Sample Category Title

GBP/USD - 1.3446

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3457

Kijun-Sen level                    : 1.3481

Ichimoku cloud top              : 1.3511

Ichimoku cloud bottom        : 1.3453

Original strategy :

Buy at 1.3410, Target: 1.3540, Stop: 1.3375

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.3380, Target: 1.3480, Stop: 1.3345

O.C.O.

Sell at 1.3500, Target: 1.3400, Stop: 1.3535

Position : -

Target :  -

Stop : -

As cable has slipped again after meeting resistance at 1.3514, suggesting near term downside risk remains for the retreat from 1.3550 (last week’s high) to bring retracement of recent rise, hence weakness to 1.3400-05 is likely, however, reckon downside would be limited to 1.3380-85 (50% Fibonacci retracement of 1.3221-1.3550) and bring rebound to 1.3500 but upside should be limited to 1.3515-25, bring another corrective decline later. 

In view of this, whilst we are still looking to buy cable on further corrective fall, we would also sell sterling on recovery as 1.3500 should limit upside. Above 1.3515-25 would signal the retreat from 1.3550 has ended, bring retest of this level, then 1.3575-80 but reckon 1.3600-10 would hold. Below 1.3345-50 (61.8% Fibonacci retracement of 1.3221-1.3550) would abort and signal top has been formed at 1.3550, bring further fall towards 1.3300-10. 

Daily Pivots: (S1) 150.23; (P) 151.35; (R1) 152.16; More...

Intraday bias in GBP/JPY remains neutral at this point. We're favoring the case that consolidation from 152.82 has completed at 146.96 already. Break of 152.82 will resume medium term rally to 61.8% projection of 139.29 to 152.82 from 146.96 at 155.32. This will be the preferred case as long as 146.96 support holds.

In the bigger picture, medium term rebound from 122.36 is still expected to resume after consolidation from 152.82 completes. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. However, break of 46.96 support will indicate rejection from 150.43 key fibonacci level. And the three wave corrective structure of rebound from 122.36 will argue that larger down trend is resuming for a new low below 122.26.

EUR/USD - 1.1868

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1856

Kijun-Sen level                  : 1.1888

Ichimoku cloud top             : 1.1891

Ichimoku cloud bottom      : 1.1871

Original strategy  :

Bought at 1.1865, stopped at 1.1855

Position : - Long at 1.1865

Target :  -

Stop : - 1.1855

New strategy  :

Sell at 1.1915, Target: 1.1815, Stop: 1.1950

Position : -

Target :  -

Stop : -

As the single currency ran into resistance at 1.1940 on Friday and has retreated, suggesting further consolidation below resistance at 1.1961 (last week’s high) would be seen and weakness towards support at 1.1808-09 (61.8% Fibonacci retracement of 1.1713-1.1961 and previous support), however, break there is needed to retain bearishness and extend weakness to 1.1770 and possibly to support at 1.1736 but price should stay above previous key support at 1.1713.

In view of this, we are looking to sell euro on recovery as 1.1910-20 should limit upside and bring another decline. Above said Friday’s high at 1.1940 would revive bullishness, bring retest of 1.1961, break there would confirm early upmove has resumed for headway to 1.1990-00 which is likely to hold from here.

Gap-higher opening on Monday and fresh extension higher which tests again the rising top of daily cloud (113.10), signals resumption of step upleg from 110.83, which showed hesitation on Friday's close in red. The dollar was inflated by passage of Senate US tax bill over the weekend and fresh bulls pressure strong resistances at 113.10 (cloud top) and 113.24 (Fibo 61.8% of 114.73/110.83 descend). Hesitation to clearly break higher could be expected as slow stochastic is overbought on daily chart. Dip-buying remains favored, with 20SMA offering solid support at 112.55 and extended dips expected to hold above 10SMA (111.84).

Res: 113.10, 113.24, 113.81, 114.45
Sup: 112.78, 112.55, 112.32, 112.84

Cable stands at the back foot at the beginning of the week, as last week’s double upside rejection at 1.3549 and Friday’s close in red weighs.

Risk of deeper pullback towards pivots at 1.3368/53 (rising 10SMA / Fibo 38.2% of 1.3038/1.3548 upleg) exists as indicators are reversing from overbought territory on daily chart and daily cloud twists later this week and could attract for further weakness.

Overall bullish bias sees dips as corrective and providing fresh buying opportunities, with 1.3350 zone seen as ideal reversal point, but deeper dips towards 1.3290/70 zone (50% retracement / rising 10SMA) cannot be ruled out.

Only firm break below 20SMA would generate stronger bearish signal and sideline bulls for deeper correction.

Res: 1.3513, 1.3549, 1.3570, 1.3600
Sup: 1.3418, 1.3368, 1.3353, 1.3290

Daily Pivots: (S1) 132.78; (P) 133.58; (R1) 134.25; More....

