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The range of the US economic reports caused a short-term strengthening of the EUR/USD currency pair, which continued the session at pre-data levels. The European single currency added 25 base points or 0.22% against the US dollar, but quickly returned to the 1.1650 area, where the bearish sentiment was sustained until Monday morning.

The Labour department revealed that the US job growth sped up in October, while the yearly wage growth as well as participation rate fell in the reported period, clouding the outlook of the job market. The report showed that the country’s economy added 261K jobs in the reported period, missing forecasts for a 310K increase. The weak pay growth is likely to hamper inflation to reach 2% target.

The pair spiked to fresh nearly eight-month high at 114.73 in early Monday’s trading, but probes above previous peaks at 114.36/49 (10 May / 11 July) were so far short-lived, adding to strong indecision signals from last Thu/Fri long-legged Dojis.

Overall structure remains bullish and favors final break higher and test of next targets at 115.00 (round-figure) and 115.50 (10 Mar high).

Buying dips remains favored near-term scenario while the price stays above rising daily Tenkan-sen (113.84) while sustained break here would sideline bulls for deeper correction.

Rising Kijun-sen (113.19) and 31 Oct trough (112.95) mark next triggers, loss oof which would intensify downside pressure.

Res: 114.33, 114.49, 114.73, 115.00
Sup: 114.00, 113.84, 113.53, 113.19

Cable is in recovery mode on Monday and probes above 1.3100 barrier, after last week’s post-BoE’s fall stalled ahead of previous low of 06 Oct at 1.3026.

Recovery attempts face strong barrier from thick hourly cloud (spanned between 1.3113 and 1.3181, with cloud top being reinforced by daily Tenkan-sen), break of which would open next key barrier at 1.3214 (daily cloud base / daily Kijun-sen).

Extended recovery is expected to stall here and keep in play bears from 1.3655 (20 Sep high) for fresh attack at 1.3026 and psychological 1.3000 support.

Alternative scenario requires sustained break above 1.3337/20 (13 Oct / 01 Nov highs) to confirm double-bottom (1.3026/38) and spark stronger recovery of 1.3655/1.3026 fall.

Res: 1.3113, 1.3132, 1.3181, 1.3214
Sup: 1.3057, 1.3038, 1.3026, 1.3000

The Euro stands at the back foot on Monday and pressuring 1.1600 support, which guards post ECB's multi-month low at 1.1574, posted on 27 Sep. Last Friday's close in red which formed bearish Outside Day pattern, weighs on near-term action for renewed attempt at 1.1574 pivot and extension of the downleg from 1.2092.

Completion of H&S pattern on daily chart was strong bearish signal, however, the pair needs clear break below 1.1574/1.1690 congestion to confirm bearish continuation.

Sustained break below 1.1574 would open next strong support at 1.1510 (Fibo 38.2% of 1.0570/1.2092 rally).

Falling 10SMA which formed bear-cross with 100SMA last week continues to cap upside attempts and offers solid resistance at 1.1662.

Alternative scenario requires close above 1.1690 (last Friday's high/top of near-term consolidation range) to sideline immediate bearish threats, with lift above 1.1705/27 (daily Tenkan-sen/Kijun-sen) needed to signal stronger recovery.

Res: 1.1628, 1.1662, 1.1690, 1.1705
Sup: 1.1595, 1.1574, 1.1510, 1.1445

The WTI is in a strong uptrend. The price is getting positive momentum and at this point a retracement towards the POC could possibly be used for another leg to the upside. Near term historical buyers are aligned with the POC 55.00-55.20 (Order block, 61.8, D L3, trend line, ATR projection low).A retracement to 61.8 is in a strong confluence with the order block and near term buyers. However 1h momentum or 4h close above W H3 56.12 should make a continuation move towards 56.67, 56.93 and 57.65 and the ascending scallop will be completed.

Currency pair EUR/USD

EUR/USD built a corrective pattern which is typical for a wave 4 (blue). The bearish breakout could indicate a potential continuation within wave 5 (blue) towards the Fibonacci retracement levels of wave 4 (light purple).

The EUR/USD is building a sideways zone within the bearish breakout. A bearish break below support (blue) could confirm more downside whereas a bullish break above resistance (red) could indicate a slightly larger correction. The bearish structure is invalidated if strong bullish price action is visible.

Currency pair GBP/USD

The GBP/USD broke the support trend lines (dotted blue) and is now building a triangle chart pattern. A new bearish breakout could indicate a potential continuation towards the Fibonacci targets of wave 5 vs 1+3 (green).

The GBP/USD retraced back to the 38.2% Fibonacci level of wave 4 (brown) of a larger wave 3 (orange).

Currency pair USD/JPY

The USD/JPY is challenging the 114.50-115 resistance zone, which is a major break or bounce spot. The trend is up at the moment but price seems to be losing steam and speed as it approaches resistance (red).

