Sterling bulls were installed with inspiration during trading on Tuesday following July’s positive CPI of 0.6% which reduced some concerns over the health of the UK economy. Although the CPI figure was the highest seen since November 2014, the eye-catcher was the shocking 6.5% rise in imports which was the most seen since 2011. Sterling vulnerability is becoming a recurrent theme with concerns potentially elevating in the coming months as the weaker currency feeds into higher import prices.
Investors may direct their attention towards the UK employment report which could offer some clarity on how the Brexit may have impacted UK employment. If the release displays a decline in employment and earnings post Brexit then the Sterling could be left vulnerable to further losses. Despite the rise in July’s CPI, sentiment still remains somewhat bearish towards the Sterling with further declines expected as speculations mount over the BoE cutting UK rates to near zero in 2016. With uncertainty still haunting investor attraction towards the pound, most upside gains could be capped.
The Sterling/Dollar surged ferociously towards 1.3050 on Tuesday and this has nothing to do with an improved sentiment towards the Sterling but Dollar weakness. This relief rally could entice bears to attack the pair with the divergence in monetary policy between the Fed and BoE sending the currency lower. From a technical standpoint, previous support at 1.3100 could act as a dynamic resistance that encourages sellers to send the GBPUSD lower towards 1.2900.
WTI Crude has surged sharply on with prices cutting above $46 as optimism grew over a potential production freeze deal in September’s unofficial OPEC meeting. Oil is becoming highly sensitive to production freeze expectations with talks of freezes producing sharp speculative boosts in oil prices. Although the current upside gains could be commended, the fundamentals of oversupply still linger in the background and this questions the sustainability of the current rally. Concerns over the excessive oversupply remain elevated while fears of a decline in demand continue to weigh on oil prices. Crude oil inventories data will be released on Wednesday and if such displays a further build up, then WTI could be open to steep losses. As long as the fundamentals of over oversupply and soft demand are presents, bears have a stable foundation to install repeated round of selling.
Gold searches for direction
Gold displayed erratic characteristics on Tuesday with prices violently vibrating between losses and gains as expectations continued to swing over the Fed raising US interest rates in 2016. The precious metal lurched to the highs $1357.90 on Tuesday before declining back lower following hawkish comments from New York Federal Reserve President William Dudley on the possibility of a September hike. Gold remains trapped in a fierce tug of war and Wednesday’s FOMC minutes could provide the metal some direction. Risk aversion has kept the metal buoyed but US rate hike expectations continue to pressure prices lower. From a technical standpoint, bulls need to keep above $1315 to maintain the daily bullish uptrend.
There is a subdued reaction following the release of the UK employment claims moments ago where the claimant count unexpectedly fell by 8,600 and the UK unemployment rate remained steady at 4.9% for the month of July, which contradicts expectations that the EU referendum outcome would hit the domestic labour market. It does need to be taken into account that this week represents the first real week of economic data from the UK following the EU referendum outcome, therefore it is still going to be difficult to truly access what impact the Brexit result has had on the UK economy at this stage. To be honest, it is likely going to require a few more months to access how the vote is impacting UK businesses hiring on a consistent basis. A dramatic decline in the Sterling is already feeding through to increase import costs, but economists needs to continue analysing business confidence readings to then search for a correlation that should in theory lead to a decline in UK job vacancies.
Investors will now turn their attention towards the release of the latest FOMC Minutes on Wednesday evening. The Dollar is gradually attempting to recover its momentum after New York Federal Reserve President William Dudley made headlines on Tuesday by suggesting that a US interest rate rise could occur as early as September. These comments fit the ongoing narrative over the Federal Reserve wanting to maintain a public stance towards raising US interest rates in 2016, however you just need to monitor the ongoing reversal of interest rate expectations to understand that there is very little confidence from investors that the Federal Reserve will actually carry through with their intention to raise interest rates this year.
By Jameel Ahmad, VP of Corporate Development & Chief Market Analyst
FOMC was the main news for the day today, and it seemed a rather weak message from the Fed which was unusual for the market, but it sent the dollar drifting lower as a result. So far the labour market has strengthened and retail sales have been relatively stronger than anticipated, which has been strong positives for the US market. The Fed was also quick to note that the labour market was approaching maximum employment conditions, which has always been a large policy for the Fed since 2008 when the market collapsed in the wake of the financial crisis. However, the elephant in the room still remains, and that is inflation, which has remained weaker than expected in the US market and has so far held back any increase in interest rates. While the Fed has been advocating further interest rate rises and the possibility of one in September, it seems unlikely that it will happen if inflation continues to remain deflated and below the forecasted levels set out by the Fed.
