Key Points:

• Recent downtrend could be about to end.
• 100 day EMA continues to push the pair higher.
• Rally could see the 115 handle challenged again.

The Dollar-Yen looks like it is on a cruise course to break free of its medium-term downtrend in the near future. Specifically, the pair is fast running out of room to consolidate unless it finally crosses back below the 100 day moving average. However, given a number of other technical readings, resistance is looking significantly weaker than support at this point.

First and foremost, it's important to take a look at that declining trend line a little more closely. Notably, it has proven rather resistant to attempts to push higher recently which would generally, and quite rightly, suggest that a reversal is now on the way. However, unlike previous attempts at breaking the trend, we don't have much in the way of resistance other than the trend line itself.

Whilst it is true that the 28.6% Fibonacci retracement will be capping upsides somewhat, this is about the only additional source of resistance currently present on the daily chart. Specifically, the RSI and Stochastics are both neutral which leaves the pair with plenty of gains to claim before risking moving into overbought territory.

Conversely, support is highly robust and this should force the USDJPY to move higher as its consolidation phase comes to an end. As is made clear above, the 100 day EMA continues to be a source of dynamic resistance and we can even see a loose double bottom forming up. Moreover, the current zone of support around the 111.59 mark has been a local trough three times in as many months.

Setting these readings aside, the price action seen since the Dollar-Yen began its decline would typically result in a breakout to the upside eventually. More precisely, a falling wedge is becoming quite obvious now and its end is nearly in sight. As a result, the air could move as high as the 115.00 mark within the next few sessions.

Ultimately, we will just have to wait and see if the pair can muster the strength to reverse its recent downtrend. However, as discussed above, the technicals definitely seem to suggest that we can see that trend line broken. Although, as always, keep an eye on the fundamental side of things which could upset the forecast, especially as we assess the aftermath of Trump's address.

President Trump's address was high on rhetoric and light on detail, leaving the market underwhelmed.

The address to Congress was released a good hour before the main event this morning. Mr Trump followed it word for word with no surprises or add-ons leaving the street (and myself) with the feeling of being underwhelmed. Again the President was high on policy and rhetoric and light on details. Given the legislative agenda, the Houses of Congress are going to be very busy indeed over the next six months getting it all done. I suspect though that most of what has been announced are already built into the price of the USD today.

The S+P, Dow and Nasdaq are unchanged with the USD drifting ever so slightly higher against most of the majors as I guess it has become a case of no news is ever so slightly good news. Attention will now turn to Fed Chair Yellen's speech on Friday which should have more impact if she is hawkish. Over the last ten days, a plethora of other Governor's have been upbeat and hawkish, and a follow-on by Mrs Yellen would put March's FOMC unexpectedly “live.” This would almost certainly lead to another bout of USD strength.

Looking around the G-10 space today post-speech,

EUR/USD

Sitting at the session lows at 1.0555 as it continues it drift lower from New York. Euro has support at 1.0550 and 1.0530 with critical support at 1.0495.

Resistance is at 1.0590 and then stronger at 1.0630. Euro continues to drift aimlessly to the nuances of the USD as French political worries recede. (for now)

USD/JPY

Had rallied in New York as bond yields firmed and Trump's tax plans circulated. There is definitely a hint of a short squeeze here as well as traders had nervously eyed key long-term support around 111.50 in the previous sessions.

USD/JPY sits at the top of its range in Asia this morning with resistance at 113.80 initially. Support appears at 112.75 intra-day.

GBP/USD

As Brexit D-Day approaches, GBP has remained capped on any rally towards the 1.2600 level. Today's speech won't affect that dynamic. GBP is trading 1.2370 at the moment with support at 1.2345 and then the 1.2250 area.

AUD/USD

Completely ignored the speech to remain around 7670 this morning. It has even shrugged off better than expected GDP this morning at +2.4% YoY as the resource rally digs Australia out of the hole.

Aud continues to be firmly anchored in the 7600/7740 range it has traded in all of February. Intra-day resistance lies at 7700. Bring a good book to read.

