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The USD/CHF increased, but failed to approach and reach the 0.9768 yesterday’s high. Price will edge higher in the afternoon if the United States data will come in better than expected, a valid breakout above the upper median line (uml) of the minor descending pitchfork and above the 0.9787 static resistance will confirm a further increase in the upcoming period.

EUR/JPY increased today and tries to approach the median line (ml) of the black ascending pitchfork, where he could find resistance again. I’ve said in the previous report that we may have a Rising Wedge pattern on this pair. You can see that is trapped within the two up sloping red line, but a breakout above the median line (ml) and above the 150% Fibonacci line will invalidate the chart pattern.

The Brent Oil increases and looks determined to stay above the 57.72 horizontal support (resistance turned into support). Price climbs higher after the last two decreasing days, is fighting hard to recover and to stay in the green territory.

Oil increased also because the USD/CAD slipped lower and erased the morning gains, remains to see what will happen because the currency pair maintains a bullish perspective on the short term because is located above some important broken resistance levels.

Brent rallies also because the United States Crude Oil Inventories have plunged in the previous week, the indicator has reported at -1.8M, even if the traders have expected to see it at 2.9M.

Technically, the price is expected to climb towards new highs in the upcoming period, the minor drop was natural after the impressive rally.

Price bounced back from the 250% Fibonacci line (descending dotted line) and tries to recover after the immense drop. Brent has found strong support on the 250% line, so we had only a false breakdown below the 57.72 static support. The failure to reach and retest the median line (ML) of the major ascending pitchfork is signaling a further and powerful increase. However, personally, I still believe that we may have a minor consolidation in the upcoming period because the rate needs to recapture more directional energy before will climb towards the wl2 or towards the major dynamic resistance from the sliding parallel line (SL).

The Canadian dollar collapsed yesterday, after BoC Governor Poloz said that the Bank will watch movements in the exchange rate. His overall tone was somewhat cautious, leaving no hints that another BoC rate hike is imminent, at least at the upcoming October meeting. With no Canadian data releases on the economic calendar to distract investors until next Friday, we believe CAD could remain on the back foot over the next days.

USD/CAD surged yesterday following BoC Governor Poloz's remarks. The rate emerged above the resistance (now turned into support) barrier of 1.2430 (S1) and subsequently, it broke above the medium-term downside resistance line drawn from the peak of the 5th of July. Bearing in mind that the price structure has been higher peaks and higher troughs above a short-term uptrend line since the 8th of September, we would expect the pair to continue trading north for a while. At the time of writing, the rate looks to be headed towards the 1.2535 (R1) resistance, where a clear break may pave the way for our next obstacle of 1.2600 (R2).

Zooming out to the daily chart, we see that USD/CAD continues to trade below the downtrend line taken from the peak of the 5th of May, which keeps the broader outlook cautiously negative. Having said that though, the positive divergence between our daily oscillators and the price action adds to our view that the latest recovery may continue in the next few days, perhaps until the rate challenges the aforementioned downtrend line.

USD uninterested in Trump's tax plan

US President Trump provided an outline of his administration's tax plan yesterday. Almost everything was in line with what recent reports suggested. The plan includes a reduction of the corporation tax to 20% and a one-time repatriation of corporate cash held abroad at a lower tax rate. In addition, it is expected to reduce the top-tier income tax bracket slightly, as well as eliminate the estate tax.

However, the dollar reacted very little to this announcement. We see two likely explanations for this lack of excitement. First, even though the plan includes a one-time repatriation, no specific rate was presented. Perhaps most importantly, given that the plan is set to increase the national deficit and provide large tax breaks to top income earners, it will likely encounter strong opposition from both Republican fiscal hawks as well as Democrats in Congress. This implies we may finally end up with a watered-down version of what was presented yesterday. We will therefore stick to our view that the USD is probably in for a bumpy ride over the next months, with lots of tax-related headlines likely to heighten volatility in the currency.

