Technical Analyst, Saxo Bank Group
After AUDUSD broke bullish out of its falling wedge formation it has been rejected at around 0.680 which is both the 0.764 retracement of the peak to trough of the wedge, 0.50 retracement of the down trend since June peak AND the 55 SMA. If Monday ends down it could signal a reversal of the bullish break out/rebound.
If Monday ends on the positive note the resistance at around 0.680 could be taken out. If that scenario plays out AUDUSD is likely to extend its rebound to key resistance at around 0.7069.
AUDJPY got rejected at the 0.764 retracement of the falling wedge breakout at around 95.60, currently trading at the 0.382 retracement of the uptrend after wedge break out. A correction down to the 0.618 retracement at 93.07 before uptrend resumes is not unlikely.
IF AUDJPY breaks above 95.76 June highs at 96.88 is likely to be tested and taken out.
EURAUD closed Thursday below support at 1.4765. Last week ended with a lot of volatility and could trade most of the last week of July in a fairly wide range between 1.46 and 1.49. A close below 1.46 and selling pressure in EURAUD is likely to be intensified and push the pair down to around 1.4320.
RSI is below 40 supporting the bearish view.
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
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