Sample Category Title

For the 24 hours to 23:00 GMT, the GBP rose 0.32% against the USD and closed at 1.3885, boosted by better-than-expected UK inflation figures.

Data showed that Britain's consumer price index (CPI) rose more-than-expected by 3.0% on an annual basis in January, suggesting that the Bank of England (BoE) needs to explore the possibility of raising interest rates soon as inflation continues to accelerate. In the previous month, the CPI had registered a similar rise, while markets were anticipating for a gain of 2.9%.

In the Asian session, at GMT0400, the pair is trading at 1.3920, with the GBP trading 0.25% higher against the USD from yesterday's close.

The pair is expected to find support at 1.3863, and a fall through could take it to the next support level of 1.3805. The pair is expected to find its first resistance at 1.3951, and a rise through could take it to the next resistance level of 1.3981.

Amid a lack of macroeconomic releases in the UK today, investor sentiment would be determined by global macroeconomic factors.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.79% against the JPY and closed at 107.84.

In the Asian session, at GMT0400, the pair is trading at 106.87, with the USD trading 0.9% lower against the JPY from yesterday’s close.

Overnight data revealed that Japan’s preliminary gross domestic product (GDP) climbed 0.1% on a quarterly basis in the October to December 2017 period, falling short of market expectations for a rise of 0.2%. In the previous quarter, GDP had risen 0.6%.

The pair is expected to find support at 106.24, and a fall through could take it to the next support level of 105.6. The pair is expected to find its first resistance at 108.12, and a rise through could take it to the next resistance level of 109.36.

Going ahead, traders would look forward to Japan’s machinery orders and final industrial production data, both for December, slated to release tomorrow.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.43% against the CHF and closed at 0.9355.

On the economic front, Switzerland’s producer and import price index climbed 0.3% on a monthly basis in January, compared to an advance of 0.2% in the prior month.

In the Asian session, at GMT0400, the pair is trading at 0.9309, with the USD trading 0.49% lower against the CHF from yesterday’s close.

The pair is expected to find support at 0.9278, and a fall through could take it to the next support level of 0.9246. The pair is expected to find its first resistance at 0.9370, and a rise through could take it to the next resistance level of 0.9430.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.07% against the CAD and closed at 1.2593.

In the Asian session, at GMT0400, the pair is trading at 1.2564, with the USD trading 0.23% lower against the CAD from yesterday's close.

The pair is expected to find support at 1.2542, and a fall through could take it to the next support level of 1.2519. The pair is expected to find its first resistance at 1.2606, and a rise through could take it to the next resistance level of 1.2647.

Going ahead, Canada's Teranet/National Bank house price index for January, slated to release later in the day, would be on investors' radar.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

The markets were reasonably busy overnight in preparation for this evening US CPI, and with some G-10 traders arguing this is the most significant economic release in the past three years, and at a minimum, the consensus is that that the US CPI release on will provide the next directional signal for markets. The announcement should generate an outsized volume of noise.

There is little to fret about the forecasted number in itself, but traders will be keying the divergence, direction and delta of the miss. Most certainly a higher CPI will be initially interpreted through USD strength, higher yields and lower equities bolstering the market views post-AHE narrative that inflation scare could push Treasury yields much higher and send equities spiralling lower.

It certainly feels like the proverbial calm before the storm and rightly so as there plenty of reasons to be cautious, but whether it warrants the present sense of foreboding in the markets or not, equity investors seem undeterred by the possibility of higher yields. US equities finished in the green for the 3rd consecutive day ahead of the critical inflation print despite the fresh memories of last weeks market carnage in the wake of an inflationary uptick in wage growth.

While there remains the concern that investors are shifting from growth to inflation narrative.A spike in CPI will reinforce that moving storyline and will draw much attention to the bond markets. However, the more significant risk for Bond Traders may be a tepid CPI reading given the staggering bearish short positions in 10 year US bonds that woYen strength spilling from the US session into Wednesday Asia combined with broadening USD weakness sent USDJPY to 107, on the brink of breaching the 1 1/2 year trendline support. Japan's Q4 GDP slowed to 0.5% y/y from 2.2%, disappointing expectations of a 1.0% reading. The rout in risk trade followed by the latest rebound hardly put a dent in the trend of US dollar weakness, especially against the yen. The Premium short USDJPY trade hit its final 107 target for a 250-pip gain. The Premium video for the upcoming trades is found below.

Yen Mystery?

Based on interest rates and the carry trade, this pair shouldn't be struggling. Japanese 30s pay just 0.8% and the BOJ hasn't given the slightest hint about raising rates. So what's the driver?

A big one is investment. Japan has been a no-go zone for a generation due to languishing growth but also due to better potential elsewhere. Now investors are giving Japan a fresh look as the economy shows small, budding signs of growth. Along with that, equity valuations in Japan are cheap.

Ashraf reminded us 3 weeks ago on the reasons to JPY strength and why it would persist.

So long as the weak-dollar paradigm extends and global growth shows signs of life, a steady trickle in the yen could continue. Note also that specs are heavily short the yen and could be forced to start covering if USD/JPY embarks on another leg lower.

Key Highlights

• The British Pound declined recently, but the 1.3760 support prevented further declines against the US Dollar.
• There is a major expanding triangle forming with support near 1.3680 on the 4-hours chart of EUR/USD.
• The UK Consumer Price Index increased 3% in Jan 2018, more than the forecast of 2.9% (YoY).
• In terms of the monthly change, there was a decline of 0.5% in the CPI in Jan 2018.

