were no fundamental releases in the UK yesterday, and the British Pound fell down to 1.5457 against the dollar, with the pair capped by the 1.5500 level for most of the European session. Nevertheless, less hawkish than-expected words coming from FED’s members triggered a strong recovery in the GBP/USD pair that reached 1.5605 before stalling.

The short term picture has changed as in the 1 hour chart, the price has accelerated well above its 20 SMA, now around 1.5500, whilst the technical indicators are turning flat in extreme overbought levels, not yet signaling a downward corrective move.

In the 4 hours chart, however, the technical indicators maintain their strong upward slope after crossing their mid-lines, whilst the price recovered above its 200 EMA, currently at 1.5560, all of which supports another leg higher, particularly if the pair manages to advance beyond 1.5620, the immediate resistance. This financial trading course may be very useful if you are not sure how the EMAs work in forex trading.

Meanwhile the GBP/CAD maintained its negative tone, closing in the red, but above Friday’s low of 2.0204, as a crude oil prices recovery helped the CAD strengthen against all of its major rivals.  In the short term, the cross is biased lower, as it was unable to advance beyond its 20 SMA, now gaining bearish slope around 2.0330 while the technical indicators continue to head south well below their mid-lines.

In the 4 hours chart, the 20 SMA continues to cap the upside, having extended its decline, while the RSI indicator heads south around the 37 level, and the Momentum indicator diverges higher, but below the 100 level, all of which maintains the risk towards the downside.

A break below the 2.0200 psychological level should see a sharp bearish acceleration with the immediate support below it at 2.0155

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The GBP/USD pair closed last week near the highest of its latest range, but still limited below the 1.5670/80 region, where selling interest has been containing advances since early July.

There was no relevant macroeconomic data in the UK to guide investors, but the Pound continued finding some support on the idea that the BOE will enter the tightening path after the FED, probably in the first half of 2016.

Technically, the 4 hours chart shows that  the price is above a bullish 20 SMA, although the technical indicators have turned lower, with the Momentum indicator about to cross its 100 level towards the downside.

In the same chart, the 200 EMA remains horizontal, reflecting the ongoing lack of directional strength, around 1.5670. Overall, market’s sentiment favors the upside, yet some follow through beyond 1.5710 is required to confirm additional gains for the upcoming sessions.

Meanwhile the GBP/CAD extended its advance on Friday, mostly on Pound’s strength. An intraday advance in oil prices, was finally erased by the US Baker Huge report, showing that the number of rigs drilling for oil in the United States rose by 2 from the previous week, bringing the total to 672.

Additionally, during the past week, the OPEC reported that its output rose to a 3-year high in July, with Iran among the biggest producers, all of which helped maintain the oil under pressure, and therefore, the Canadian dollar.

As for the GBP/CAD, the daily chart shows that the price has extended above its 20 SMA, whilst the technical indicators present limited upward strength above their mid-lines, supporting some further gains in the cross.

In the 4 hours chart, the upward potential seems limited, as the technical indicators are losing their upward strength above their mid-lines, whist the price stands above a horizontal 20 SMA.

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Technical Bias: Neutral

Key Points

• Aussie Dollar after correcting higher facing an important resistance around 91.80-92.00.
• Japanese Yen continues to weaken and might head lower in the near term.
• The Japanese Gross Domestic Product released by the Cabinet Office registered a decline of 0.4% in the second quarter of 2015, which was a better compared with the forecast of a 0.5% fall.

Technical Analysis

The AUDJPY pair after a decline towards 90.40 support area against the Japanese Yen found support and traded higher. There is a bearish trend line formed on the 4-hours chart, which is acting as a short-term resistance for the pair. Only if buyers manage to clear it, more gains are possible.

One encouraging sign for buyers is the fact that the pair is above the 100 and 200 simple moving average on the 4-hours chart.

On the downside, the 100 SMA (H4) could act as a support, followed by the 100 SMA. There is also a support trend line formed on the 4-hours chart.

Japanese GDP

Earlier during the Asian session, the Japanese Gross Domestic Product, representing the monetary value of all the goods, services and structures produced in Japan within a given period of time was published by the Cabinet Office. The market was expecting a decline of 0.5% in the GDP in the second quarter of 2015, compared with the preceding quarter. However, the result was above the forecast, as the Japanese GDP posted a decline of 0.4%. This was disappointing, and cannot be considered on the positive side.

Furthermore, when we look at the yearly change, then there was a fall of 1.6% in GDP in the second quarter of 2015, compared with the same quarter a year ago. Overall, the data was mixed, but weighed on the Japanese Yen in the short term.

Trade Idea

We can attempt a buy trade if the AUDJPY breaks and settles above the highlighted trend line.