For the S&P 500 it was a case of a brief drop in the market in the back of the FOMC minutes, but it looked to recover during the course of the day as the dovish tone that came out of the FOMC helped drive further bets that they made hold of rate rises during September. The 50 day moving average also was acting as dynamic support for the S&P and it will be one to watch when it comes to market movements in the coming week to see if it can contain further drops. For now any further highs will come under pressure at 2185 which is looking like a strong level of resistance in a very careful market as it looks to push higher highs. However bullish momentum has been strong on the H1 and I would look to watch momentum there for indicators for further rises and to see if there is enough to actually crack through resistance.
Oil was also the other surprise in the market as it looked to buck the three week trend and showed a drawdown in oil inventories of -2.15M barrels. There is anticipation that this will continue in the coming season as gasoline demand picks up, and this will obviously weigh on the oil inventory reading as we start to move towards winter. Oil markets are likely to find further pressure off-shore eventually, but no one is currently looking to cut supply as global oil consumption forecasts are barely moving and markets are still overstocked when it comes to supply.
On the charts oil has been looking very bullish in the lead up to today's report as the USD weakness has also helped prop up prices. Previous movements on the H1 had been supported by 20 period moving average which acted as dynamic support. A brief breakdown of the volatility today saw it touch the 50 period moving average before being forced back. This pullback shows that bullish momentum is still very much strong in the market and the trend is very much your friend until we see a total breakdown of these key moving averages on the H1.
Greenback slide resumes on disappointing Fed minutes; Japan’s verbal intervention falling on deaf ears
Dollar bulls were clearly uninspired by July’s Federal Reserve’s minutes released on Wednesday as participants remained divided over when to move interest rates.
According to the minutes, “Some participants viewed recent economic developments as indicating that labor market conditions were at or close to those consistent with maximum employment” suggesting that one of the Fed’s mandate is being met and May’s employment report was just an anomaly. However on price stability, the minutes said “Inflation continued to run below the Committee’s 2%longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports.” A justification that will continue to be used against rising rates. Meanwhile all members seemed to have agreed that Brexit is no longer creating an imminent threat to the U.S. economy.
Although doors were kept opened for a September rate hike, markets are no longer convinced that monetary tightening will happen any time soon, with terms such as “several, some, and few participants” were all over the release, indicating that there’s a clear division in opinions within the 17 members.
Investors reacted to the Fed minutes by sending the dollar and yields on treasury bonds lower, while U.S. stocks reversed early losses to close slightly higher.The utilities sector leading the S&P 500 rising 1.49% for the day, is another sign of investors disbelieve that a rate hike will happen in September.
The only chance left to prepare markets for tightening next month is Chair Janet Yellen’s speech at the annual Jackson Hole monetary policy conference on August 26. However, I believe she will remain on the dovish side.
Japan will respond to speculative FX moves
Japanese authorities continued to struggle with the strong Yen, and for the second time this week, Vice Finance Minister of International Affairs intervened verbally by saying they will respond to speculative market moves as needed. However, it seems these verbal interventions are falling on deaf ears with USDJPY falling below 100 key psychological level. Earlier today data showed Japanese imports and exports suffered their biggest monthly fall in 7 years, which is likely to put more pressure on BoJ to take action. I believe the ability of direct intervention in currency markets is quite limited especially after the U.S. issued several warnings against competitive currency devaluations. The central bank which failed to deliver in the past two meetings should prepare something big to convince FX markets on their willingness to implement further aggressive easing measures, or Yen strength will likely resume in the foreseeable future.
Aussie benefits from robust employment report
The Australian dollar is the top performing major currency today, rising by more than 0.8% against the dollar. The commodity linked currency received a boost from today’s Australian labor report showing that the economy added 26,200 jobs in July, versus expectations of 11,000, while the unemployment rate unexpectedly dropped to 5.7%, indicating that the Reserve Bank of Australia is likely to keep monetary policy unchanged in the next two meetings. Commodity currencies are also benefiting from higher oil prices with Brent approaching the $50 benchmark for the first time since late June.
