• EUR/USD recovery moves has broken and closed above the 1.1873 Fibo

• 1.1873 Fibo is a 23.6% retrace of the 1.2266 to 1.1752 (May to July) fall

• That has unmasked the 1.1948 Fibo, a 38.2% of the same drop

• Fourteen-day momentum has turned positive, risk shifts to the upside

• We remain short at 1.1835, a bearish resumption is badly needed

• Fed has blown the dollar's rise off course nL1N2P50QO

• EUR/USD Trader TGM2334. Previous update nL1N2P50F9

• FX options expire 10-am New York/3-pm London - Friday July 30

• EUR/USD: 1.1850 (1.5BLN), 1.1865-75, 1.1900 (1.3BLN), 1.1910-20 (700M)

• USD/CHF: 0.9225 (250M). EUR/NOK: 10.35 (520M). AUD/USD: 0.7340 (205M)

• EUR/GBP: 0.8470-80 (810M)

• GBP/USD: 1.3800 (381M), 1.3900-05 (425M), 1.4000 (270M)

• USD/CAD: 1.2400 (785M), 1.2450 (735M), 1.2500 (835M), 1.2545 (431M)

• USD/JPY: 109.00 (537M), 109.25-35 (500M), 110.25 (315M), 110.40 (280M)

  
  

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• -0.05%, towards the base of a 1.3945-1.3971 range, as the USD firmed

• Subdued Amazon Q3 outlook, fell 7% after hours, weighing on risk in Asia

• Amazon issues not seen in other major tech results - modest impact likely

• Month end flows often create short term volatility in sterling

• Charts; 5, 10 & 21 daily moving averages climb - momentum studies rise

• Bullish setup after four days of higher highs and seven higher lows

• 1.3985 upper 21 day Bolli and 1.3991 61.8% June July fall cap at present

• 1.4000 break opens the door to 1.4090 76.4% retracement of June July fall

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• Steady in a busy 0.7381-0.7403 range, capped by soured risk appetite in Asia

• Amazon fell 7% after hours on subdued Q3 growth expectations nL4N2P53XQ

• E-mini S&P futures -0.65%, Nikkei -1.35%, AsiaxJP -0.6% & commodities lower

• Sydney COVID-19 cases ease slightly as lockdown rules tightened nL1N2P600F

• Charts; momentum studies flat line, 5, 10 & 21 DMAs conflict - mixed signals

• The June/July downtrend remains in play while trades below 0.7422 21 DMA

• Sustained 0.7422 break would open the door to 0.7519, 38.2% May-July fall

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• Flat after closing up 0.3%, amid risk 'on' safe haven USD weakness

• Sydney under strict new lockdown rules as cases soar nL1N2P537S

• PPI and credit data due at 11.30 AEST - unlikely to impact AUD

• E-mini S&P -0.55% may cap risk - Amazon off 7% nL4N2P53XQ

• Charts; momentum studies flat line, 5, 10 & 21 DMAs conflict

• Mixed signals, but the downtrend remains in play while 0.7422 21 DMA caps

• Sustained 0.7422 break would open the door to 0.7519, 38.2% May-July fall

• NY 0.7377 low and early London 0.7413 high initial support-resistance

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• +0.1% after closing up 0.4%, supported by broad based USD weakness

• UK government to invest 338 mln pounds to boost cycling, walking in England

• Gov't hopes increased exercise during COVID-19 will continue nL1N2P526O

• Charts; 5, 10 & 21 daily moving averages climb - momentum studies rise

• Bullish setup saw a fresh high for this bounce, with further gains viable

• 1.3989 upper 21 day Bolli and 1.3991 61.8% June July fall cap at present

• Break would open the door to 1.4090 76.4% retracement of June July fall

• 1.3941 NY base then 1.3900 426M strikes are first supports

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• Steady after closing up 0.35% on broad based risk on USD weakness

• ECB focusing on medical data when declaring end to emergency nF9N2N6018

• Charts; 5, 10 & 21 daily moving averages climb, 21 day Bolli bands expand

• Positive setup targets a return to the 1.2000 200 daily moving average

• 1.1894 rising upper 21 day Bollinger band capped in NY, today at 1.1900

• 1.1850 early European low 1.1847 5 day moving average is initial support

• 1.1865/75 1.342 BLN and 1.1900 1.225 BLN strikes likely contain in Asia

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• AUD/USD opens 0.25% higher on softer-than-forecast U.S. economic data

• Boosted by growing perception that Fed will remain patient on tapering

• Buoyed by elevated risk mood as China calms investors nerves nL1N2P50RW

• Upside limited as Sydney lockdown clouds economic recovery outlook

• RBA meets Tuesday, widely expected to reverse taper decision nL1N2P5043

• Resistance 0.7415-20, 0.7445-50, support 0.7375-80, 0.7355-60

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Credit Agricole CIB Research discusses the latest reading from its Risk Index.

