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The Euro stands in red in early Thursday's trading and extends lower after previous day's strong upside rejection in the middle of daily cloud. Failure to sustain break in the cloud and subsequent quick pullback formed Shooting Star pattern which suggests pullback.

Today's easing confirms the scenario with dips expected to find solid support at 1.1740 zone (broken 100SMA/Fibo 38.2% of 1.1553/1.1859 upleg) which should ideally contain, as underlying bull-trend favors dip-buying before fresh attempts higher.

Extended pullback should hold above 1.1716/06 zone (converged daily Kijun-sen/Tenkan-sen) to keep bulls in play.

Near-term bias remains at the upside for final break above daily cloud (1.1877), reinforced by Fibo 61.8% of 1.2092/1.1553 descend, break of which is needed for strong bullish signal.

Traders are awaiting release of EU CPI data, which is key event for the Euro today and forecasted to stay within last month's levels.

Res: 1.1800; 1.1836; 1.1859; 1.1877
Sup: 1.1768; 1.1740; 1.1716; 1.1706

Sunrise Market Commentary

• Rates: Risk sentiment key for trading
  European stock markets remain fragile with the German Dax extensively testing first support yesterday. Asian sentiment suggests a risk rebound after a 7-day sell-off, but we are suspicious about the sustainability of such move (bull trap?). With normal correlations back in place, a risk rally could be slightly negative for core bonds today.
• Currencies: Euro finally running into resistance?
  The EUR/USD rally made an intraday U-turn yesterday. The jury is still out, but the technical picture of EUR/USD and EUR/GBP show tentative signs of a ST topping out process. The dollar (and sterling) might get some additional support if risk sentiment improves.

The Sunrise Headlines

• US stock markets closed around 0.5% lower, failing to really recover from opening weakness. Overnight, Asian risk sentiment improved with most indices gaining ground and Japan outperforming (+1%).
• Australia's jobless rate unexpectedly fell to 5.4% in October as fewer people sought work. Employment grew less than expected (+3.7K), but was driven by full-time positions (+24.3k) which boosted hiring this year.
• China's financial sector faces bubble risks, a government official warned and said a property tax may be on the cards in the near future as authorities extended their efforts to reduce a worrisome build-up of debt in the economy.
• The Republican effort to revamp the US tax code hit turbulence as two senators expressed misgivings over a bill hastily rewritten by leaders trying to placate rebellious moderates and conservatives.
• Merkel's running out of time to form a government. With her self-imposed end-of-week deadline to unlock coalition talks approaching, she'll meet heads of her potential “Jamaica” coalition to decide if a deal is possible
• Slovakia's government needs to take additional consolidation measures to meet its balanced budget goal in 2020 and risks overshooting goals in future years, the country's fiscal watchdog said.
• Today's eco calendar contains US weekly jobless claims, Philly Fed business outlook, industrial production and EMU CPI (final). More central bankers are scheduled to speak and Spain & France tap the bond market

Currencies: Euro Finally Running Into Resistance?

EUR/USD rally stalls ahead of key 1.1880 resistance

USD trading showed two faces yesterday. The euro rally/USD sell-off continued in Europe and early in US dealings. EUR/USD (temporary) cleared the 1.1837 post-ECB top. US retail sales and CPI were marginally better than expected. Initially it didn't help the dollar, but the USD sell-off gradually slowed. US equities bottoming out after an initial dip maybe helped to slow USD selling. EUR/USD reversed the earlier gains and closed the session at 1.1791 (from 1.1789). USD/JPY finished the day at 112.88 (from 113.46).

Asian risk sentiment improved this morning as the correction of the previous days lost momentum. Most regional indices show moderate gains with Japan outperforming. USD/JPY tries to regain the 113 mark. EUR/USD (1.1790 area) is little changed from yesterday's close. Australian labour market data were mixed. The unemployment rate declined further to 5.4% from 5.5%, but job growth disappointed. Still, AUD/USD rebounded to the 0.76 area, despite the overall comeback of the dollar.

The European and US eco calendars are modestly interesting today. In Europe, the final EMU October CPI is expected to be confirmed at 0.1% M/M and 1.4% Y/Y. (core unchanged at 0.9% Y/Y). The report probably won't be a market mover, but in theory it is no support for the euro. In the US, the jobless claims, the Philly Fed business outlook and the October production data will be published. Claims are expected to decline slightly to 235K. The Philly Fed outlook is expected to decline from 27.9 to 24.6, but remains at a healthy level. Production is expect to rise a decent 0.5% M/M. Today's US eco data are not the most important ones, but the intraday price swings to the data might be an indication whether dollar sentiment improves after the recent setback. We also look out whether the equity correction slows down. Of late, the dollar was often more sensitive to risk-off sentiment than the euro. The debate on the US tax bill remains a source of uncertainty. Earlier this week we had a cautious bias on the dollar. We considered the decline exaggerated given the data and the developments on other markets, but we didn't fight the ST negative USD momentum. The jury is still out, but yesterday's intraday price action suggests that the USD decline (EUR/USD rally) might be losing momentum. If confirmed, cautious EUR/USD sell-on-upticks can be reconsidered