By Hussein Sayed, Chief Market Strategist (Gulf & MENA)
The GBPUSD is rebounding significantly higher up the charts following an impressive UK retail sales release moments ago which has followed the path of yesterday’s jobless claims and contradicted concerns that the EU referendum outcome would have an immediate impact on the UK economy. The GBPUSD has already spiked to its highest level in nearly two weeks at 1.3163 at the time of writing, with investors enticed towards purchasing the Pound following another indication that the EU referendum outcome is not having a negative impact on the UK economy. This of course is in contradiction to previous PMI releases in the lead up to the referendum and a preliminary GDP report suggested the UK economy contracted last month. Onlookers should keep in mind that it will take time to truly access how the UK economy is performing on a consistent basis following the historic vote.
As mentioned yesterday following the employment data, economists need to be monitoring business confidence readings to then look for a possible correlation in search of a decline in future UK job vacancies. However at a time where many are expecting external investments to enter a decline, the news of an impressive retail sales shows consumers are spending and should support GDP in the meantime. Domestic consumption is going to be vital for the UK economy in the period ahead if international investment is set to drop in the uncertainty of the EU referendum outcome.
Yen rebounds once again despite alarming data
In other news, the Yen is once again showing indications of further buying demand on Thursday despite alarming trade data being released from the Japanese economy overnight. This persistent demand for the Yen has simply nothing to do with any improved confidence in the global economy, but everything to do with investors being consistently drawn towards the Yen as a safe haven as the external environment remains uncertain. The Bank of Japan (BoJ) would have certainly woke up to concerns again on Thursday following the USDJPY dropping below the heavily psychological 100 level once again, which is where expectations are high that the Japanese central bank are readily intervening in the FX market.
The trade data released from Japan overnight was alarming to say the least, I would personally add that it is only going to fuel the ongoing expectations that the Bank of Japan (BoJ) will need to launch additional monetary stimulus.
Exports collapsed by around 14% with this reportedly representing the worst decline on headline in seven years for Japan, which will only continue to strengthen concerns over global trade as a whole. Many institutions have repeatedly aired their concerns over a forthcoming slowdown in global trade, and seeing exports collapse by such an extent is only going to validate these concerns and align with similar figures being noticed across the emerging markets in recent months.
There will also be additional shocks at the news that imports collapsed at levels close to 25%. This is an astonishing decline when you not just look at the headline, but also consider that the Japanese Yen has strengthened dramatically in recent months and this should have contributed towards importing goods into Japan becoming more attractive. To briefly sum up, this appalling headline will continue to stress concerns over the ongoing weak spending across the Japanese economy and put even further pressure on the Bank of Japan (BoJ) into adding further stimulus.
By Jameel Ahmad, VP of Corporate Development & Chief Market Analyst
Bullish Dollar investors were left empty handed on Wednesday following the balanced FOMC minutes which provided little clarity on when the Fed may break the tradition of central bank caution. Although a majority of Fed members were in agreeance of the current economic outlook post Brexit, the visible divide on when to raise US rates left the Dollar vulnerable to losses. Before the passive FOMC minutes, some hawkish Fed members came forward to plant the idea of a September US rate hike but this did little to dispel the period of uncertainty. The overall outlook for the US economy is still somewhat encouraging but conflicting data this month has caused US rate expectations to constantly fluctuate. Dollar sensitivity remains a recurrent theme in the currency markets with anxiety potentially mounting ahead of September’s FOMC meeting.
Investors may direct their attention towards the unemployment claims report which could offer further insight on the health of the US economy in a time of global uncertainty. If US employment continues to display signs of resilience in a period of instability then optimism could heighten over the Fed taking action before the end of 2016. The Dollar Index remains under pressure and is currently bearish on the daily timeframe. The breakdown below 94.50 could entice sellers to drag prices lower toward 94.00.
UK retail sales defy expectations
Sterling bulls were installed with inspiration on Wednesday following July’s blockbuster retail sales of 1.4% which dispelled concerns over a slowdown in economic momentum. The persistent pound weakness may have enticed tourists to spend in the UK while good weather boosted cloth sales. This has been a solid week for the Sterling with the string of positive domestic data not only questioning the persistent Brexit fears but also elevating overall sentiment. While recent data has been undeniably encouraging, it still may be too early to gauge the ramifications of the Brexit to the UK economy.