RBNZ remains on hold, maintains a neutral bias

The RBNZ kept its policy unchanged overnight. The most noteworthy change in the accompanying statement related to the Kiwi. Policymakers softened their tone on the currency, noting that a lower NZD would “help” the economy, as opposed to a lower NZD is “needed” in the previous statement. The reaction in the currency was negative, but not major. Moving forward, we expect the Kiwi's forthcoming direction to depend primarily on election developments and specifically, on what coalition will be formed, which will become clearer in early October. Until then, the currency could continue to drift lower, weighed on by the increased political uncertainty, we think.

NZD/USD traded higher yesterday ahead of the RBNZ policy decision. However, the recovery remained limited below the 0.7245 (R1) resistance barrier and after the Bank reiterated some concerns over the Kiwi's exchange rate, the pair slid to challenge once again the support of 0.7185 (S1). In our view, the outlook remains the same as yesterday. We believe that the pair is poised to continue trading lower and as such, we expect a decisive dip below 0.7185 (S1) to open the way for our next support of 0.7140 (S2).

Today's highlights:

During the European morning, Germany's preliminary CPI for September is due out, one day ahead of Eurozone's print. The forecast is for the CPI rate to have ticked up, something that could help EUR recover some of its latest losses. In the US, the final estimate of GDP for Q2 is due out, but the final print is usually not a major market mover.

We have three speakers on the agenda. In Europe, we will hear from ECB Executive Board members Peter Praet and Sabine Lautenschlager. In the US, Fed Vice-Chair Stanley Fischer will deliver remarks.

USD/CAD

Support: 1.2430 (S1), 1.2335 (S2), 1.2250 (S3)

Resistance: 1.2535 (R1), 1.2600 (R2), 1.2660 (R3)

NZD/USD

Support: 0.7185 (S1), 0.7140 (S2), 0.7055 (S3)

Resistance: 0.7245 (R1), 0.7295 (R2), 0.7340 (R3)

WTI Oil regained traction on Thursday and broke above previous high at $52.41, signaling bullish continuation after larger bulls took a breather in past two days when the action was shaped on double long-legged Doji.

Firmly bullish techs, reinforced by freshly formed 20/200SMA Golden Cross, support further advance and ignore overbought conditions for now.

Additional support came from better than expected US crude stocks data (oil inventories fell by 1.8 million barrels last week after previous three weeks’ build due to closure of refineries).

Oil price is riding on extended third wave of five-wave cycle from $45.57, which eventually broke above its FE 138.2% ($52.30), en-route towards round-figure $53.00 barrier and FE 161.8% at $53.21, which mark immediate targets.

Key med-term barrier at $55.22 (2017 high, posted on 03 Jan and the highest level of the recovery from $26.04) is expected to come in focus on further bullish acceleration.

Lows of past two days at (51.62/41), also repeated strong downside rejections, mark decent supports, followed by rising daily Tenkan-sen at $50.99.

Res: 53.00, 53.21, 53.77, 54.00
Sup: 51.85, 51.62, 51.41, 50.99

Daily Pivots: (S1) 0.8746; (P) 0.8772; (R1) 0.8799; More...

With 0.8884 minor resistance intact, deeper decline is expected in EUR/GBP for 61.8% retracement of 0.8312 to 0.9305 at 0.8691 and below. Fall from 0.9305 is seen as the third leg of consolidation pattern from 0.9304. We'll look for bottoming signal again at it approaches 0.8303 support. Meanwhile, break of 0.8884 will indicate short term bottoming and turn intraday bias back to the upside for 55 day EMA (now at 0.8951).

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. It's still in progress with fall from 0.9305 as the third leg. Break of 0.8303 could be seen. 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. Whole up trend from 0.6935 is expected to resume after consolidation from 0.9304 completes.

Daily Pivots: (S1) 1.4917; (P) 1.4953; (R1) 1.4997; More....

