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Amidst all the Trump-induced chaos and uncertainty, there are opportunities for other countries.

Tariffs, policy chaos, deportations – even challenges to the rule of law. So much of the Trump administration’s agenda represents an act of economic self-harm for the US. No wonder US consumer sentiment has plummeted in the past few months. Some of that sense of gloom even leaked into other countries such as Australia, though to a much lesser extent. Certainly, global economic growth will take at least some hit because of the US’s travails. Yet for countries other than the US – including Australia – the current situation also presents opportunities, not all of which have been fully appreciated.

The first opportunity stems from the overvaluation of the USD, which is still more than 15% above standard estimates of inflation-adjusted fair value against its trading partners, including the AUD. An overvalued currency means an uncompetitive economy. This opens up opportunities for firms in other countries, either to sell into the US market or to bid business away from US competitors at home or in third-country markets. While tariffs override this advantage for goods sold into the US market, the same is not true for services.

Recent comments about tariffing foreign-made films might suggest that services imports more broadly could soon face similar imposts. However, it is unlikely to be practically feasible to tariff much services trade. Try as it might, the Trump administration will not be able to tax Americans’ spending on overseas holidays – at least not without some severe intervention in global card payment systems, and I don’t want to give them ideas.

Nor will it be feasible to tax the burgeoning trade in software, miscellaneous consulting and other business services. Professional services and software licencing are both large export industries for Australia, each generating more than $7½ billion in export revenue in 2024. Within the former, consulting, accounting & auditing and legal services each generated around $1 billion of export revenue. To put these in perspective, $7½ billion annual export revenue is more than Australia’s

2024 exports of copper metal, or aluminium, pharmaceuticals, alcoholic beverages, wool, rice or barley – and not much less than last year’s wheat exports.

Not all of these services exports go to the US, but it is the largest single destination for both of these broad services categories. While ever the USD remains overvalued, consultants, auditors and all those other providers of professional services will be able to undercut their American competitors for work in the US and elsewhere, whether by traveling or working remotely. And unlike say, manufactured exports, it will be easy to pivot when that overvaluation eventually unwinds.

The second opportunity stems from the revulsion-and-reallocation phase in global asset management. As we have previously discussed, the fading of the ‘US exceptionalism’ narrative means that asset managers globally are deciding that they want to be a bit less long US assets. This process had already started before ‘Liberation Day’, with US equity markets selling off and European equities rising, especially defence companies, over February and March. So far, Europe has been the main beneficiary of this asset reallocation. This is unsurprising given that European and UK-domiciled asset managers are such a large fraction of the global industry.

Australian-domiciled asset managers will nonetheless be contemplating the same issues. Aggregate data on Australia’s international investment position show that US equities were around 55% of portfolio equity assets in 2024, and US debt securities were more than a third of portfolio debt assets. (The share of US investors in Australia’s portfolio liabilities is noticeably smaller for both asset classes.)

This revulsion and reallocation process need not be a case of bringing assets home. It is simply that reallocating out of the US means reallocating into something else, and that something else can be more diversified and include Australian assets, regardless of the location of the end investor. Some of that reallocation will mean more capital, or at least cheaper capital than otherwise, for needed investment in the climate transition, in infrastructure and other areas.

A third opportunity, perhaps related to the second, centres on the defence industry. With the US under Trump looking like a less reliable defence partner and wanting its allies to provide for more of their defence themselves, Europe and other aligned nations such as Canada are looking to re-arm. In doing so, they are looking for alternatives to US equipment.

Again, this is more of an opportunity for Europe, noting that it already has extensive defence and aerospace sectors and other manufacturing industry that can be retooled. Here too, though, Australia can capitalise on this opportunity and is already doing so. We have already noted the offshore interest in Australia’s JORN (Jindalee Operational Radar Network) over-the-horizon radar technology. We are hearing from a range of clients that this interest has broadened to other countries and products. Australia has a significant defence equipment industry and provides overflow production capability for a range of overseas customers. Several offshore-headquartered defence technology firms already have operations here, building equipment for European military forces.

The broader point here is that other countries are not the US and are not constrained to behave in the same way. People adapt to events beyond their control, including the policy gyrations of other countries’ governments. To be fair, the constant renegotiation and uncertainty around some of the Trump administration’s policies makes it difficult to plan and make investment decisions involving the US. Even so, the currently overvalued USD, asset reallocation and defence pivot are all shifts that are robust to the daily headlines.