Intraday bias in EUR/JPY remains neutral for the moment. We're favoring the case that medium term up trend is nearly ready to resume. Break of 134.48 will target 61.8% projection of 127.55 to 134.48 from 131.16 at 135.44 and then 100% projection at 138.09. However, firm break of 131.16 support will now indicate near term trend reversal and turn outlook bearish for 127.55 key support.

In the bigger picture, medium term rise from 109.03 (2016 low) is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). 61.8% retracement of 149.76 to 109.03 at 134.20 is already met. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. However, break of 127.55 support will suggest medium term topping and will turn outlook bearish for deeper fall back to 114.84/124.08 support zone at least.

The Euro opened with gap lower against the dollar on Monday after the greenback was boosted by progress in US tax cut plan over the weekend.

This also suggests more aggressive US rate hike, as Fed is meeting next week for the last time this year and markets widely expect the central bank to further raise interest rates.

The pair accelerated to fresh session low at 1.1836 (4-hr cloud base) at the beginning of European trading, after holding within narrow range in Asia. Fresh weakness broke below initial support provided by rising 10SMA (1.1856) and pressuring daily cloud top (1.1833) which marks next pivotal support.

Technical studies on lower timeframes turned to bearish mode and signal further easing, as negative sentiment is growing.

Key supports lay at 1.1808 (30 Nov trough) and 1.1805 (Fibo 38.2% of 1.1553/1.1961 ascend), with sustained break here to complete failure swing pattern on daily chart and generate stronger bearish signal.

Bearish extension below 1.1805 would look for test of 1.1757 (Kijun-sen/50% retracement) and 1.1709 (Fibo 61.8% of 1.1553/1.1961).

The upside should stay protected by hourly cloud (spanned between 1.1870 and 1.1890).

Res: 1.1875, 1.1890, 1.1940, 1.1965
Sup: 1.1836, 1.1805, 1.1780, 1.1757

USD/JPY - 112.90

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 112.87

Kijun-Sen level                  : 112.24

Ichimoku cloud top             : 112.36

Ichimoku cloud bottom      : 112.04

Original strategy  :

Bought at 112.00, stopped at 111.65

Position :  - Long at 112.00

Target :  -

Stop : - 111.65

New strategy  :

Buy at 112.30, Target: 113.30, Stop: 111.95

Position :  -

Target :  -

Stop : -

Although the greenback retreated sharply on Friday to as low as 111.41, renewed buying interest emerged and the pair has rallied from there on dollar’s broad-based strength, reviving our bullishness for the rise from 110.84 low to extend gain to previous support at 113.09, however, near term overbought condition should limit upside to resistance at 113.33 and reckon 113.60-70 would hold on first testing.

In view of this, we are still looking to buy dollar on pullback as the Kijun-Sen (now at 112.24) should limit downside. Below 111.80 would defer and risk weakness to 111.60 but only break of said support at 111.37-41 would abort and signal top is formed instead. 

Sunrise Market Commentary

• Rates: US political developments weigh on US Treasuries
  The US Note future loses ground this morning after the successful US Senate tax vote and the erroneous Flynn report. We expect the Bund to move back in its sideways range after the European opening. The eco calendar is empty today, but heats up later this week in the US with payrolls on Friday.
• Currencies: USD gains only modestly after approval of Senate tax bill
  US political headlines sent the dollar in a roller-coaster ride on Friday. This morning, markets react mostly positive to the approval of the US tax bill in the Senate. The approval could help to put a ST floor for the dollar. However, ongoing political noise might prevent a sustained USD rebound ahead of next week's Fed meeting.

The Sunrise Headlines

• US stock markets closed 0.2% to 0.4% lower on Friday, nervously awaiting the outcome of the US Senate vote on tax reforms. Asian markets show a very mixed picture overnight, with daily changes ranging between -0.5% and +0.5%.
• US Senate Republicans narrowly approved the most sweeping rewrite of the US tax code in three decades, slashing the corporate tax rate and providing temporary tax-rate cuts for most Americans.
• Congressional GOP leaders hope to pass a two-week spending bill before the federal government runs out of money by Saturday, but resistance among conservative Republicans and some Democrats could derail their plans with little time to spare.
• Major central banks must ensure their efforts to gradually lift interest rates prove effective enough to cool some already "frothy" financial markets, the Bank for International Settlements (BIS) said in its latest report.
• Britain and the EU are on the brink of sealing a Brexit divorce deal on Monday, as Theresa May travels to Brussels with potential solutions in sight for the two biggest political obstacles to opening trade talks.
• A coalition of movements pushing for greater autonomy for Corsica looks likely to dominate a newly constituted assembly on the French Mediterranean island of Corsica, returns from the first round of voting show.
• Today's eco calendar is uneventful with EMU PPI data, the UK construction PMI and US factory orders

Currencies: USD Gains Only Modestly After Approval Of Senate Tax Bill

Dollar cautiously higher on Tax bill approval

The dollar initially held up well on Friday even as sentiment in Europe was outright risk-off. The dollar rebounded further early in US dealings, but fell off a cliff on headlines that Michael Flynn admitted to have lied to the FBI on contacts with Russia, potentially resulting in further trouble for the US president. The decline was short-lived as the debate on the Tax bill in the US Senate made progress. USD/JPY closed the session at 112.17 (from 112.54). EUR/USD finished the session at 1.1896 (from 1.1904 on Thursday).