"At -0.56 (vs -0.58 last week) our Risk Index remains broadly unchanged in risk-seeking territory. This is mostly due to lower equity market volatility and tightening credit spreads. FX volatility, in contrast, rose," CACIB notes.

"In addition, defensive stock market sectors such as utilities have been outperforming. While this could be reflective of increased caution among investors, it may also mean that there is less scope for material corrective downside from current levels," CACIB adds.

• AUD/USD rallies to a 9-session high in Europe's am, hits 0.74135

• Pair nears 0.7400 into NY's open, choppy trading then takes hold

• US claims nAQN04GULD, GDP nS0N2OE01T drive US rates, US$ lower

• AUD/USD lifts briefly then sinks near 0.7375 before rallying again

• Equity ESv1, copper HGv1 gains, USD/CNH fall help AUD/USD rally

• 0.7410 trades but AUD/JPY drop halts gains, AUD/USD near 0.7400 late

• AUD/USD rally seems corrective, likely a bearish opportunity nL1N2P521E

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• Euro buoyed by above estimate German July CPI/HICP data nAPN000X00

• US$ weighed down on claims nAQN04GULD, GDP nS0N2OE01T misses

• Eurodollar prices rally while euribor prices drop slightly

• EUR/USD opens NY near 1.1870 after gains in Europe am, rally extends

• Hits 1.1891 on EBS, eyes top of 1.1750/1.1900 range, near high late in day

• EUR/USD gains aided by equity ESv1, oil LCOc1 & EUR/JPY rallies

• EUR/USD upside potential grows on inflation, jobs data nL1N2P51JL

• July bull hammer, rising RSIs, hold above 10 & 21-DMAs are bull signals

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• GBP/USD ends NY +0.42% at 1.3964, NorAm range 1.3982-1.3952

• Pair adds to post-Fed gains after tepid US GDP, jobless claims data

• Rise above 1.3911's 50% fib of 1.4250-1.3573, takes out 100/55-DMA 1.3925/69

• Pair eyes upper 30-d Bolli at 1.3995 and 1.4001's Jun 23 high

• BoE MPC meet on Aug 5 in focus, hawkish tone puts June's 1.4250 high in view

• GBP bears need a dip below 1.3777, 50% of 1.3573-1.3982 to slow bullish rise

• EUR/GBP dips 0.1% to 0.8511; Thurs range 0.8520-0.85; BoE to move ahead of ECB favors GBP bulls

Bank of America Global Research discusses the US 10y yields outlook.

"One of the most frequent client questions we tackle these days is: Why are US interest rates so low and can this persist? Clients point to strong growth - currently tracking 4.1% for 3Q - and CPI inflation running above 5%. But we think the rates market is focused on 2023 and beyond, and are increasingly questioning the ability of the Fed to deliver a substantial hiking cycle. The most important driver of long-term rates, in our view, is the market's perception of where the Fed will stop hiking after it begins its cycle of policy normalization," BofA notes.

"We have not changed our forecast for 10y rates at 1.9% by year-end, but downside risks to our forecast have increased. We also continue to like 2y-10y steepeners as better-carry alternative to an outright short in 10y rates," BofA adds.

• AUD/USD rallies above the 10-DMA, hits a 9-session high Thursday

• Daily RSI is unwinding oversold condition, implies s-t upward momentum

• Monthly RSI is falling though, suggest downside momentum longer-term

• Daily chart shows bear flag continuation pattern forming

• AUD/USD also nearing key resistances 21-DMA and July 16 daily high

• Bears see the corrective bounce as an opportunity to sell

• Rally sellers likely target 0.7225/50 zone & 38.2% Fib of 0.5510-0.8007

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UOB Research discusses its forecasts for GBP/USD and USD/JPY.

"With the positive vibes likely to spillover to the GBP together with the currency’s attractive valuations, we keep to our bullish view on the GBP/USD, expecting the pair at 1.40 in 3Q21, 1.41 in 4Q21, 1.42 in both 1Q and 2Q22," UOB notes. 

"With the Bank of Japan expected the last within G-10 to normalize monetary policy, if any, the resulting monetary policy divergence with the FED will be the widest and underpins a higher USD/JPY. As such, we keep to our existing forecasts, expecting USD/JPY at 112 in 3Q21, 113 in 4Q21, 114 in both 1Q and 2Q22," UOB adds. 

GBP/USD rallied on Thursday after disappointing U.S. GDP data, reaching highs by 1.3980 after extending the session's earlier gains above the 50% Fibo of the June-July range -- at 1.3911 -- with sterling bulls regaining momentum for further advances.

Helping cable's outlook, the pound broke 100- and 55-day moving average resistance at 1.3925 and 1.3969, respectively.