Key Highlights

• USD/JPY found support near 142.35 and started a fresh increase.
• A connecting bullish trend line is forming with support at 143.80 on the 4-hour chart.
• GBP/USD is correcting gains and trading below the 1.3300 support zone.
• EUR/USD started another decline and traded below the 1.1265 support zone.

USD/JPY Technical Analysis

The US Dollar remained supported above 142.20 against the US Dollar. USD/JPY is again rising and aims for a move above the 146.00 level.

Looking at the 4-hour chart, the pair started a fresh increase above the 143.50 and 144.00 levels. The pair settled above the 100 simple moving average (red, 4-hour) and recently surpassed the 200 simple moving average (green, 4-hour).

There was a clear move above the 76.4% Fib retracement level of the downward move from the 145.92 swing high to the 142.35 low.

Besides, there is a connecting bullish trend line forming with support at 143.80 on the same chart. The pair is now facing resistance near the 146.00 level. The next major resistance is near the 146.75 zone.

A close above the 147.75 level could set the tone for another increase. In the stated case, the pair could even clear the 148.50 resistance. The next major stop for the bulls could be near the 150.00 level.

On the downside, immediate support sits near the 145.00 level and the 200 simple moving average (green, 4-hour). The next key support sits near the 144.20 level. Any more losses could send the pair toward the 143.50 level.

Looking at EUR/USD, the pair started a fresh decline and the bears were able to push the pair below the 1.1265 support.

Upcoming Economic Events:

• Fed's Kugler speech.
• Fed's Goolsbee speech.
• Fed's Waller speech.
• Fed's Williams speech.

Summary

• The Bank of England (BoE) delivered a widely anticipated 25 bps rate cut at today's announcement, bringing the policy rate down to 4.25%. Between the somewhat balanced policymaker vote split, mixed commentary on economic trends, and updated economic projections that did not contain any major surprises, we view the decision as broadly neutral. In terms of forward guidance, BoE officials communicated a desire to maintain a gradual and cautious approach towards further easing.
• In terms of recent economic trends in the United Kingdom, we have yet to see data that would suggest a deviation from this gradual rate cut path. The U.K. economy started 2025 in reasonably good shape, and we see relatively limited impact on the U.K. economy from higher U.S. tariffs. There are areas of caution—such as some degree of fiscal consolidation and a mixed picture for business investment—but we believe policymakers would likely only adopt a shift in stance if these developments were to result in sharply slower overall economic growth.
• As for wage and price growth developments, the picture is somewhat mixed. While in our view the direction of wage and labor cost pressures is broadly favorable, some measures of pay growth are still elevated. On the price front, the news has been more encouraging, with March CPI inflation surprising to the downside. While disinflation progress is noticeable, services inflation is persisting for now, which we see as consistent with a more gradual pace of rate cuts.
• We maintain our view for a once-per-quarter BoE rate cut pace through Q1-2026. We see 25 bps rate cuts in August, November, and February, with the policy rate expected to reach a low of 3.50% by early next year. Given our expectation for only gradual BoE easing, combined with anticipated U.S. economic weakness later this year, we see limited pound weakness against the dollar through the end of this year. However, more pound weakness could be seen in 2026, as the Fed concludes its easing cycle and the U.S. economy recovers.

Bank of England Takes Further Step Along Its Monetary Easing Path

The Bank of England (BoE) delivered a widely anticipated 25 bps rate cut at today's announcement, bringing the policy rate down to 4.25%. The accompanying statement and updated projections were relatively balanced, which we view as consistent with the BoE maintaining a gradual pace of rate cuts for the time being.

Looking more closely at the statement itself, the first balanced element was the 5-2-2 vote split. That is, five policymakers voted for the 25 bps rate reduction, while two policymakers voted for a larger 50 bps cut and two voted for no change. In terms of the other elements of the statement, the BoE said “underlying UK GDP growth is judged to have slowed since the middle of 2024, and the labor market has continued to loosen.” The central bank also observed that “progress on disinflation in domestic price and wage pressures is generally continuing ... although indicators of pay growth remain elevated, a significant slowing is still expected over the rest of the year.”