Intraday bias in EUR/AUD remains neutral as consolidation continues in range of 1.4791/5173. On the upside, break of 1.5173/5226 resistance zone will finally resume larger rise from 1.3624. On the downside, break of 1.4791 support will turn bias to the downside and extend the fall from 1.5173 to retest 1.4421 support.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term top has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. The corrective structure of the price actions from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, break of 1.4421 support will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

Daily Pivots: (S1) 1.1400; (P) 1.1429; (R1) 1.1448; More...

With 1.1511 minor resistance intact, deeper fall is expected in EUR/CHF. Correction from 1.1622 short term top would extend through 1.1355 support. Strong support is expected from 1.1257 (38.2% retracement of 1.0652 to 1.1622 at 1.1251) to bring rebound. On the upside, break of 1.1511 minor resistance will suggest that the pull back is completed and bring retest of 1.1622.

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 1.1198 resistance turned support holds.

US markets broke its four day losing streak
GOP frame work on the tax reform is here
FOMC voter, William Dudley poured cold water on the interest rate hike hopes
The RBNZ left the interest rate unchanged

The European futures and Asian markets are showing that the investors are picking up the momentum from the US markets which broke its four day losing streak. The US equity markets have been focused on the fiscal stimulus and the tax reform plans. On Wednesday, we finally have some details on the GOP frame work on the tax reform. The corporate tax rate would be reduced to 20 percent which is in-line with the market expectations because it was expected. On top of this, the plan also outlines three levels of individual tax rates and double the standard deduction. Tax reform hopes triggered the strong bull rally in the equity markets this year. The announced plan also encourages firms to bring back their overseas profits. Traders do believe this reduction in the corporate tax would help the corporates to report more healthier profits .

The dollar index have also found its new friends and moved higher from its lows as investors factored in the impact of the newly proposed tax laws. This is despite the fact that we have very little details in relation to the new tax plans. This made investors to shave some profit. Announcing tax details only means that it is a start, because it has a long way to go. It is almost certain that the plan is going to face enormous obstacles which would keep investors on their toes. Once the dust is settled, then we will be able to see a more clear picture. Remember, Trump is still struggling in repealing the Obama Care. The official FOMC voter, William Dudley has poured some cold water on the interest rate hike hopes by stating that the current interest rate is appropriate for the time being given where the inflation is.

The RBNZ left the interest rate unchanged- in line with the market expectations. The bank is keen to leave the monetary policy more accommodating for some time and it does think that the lower currency would help it to create the growth which the bank is after. The dovish stance by the RBNC drove the currency lower and we do expect the currency to stay under pressure for some time.

The Euro-dollar is suffering from profit taking as traders are still waiting on the biggest economy of the Eurozone to announce a coalition government. We do know that the profit taking could be very temporary thing because it is evidently clear that the European central bank is on path to normalise its monetary policy i.e tapering. Therefore, it is highly likely that the euro-dollar would be able to visit the 1.2092 very soon.

The Aussie remains in red for the fourth straight day and dented strong support at 0.7807 (15 Aug former trough), coming ticks ahead of another significant support provided by daily cloud base at 0.7794.

The price bounced after hitting new 2 ½ month low at 0.7799 which could be seen as consolidation ahead of final push below cloud top.

The zone between 0.7820 and 0.7794 marks very strong support, consisting of Fibo 38.2% of 0.7328/0.8124 rally / former higher low and daily cloud base and the broader bears may take a breather here. The notion is supported by oversold slow stochastic on daily chart, however, limited upside action is expected.

Session high at 0.7856 marks initial resistance ahead of Wednesday’s high at 0.7888 and daily cloud top at 0.7911, which is expected to cap extended upticks.

The pair is riding on extended third wave of five-wave sequence from 0.8124 peak, which could travel to 0.7777 (FE 176.4% and 0.7733 (FE 200%).

Res: 0.7856, 0.7888, 0.7911, 0.7951
Sup: 0.7807, 0.7794, 0.7777, 0.7758