As of now, expectations remain elevated over the Bank of England implementing further stimulus to stabilise the UK economy while the lingering uncertainty continues to haunt investor attraction towards the Sterling. Although the GBPUSD lurched towards 1.3170 following the firm releases, the potential divergence in monetary policy between the Fed and BoE could encourage sellers to install repeated rounds of selling. From a technical standpoint, the GBPUSD is in the process of fulfilling the prerequisites of an uptrend on the daily timeframe but bears could sabotage this if prices fail to close above 1.3100.
Japanese trade shrinks in July
Sentiment towards the Japanese economy received repeated blows following the dismal trade data for July which reinforced concerns over slowing economic growth. Exports tumbled by roughly 14% simply representing the worst decline since the global financial crisis with Yen’s resurgence weighing heavily on overseas shipments. The negative sentiment was complimented with a mammoth 25% collapse in imports which renewed fears of weak consumer spending across the Japanese economy consequently leaving the Bank of Japan under further pressure.
Despite the influx of weak data which continues to heighten fears over the health of the Japanese economy, the Yen has strengthened which has nothing to do with an improved sentiment but risk aversion. Japan remains entangled in a losing battle with static inflation while the unstable global landscape continues to expose the nation to downside risks. Although the BoJ have repeatedly discussed the possibility of further intervention to stimulate growth, previous instances of under delivery of stimulus measures have caused such statements to fall on deaf ears.
With risk aversion rife in the markets, Yen strength could be a dominant theme which may ensure the USDJPY remains depressed. From a technical standpoint, the USDJPY is bearish on the daily timeframe as there have been consistently lower lows and lower highs. A decisive breakdown below 100.00 could open a path towards 99.00.
Eurozone July CPI 0.2%
Uncertainty caused by Brexit has noticeably pressured the Eurozone with the overall economic outlook still unstable as anxiety weighs heavily on sentiment. Concerns still linger over the soft second quarter GDP while optimism over the ECB reaching the golden 2% inflation goal continues to diminish. Although July’s inflation figure hit expectations at 0.2% this still remains somewhat static with expectations heightening of further stimulus measures implemented by the ECB.
The EURUSD lurched higher this week and this has nothing to do with an improved sentiment towards the Euro but Dollar weakness. If Dollar weakness persists amid the fluctuating US rate hike expectations then EURUSD bulls could send the pair higher. From a technical standpoint, prices have turned bullish on the daily timeframe and a breakout above 1.1300 could open a path towards 1.1400.
WTI crude challenges $47
The rising optimism towards a potential production OPEC freeze deal in September has sparked speculative boosts in oil prices which paved a path for bulls to send oil towards $47.00. Regardless of these short term gains, oil still remains fundamentally bearish and recent reports of Saudi Arabia output hitting record levels could pressure prices in the future. Concerns still linger over the excessive oversupply in the markets while fears of a decline in demand have weighed on prices. While current gains are impressive it should be kept in mind that the combination of Dollar weakness and oil price sensitivity has created the explosive gains. If the informal OPEC meeting in September concludes without a production freeze then current gains could be swiftly relinquished. Although WTI bulls are back in control, bears could still have a chance below $44.
U.S Dollar under pressure as FED minutes disappoints
Global equities traded in a choppy manner yesterday after the FED July minutes left market participants confused.
In the U.S, stocks closed mostly higher with the Dow rising by +0.12% and S&P500 by +0.19% after suffering from heavy selling pressure in early U.S trading session.
Conversely, European stocks fell sharply on Wednesday as investors were waiting cautiously for the release of the latest FED minutes. The German DAX ended the day sharply lower losing as much as -1.30%.
In the commodity market, Gold was little changed ending the day at $1348 per ounce after the recent minutes showed the need for more economic data, while Oil rally continue as crude prices edged towards $47 per barrel.
Meanwhile,the FOMC meeting minutes did not specify the timing of the next rate hike as Federal Reserve policy makers had divided views on the U.S economy growth. This lack of consensus has brought uncertainty back to the table, which led to a choppy trading towards the U.S Dollar. Both EUR/USD and GBP/USD closed slightly higher at 1.1288 and 1.3040 respectively, while the Japanese Yen surged again pushing USD/JPY to as low as 100.03 following the minutes report.
Now let us have a look at the recent price action in both the Dollar index along with USD/JPY pair
Dollar index
From a technical standpoint, we can see that the Dollar has failed to break above 95.90/96.00 hourly resistance for the third time this week, which signals a clear slowdown in the bullish momentum in the near-term.