Importantly, the BoE did not offer any significant adjustment to its future policy guidance. The central bank reiterated that a “gradual and careful approach” to the further withdrawal of monetary policy restraint remains appropriate. Additionally, the BoE also said monetary policy will need to “remain restrictive for sufficiently long” until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.

Turning to the BoE's updated economic projections, there is little to suggest an acceleration in the pace of rate cuts. The forecasts are based on an assumption that the BoE's policy rate will decline gradually to 3.50% by Q2-2026. With respect to economic growth, U.K. GDP is expected to jump 0.6% quarter-over-quarter in Q1-2025 before slowing sharply thereafter. In terms of its overall GDP forecasts, the BoE raised its growth forecast for 2025 to 1% (previously ¾%), lowered its growth forecast for 2026 to 1¼% (previously 1½%), and kept its 2027 growth forecast at 1½%.

Meanwhile, the central bank lowered its CPI inflation forecast for 2025, 2026 and 2027. For a start, the BoE now sees a lower inflation peak of 3.5% in Q3-2025, compared to a previous forecast peak of 3.7%. CPI inflation is expected to return to the 2% target by early 2027, and to fall slightly below that target at 1.9% in both Q2-2027 and Q2-2028. The slowdown of inflation is predicated, in part, on a significant slowing in wage growth over the rest of this year.

A Slowdown in U.K. Growth Could Allow For Faster Rate Cuts...

Overall, today's BoE announcement was broadly neutral and, so far, the central bank has not deviated from its once-per-quarter rate cut pace. Looking forward and thinking about what could prompt a shift in approach from the central bank, we think that growth dynamics have the most potential to prompt a shift to a faster pace of BoE easing, though probably not for some time.

The U.K. economy started 2025 on a relatively solid footing. Retail sales rose every month during the first quarter, and February GDP registered a sizable 0.5% month-over-month gain. Considering the gains during the January-February period, the United Kingdom appears on track for Q1 GDP growth of around 0.5% overall. Some underlying dynamics behind the recent U.K growth details also appear favorable. Notably, the latest available data show real household disposable income grew 5.3% year-over-year in Q4-2024, well in excess of growth in consumer spending. Coupled with early-year advances seen in both services output and retail sales, this suggests that the U.K. consumer could provide some support for activity this year. That said, there are some cautionary factors to watch for. One concern on the consumer front is the increase in National Insurance Contributions that took effect in April, a factor that could lead some firms to adjust employment or wages, which could offer some headwinds to real income growth. Finally, while higher U.S. tariffs are certainly not a positive for the United Kingdom, the British economy could be less negatively impacted by U.S. tariffs than some other regions. We would argue the United Kingdom's direct exposure to higher U.S. tariffs is somewhat limited. U.K. exports of goods the United States (which are subject to tariffs) accounted for a relatively modest 2.1% of U.K. GDP in 2024, while U.K. exports of services to the United States (which for now are not subject to tariffs) accounted for a more sizable 4.8% of U.K. GDP last year.

While the consumer outlook appears reasonably solid and the direct negative impact from tariffs could perhaps be limited, there are nonetheless still reasons for concern regarding the U.K. outlook. For one, the government's fiscal stance has turned more cautious in recent months. Faced with a shortfall in tax revenues and increased debt interest costs, the Chancellor of the Exchequer Rachel Reeves announced in the Spring Budget Statement in late March a package of £8.4B of welfare reductions and day-to-day spending cuts, an extra £3.4B from higher revenues from planning reforms, and £2.2B from more efficient tax collection. Even with the measures, the government has only a slim £9.9B fiscal buffer, meaning slower economic growth and tax revenues, or alternatively, higher yields, could still lead to further consolidation measures ahead.