USD/CNH

Ignored better than expected Manufacturing PMI's as general USD strength sees the pair trade to the top of its range at 6.8650. Yellen's speech and the trajectory of U.S. interest rates seem likely to have a far greater effect on the CNH and EMFX in general then Mr.Trump for now.

USD/CNH remains mired in its 2-week range of 6.8400 to 6.8700 with eyes turned to Friday now to break the deadlock.

GOLD

The USD strength has weakened the hands of Gold bulls. A reduction in the levels of perceived risk around the world and the very extended speculative long positioning sees Gold eyeing support at 1242. A move through here could see more stop-loss selling emerge with the next support at the 1236 area on the short term charts.

Resistance intra-day is at the 1248 area.

Summary

Mr Trump's highly anticipated speech was a highly scripted damp squib in the end. No news was good news, and this sees the USD slightly bid in Asia although, with so much built into the price, the longevity of the move into Europe is perhaps doubtful.

The highlight of the week now becomes Chair Yellen's speech on Friday for signals as to whether March's discounted FOMC meeting is in fact “live.”

EUR/USD

Expectations ahead of Trump's speech before the Congress, kept major pairs limited to tight ranges for a second consecutive day. US President Trump will address a joint session of the Congress early Asia this Wednesday, and has anticipated he will discuss increasing military spending, replace Obamacare and tighten borders in an interview this Tuesday, but has not mentioned the "phenomenal" tax reformed he announced a couple of weeks ago. Markets are expecting some clearer guidance and not just pledges, although this last has more chances to occur.

The EUR/USD pair posted some modest gains daily basis, settling above 1.0600, but still contained by last week highs in the 1.0630 region, helped by worse-than-expected US macroeconomic data. The second estimate of US Q4 GDP came in at 1.9%, matching the advanced reading, but below the 2.1% expected. Also, the price index for personal consumption expenditures was down to 1.9% from previous 2.2%, in the same quarter. January trade balance showed a deficit of $69.2B, yet on a positive note, the CB consumer confidence index rose in February to 114.8 from 111.6 in January.

From a technical point of view, the price has pulled back to the daily descendant trend line broken on Monday and recovered, somehow suggesting that selling interest eased during the last 24 hours. In the 4 hours chart, the price has bounced from an advancing 20 SMA, and is currently above a modestly bearish 100 SMA, whilst the Momentum indicator heads north within positive territory, and the RSI consolidates around 60, supporting some further gains on a break beyond 1.0660 that can extend up to the 1.0700/20 region. Upcoming direction will depend solely on how the market digests Trump's speech, with cautious recommended on dollar weakness, as the common currency is still undermined by local political woes.

Support levels: 1.0590 1.0565 1.0520

Resistance levels: 1.0635 1.0660 1.0710

USD/JPY

The USD/JPY pair plunged to 111.68 during the US afternoon, tracking the decline in Wall Street, as US indexes came under selling pressure after posting multiple record highs in-a-row, ahead of Trump. The pair managed to bounce from the level, as stocks bounced some ahead of the close, but mostly because of a technical support, as February's previous declines stalled in the 111.60 region. The yen strengthened also on the back of soft US growth figures, as the second estimate of Q4 GDP missed expectations of 2.1%, printing 1.9%. During the past Asian session, Japan released its January Industrial Production figures, which came in at -0.8% against an advance of 0.3% expected. Retail Sales in the same month, rose 0.5% compared to December, and by 1.0% yearly basis, overall soft readings that reflect the poor performance of the local economy. The pair hovers around 112.00 ahead of the Asian opening, with technical indicators in the 4 hour chart bouncing modestly within bearish territory, and the price far below the 100 and 200 SMAs, favoring a bearish acceleration on a break below 111.60, which could extend down to 110.00.

