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GBPJPY is consolidating gains made after reaching a high of 152.85 yesterday, the highest level since June 2016. The chances for a push higher have diminished since the market became overbought at this level. This was indicated by the RSI rising above 70 on the 4-hour chart. Consequently, prices turned back down as upside momentum faded.

In the near term, GBPJPY is expected to see some choppy trading and will likely trade in a range below the 152.85 high, with support at 151.47, which is a resistance-turned-support level and also where the Kijun-sen line is located. Slipping below this support would turn the focus towards 150.00, a level which has been respected since September 15. A break below this support would bring more weakness to the market and open the way towards 146.80 (which was tested as both support and resistance in the past). Under this level, 143.00 comes into view ahead of 140.00.

Based on Ichimoku cloud analysis, the overall picture is bullish as the market is above the cloud while the Tenkan-sen and Kijun-sen lines are positively aligned. Other trend indicators are also bullish, as the 20 and 50-period moving averages are rising. The 152.85 high is a strong hurdle to overcome but clearing this level would see a resumption of the uptrend that started from the 140.00 area.

The risk-off sentiment reemerged on Friday in Asia, as the North Korean leader Kim Jong Un delivered another threatening message to the US following Trump's warning at his debut speech at the UN General Assembly on Monday. The dollar lost ground against a basket of major currencies, paring gains made after the Fed's decision to start unwinding its balance sheet on Wednesday. Meanwhile, the pound remained steady ahead of the widely expected speech by the British Prime Minister on Brexit later today.

Investors were in a risk-averse mode during the Asian session after the North Korean leader Kim Jong Un stated on Friday that he was considering “the highest level of hard-line countermeasure in history” against the US. A few hours later, the North Korean Foreign Minister, Ri Yong Ho, said that the regime is preparing to launch a hydrogen bomb test on an “unprecedented scale”. The North Korea's threatening message arose in response to the recent war of words by Trump who said the US would “totally destroy” the regime if it continued challenging the US or its allies.

The dollar index dropped by 0.33% on the day to 91.33, reversing more than half of gains made on Wednesday after the Fed decided to start reducing its balance sheet in October.

The safe-haven assets moved higher due to rising geopolitical tensions. Dollar/yen tumbled by 0.45% to 111.95 while dollar/swissie declined by 0.24% to 0.9684. Gold jumped by 0.45% to $1,296.61

The euro gained 0.23% against the dollar on Friday, reversing more than half of yesterday's losses. During the weekend, attention will turn on the German federal elections on Sunday, with markets eager to see if chancellor Angela Merkel will stay another four years in power. Based on voter opinion polls, Merkel's center-right Christian Democratic Union is said to lead the elections by attracting 36% of the votes. Although the first election results will be announced on Sunday, the final outcome will not come out until Tuesday. However, Reuters opinion surveys show that even if the election outcome upsets, the impact on the EU markets would be minimal as the majority of the parties are in favor of the euro project.

Today, markets will keep a close eye on speeches by ECB officials. The ECB executive member Benoit Coeure will deliver his speech first before the ECB President Mario Draghi, while the ECB Vice President Vitor Constancio will follow later on.

New Zealand will also go to the polls a day before the German elections on Saturday. Despite the National Party of Prime Minister Bill English leading the latest polls, its lead is close to 10 points making the race tight and volatile. The kiwi was trading 0.10% down at $0.7297.

The pound was in a range versus the greenback around $1.3580 and was up by 0.16% against the euro at €0.8805 ahead of the British Prime Minister's key speech on Brexit later today in the city of Florence in Italy. Theresa May is expected to give an overview of Brexit negotiations according to her deputy spokesperson, with markets anticipating that May will support a softer exit from the EU. This came after BBC sources said on Thursday that May will likely express her willingness to pay €20bn to the EU during the transition period under the agreement to have access to the bloc's single market. Note that Brexit talks are scheduled to begin their fourth round on Monday.

The loonie recovered smoothly in Asia, rising by 0.15% and driving dollar/loonie down to 1.2306. In terms of data, Statistics Canada will release inflation figures for the month of August with forecasts suggesting inflation to increase from 1.2% in July to 1.5%. Another report on monthly retail sales is projected to show no change in July's household spending.

Looking at energy prices, those were in an uptrend before the OPEC meeting kicks off in Vienna later today. Oil traders are waiting for the OPEC oil producers as well as some other producers outside the organization to discuss a potential extension of the supply cuts beyond March. WTI crude jumped by 0.28% to $50.68 per barrel and Brent increased by 0.14% to $56.51.

The pair trades in red on Friday, following Thursday's rejection on first attempt at 112.80 target (Fibo 76.4% of 114.49/107.31 fall) and fresh pressure on the greenback after North Korea's threats of another nuclear probe.

Dips were so far strongly rejected above daily cloud top (111.61) and subsequent bounce regained 112.00 handle.

Thickening daily cloud (111.61/110.43) offers strong support and renewed attempts higher could be expected while cloud top holds, with return above 200SMA (112.15) needed to generate stronger bullish signal.

However, negative signals are emerging from south-turning daily RSI which reversed on approach to o/b zone border and reversal of slow stochastic in deep overbought territory.