From a technical point of view, EUR/USD set a new post-ECB low on Tuesday last week, but the move petered out. EUR/USD this week regained intermediate resistance at 1.1690/1.1837, but the 1.1880 MT correction top was left intact. A break above the latter would suggest a full retracement to the 1.2092 correction top. We don't preposition for such a scenario yet unless there comes real negative news from the US. Yesterday's intraday price action suggests that a ST trend reversal might develop. We look out whether the 1.1861/1.1880 resistance can do the job. USD/JPY's momentum was positive in past months. The pair regained 110.67/95 resistance and tested the 114.49 MT range top. The attempt failed. A sustained break would improve the technical picture. However; last week's price action was unconvincing despite a solid interest rate support. The pair yesterday dropped temporary below the 112.96 support, but the test is ongoing. We see no sign yet of a sustained USD/JPY rebound

EUR/USD: rebound stalls ahead of 1.1880 resistance. Tentative signs of a ST trend reversal

EUR/GBP

EUR/GBP running into resistance?

The UK labour market data showed a mixed picture yesterday. Wage growth (2.2% Y/Y) was marginally higher than expected, but remains low. The unemployment rate was stable as expected at 4.3%. Employment growth unexpectedly declined. Sterling lost some further ground after the publication of the data. EUR/GBP jumped temporary north of 0.90, but the gain could not be sustained. Later in the session, the EUR/USD correction also dragged EUR/GBP back south. The pair even closed the session at 0.8952 (from 0.8961). Cable maintained the recent consolidation pattern and finished at 1.3171.

October UK retail sales are expected little changed (0.2% M/M and -0.5% Y/Y) after a substantial setback in September. Monthly swings were quite big recently. The bar of the consensus estimate isn't too high. In addition, we have the impression that eco data have to be really weak for sustained further sterling losses at this stage. Sterling is in some kind of wait-and-see modus awaiting more clear signs from UK politics and from the progress in the Brexit negotiations. Markets will also continue to keep an eye at the debate on the 'EU Withdrawal Bill' in the UK Parliament. We had a EUR/GBP positive bias short-term. We have the impression that the upside momentum is easing. A break above the 0.9015/33 area might not be that easy shortterm. This would especially be the case if the EUR/USD rally slows. We take a more neutral approach short-term.

MT technical: Sterling rebounded in September as the BoE prepared markets for a rate hike. This rebound ran into resistance as markets anticipated that any rate hikes would be very gradual and limited. This view was confirmed at this month's BoE policy meeting. EUR/GBP currently trades in a 0.8733/0.9033 consolidation range. A downside test of this range was rejected. We assume that the 0.8733-0.8652 support will be tough to break. We change our short-term bias from buy-on-dips to neutral as the pair came close to the 0.9033 ST range top and as this test was rejected yesterday.

EUR/GBP nears MT range top. Time for the rebound to take a breather?

Download entire Sunrise Market Commentary

Daily Pivots: (S1) 148.04; (P) 148.69; (R1) 149.29; More...

With 149.98 minor resistance intact, deeper fall is expected in GBP/JPY for 146.92 support and below. Fall from 151.92 is seen as the third leg of the corrective pattern from 152.82. We'd expect strong support from 61.8% retracement of 139.29 to 152.82 at 144.45 to contain downside and bring rebound. On the upside, break of 149.98 resistance will turn bias back to the upside for 151.92/152.82 resistance zone instead.

In the bigger picture, medium term rebound from 122.36 is still expected to resume after corrective pull back 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 139.29 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.

Daily Pivots: (S1) 132.74; (P) 133.30; (R1) 133.65; More....

EUR/JPY ist still bounded in n range of 131.65/134.48 and intraday bias remains neutral at this point. On the upside, decisive break of 134.39/48 resistance zone will confirm medium term up trend resumption. In that case, 141.04 resistance will be the next time. On the downside, though, decisive break of 131.65 will confirm rejection from 134.20 fibonacci level and confirm near term reversal. And, in such case, intraday bias will be turned to the downside for 127.55 key support level.

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 argue that the medium term trend has reversed and will turn outlook bearish for deeper fall back to 114.84/124.08 support zone at least.

USDJPY is in a broad neutral trend as the market remains trapped in a range between 108–114 during the past 8 months. In the short-term, the pair rose towards the upper end of the range but has found strong resistance and reversed back down from a high of 114.73.

The bullish phase from 107.31 has turned neutral with prices currently consolidating mostly in the 113-handle. Yesterday’s dip below 113 has found support at the 50-day moving average resulting in a bounce back to test this key level.

Prices need to move further above the key 113 level in order to ease immediate downside pressure. This level is important since it is the 23.6% Fibonacci retracement of the upleg from 107.31 to 114.73. Failure to rise above it could result in prices threatening to break below the 50-day MA. A drop below the 200-day MA would bring further losses towards 111 (the 50% Fibonacci) and 110.15 (61.8% Fibonacci), moving towards the lower end of the range.