Support levels: 112.50 111.95 111.60

Resistance levels: 113.05 113.45 113.90

GBP/USD

The GBP/USD pair ends the day marginally lower, as the Pound remained weighed by jitters about a possible Scottish independence referendum, at the time the UK is getting ready to leave the EU. There were no macroeconomic releases in the UK this Tuesday, neither fresh news on Scotland or Brexit, although the kingdom will release its money figures alongside with the preliminary Markit manufacturing PMI for February this Wednesday, this last, expected to have ticked modestly lower to 55.5. The pair traded within Monday's range, meeting selling interest around a bearish 20 DMA for a second consecutive day, rather suggesting that buyers are rushing to take profits on advances than suggesting increasing selling interest. For the upcoming sessions, the 4 hours chart shows that the risk is towards the downside, given that the pair has been unable to recover beyond a still flat 200 EMA, and a modestly bearish 20 SMA, whilst technical indicators remain within bearish territory, with no certain directional strength. The pair has an immediate support at 1.2380, where buying interest has been surging during the last two weeks, although a more relevant support comes at 1.2345, February low and the 50% retracement of its latest bullish run. To the upside, gains are unlikely to extend beyond the 1.2530/50 region, where strong selling interest contained rallies pretty much since February started.

Support levels: 1.2380 1.2345 1.2300

Resistance levels: 1.2480 1.2530 1.2565

GOLD

Gold prices fell, despite risk aversion remained high ahead of Trump's budget speech before a joint session at the Congress. The commodity was partially weighed by increasing odds for a US rate hike in March, following comments from Dallas FED President Rob Kaplan, who stated that the Central Bank should move "sooner rather than later," when it comes to rates. Several FED speakers, including Yellen, will speak this Friday, and may offer some clearer clues on what's next for rates. Spot gold settled around $1,250.00 a troy ounce, and the daily chart shows that the price failed once again to surpass its 200 DMA, but holds around a key Fibonacci level, and above a bullish 20 DMA. The Momentum indicator in the mentioned time frame stands directionless within positive territory, while the RSI indicator barely retreats from overbought readings, now at 66. In the 4 hours chart, the price has broken below its 20 SMA that losses upward strength, while technical indicators head sharply lower, with the RSI indicator currently at 51, not enough to confirm additional declines. A break below the daily low of 1,247.65 is what it takes to confirm a new leg lower towards 1,300.

Support levels: 1,247.65 1,238.90 1,230.00

Resistance levels: 1,255.25 1,263.80 1.273.20

WTI CRUDE

West Texas Intermediate crude oil prices fell to a fresh 2-week low of $53.18 a barrel this Tuesday, on renewed concerns about US rising production. Ahead of the release of US stockpiles data, crude inventories are expected to have risen by 2.9 million barrels last week. The commodity bounced back in the US afternoon, to close the day a few cents below 54.00, helped by a Reuters survey, indicating that OPEC's members have achieved 94% of their pledged output cut in February, after cutting roughly 80% in January. The commodity is ending the month modestly higher, although having remained contained within January's range. The daily chart retains the neutral stance seen on previous updates, although the downward potential increases, as technical indicators turned south, although still within neutral territory, whilst the commodity remains above a horizontal 20 DMA. In the 4 hours chart, the late recovery stalled below a modestly bearish 20 SMA, whilst technical indicators have bounced within bearish territory, limiting chances of a short term decline.

Support levels: 53.40 53.00 52.50

Resistance levels: 54.75 55.30 56.00

DJIA

The Dow Jones Industrial Average ended its record-winning streak, losing roughly 25 points this Tuesday, to close at 20,812.51. The Nasdaq Composite lost 36 points and settled at 5,825.44, while the S&P ended at 2,363.64, down by 0.26% or 6 points. US equities plummeted at the opening, but managed to trim most of their losses ahead of the close, undermined at the beginning of the day by a worse-than-expected GDP revision. Among the Dow, Coca Cola was the best performer, up 0.77%, followed by Chevron that added 0.69%. Wall-Mart led decliners, down 1.18% whilst Nike followed, ending the day 1.07% lower. The daily technical picture for the DJIA shows that the benchmark remains at record highs and far above bullish moving averages, while the RSI keeps consolidating around 82 and the Momentum indicator has turned flat after correcting overbought readings, with no signs that the index could decline further. Shorter term and according to the 4 hour chart, the index managed to close the day a few points above the 20 SMA, while technical indicators are attempting to recover after a pullback within positive territory, in line with the longer term perspective.