In addition, the index has ended last week in the negative territory. Therefore, another re-test of 92.0 support remain possible during the weeks ahead especially if the Greenback keeps trading below 95.10 peak.
Looking at the biggest picture, the Dollar index is showing a bearish head and shoulders reversal pattern in the weekly chart, and prices can be in the process of forming the right shoulder actually. If this technical picture is validated, then we should expect a big drop in the Dollar by the beginning of Q4 and prices can target 90.00-88.00 zone easily in the coming months. However, a weekly close below 92.00 area is needed to confirm these theoretical targets.
Support: 94.00-93.50-92.00
Resistance: 95.10-95.90-96.20
USD/JPY
The pair keep fighting to print fresh yearly lows as bulls did not throw the sponges yet.
Looking at the hourly chart, prices keep following a bearish wave structure, which keeps the negative trend intact in this pair. In the daily chart, the pair keep printing lower highs/ lower lows since 114.90 peak and consequently the upside potential is likely to remain limited.
For the time being, the pair may continue its path in the direction of 99.00 handle as far as prices keep trading below 101.20 peak and a daily close below the psychological support of 100.00 today, will reinforce this scenario.
Global stocks traded lower on Friday as the ongoing debates between Fed policymakers over future US rate hikes sparked jitters consequently overshadowing oil’s sharp resurgence. Asian markets concluded depressed after some Federal Reserve officials suggested the idea of a US rate hike in September which repelled investors from riskier assets. European equities were punished by Asia’s bearish contagion with most major stocks drifting lower as market participants reassessed the health of the global economy. Although Wall Street was uplifted by the rebound in oil prices that provided energy companies a welcome boost, losses could be realised if the Fed debate takes center stage.
The short term gains seen in global stocks have been undeniably impressive but go against the fundamentals which does raises questions about the sustainability of the current market rally. Concerns over the global economy still linger in the background while uncertainty remains a persistent theme which has left most investors anxious. Although speculative boosts in oil prices have somewhat elevated global sentiment, it should be kept in mind that fears over the excessive oversupply are still present. Central bank caution is still a theme in the markets and this could weigh heavily on global confidence consequently leaving stocks vulnerable to further losses. With the ingredients of a bear market still present, investors should remain alert as it could take an unexpected catalyst to rapidly halt the stock market rally.
Sterling bears are back in action
Sterling bulls were provided a lifeline this week following the string of impressive UK data which reduced some post-Brexit anxieties while also elevating sentiment towards the UK economy. Inflation figures were solid on Monday and employment data provided a pleasant surprise on Tuesday while July’s retail sales defied expectations at 1.4% consequently questioning if the impacts of a Brexit has any impact on the UK economy. While the recent data has been unquestionably encouraging, it still may be too early to gauge the ramifications of the Brexit to the UK.
Uncertainty is still a recurrent theme which continues to haunt investor attraction towards the Sterling consequently leaving prices vulnerable to heavy losses. With expectation heightened over the Bank of England implementing further stimulus to stabilise the UK economy, Sterling weakness could persist moving forward. Although the pound bulls may be installed with some inspiration in the short term if UK data continues to display signs of improvement, the thick cloud of uncertainty could ensure upside gains are capped. From a technical standpoint, although the GBPUSD broke above 1.3100, bears could reclaim back control if prices fail to stabilise above this level.
Dollar sensitivity intensifies
The Dollar was on the slippery slope this week as expectations kept changing over if the Fed will break the trend of central bank caution by raising US interest rates. Although Wednesday’s divided FOMC meeting minutes left most Dollar bullish investors empty handed, recent debates from some Fed policy makers on US rates have sparked speculations of a potential September rate increase. It seems likely that the Fed remains on standby in wait for further positive core economic data to justify raising US interest rates in December. Fluctuating US rate hike expectations could intensify Dollar sensitivity consequently creating explosive movements moving forward.