The USD/JPY will need to break above resistance or below support (blue) before the direction could be clear.

The dollar managed to hit an 8-month high against the yen on Monday in Asia after the BOJ Governor Haruhiko Kuroda signaled a continuation of the current ultra-easy monetary policy, while persistent confidence on the US economy supported the pair as well. Oil recorded a substantial increase, rising to a two-year high amid tightening markets and as anti-corruption measures took effect in Saudi Arabia.

With the economic calendar lacking important data, the dollar index which gauges the dollar's strength against a basket of major currencies was on track to break the 95-key level as investors' expectations of a third Fed-rate hike in December remained high despite a string of mixed data released on Friday.

Against the yen, the greenback touched an 8-month high of 114.72 before it pulled back to 114.37 following dovish remarks by the BOJ Governor Haruhiko Kuroda early in the session. Kuroda claimed that the current ultra-easy monetary policy is accommodative for inflation to reach the BOJ's 2% target, while he added that the central bank was considering long-term risks arising from low-interest rates. Minutes from the BOJ's September meeting showed that a majority of policymakers held the same view, believing that the current policy is sufficient to drive inflation towards the target.

The euro was trading flat around $1.16 ahead of Markit PMI readings and the Sentix index out of the Eurozone later today, with political uncertainties in Spain continuing to weigh on the currency.

The pound was moving sideways around $1.3075, with traders expecting the British Prime Minister, Theresa May, to calm business leaders' fears on cliff-edge Brexit on Monday, showing her commitment to reach a deal on the transitional period.

In other commodities, the kiwi fell 0.32% versus the dollar to $0.6885 with markets anticipating the RBNZ to maintain rates at a record low of 1.75% on Thursday and the new government to reveal its policy plans. Its Australian cousin held steady at $0.7650 ahead of the RBA policy meeting on Tuesday, where policymakers are projected to leave interest rates unchanged at a record low of 1.5%.

Looking at commodities, oil prices jumped to a two-year high on signs that markets are under tightening conditions, while arrests of royals and ministers in Saudi Arabia demanded by the Crown Prince Mohammed bin Salman in an effort to limit corruption in the country added further gains to oil prices. WTI crude was up by 0.84% at $56.11 per barrel and London-based Brent increased by 0.95% to $62.66.

Gold stood flat at $1,269.50 per ounce.

Sunrise Market Commentary

• Rates: Technical resistance nearby, but no breaks expected
  Today's eco calendar is uninspiring. We have no strong view on trading and expect sentiment-driven action. Core bonds could be lured towards nearby resistance levels, but we don't anticipate breaks higher. Italian BTP's might underperform following regional elections (Sicily) which are a first real barometer for a national vote early next year.
• Currencies: Dollar holds near the recent highs against the euro and the yen
  On Friday, the payrolls where not strong enough to trigger sustained USD gains, but the USD price action remained constructive. USD/EUR and USD/JPY remain near recent highs. Today, technical traded will probably prevail. The big positive interest rate differential should continue to protect the downside in the major USD cross rates.

The Sunrise Headlines

• US equities eked out modest (S&P) to moderate (NASDAQ) gains on Friday with Apple results and guidance an important driver. New all-time highs for S&P and NASDAQ. Asian equities start the week mixed.
• Saudi Arabia Crown Prince Mohammed bin Salman ordered Saturday night an anti-corruption crackdown. Security forces arrested princes, billionaires, ministers and former top officials including the well-known Alwaleed bin Talal.
• Ousted Catalan president Puigdemont and 4 former government members were released in Brussels pending a court ruling on an international arrest warrant issued by Spain. The tension between Madrid and Barcelona remains.
• US Commerce Secretary Wilbur Ross has investments in a shipping firm with ties to Putin's circle, according to the Paradise Papers reports. Also Trump's son-in-law and confident Kushner is apparently named.
• A fresh round of Brexit talks kicks off this week, which should be the focus of the UK government. However, PM May's big announcement was a new code of conduct for Conservative politicians in the wake of a sexual harassment scandal that's forced the resignation of her defence secretary.
• BOJ governor Kuroda confirmed that the BOJ will persistently continue powerful easing and that there is still a long way to getting to 2% inflation.
• Today's eco calendar is unattractive, but political issues might impact trading. US President Trump's Asian tour will be extended by one day

Currencies: Dollar Holds Near The Recent Highs Against The Euro And The Yen

Dollar holding near recent highs

On Friday, the US payrolls were a mixed bag and failed to give clear guidance for USD trading. Later in the session, a strong US non-manufacturing ISM and upbeat US equity performance supported the dollar slightly. EUR/USD finished the session at 1.1608 (from 1.1658). USD/JPY closed to session almost unchanged at (114.07).