Support levels: 20,779 20,724 20,668

Resistance levels: 20,855 20,900 20.940

FTSE 100

The FTSE 100 advanced 10 points to close February at 7,263.44, up 2.3% on the month, and not far from record highs posted last January at 7,354. The index managed to post daily gains, despite miners edged lower, following price retracements in base metals. Babcock International Group, led advancers, closing the day 7.24% higher, followed by Croda International, up by 5.98%, boosted by hopes that US President Trump will make a big announcement on infrastructure investment. On the losing side, BHP Billiton ended 2.11% lower, Randgold Resources shed 1.835, while Glencore shed 1.66%. The index has made little progress from the technical point of view, as the daily chart shows that it held above its 20 SMA, although technical indicators keep losing upward strength within positive territory. In the 4 hours chart, the index keeps struggling around a bearish 20 SMA, but above its 100 SMA, whilst technical indicators are stuck around their mid-lines, lacking clues on what's next for the index.

Support levels: 7,238 7,195 7,160

Resistance levels: 7,285 7,315 7,342

DAX

European equities posted modest gains this Tuesday, with the German DAX adding 11 points or 0.10% to end at 11,834.41, with market's sentiment neutral ahead of US releases and President Trump speech before the Congress. Financials recovered ground, with Deutsche and Commerzbank adding 0.62% and 0.56% respectively, although the best performer was ProSiebenSat.1 Media, up 1.01%. Infineon Technologies led declines, down 1.21%. The daily chart for the index shows that an early decline was again contained by buying interest around a modestly bullish 20 DMA, while technical indicators lack directional strength within positive territory, indicating a limited downward potential as long as the benchmark holds above Friday's low of 11,721. In the 4 hours chart, however, the index is below a now bearish 20 SMA, whilst technical indicators hold within negative territory, and particularly the RSI is gaining downward strength, around 45, increasing chances of further slides for this Wednesday.

Support levels: 11,781 11,721 11,669

Resistance levels: 11,865 11,902 11,945

STOCKS

Dow (20812.24, -0.12%) has paused near current levels making a small red-candle after a long rally from levels near 20061 levels. As we have been mentioning for quite some time, we could expect a small corrective dip possibly towards 20600 levels before again bouncing back higher.

Dax (11834.41, +0.10%) has been finding it difficult to move up above 11860 just now and could possibly trade sideways for a couple of sessions before moving up towards 12000.

Nikkei (19222.56, +0.54%) is trading flat but could be ready for a break out in the next few sessions on either side of the 19400-19000 region. In case it breaks lower, it would support the resistance on Dollar-Yen near 113.75. (SEE FOREX SECTION BELOW)

Shanghai (3257.02, +0.47%) is trading slightly higher today. It could move up towards 3275 in the next couple of days. Failure to move above 3275 in the near term could indicate some sideways movement within the 3225-3275 region for some more sessions.

Nifty (8879.60, -0.19%) closed exactly at the 8880 level mentioned as the lower limit of the 8960-8880 range. A close below 8880, if seen today could confirm the start of a near term corrective dip that may extend towards 8800 or lower in the medium term.

COMMODITIES

Gold (1247) has moved lower in line with our expectation and trading within its bullish trading range of 1217-1274. A close below 1230 could hamper its upward momentum.

Silver (18.32) is holding its crucial support of 18, though a possibility of a decline towards 18 levels can't be ruled out.A close below 17.80 could be trend reversal.

Copper (2.71)was unable to close above its pivot of 2.75 of its recent trading range of 2.60-83, though it is still holding its upward trend line support at 2.68-70 since October 16. We have US ISM Manufacturing PMI data at 8.30 p.m IST, which could influence the price of copper and silver.

Brent (55.59) and WTI (54.11) both are trading within their narrow ranges of 55-57.60 and 53-55 with no directional bias. We have US Crude oil inventory data at 9.00 p.m IST.

FOREX

Trump's speech in support of cutting taxes for the American corporate companies and spending more on the crumbling infrastructure could be taken positively by the markets. (To read the full speech click here: http://www.vox.com/2017/2/28/14772568/trump-speech-congress-transcript)

Dollar Index (101.33) tested levels near 101.57 ahead of the speech but could possibly move up in the opening session tonight.