The business sector outlook also remains decidedly mixed. According to the OECD, gross entrepreneurial income of non-financial corporates fell 1.1% year-over-year in Q4-2024, a potential restraining influence on business investment moving forward. The increase in the employers' National Insurance Contributions that took effect in April could also be a factor that weighs on profits, at the margin. More broadly, while the United Kingdom was spared the worst of the direct impact from higher U.S. tariffs, the indirect impact on the U.K. economy could still be significant. Given the likelihood of higher prices and/or lower growth across many major economies—including the United States, Eurozone and China—we have lowered our global GDP growth forecast to just 2.3% for both 2025 and 2026. The rather mixed outlook for U.K businesses is also reflected in the April PMI survey. It showed a modest improvement in the manufacturing PMI to 45.4, a reading that nonetheless remains very much in contraction territory. Meanwhile, the services PMI fell sharply to 49.0 from 52.5 in March, also entering contraction territory. Especially as this year progresses, and the full impact of higher U.S. tariffs and slower global growth takes effect, we expect the U.K. economy to underperform. Indeed, we forecast U.K. GDP growth of just 0.7% in 2025, rising to 1.5% in 2026. Our outlook for 2025 GDP growth is modestly below the BoE's own forecast, and cumulatively, our growth forecast is also below the central bank's estimates of potential growth, which it sees as around 1.5% over the medium term. Against this backdrop, we view our subpar U.K growth outlook as consistent with slowing employment growth, rising unemployment, and some easing in wage pressures—trends that could eventually be consistent with a more accelerated pace of Bank of England monetary easing.

...But Wage And Price Trends Will Hold The Key To Whether Faster Easing Occurs

While the U.K. growth outlook in isolation might suggest scope for an eventual faster pace of easing, whether the Bank of England ultimately pursues that approach will in large part depend on whether wage and inflation trends show clearer and more decisive deceleration. The BoE has been regularly surprised in recent years, during and following the pandemic, initially by how quickly wages and inflation spiked surrounding the pandemic, and subsequently by how persistent and stubborn wage and price pressures have been in the years since. Thus, although the BoE's analysis and modeling might suggest an expected slowdown in wage and prices, the central bank might need to see more evidence of that slowdown before transitioning to a more frequent cadence of rate cuts.

So far, the evidence on wage growth is mixed. For the December-February period, average weekly earnings for the private sector excluding bonuses—a measure closely watched by BoE policymakers—rose 5.9% year-over-year, in line with the consensus forecast and steady compared to the prior reading. This measure of wage growth has also quickened slightly since late 2024. Still, recent pay growth has come in somewhat below the BoE's previous projections. Other indicators of wage growth hint at the potential for further deceleration ahead. For example, realized wage growth as reported by the BoE's Decision Makers Panel slowed to 4.8% year-over-year in the three months to April. Similarly, the U.K. Indeed Wage Tracker has also slowed recently, though it remains elevated at 5.8% year-over-year in the three months to March. While somewhat dated, the most recent estimate of U.K. unit labor costs showed a gain of 4.5% year-over-year in Q3-2024, a level that we view as likely too high to be compatible with the BoE's 2% inflation target on a sustained basis. A modest improvement in U.K. productivity since then may have seen unit labor costs soften a bit further. Altogether, our sense is that the direction of wage and labor cost pressures is broadly favorable from the BoE's inflation targeting perspective. At the same time, we suspect that policymakers will want to see clearer evidence of a more pronounced slowdown in wage pressures before they would contemplate accelerating the pace of rate cuts.

Regarding prices, the latest inflation news has been a bit more encouraging, with the March CPI surprising modestly to the downside. Headline inflation slowed to 2.6% year-over-year, and a sharp slump in oil prices since early April could help restrain headline inflation in the immediate months ahead. March core CPI inflation eased to 3.4%, and services inflation slowed a bit more than forecast to 4.7%. Specifically with respect to services prices, our own seasonally adjusted measures suggest that services inflation has advanced at around a 4.50%-4.75% annualized rate over the past six months. The key takeaway, in our view, is that while the recent price trends in U.K. core inflation and services inflation are encouraging, they remain more consistent with a steady rather than accelerated pace of monetary easing by the Bank of England at this stage.