Asian equity markets trade mixed this morning after the approval of the Tax bill in the US Senate. Investors remain cautious as the House of Representatives and the Senate still have to the make a reconciliation on their two proposals. US yields are modestly higher and so is the dollar. USD/JPY profits most and trades in the high 112 area. Japanese equities underperform despite the rise of USD/JPY. EUR/USD trades in the 1.1865 area, within the range that reigned for most of last week. Ongoing noise on the Russia investigation against aides of President Trump might prevent a bigger positive reaction to the Senate Tax bill.

The eco calendar is thin today. EMU PPI is no market mover. US factory orders will be published, but the cyclical component of the report (durable orders) is already available. Any FX reaction should only be of intraday significance, at best. The reaction of global markets to the US tax bill will be an important driver for USD-trading. At the same time, there will remain plenty of political noise from the US (fall-out from the investigation on contacts of Trump's aides/campaign team with Russia; solution for the debt ceiling). The US calendar is interesting later this week with the non-manufacturing ISM, ADP labour market report and payrolls. We expect the US eco data to confirm the positive drive in the economy.

The dollar showed a mixed picture last week, rebounding against the yen but holding relatively soft against the euro. Even after the approval of the Tax bill, this pattern apparently continues. Markets are still looking forward for the Fed's rate hike intentions in 2018. This week's US eco data might be USDsupportive, but we don't expect a really big directional move ahead of next week's Fed policy decision/statement

EUR/USD might continue last week consolidation pattern. Unless in case of high profile negative news from the US (or negative risk sentiment) we see no reason for EUR/USD to rise beyond the 1.1961/1.20 area. USD/JPY's momentum looks a bit more constructive, but the rebound might slow if it isn't supported by developments on other markets.

From a technical point of view: EUR/USD set a post-ECB low mid-November, but dollar momentum wasn't strong enough. EUR/USD regained the 1.1880 MT correction top, opening the way for a full retracement to the 1.2092 top. A return below 1.1713 would signal that the rebound in EUR/USD is aborted. For now, there is no clear technical signal. The USD/JPY momentum deteriorated early November. USD/JPY dropped below the 111.65 neckline, but there was no aggressive follow-through selling. Last week, the pair even succeeded a nice rebound, calling off the downside alert. The pair again hovers in the 110.84/114.73 consolidation range. We amend our ST bias on the pair from negative to neutral.

EUR/USD: rally aborted, but no clear correction signal

EUR/GBP

Brussels meeting to set tone for Sterling trading

Sterling trading showed no clear trend Friday. The issue of the Irish border proves to be a hard nut to crack to make progress in the Brexit negotiations. Sterling lost slightly ground against the euro and the dollar. EUR/GBP hovered mostly in the lower half of the 0.88 big figure and finished the day at 0.8929. Cable traded with a negative bias even as dollar volatility was also visible in this cross rate. The pair closed the session at 1.3477. The UK November manufacturing PMI printed at a very strong 58.2 (from 56.6, 56.5 was expected), but the report had no lasting impact on sterling trading.

The UK construction PMI will be published today. However, the focus of sterling traders will be on Brussels as UK PM May meets with EU's Juncker. The EU initially set this meeting as the deadline to meet the UK propositions on the separation. However, for now it looks that a final agreement is still too far off. Signals on the progress this weekend were mixed. If there remain substantial obstacles today, sterling might cede some ground short-term.

MT view/technical picture: A BoE driven sterling rebound ran into resistance early this month. Sterling declined again as markets anticipated that the rate cycle would be very gradual and limited. EUR/GBP trades in a 0.8733/0.9033 consolidation range. Brexit headlines cause day-to-day gyrations. We changed our ST bias on EUR/GBP from positive to neutral mid-November. The 0.9015/33 area might be tough to break short-term. In case of more positive news on Brexit, return action to the 0.8733 (or below) level is possible ST.

EUR/GBP: decline slows as investors want positive news on Brexit

Download entire Sunrise Market Commentary

Daily Pivots: (S1) 1.5543; (P) 1.5656; (R1) 1.5736; More....

Intraday bias in EUR/AUD remains mildly on the downside. Pull back from 1.5770 short term top would extend lower to 1.5458 support or below. But, we'd expect strong support above 1.5226 key support to bring rebound. Medium term rally is still expected to resume later and break of 1.5770 will target 61.8% projection of 1.3624 to 1.5226 from 1.4949 at 1.5939 first.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term top (2015 high) has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. We'll hold on to this bullish view as long as 1.5226 resistance turned support holds. Firm break of 1.6587 will resume long term rise from 1.1602 (2012 low).