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Technical Bias: Neutral

Key Points

• US Dollar after completing a short-term correction phase against the Swiss Franc started to move higher.
• USDCHF pair is forming a breakout structure in the form of an ascending channel.
• Swiss Retail Sales conducted by the Swiss Federal Statistical Office registered a decline of 0.9% in June 2015, which was lower compare with the forecast of a 0.6% fall.

Technical Analysis

The USDCHF pair managed to recover after trading as low as 0.9680. However, there are many barriers, which buyers must clear for more upsides in the near term. The pair is still below the 100 and 200 simple moving averages (hourly), pointing that sellers are active. Moreover, there is an ascending channel formed on the hourly chart, which is likely to act as a catalyst for the next move in the near term.

If buyers manage to clear the highlighted channel and resistance area, then a move towards the last swing high of 0.9850 is possible in the short term.

On the downside, the 50 SMA (H1) could act as a support, coinciding with the channel lower trend line on the hourly chart.

Swiss Retail Sales

There was a major release in Switzerland today, as the Retail Sales, which is a survey of goods sold in the last month and serves as an indicator of the Swiss consumer demand was published by the Swiss Federal Statistical Office. The market was expecting a decline of 0.6% in sales in June 2015, compared with the same month a year ago. However, the result was disappointing, as the Swiss retail sales posted a decline of 0.9%.

Overall, there is no hope for the Swiss Franc in the short term, and more losses cannot be discarded meaning the USDCHF pair could move higher if it manages to break the 100 SMA.

Trade Idea

We can attempt a buy trade if the USDCHF breaks and settles above the highlighted channel resistance area.

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Spot gold added $2.00 yesterday, holding to its recent gains, but unable to extend its rally as the market entered wait-and-see mode ahead of critical US data next Wednesday.

The commodity advanced on tepid US manufacturing figures, but traded within Friday’s range, settling around $ 1,117.50 a troy ounce by the end of the day.

The latest rebound from multi-years low seems to be losing pace, as the daily chart shows that the Momentum indicator is turning south, but still above its 100 level, whilst the RSI indicator hovers around 53.

In the same chart, the 20 SMA heads slightly higher around 1,098.60, providing a strong intraday support in the case of a retracement.

Shorter term, the 4 hours chart shows that the price is unable to overcome its 20 SMA that now turns lower, whilst the technical indicators lack directional strength around their mid-lines.

At this point, the bright metal needs to extend beyond last week high of 1,126.70 to be able to resume its advance towards the 1,140 region.

Meanwhile the Australian dollar erased all of its intraday losses against the greenback, with the AUD/USD finding some intraday demand after bottoming at 0.7343 early in the American morning.

The pair is unchanged daily basis, and maintains a neutral tone, albeit compared with Friday’s one, the daily candle shows a lower high and a lower low, increasing the risk of a break lower.

The short term technical picture is neutral, as the 1 hour chart shows that the price moves back and forth around an horizontal 20 SMA, whilst the technical indicators also lack directional strength, laying flat around their mid-lines.

In the 4 hours chart, the price managed to recover above its 20 SMA in the last hours, but the indicator has lost its bullish slope, whilst the Momentum indicator heads lower, approaching the 100 level, and the RSI stands flat around 54.

Chances of a stronger decline will surge on a break below 0.7295, with scope then to retest the recent multi-years lows near the 0.7200 level.

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The US Dollar (USD) extended upside movement against the Japanese Yen (JPY) on Wednesday, increasing the price of USDJPY to more than 124.20 ahead of some major economic releases which are due later in the US session. The technical bias remains bullish due to a Higher High and Higher Low in the recent wave on daily chart.

Technical Analysis

As of this writing, the pair is being traded around 124.26. A hurdle may be noted near 124.59, the 76.4% fib level ahead of 125.27, the swing high of the large bearish candle which emerged last week and then 125.89, the swing high of the last major upside rally as demonstrated in the following daily chart.

On the downside, the pair is likely to find a support around 123.79, the 61.8% fib level ahead of 123.14, the 50% fib level and then 123.00, the confluence of psychological number as well as major horizontal support. The technical bias will remain bullish as long as the 123.00 support area is intact.

US Consumer Price Index

The US Bureau of Labor Statistics is due to release the Consumer Price Index (CPI) report today during the early New York session. CPI is considered a main gauge for inflation which plays key role in policy making. According to the average forecast of different economists, the CPI remained 0.2% in July as compared to 0.1% in month before. Generally speaking, higher CPI figure is considered positive for the developed economies like the United States. Thus a better than expected actual outcome will incite renewed buying pressure in the price of USDJPY and vice versa.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair around current levels could be a good strategy if we get another bearish engulfing candle or bearish pin bar on four-hour timeframe after the release of CPI data and FOMC minutes.

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