Overnight, Asian equities are trading mixed. The PBOC warned on the risks of too high leverage. BOJ's Kuroda said that the BOJ wants inflation the overshoot the 2% target, suggesting the ultra-loose BOJ policy won't be scaled back anytime soon. USD/JPY spiked temporary north of the 114.45 resistance, but trades currently again near 114.30. Markets keep an eye on the topics that are handled during the Asian trip of US President Trump. EUR/USD is holding stable in the low 1.16 area.

Today, the final October EMU services PMI's will be released, but they are usually close to the preliminary results. The event calendar is also thin with only speeches of NY Fed Potter and NY Fed president Dudley. They speak about policy & balance sheet and lessons from the financial crisis. From ECB side, governor Praet, Visco, Hansson, Villeroy and Mersch will speak but we don't expect new info shortly after the ECB meeting. Politics will also get a lot of attention with Brexit talks and UK May's precarious position, the increased tensions between Spain & Catalonia, the Asia trip of Trump and the negotiations on the US tax plan the main features.

Last week, EUR/USD held close to the post-ECB low, but there were no followthrough losses of the euro. The nomination of Powell as next Fed-Chairman, new proposals to change the US tax code and Friday's payrolls were not able to break this stalemate. For now, the dollar fails to really profit from high interest rate differentials (especially at the short end of the curve). This is slightly disappointing for USD bulls. That said, EUR/USD currently trades more than 400 ticks below the cycle top. The wide positive interest rate differential should give the dollar downside protection unless there is high profile US negative news. However, additional rate support for the dollar will probably be modest near term. So, further EUR/USD decline might develop gradually. We maintain a cautious sell-on-upticks bias.

From a technical point of view, EUR/USD dropped below 1.1670/62 support, but no convincing follow-through dollar gains occurred. If the break is confirmed, it would confirm that the recent EUR/USD uptrend is broken. EUR/USD 1.1423 (38% retracement of 2017 rise) is the next downside target on the charts. USD/JPY's momentum was positive in past months. The pair regained 110.67/95 resistance and now tests the 114.49 correction top. A sustained break would further improved the technicals. We remain cautious to preposition for further USD/JPY gains.

EUR/USD broke below 1.1662 support, but non follow-through price action yet

EUR/GBP

Post-BoE sterling decline slows

On Friday, sterling reversed a (small) part of the losses it suffered on Thursday when the BoE indicated that the future rate hike path will be extremely gradual. The sterling rebound was reinforced by a strong UK services PMI. The (modest) intraday decline of EUR/USD also weighed slightly on EUR/GBP. EUR/GBP closed the session at 0.8877 (from 0.8927). The gain in cable was more modest as the dollar captured a better momentum later in the session. The pair finished the session at 1.3077 (from 1.3059).

Today, markets look out for a meeting of UK PM May at the Confederation of British industry. UK business are eager to hear whether the UK will be able to obtain a transition period in the Brexit negotiations with the EU. At the same time, there are still plenty of headlines on scandals that members of the UK government might be involved in. We start the week with a neutral bias on sterling. However, sterling faces plenty of political event risk. (Brexit negotiations restart this week).

In September, sterling rebounded 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 last week's BoE policy meeting. EUR/GBP currently trades in a 0.8733/0.9033 consolidation range. A downside test of this range was rejected last week. We maintain the view that the 0.8733 -0.8652 support area will be though to break in a sustainable way. A EUR/GBP buy-on-dips approach is favoured. 0.9023/33 is the first important resistance for the EUR/GBP cross rate

EUR/GBP: rebounds off 0.8733/43 support on soft BoE policy assessment

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EUR/USD

Current level - 1.1607

The recent peak at 1.1690 signals a finale of the consolidation pattern above 1.1570 and the outlook is bearish, for a break through 1.1600, towards 1.1480. Minor intraday resistance lies at 1.1635.

USD/JPY

Current level - 114.38

The bias is positive, for a rise towards 115.50. Crucial on the downside is 113.50.

GBP/USD

Current level - 1.3070

The outlook remains bearish below 1.3150 resistance, for a violation of 1.3020 lows, towards 1.2907 zone.

EURUSD maintains its bearish outlook after the breakdown of the key level at 1.1660. The chart pattern on the daily time frame indicates a head and shoulders pattern with a break below the neckline giving a bearish signal.

Resistance at 1.1660 is expected to hold in the near term, as EURUSD continues to trade in a small range just below this level. A daily close below 1.1600 would increase downside pressure and open the way to 1.1470. This level is roughly the mid-point of the upleg from 1.0820 to 1.2091. A deeper decline would target 1.1300, which is the 61.8% Fibonacci retracement level.

A rise above the 50-day moving average and above the right-shoulder high of 1.1874 would confirm the short-term bearish phase has ended. This would bring a re-test of the 1.2091 peak before the resumption of the uptrend from the April lows.

Technical indicators are bearish but RSI is suggesting the near-term bias is neutral. In the bigger picture, sustained trading below the 50-day moving average will keep the bearish outlook in place.