Overall, we view today's policy announcement as broadly neutral and are not yet convinced the Bank of England will shift to an accelerated rate cut path. For the time being, our base case remains for Bank of England easing to continue at a 25 bps rate cut per quarter pace. We forecast 25 bps rate cuts in August and November of this year, and February of next year, which would bring the policy rate to a low of 3.50%. While we view the growth outlook as potentially consistent with an eventual acceleration of monetary easing, we think policymakers will need to see more convincing evidence that wages and prices are indeed slowing in a manner that is more compatible with sustained convergence towards the 2% inflation target before adjusting rates more frequently. We think it will be several months, at the earliest, before sufficient evidence emerges on the wage and price front for BoE policymakers to be comfortable picking up the pace of easing. Moreover, we think it could be several months before the full effect of higher U.S. tariffs and weaker global growth are fully apparent, prompting the Federal Reserve to also begin lowering interest rates from later this year. Thus, while we would view the risks to our outlook as tilted toward faster and more pronounced rate cuts, that appears unlikely until late this year at the earliest. Indeed, we think the most plausible risk scenario would see the BoE deliver 25 bp rate cuts in August, November and also December this year, along with February of next year, for a policy rate low of 3.25%. However, that outcome would probably only happen if U.K. growth and inflation data surprise consistently to the downside. Finally, the relatively gradual easing we expect from the BoE, combined with the economic challenges the United States should face in the second half of this year, in our view, suggests only limited weakness in the pound through most of 2025. We see more potential for sterling to weaken in 2026, as U.S. economic growth recovers and as Fed easing comes to an end. Our medium-term outlook anticipates a GBP/USD exchange rate of $1.3100 by the end of 2025, declining to $1.2800 by late 2026.

It's a busy, busy day in the UK. The Bank of England has lowered interest rates and the UK and US are poised to announce a trade agreement to reduce tariffs. The British pound has not showed much reaction to all the news. In the North American session, GBP/USD is trading at 1.3340, up 0.40% on the day.

BoE lowers rates to 4.25%

The Bank of England has lowered rates to 4.25% from 4.5%. The decision, which was expected, brings the cash rate to its lowest level since March 2023 and is the second cut this year.

The vote was expected to be unanimous but only five members voted for the quarter-point cut, with two votes for a larger half-point reduction and two votes for no change.

Bank of England Governor Bailey pointed to lower inflation as the factor behind the rate cut but added that the global economy had become unpredictable due to US tariffs. Bailey added that he planned to stick to a "gradual and careful approach to further rate cuts" in order to ensure that inflation remained low and sustainable.

The US and UK have apparently reached a trade agreement, with details to be provided later in the day. The deal is expected to reduce tariffs between the two countries and will be celebrated as a political victory by President Trump and Prime Minister Keir Starmer.

Powell pushes back against Trump

The Fed decision to maintain interest rates was no surprise. The markets were looking for Fed Chair Powell to push back against President Trump's blunt calls to lower rates. Powell responded forcefully, saying if the tariffs remained in place the likely result would be stagflation, a combination of high inflation and high unemployment with little growth. Powell added that he was in no rush to lower rates.

GBP/USD Heading

• GBP/USD is putting pressure on resistance at 1.3357. Above, there is resistance at 1.3421
• 1.3318 and 1.3254 are the next support levels

GBPUSD 1-Day Chart, May 8, 2025

EURUSD: ⬇️ Sell

• EURUSD broke support zone
• Likely to fall to support level 1.1130

EURUSD currency pair recently broke the support area between the support level 1.1300 (which has been reversing the pair from the start of April), support trendline of the daily up channel from March and the 38.2% Fibonacci correction of the upward impulse from March.

The breakout of this support area accelerated the active short-term ABC correction ii from the start of April.

EURUSD currency pair can be expected to fall to the next support level 1.1130 (former strong resistance from the start of April).

Nikkei 225 index: ⬆️ Buy

•  Nikkei 225 index broke the resistance zone
•  Likely to rise to resistance level 38275,00

Nikkei 225 index recently broke the resistance area between the resistance level 37255.00, resistance trendline from January and the 61,8% Fibonacci correction of the downward impulse from January.

The breakout of this resistance zone accelerated the active impulse wave c of the intermediate ABC correction 4 from the start of April.

Nikkei 225 index can be expected to rise to the next resistance level 38275,00 (former monthly high from March and the target for the completion of the active impulse wave c).

Ethereum: ⬆️ Buy

• Ethereum broke the resistance zone
•  Likely to rise to resistance level 2100,00

Ethereum cryptocurrency recently broke the resistance area between the major resistance level 1935,00 (former monthly top from April) and the 50% Fibonacci correction of the downward impulse from March.

The breakout of this resistance zone accelerated the active short-term ABC correction ii from the start of April.

Given the strongly bullish sentiment seen across the cryptocurrency markets, Ethereum cryptocurrency can be expected to rise to the next resistance level 2100,00 (top of the previous correction iv).