This may spark fresh downside and violate daily cloud top support (111.61), with extended dips to find next strong support at 111.00 zone (111.11 – converged 10/100SMA's in attempt to form bull-cross and rising daily Tenkan-sen) which guards lower breakpoint at 110.43 (daily cloud base).

Res: 112.15, 112.55, 112.80, 113.00
Sup: 111.93, 111.61, 111.11, 110.97

Cable is consolidating under 1.3600 where Thursday's recovery rally faced strong headwinds. Bounce from the floor of four-day congestion at 1.3460 zone sidelined immediate downside risk, but renewed bearish pressure could be anticipated if 1.3600 zone resists attacks.

Bearish signals from overbought daily RSI and slow stochastic reversal from overbought territory continue to warn, but clearer direction signals could be expected on sustained break out of near-term congestion between 1.3451 and 1.3655.

Today's focus is on UK PM May's speech in Italy, as May will try to rescue stalled Brexit talks if she convinces the EU that she is ready to cut a fair divorce deal.

May's speech is expected to have a strong impact on pound, as expectations of positive outcome already strongly boosted UK currency on Thursday.

Cable may receive fresh boost on euphoric reaction on May's speech and could accelerate towards next target at 1.3837 (Fibo 61.8% of 1.5016/1.1930 fall) on sustained break above recent peaks at 1.3618/55.

Theresa May's speech in Italian city of Florence is due at 13:15 GMT.

Res: 1.3595, 1.3618, 1.3655, 1.3700
Sup: 1.3553, 1.3535, 1.3523, 1.3470

The Euro extends rebound from post-Fed low at 1.1861, with fresh acceleration higher on Friday being triggered by renewed geopolitical tensions over North Korea that put the greenback under pressure and sidelined positive impact from Fed.

Bullish signal was generated on Euro's return above daily Tenkan-sen (1.1935) which now acts as support.

Near-term focus shifted higher again, as the pair is on track for full retracement of post-Fed fall from 1.2033.

Sustained break above 1.2000 barrier is required to confirm bullish scenario, with weekly close above here to generate further positive signals as the pair is on track for bullish weekly close.

Alternatively, failure to clear 1.2000 barrier would keep the downside vulnerable, but return and close below daily Tenkan-sen is needed for stronger bearish signal.

Res: 1.1900, 1.1926, 1.1967, 1.1994
Sup: 1.1963, 1.1935, 1.1900, 1.1861

In accordance with expectations, the currency exchange rate made a rebound from a combined support set up by the monthly PP at 1.1881 together with the bottom trend-line of a dominant ascending channel. The better that expected US data release together with the remarks made by Mario Draghi in Frankfurt only supported the yesterday's surge. Today the pair is expected to continue to climb to the top. First, it has no barriers on its way except for the supposed upper edge of a junior descending channel. Second, it experiences pressure from a number of moving averages as well as the weekly PP, which from resistance turned into support. Third, at 8:00 GMT the ECB President is going to speak at Trinity College, which is likely to give additional stimulus to the Euro.

Although the pair managed to break through a combination of the 55- and 100-hour SMAs yesterday, the surge was stopped a little bit below the 1.3600 mark, thus confirming an existence of a strong barrier in that area. It appears that during this whole trading week movement of the exchange rate was guided by some sort of rectangle pattern whose resistance line was located near the 1.3600 level and the support line near the 1.3475 level. On the one hand, there is a high chance that the pair will spend the rest of the day in this established formation, as it faces no significant pressure from technical indicators. On the other hand, a speech that will be delivered by PM May about post-Brexit relations with the EU is likely to have a notable impact on the value of Pound.

In result of combination of technical factors and fundamental events, the currency pair made a turn around a broke though the bottom boundary of a previously dominant ascending channel. From technical point of view, the rate encountered a resistance level formed by the monthly R2 at 112.54 and the upper boundary of a long-term falling wedge. From fundamental perspective, the new threat from North Korea only accelerated depreciation of the buck.

In the short run the currency rate might try to restore some lost positions, using the 100-hour SMAs or the monthly R1, as a springboard. But, in general perspective, the pair is expected to enter into a new long bearish phase.

A suggestion expressed yesterday was basically confirmed. The yellow metal indeed continued to lose value against the buck. The only exception was that it made a rebound not from the weekly S3 but a little bit earlier from the bottom trend-line of a senior descending channel.

However, a recovery of the gold is not expected to last for long today. Most probably, the pair is going to make another turn around somewhere between the 1,300.00 and 1,302.35 levels, as this area represents a location of multiple technical indicators, such as the monthly PP, weekly S2 and the 55-hour SMA. An aggregate of those indicators supports this assumption via sending strong sell signal.

EUR/USD

Current level - 1.1968

The rebound after 1.1860 low is still intact and my outlook is bullish, for a break through 1.2030, towards 1.2090 peak, en route to 1.2240 zone.

USD/JPY

Current level - 111.96

The test at 112.80 resistance has failed and the bias is already bearish, for a slide to 111.10, en route to 109.30. Minor intraday resistance lies at 112.15.

GBP/USD

Current level - 1.3587

The intraday outlook is positive above 1.3520, for a break through 1.3635 resistance area, towards 1.3830. Crucial on the downside is 1.3440 static support.