A rise above 114 would help USDJPY gain upside momentum for a re-test of the 114.73 high and then from here the overall trend would turn bullish to target the next high at 118.66.

In the big picture, USDJPY remains range-bound on the daily chart but short-term price moves have been bullish and trend indicators are bullish after the crossover of the 50-day MA above the 200-day MA.

Daily Pivots: (S1) 0.8792; (P) 0.8840; (R1) 0.8889; More...

Intraday bias in EUR/GBP remains neutral as it's staying in range of 0.8732/9032. With 0.9032 resistance intact, deeper decline is mildly in favor in the cross. Break of 0.8732 will resume the decline from 0.9305 and target 0.8303 key support level. However, on the upside, decisive break of 0.9032 will confirm completion of the decline from 0.9305. In such case, intraday bias will be turned back to the upside for retesting 0.9305 key 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) 1.5456; (P) 1.5530; (R1) 1.5611; More....

A temporary top is in place at 1.5605 and intraday bias in EUR/AUD is turned neutral first. Downside of retreat should be contained above 1.5226 resistance turned support to bring another rise. Medium term rally from 1.3624 is in progress. Above 1.5605 will target 61.8% projection of 1.3624 to 1.5226 from 1.4949 at 1.5939 first. Break will target 100% projection at 1.6551, which is close to 1.6587 key resistance.

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).

Economic data are back in the spotlight on Thursday, with reports from Europe and the United States scheduled to make headlines.

Action begins at 06:30 GMT with French unemployment data. France’s Q3 unemployment number is forecast to 9.7% in Q3 from 9.5% in the second quarter.

A few hours later, Italy will report its latest trade figures. Italy’s trade surplus is forecast to rise to €3.42 billion in September from €2.77 billion.

Shifting gears to the United Kingdom, retail sales will make headlines at 09:30 GMT. Receipts at retail stores are forecast to rise 0.1% in October following a 0.8% drop the previous month.

The European Commission will release the Eurozone CPI data at 10:00 GMT. The final print is expected to show a reading of 1.4% year-over-year.

In North America, the US Commerce Department will report on initial jobless claims for the week ended 10 November. The weekly report is expected to show a decline of 4,000 to a seasonally adjusted 235,000.

Earlier in the day, the Australian government reported a much smaller than expected gain in job creation last month. The Australian economy added just 3,700 jobs in October, well below forecasts calling for 17,500. However, the entirety of the gains came in full-time positions.

Government economists also reported a slight drop in unemployment as workforce participation fell to 65.1% from 65.2%.

Meanwhile, the Melbourne Institute said 12-month inflation expectations weakened to 3.7% from 4.3% previously.

EUR/USD

The euro traded within a narrow range against the dollar on Thursday after failing to sustain upside north of 1.1800. The EUR/USD was last seen trading at 1.1779, having gained around 0.1%. The pair is eyeing immediate resistance at 1.1850. A rally above that level would lead to a re-test of the 1.1886 level. On the flipside, immediate support is located near the 1.1740 region.

GBP/USD

Cable has shifted into higher gear this week, with prices fast approaching 1.3200. GBP/USD was last seen trading at 1.3170, where it was little changed compared to the previous close. The technical picture shows immediate resistance near 1.1385, followed by the psychological 1.3200 barrier. On the opposite side of the spectrum, support is likely to be found at 1.13115, followed by 1.3075.

AUD/USD

The Australian dollar held its ground after Thursday’s early morning data releases. The AUD/USD exchange rate edged up 0.1% to 0.7597. When it comes to the short-term technical indicators, the Aussie faces immediate resistance at 0.7607, which corresponds with the 50-MA on the one-hour chart. A clean break above this level would expose the 0.760 region as the next target. On the opposite side of the ledger, immediate support is located at the session low of 0.7567.

Daily Pivots: (S1) 1.1638; (P) 1.1663; (R1) 1.1679; More...

Intraday bias in EUR/CHF remains on the upside for 1.1709 resistance. Break will resume medium term rally and target 61.8% projection of 1.1387 to 1.1709 from 1.1541 at 1.1740 first, and then 100% projection at 1.1863. For now, this will be the favored case as long as 1.1541 support holds.

In the bigger picture, long term rise from SNB spike low back in 2015 is still in progress. EUR/CHF should now be heading back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1355 support holds. However, break of 1.1355 will indicate medium term topping. In that case, EUR/CHF should head back to 55 week EMA (now at 1.1105) and possibly below.

The U.S dollar has recovered some of its steep early-week trading losses against the Japanese yen, after improved U.S macroeconomic data, and an overall shift in trading sentiment. The USDJPY pair has moved price-action back above the key 113 level, after finding support at the 112.47 level on Wednesday. Traders now look to global stock markets, and the U.S dollar index's reaction to today's crucial vote in the U.S Senate, which centers around the Trump administrations proposed U.S tax reforms.

The USDJPY pair remains intraday bullish while holding above the 112.94 technical level. Further upside towards the 113.24 and 113.68 appears likely.

Should price-action on the USDJPY pair decline below the 112.94 technical level, further losses towards the 112.47 and 111.90 levels seems possible.