Oil enters bull market
Oil prices surged ferociously for the six straight days with Brent officially entering a bull market as expectations heightened over a potential output freeze deal in the upcoming informal September OPEC meeting. Oil sensitivity has intensified the speculative boosts in prices with bulls exploiting every opportunity provided to install repeated rounds of buying. Although the current gains are unquestionably impressive, it goes against the narrative of excessive oversupply and questions the sustainability of the current rally. With the last OPEC meeting leaving investors empty handed, there is a threat that the pending informal meeting will end without a deal laid out which could leave oil prices extremely vulnerable to heavy losses. Although sentiment remains bearish towards this commodity the technicals are pointing to the upside with bulls observing $49. While part of oil's resurgence has been hopes of a freeze deal, it should also be kept in mind that Dollar vulnerability may have played a key part.
Commodity spotlight – Gold
Gold was trapped in a wide range this week with prices meandering between $1357 and $1335 as uncertainty grew over when the Fed may raise US interest rates in 2016. This metal has always been highly sensitive to US interest rate hopes and with current expectations clouded; prices could remain in limbo moving forward. Risk aversion still lingers in the markets and such could provide a boost to prices in the medium term. With no key US economic data releases today price action and Dollar weakness could propel Gold slightly higher. From a technical standpoint, bulls must keep above $1315 to maintain the current daily bullish uptrend.
Dollar bounces on profit taking ahead of the weekly close
There were only few economic releases for today without any figures scheduled for the U.S trading session.
Beginning with Germany, the PPI MoM came out higher than expected at 0.2% against forecasts of 0.1%. Meanwhile, we have seen a depreciation compared to the previous month.
In the U.K, the public sector net borrowing decreased significantly by -1.5B in July from 7.5B previously. While in Canada, USD/CAD jumped to as high as 1.2892 level following weak economic data. The Canadian retail sales for the month of June retreated to -0.1% down from 0.0% previously. In the meantime, inflation contracted in the previous month as the figures showed deflationary pressure persisting with the MoM inflation change falling to reach -0.2% down from 0.2%, in addition, the YoY figures missed estimates and declined towards 1.3% compared to 1.5% in June.
USD/CAD rallied following this release, as the short-term technical picture matched the fundamental one sending the pair higher today. Looking at the 4-hour chart, prices have reached the 61.8% of the entire recovery that began from 1.2445 low and therefore, we were expecting to see strong buyers around this level, which stands at 1.2765. The pair managed to bounce strongly to reach as high as 1.2892 in early U.S trading session.
As of now, another extension to the upside remain possible in the coming days as the near-term trend switched from bearish to neutral. Meanwhile, the daily trend still negative, and consequently the upside potential is likely to remain limited in this pair as far as 1.3085 peak is in place.
Technically, the recent jump can reach as high as 1.2900-1.2930 resistance zone before the downside pressure resume.
Looking at the U.S Dollar price action ahead of Janet Yellen speech in Jackson Hole, the Greenback bounced on Friday as profit taking has begun ahead of the weekly close.
The Dollar recovered near 94.00 weekly support and by now, prices are testing an important bearish trend line in the hourly chart, and should see some sellers in the coming hours.
Overall, the bearish trend remain intact below 96.00 area in the daily chart, while in the hourly chart, if the recent recovery continue to gain some ground, then we expect this corrective wave to end around 94.90/95.00 resistance levels for another dip below 94.00 support.
GOLD
Gold failed to overtake 1357 hourly resistance for the third time in a row and the yellow metal showed another negative rejection candle yesterday. As of now, we can see that momentum indicators are beginning to turn lower, which warns about a potential corrective wave in the next days.
Technically, a re-test of the yearly high around 1375 level still possible. However, gold has shown three consecutive lower highs (1375-1367-1357) from its yearly peak and we will focus on a daily close below $1328 support to confirm a bearish reversal in the next hours. In the flipside, a break above 1357 resistance will bring the bullish outlook in the short-term and should expose $1375 soon.
To summarize, the positive trend started to show some signs of weakness in the hourly chart and traders should not be surprised if gold extend its losses soon as far as 1357 peak remain intact.
Support: 1333-1328-1320
Resistance: 1352-1357-1367
AUD/USD
The Aussie was the weakest currency in the FX market today as bears succeeded to push prices from 0.7700/0.7720 resistance zone.
Looking at the recent price action, the Aussie found strong resistance after reaching the daily resistance zone, which is considered as the last barrier before to reach the yearly high of 0.7830 and by now, a deeper correction in the direction of 0.7550 support remain possible.
However, we should for a daily close below 0.7600 support to confirm another extension to the downside in the pair.
Actually, our view has turned bearish in the short-term and as far as the pair keep trading below 0.7685 peak, downside pressure will persist.
