Financial market research and analysis

EURUSD consolidates gains above 1.1100, still keeping the bullish trend in the short term. First resistance is seen at 1.1169 (July 1st high), however if surpassed, the pair could advance to the 1.1198/1.1200 mark. US markets reopen after Independence Day festivity, so we can expect more volumes compared to yesterday’s session and the volatility could increase. Main focus of the week is on the Italian banks debt, and the possible solutions that could be found to reduce that debt. Adding the Italian banking issues to the outcome of the recent Brexit, the Euro could start depreciating against the US dollar. The first support is seen at the 1.1100 mark, then if cleared the pair could test the 1.1087 level (200-day moving average).

Today was the first negative session in 5 days for the Asian stock markets (Nikkei -0.67%, Hang Seng -0.75%), caused by concerns about what is going on in the UK, and further uncertainties surrounding the Italian banks. The Yen strengthens once again, and USDJPY has dropped below the 102 mark, with next support seen at 101.40 before the 98.99 low of the 24th of June. A recovery above 102.00 and 102.80 (July 1st high), could cause the pair to rise to 103.00 then 104.00 and even 104.35 (Fibonacci retracement).

The Bank of England releases its bi-annual Financial Stability report, then Governor Mark Carney will speak at the press conference. Carney is expected to announce the instruments that will be used to sustain the markets. Again, with the US markets reopening after the 4th of July festivity, volumes could be much higher for GBPUSD, which right now trades below 1.3200 mark ahead of the UK services PMI data (expectations are for a decline to 53.1 from 53.5).
Cable’s first support is at 1.3120 (June 26th low), and below that level the pair could accelerate the fall towards the 1.3000 mark. A recovery above the 13200 mark and then 1.3227 (July 4th high) could bring the pair back to 1.3300/1.3360 (Fibonacci retracement).

The Reserve Bank of Australia kept interest rates at 1.75%, and the Aussie, after recording a two-day advance, dropped below the 0.7500 mark. The RBA Governor expressed the need of the central bank to wait for more data in order to refine the outlook on inflation and growth. The short term trend on AUDUSD is still bullish, with first support 0.7474 (100-day moving average), and if broken, the next support is 07450 (Fibonacci retracement) then the 0.7400 mark. The first resistance is 0.7543 (July 4th & July 5th high), and if this is surpassed the pair could target the 0.7597/0.7600 mark.

After reaching the 1357 high level of yesterday, Gold retraced below $1350 as the US dollar gained new strength against the major G10 currencies. Data from the UK and EU are expected this morning, also BoE Gov. Mark Carney is expected to talk about the measures that he is going to use to balance out the negative Brexit effects on UK growth. This could cause new tension in the market, which could translate into further increases of volatility in gold prices.

Oil prices fell, probably affected by economic concerns across Europe. Brent dropped back below $50 a barrel, and WTI is trading below 48$ a barrel. More data from China in the coming weeks could provide new evidence of weaknesses in trade and investments, while many analysts agree that the demand will rise later this year.