Sample Category Title

EUR/USD - 1.1752

Original strategy  :

Sell at 1.1800, Target: 1.1700, Stop: 1.1835

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1800, Target: 1.1700, Stop: 1.1835

Position : -

Target :  -

Stop : -

As the single currency has fallen again after brief bounce to 1.1820 yesterday, suggesting top has possibly been formed at 1.1880 and the fall from there may extend weakness to 1.1750 (61.8% Fibonacci retracement of 1.1669-1.1880), break there would add credence to this view and bring test of support at 1.1719 but break there is needed to signal the rebound from 1.1669 has ended, then further decline to 1.1700 would follow.

In view of this, we are looking to sell euro on recovery as 1.1800 should limit upside. Above 1.1820 would suggest low is formed instead, bring a stronger rebound to 1.1845-50 but price should falter below said resistance at 1.1880, bring another retreat later. 

WTI oil futures have shifted to a bullish phase and are making a steady recovery after breaking above the key 50.00 level. On the 4-hour chart, the crossover of the 20-period moving average above the 50-period MA highlights the bullish bias. Momentum indicators are positive.

The rise from the October 6 low of 49.07 is still in progress but the market will likely remain in a range between 51.60 and 52.33 in the near-term. Immediate support is at 51.60. This is expected to act as strong support since this level has provided both support and resistance in the recent past. There is scope to target the September 28 high of 52.83 and from here there would be a resumption of the broader uptrend that started from the 42.00 area.

Breaking below support at 51.60 would shift the focus to 50.00 and another drop would dampen the bullish view. Support at 49.07 comes into sight and any further weakness would increase downside pressure for a move towards 47.00. Below this, the 45.56 low is the next support which if broken would likely bring about a sustained move lower.

Overall, risk is titled to the upside but for now, WTI oil futures are expected to trade between 51.60 and 52.33 until upside momentum picks up. The 4-hour RSI has lost upside strength but remains in bullish territory above 50, while the MACD is rising.

Sterling bears made a late appearance on Tuesday, after official figures showed that inflation in Britain climbed to its highest level for more than five years, in September.

Consumer price inflation rose to 3.0% in September, up from 2.9% in August, on the back of rising food prices and transportation costs. With UK inflation now 1% above the Bank of England's 2% target, Mark Carney and co. have found themselves under renewed pressure to raise interest rates at November's policy meeting. Although today's CPI figure has supported expectations of a rate hike this year Sterling remains depressed, and this continues to highlight how investors are still in mixed minds about the BoE's ability to take action.

This has been a tricky year for the central bank, especially when considering how elevated inflation levels have squeezed household spending - impacting the outlook for the economy. With inflation leaving average earnings in the dust, consumers are feeling the pinch and as such, it threatens the sustainability of Britain's consumer-driven growth. While the argument for higher rates is to put a lid on inflation, this may end up punishing the fragile UK economy.

With political risk at home and Brexit uncertainty adding to the messy mix, markets will be paying very close attention to how the Bank of England addresses these issues during November's policy meeting. The question everyone is asking, is whether the central bank will raise rates to tame inflation, or if will be forced to remain on standby amid Brexit uncertainty. Whatever the decision, it will reflect on Sterling, which has become increasingly sensitive to monetary policy speculation.

From a technical standpoint, traders will continue to observe how the GBPUSD reacts around the 1.3300 region. Weakness below this level, may open a path back towards 1.3150. Otherwise, a solid break above the 1.3300 resistance could inspire bulls to attack 1.3380.

Oil supported amid Iraq tensions

Oil bulls were in full force this week, as escalating tensions in Iraq sparked concerns over potential output disruptions from the northern regions.

Reports that Kurds had shut down around 350,000 barrels per day of production from major oil fields fuelled oil's appreciation, with WTI Crude trading above $52 as of writing. While oil supply disruptions and high OPEC compliance rates may support oil prices, the question is - for how long?

It should be kept in mind that OPEC's October report showed that the cartel's production rose to 32.7 million barrels a day in September. This increase in production, despite the cartel's attempts to limit output, is likely to eventually weigh on sentiment, and raise questions over the effectiveness of the production cuts. With rising production from Nigeria, Libya and Iraq, the culprits behind September's high OPEC output, markets will be paying very close attention to how the cartel addresses this. The threat of increased production from these three nations is sabotaging the efforts made by the rest of the group to rebalance markets. This may force OPEC to request all three nations to be added to the production cut deal.

Bitcoin in focus

Bitcoin bulls seem to be on a tea break following the incredible rally last week, which saw prices sprint to an all-time high of $5856.10. It seems some investors are still scratching their heads and pondering over what was behind the catalyst behind last week's impressive rally. With Bitcoin being the new cool kid in town and attracting investors like moths to a flame, further upside could still be on the cards. Will Bitcoin hit $6000? This is the question everyone is asking and what investors are banking on.