Markets

The Bank of England stuck to its quarterly cutting pace in place since August of last year. They lowered the key policy rate by 25 bps to 4.25% in a 3-way vote. Five out of nine members supported the decision with two in favour of a larger, 50 bps, rate cut and two in favour of keeping rates steady. Minutes of the meeting showed that “prior to the latest global developments, most members in this group had judged that this policy decision would be finely balanced between no change in Bank Rate and a further reduction.” Going into the release, some expected the BoE to drop a reference to gradual rate cuts. That is not the case. Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate. Similarly, markets feared significant downgrades to the expected growth path. BoE Bailey at the press conference downplayed those concerns as well. Short term prospects faced an upward revision because of stronger actual data (2025 Q2: 0.8% Y/Y from 0.3%), medium term was slightly downwardly revised (2026 Q2: 1.3% Y/Y from 1.5%), while the long term end point is pretty much the same (2027 Q2: 1.5% Y/Y from 1.4%). This baseline forecast is conditioned on the market path for interest rates. Deputy governor Ramsden added that downward revisions to business investments and the increasing (precautionary) household savings rate could easily unlock upside potential if global uncertainty is reduced, for example by the flagged UK-US trade deal. UK inflation is likely to rise to 3.7% by September, partly because of increases in energy prices and increases in some regulated prices such as water bills. Inflation is expected to fall back to the 2% target after that. But there are risks around this path of inflation. Bank staff prepared two alternative scenarios. In one scenario, there could be weaker supply and more persistence in domestic wages and prices, including from second-round effects related to the near-term increase in CPI inflation. In another scenario, inflationary pressures could ease more quickly owing to greater or longer-lasting weakness in demand relative to supply, in part reflecting uncertainties globally and domestically. Bailey stressed that these are only two examples of a wide range of different paths the economy could take. In the former, inflation ends up 0.4 ppt higher over the forecasting period. In the latter, the path is 0.3 ppt lower over the policy horizon. The baseline projection is 3.4% Y/Y for 2025 Q2, 2.4% for 2026 Q2 and 1.9% for 2027 Q2. The UK Gilt curve bear flattened (UK 2-y yield +6 bps) after the BoE meeting as the central bank wasn’t as doom and gloom as feared (hawkish cut), sticking to its gradual approach. EUR/GBP dipped from 0.8510 to 0.8480. The amount of global uncertainty calls for patience, as witnessed in today’s Riksbank and Norges Bank decisions as well. It should serve as a reminder to the dovish-skewed market positioning going into the June ECB meeting. EMU money markets almost fully discount a June rate cut, with another one priced in by September.

News & Views

The Swedish Riksbank left its policy rate unchanged at 2.25%. The uncreased uncertainty abroad makes the economic outlook slightly weaker. The impact on inflation is more difficult to assess. The executive board still sees monetary policy currently as well balanced providing the room to assess further information. Still it is somewhat more probable that inflation will be lower than that it will be higher compared to the March forecast. The central bank concludes that a slight further easing of monetary policy could occur going forward. Swedish money markets already (more than) fully discounted an additional RB rate cut later this summer (August or September). EUR/SEK holds the 10.90 area after having a good run in February/March. The Norges Bank (NB) also left its policy rate unchanged at 4.50%, the cycle peak in place since December 2023. The MPC also sees uncertainty about future economic developments, but the outlooks still implies that the policy rate will most likely be reduced during the course of 2025. In March, the NB guided the policy rate to be near 4.0% by the end of the year. Inflation has fallen markedly from the peak but is still above the 2% target. For now, a restrictive policy is still needed to bring inflation down to target within a reasonable time horizon. Trade barriers have become more extensive, and there is uncertainty about future trade policies. This may pull the interest rate outlook in different directions. The NB will judge on the basis of new forecasts in June. For now markets still only see a 50/50 chance of a rate cut next month. EUR/NOK is trading little changed near 11.70.

Daily Pivots: (S1) 1.1270; (P) 1.1324; (R1) 1.1356; More...

EUR/USD is staying in sideway trading and intraday bias remains neutral. On the downside, below 1.1265 will resume the corrective fall from 1.1572 short term top. But downside should be contained by 38.2% retracement of 1.0176 to 1.1572 at 1.1039. On the upside, break of 1.1424 will suggest that the correction has completed and bring retest of 1.1572 high.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0808) holds.