GBPUSD Technical Analysis

The British Pound declined sharply from the 1.4270 swing high against the US Dollar. The downside move in GBP/USD was protected by 1.3760, which is a major support.

The last decline in GBP/USD was more than 400 pips. The pair made a top near 1.4270 and declined below the 1.4000 support. The downside push was strong as the pair even traded below the 1.3920 support and settled below the 100 simple moving average (red, 4-hours).

However, the 1.3750-60 region acted as a major hurdle for more declines along with the 200 simple moving average (green, 4-hours). A base was formed and the pair started a recovery above the 1.3800 level.

On the upside, the pair faces a strong resistance near 1.4000-1.4020. It is the 50% Fib retracement level of the last decline from the 1.4273 high to 1.3766 low. Moreover, the stated 1.4020 was a support earlier and now it will most likely act as a resistance.

Overall, it seems like is a major expanding triangle forming with support near 1.3680 on the 4-hours chart. The pair may trade higher in the short term, but it could face sellers near 1.3960 and 1.4000.

UK CPI

Recently in the UK, the Consumer Price Index for Jan 2018 was released by the National Statistics. The market was looking for an increase of 2.9% in the CPI in Jan 2018 compared with the same month a year ago.

The actual result was on the higher side as the CPI increased 3.0%. The monthly change was -0.5%, less than the forecast of -0.6. The report added:

The largest downward contribution to change in the rate came from prices for motor fuels, which rose by less than they did a year ago. The main upward effect came from prices for a range of recreational and cultural goods and services, in particular, admissions to attractions such as zoos and gardens, for which prices fell by less than they did a year ago.

The GBP/USD pair spiked a few pips before retreating. The overall trend remains stable as long as the pair is above 1.3750.

Looking at the other major pairs, EUR/USD succeeded in recovering and moved above 1.2280. More importantly, USD/JPY tumbled and moved below a crucial support at 108.20.

Daily Pivots: (S1) 148.95; (P) 149.78; (R1) 150.59; More...

Decline from 156.59 extends today and intraday bias remains on the downside for 146.96 support. Considering bearish divergence condition in daily MACD, firm break of 146.96 will be another sign of medium term trend reversal. On the upside, break of 154.03 resistance is needed to confirm completion of the fall. Otherwise, outlook will remain cautiously bearish even in case of recovery.

In the bigger picture, as long as 146.96 key support holds, medium term outlook remains bullish. Rise from 122.36 is in favor to extend to 61.8% retracement of 195.86 to 122.36 at 167.78. However, break of 146.96 support will indicate trend reversal after rejection by 55 month EMA. In that case, deeper fall would be seen to 38.2% retracement of 122.36 to 156.59 at 143.51 and then 61.8% retracement at 135.43.

Daily Pivots: (S1) 132.52; (P) 133.15; (R1) 133.79; More....

Intraday bias in EUR/JPY remains neutral for the moment. Deeper fall is still expected with 134.79 resistance intact. Decisive break of 132.04 cluster support (23.6% retracement of 114.84 to 137.49 at 132.14) will indicate larger trend reversal on bearish divergence condition in daily MACD. In such case, outlook will be turned bearish for 38.2% retracement at 128.38 first. Nonetheless, rebound from 132.04 will retain near term bullishness. Break of 134.79 minor resistance will bring retest of 137.49 high instead.

In the bigger picture, bearish divergence condition in week EMA indicates lost up medium term up trend momentum. But there is no clear sign of completion of up trend from 109.03 yet. Break of 137.49 will target 141.04/149.76 resistance zone. However, sustained break of 132.04 will be the early sign of long term reversal and should bring deeper fall back to retest 124.08 key support level.

Daily Pivots: (S1) 0.8862; (P) 0.8885; (R1) 0.8914; More...

EUR/GBP rebounds further today but after all, it's bounded in range of 0.8686/8928. Intraday bias remains neutral. Near term outlook will remain mildly bearish as long as 0.8928 resistance holds. On the downside, firm break of 0.8686 will resume whole decline from 0.9305. As 61.8% retracement of 0.8312 to 0.9305 should then be taken out too. Deeper decline would be seen to retest 0.8303/8312 support zone. Nonetheless, on the upside, break of 0.8928 will indicate near term reversal and turn outlook bullish for 0.9304 resistance.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of deeper fall. And in that case, EUR/GBP could have a retest on 0.8303. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 1.5599; (P) 1.5655; (R1) 1.5687; More....

Intraday bias in EUR/AUD remains neutral at this point. Further rise is still mildly in favor. Sustained break of 1.5770 resistance will confirm resumption of medium term rise from 1.3264. In that case, EUR/AUD should target 1.6587 key long term resistance. However, below 1.5633 minor support minor support will dampen this bullish case and turn bias to the downside.

In the bigger picture, medium term rise from 1.3624 is not completed yet. Break of 1.5770 will extend the rise to retest 1.6587 (2015 high). However, considering bearish divergence condition in daily MACD, sustained break of 1.4949 cluster support (38.2% retracement of 1.3624 to 1.5770 at 1.4950) will indicate medium term reversal. And there is prospect of retesting 1.3624 low in that bearish case.