The USD/CHF increases and resumed the yesterday's minor bullish candle, but is facing a tough resistance level. The USD has taken the lead again and is driving the rate higher, but still, needs a helping hand from the United States data to be able to jump much higher in the upcoming period.

The greenback increases as the dollar index have managed to climb much higher. USDX is trading above the 93.50 psychological level and could hit the 93.81 static resistance if the United States data will come in better than expected.

The US Industrial production is expected to increase by 0.3% in the previous month versus the 0.9% drop in the former reading period, while the Capacity Utilization Rate could be reported at 76.2%, higher versus the 76.1% estimate. The Import Prices will be released as well and are expected to increase by 0.6%, matching the 0.6% growth in the former reading period.

Price increased and jumped above the outside sliding line (SL) of the descending pitchfork and above the upper median line (UML). USD/CHF climbed above the 0.9787 static resistance, but failed to stay above it and now is waiting for the US data to come out.

I've said in the previous report that the pair may increase after the false breakdown below the WL2 and after the failure to close on this level. Only a valid breakout above the 0.9787 static resistance will confirm a further increase.

USD/JPY - 112.43

New strategy  :

Buy at 112.10, Target: 113.10, Stop: 111.75

Position :  -

Target :  -

Stop : -

As dollar has surged again today after finding renewed buying interest at 112.03, adding credence to our view that low has been formed at 111.65 and consolidation with mild upside bias is seen for gain to 112.55-59 (50% Fibonacci retracement of 113.44-111.65 and previous resistance), however, break there is needed to signal the fall from 113.44 has ended, bring further gain to 113.00-10 but said resistance at 113.44 should hold from here due to near term overbought condition.

In view of this, we are looking to buy dollar on pullback as said support at 112.03 should limit downside and bring another rebound later. Below said support at 111.65 (yesterday’s low) would revive bearishness for the fall from 113.44 top to extend weakness to 111.47 support and later towards another previous support at 111.11 which is expected to remain intact.

The Brent Oil rallied in the last two days and reached the 58.64 level, but failed to stay there. Price increased today and tries to climb towards the yesterday's high, but the bulls seem exhausted. The near-term upside targets will be at the upside line of the up channel and at the 59.50 previous high. A failure to reach these levels will signal a minor retreat, while a drop below the 57.72 level and below the ML will confirm a larger drop.

The rate has reached new lows today, but has squeezed a little and tries to stay near the 1.1504 yesterday's closing price. It is somehow expected to reach the upper median line (uml) of the minor ascending pitchfork. Is trading right above the 1.1500 psychological level, but if will close below this obstacle a below the upper median line (uml) of the ascending pitchfork will confirm a drop at least till the median line (ml) of the ascending pitchfork.

EURUSD: With the pair weakening further during Tuesday trading session, more decline is envisaged with eyes on its psycho support at 1.1700. Resistance comes in at 1.1800 level with a cut through here opening the door for more upside towards the 1.1850 level. Further up, resistance lies at the 1.1900 level where a break will expose the 1.1950 level. Conversely, support lies at the 1.1700 level where a violation will aim at the 1.1650 level. A break of here will aim at the 1.1600 level. Below here will open the door for more weakness towards the 1.1550. All in all, EURUSD continues to face further bear threats.

Daily Pivots: (S1) 1.3212; (P) 1.3261; (R1) 1.3299; More....

Intraday bias in GBP/USD remains neutral for the moment. On the downside, break of 1.3026 minor support will indicate that recovery is completed at 1.3337. And fall from 1.3651 is resuming for 1.2773 support. That will revive that case that medium term rise from 1.1946 has completed at 1.3651. Meanwhile, above 1.3337 will bring retest of 1.3651 high instead.

In the bigger picture, while the medium term rebound from 1.1946 was strong, GBP/USD hit strong resistance from the long term falling trend line. Outlook is turned a bit mixed and we'll turn neutral first. On the downside, decisive break of 1.2773 key support will argue that rebound from 1.1946 has completed. The corrective structure of rise from 1.1946 to 1.3651 will in turn suggest that long term down trend is now completed. Break of 1.1946 low should then be seen. On the upside, break of 1.3835 support turned resistance will revive the case of trend reversal and target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

Dollar strengthens broadly today on report that Stanford University John Taylor impressed President Donald Trump in his Fed chair interview. Taylor is famous for his so called Taylor rules and he is seen by some as a hawkish candidate as a Fed chair. However, it should be noted that Taylor recently said that rules shouldn't be used as a "way to tie central bankers' hands." Instead, "there are reasons to run policy with a strategy." . Meanwhile, chance of former Fed Governor Kevin Warsh is fading. Trump will interview current Fed chair Janet Yellen on Thursday. White House economic advisor Gary Cohn and Fed Governor Jerome Powell are among the candidates for the job.