GBP/USD initially whipsawed after the U.S. data as traders weighed the below-forecast headline GDP against rises in PCE prices advance nL1N2P434L, which came after Thursday's Fed meeting avoided specifics on asset purchases tapering, tempering dollar enthusiasmnL1N2P41Q9.

The pound isup nearly 3% from its July 20 low at 1.3573, as bulls look toward firming BoE rate expectations, in contrast to Fed uncertainty and a stagnating ECB outlook.

The divergence of U.S.-UK rate normalization timing is becoming more stark as UK short-sterling futures price a 25bpp rate hike between March and June 2022, with U.S. Eurodollar futures hinting at a Q4 2022 Fed hike.

Bulls are pinning their hopes on a hawkish BoE lean at the Aug. 5 MPC meeting to overcomethe early June 2021 high at 1.4250.

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Citi flags a USD selling signal from its month month-end fixing model.

"The July FOMC was slightly hawkish relative to our and market expectations, but in line with the view of Citi’s economists by signaling that a taper announcement could come as early as the September FOMC," Citi notes. 

"Dollar weakness is also likely to continue over the coming sessions. Factors to consider include month-end USD selling signals alongside a large drawdown in the TGA ahead of the July 31 ‘soft debt ceiling’ deadline," Citi adds. 

ANZ Research summarizes its tactical bias on EUR, GBP, AUD, and NZD.

"In the near term some consolidation in the EUR is possible as the dovishness of the ECB and its low rates structure hamstring its recovery. The path of the GBP will depend on how COVID-19 affects the ‘free’ economy," ANZ notes. 

"The AUD will be supported by the global outlook, but the lockdowns are posing domestic risk. For the NZD, we expect consolidation ahead of the RBNZ’s first hike," ANZ adds. 

• Cable met headwind at 1.3970 after extending north from 1.3901 (Asia low)

• 1.3970 approximates to 55DMA. Rise to 1.3970 aided by global equity gains

• See: nL4N2P51MQnL1N2P50RW. GBP is a risk-sensitive currency

• More offers expected pre-1.40. 1.3991 = 61.8% Fibo of 1.4250-1.3573

• UK mortgage lending looms but consumers stay wary about debt nL8N2P53YD

• BoE set to keep its stimulus running at full-speed next week nL8N2P3627

• Better German jobs, state CPI gains aid post Fed EUR/USD support

• Month end USD weakness touted, so those flows should soon fade

• EUR broke 23.6% of 1.2266-1.1752 May-Jul drop 1.1873, but struggles above

• Close above Fibo needed to reinforce potential to 38.2% at 1.1948

• EUR also needs to break 12/6 July daily highs 1.1884-95

• Thurs range 1.1841-79, 1.7bln option expiry 1.1850, support 21DMA 1.1821

• Volatility measures ease, options erase directional premium nL1N2P50F7

  
  

  
  

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• Weakened USD/JPY propped by daily cloud support nL1N2P50H9

• Daily Ichmoku cloud currently spans the 109.30-110.10 region

• USD/JPY has seen a 109.68-94 range on Thursday, according EBS data

• Talk of bids from 109.50 down, while offers start at 110.00

• USD/JPY and EUR/JPY positive relationship grows, 30-day correlation +0.67

• Japan stocks biggest weekly foreign money outflows in 2 months nL4N2P51KU

• Cable climbs to 1.3951 as global equity gains lift the risk-sensitive pound

• 1.3951 = one-month peak. European stocks hit record high nL4N2P51HR

• China equity gains fuelled earlier rise to 1.3940 nL1N2P50D7nL4N2P50KQ

• 1.3768 was Tuesday's low, when China and HK stocks plunged nL1N2P30J7

• Drop to 1.3768 preceded Tuesday's fix-related buying of GBP nL1N2P31L3

• 1.3845 was Wednesday's low (before and just after Fed's policy statement)

• EUR/USD recovery will likely be limited by the kijun line, now at 1.1864

• 1.1873 Fibo, 23.6% of 1.2266 to 1.1752 (May to July) fall, should also cap

• Overall bias remains on downside, expect a bearish resumption to 1.1695 Fibo

• 1.1695 Fibo, 38.2% retrace of the 1.0636 to 1.2349 (2020 to 2021) (EBS) rise

• 1.1695 Fibo is where solid support might return. We are short at 1.1835

• EUR/USD Trader TGM2334. Previous update nL1N2P40BZ

• Forward looking EUR/USD FX options have seen risk premiums fall post Fed

• The tiny premium for downside vs upside options has been totally erased

• Falling implied volatility consistent with low actual volatility outlook

• 1-3-month risk reversals neutral - no directional premium at all

• Outright flows have seen more sellers of options - banking premium

• Suggests range trading expected to prevail over coming sessions

• However, options do retain some risk premium for NFP and Jackson hole

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