UK CPI hit 4.5 year high, but other readings steady

Sterling didn't get support from inflation data today even though headline CPI met expectations. Other inflation readings were generally steady. Headline CPI accelerated to 3.0% yoy in September, hitting five-and-a-half years high. Core CPI, on the other hand, was unchanged at 2.7% yoy. RPI was also unchanged at 3.0% yoy, below expectation of 4.0% yoy. RPI input was unchanged at 8.4% yoy, PPI output dropped to 3.3% yoy, PPI output core was unchanged at 2.5% yoy.

BoE Governor Mark Carney said to lawmakers that "inflation rising potentially above the 3 percent level in coming months is something that we have anticipated." And, as a result "we faced a trade-off, and we still face a trade-off, between having inflation above target and the need to support, or the desirability of supporting, jobs and activity." Meanwhile, Carney reminded the lawmakers that after Brexit referendum last week, BoE officials "expected Sterling to fall sharply. It did". And "the sole reason that inflation has gone up as much as it has is the depreciation of Sterling."

ZEW: Accelerating inflation points to change in ECB policy

German ZEW economic sentiment rose 0.6 pts to 17.6 in October, missing expectation of 20.0. That's also well below long-term average of 23.8. Current situation gauge dropped 0.9 to 87.0, also missed expectation of 88.5. Meanwhile, Eurozone ZEW economic sentiment tumbled sharply to 26.7, down from 31.7, well off expectation of 34.2. Nonetheless, ZEW President Achim Wambach said that "the improved outlook for the coming six months is not least the result of the surprisingly positive growth figures seen in the previous months. In August, figures for both production and incoming orders were significantly better than expected." Also, "the fact that the inflation rate is rising again, and expected to climb further, equally points towards a positive economic development in Germany, making a change in the ECB's monetary policy more likely."

RBA minutes give no sign of tightening soon

The RBA minutes for the October meeting reaffirmed the market that the central bank is in no hurry to increase interest rates. Policymakers stressed that rate hikes, or other kinds of monetary policy normalization, in other major economies do not necessarily imply that the RBA would follow suit anytime soon. The RBA remained upbeat in the domestic economic outlook, staying confident in the employment market conditions. Yet, it was still weary of subdued inflation. As usual, the central bank continued to warn of the strength in Australian dollar. More in RBA Shrugged Off Global Normalization Trend, Maintaining Neutral Stance

NZ CPI beat expectations, but no change to RBNZ's stance

New Zealand CPI rose 0.5% qoq 1.9% yoy in Q3, up from prior 0.0% qoq 1.7% yoy, and beat expectation of 0.4% qoq 1.8% yoy. It's also well above RBNZ's own projection of 1.6% yoy. Still, it's believed that RBNZ won't change it's neutral stance on monetary policy. So far, there is little signs of overheating in the economy that points to higher inflation ahead. Instead, the economy could be entering a slowing phase.

Former Japan EM Takenaka: Abe win will push the tide towards Kuroda

In Japan, former Economy Minister Heizo Takenaka hailed that BoJ Governor Haruhiko Kuroda has done an "excellent job" and "should continue" after his term expires next year. He pointed out that after Kuroda's massive stimulus policy, prices have stopped falling, and the economy is in better shape. And, according to Takenaka, a win for Prime Minister Shinzo Abe in the October 22 election will "of course push the tide" towards another term for Kuroda. He noted that "there is a sufficient amount of trust between the government and the BoJ for that to happen". Also, renewing Kuroda's term will raise expectations for appropriate policies but "a shift in personnel can change expectations at once".

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3212; (P) 1.3261; (R1) 1.3299; More....

Intraday bias in GBP/USD remains neutral for the moment. On the downside, break of 1.3026 minor support will indicate that recovery is completed at 1.3337. And fall from 1.3651 is resuming for 1.2773 support. That will revive that case that medium term rise from 1.1946 has completed at 1.3651. Meanwhile, above 1.3337 will bring retest of 1.3651 high instead.

In the bigger picture, while the medium term rebound from 1.1946 was strong, GBP/USD hit strong resistance from the long term falling trend line. Outlook is turned a bit mixed and we'll turn neutral first. On the downside, decisive break of 1.2773 key support will argue that rebound from 1.1946 has completed. The corrective structure of rise from 1.1946 to 1.3651 will in turn suggest that long term down trend is now completed. Break of 1.1946 low should then be seen. On the upside, break of 1.3835 support turned resistance will revive the case of trend reversal and target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

Economic Indicators Update