Euro (1.0577) is holding within the 1.055-1.065 region and could possibly come down below 1.055 in the next couple of sessions. Near term looks weak. (REFER TO INTEREST RATE SECTION BELOW)

Dollar-Yen (112.96) is trading a bit higher today. Immediate resistance is seen near 113.75 which if holds could possibly push Dollar-Yen towards 112.00. A break above 113.75 is needed to turn bullish on Dollar-Yen. Keep a close watch on Nikkei, which if breaks on the downside could bring down Dollar-Yen also to lower levels.

Pound (1.2376) is on the verge of breaking below the immediate support at 1.2382 mentioned yesterday. While it sustains at lower levels, we could see a fresh fall towards 1.230 in the near term. (ALSO REFER INTEREST RATE SECTION BELOW)

Aussie (0.7665) is holding above immediate support at 0.7625 and has tested 0.77 on the upside. Trade within 0.7625-0.7750 could be expected for the next couple of days. Overall broad range of 0.7600-0.7750 holds for the medium term.

Dollar-Rupee (66.69) could possibly open higher on the onshore markets today. But overall range of 66.90-66.70 may hold today also.

INTEREST RATES

The German-US 2Yr (-2.21%) has fallen sharply but we are yet to see a fall in the Euro. The close correlation between the differential and currency indicates that the Euro may possibly see a sharp fall towards 1.05 or lower in the next few sessions. The German-US 10YR (-2.20%) is also sharply down from levels near -2.13% seen on Monday.

The US-UK 10Yr (-1.27%) has also been falling sharply, indicating a faster fall in Pound. Investors need to be cautious on a sharp fall in Pound in the near term towards 1.23-1.22 levels.

The US yields have risen some more. The 5Yr (1.96%), 10YR (2.41%) and the 30YR (3.01%) are sharply up from previous levels of 1.87%, 2.36% and 2.97% respectively. But on a medium term, the crucial long term resistances may hold, pushing back the yields to lower levels soon.

The US10-5Yr yield spread (0.45%) is down sharply from levels near 0.50% but could bounce back from immediate support near 0.44%.

EURUSD - The pair retains its downside pressure a recovery threat on Monday. On the upside, resistance comes in at 1.0650 level with a cut through here opening the door for more upside towards the 1.0700 level. Further up, resistance lies at the 1.0750 level where a break will expose the 1.0800 level. Conversely, support lies at the 1.0550 level where a violation will aim at the 1.0500 level. A break of here will aim at the 1.0450 level. All in all, EURUSD faces further downside pressure short term.

AUD/NZD Precariously Poised At Resistance

Heading into Aussie GDP, AUD/NZD is precariously poised at resistance.

The pair is very choppy and whipsawing price action is quite normal on these sorts of lower liquidity currency crosses, but most of all I just love that the big fundamental announcements seem to coincide with major technical levels like this.

AUD/NZD Daily:

The daily chart shows an obvious higher time frame resistance level and as mentioned above, price action up into this zone looks very choppy. You can see the way that price has spiked in and out of the 25 pip zone that I've drawn.

Although the swift rejections out of a zone like this prove that the sellers are there and in charge at the moment, it also leaves you open to getting stopped out if you don't leave yourself enough room. Especially so close to a big announcement like GDP.

This is just a characteristic of trading a currency cross that you have to get used to and adjust your trading style around if it's something you're not normally familiar with.

AUD/NZD Hourly:

Now that the higher time frame resistance zone looks like having held, we zoom into an hourly and we can start to see price printing that familiar stepping down pattern.

• The updated estimate falls slightly short of market expectations for an upward revision to 2.1%.
• Consumer spending was stronger than previously estimated but that was offset by weaker government spending and business fixed investment.

Consumer spending growth was revised up to 3.0% in the second estimate of Q4/16 GDP from 2.5% previously, now matching the previous quarter's pace. While 2016 was a strong year for consumer spending, the 2.7% annual increase fell short of the previous two years' gains. Stronger Q4/16 household expenditure was offset by modest downward revisions elsewhere0most significantly government spending, which is now estimated to have edged up just 0.3%. Business fixed investment was also revised lower; at 1.3% in Q4/16, there is no longer evidence of a meaningful pickup relative to the previous two quarters. With residential investment still showing a near 10% increase, final domestic demand was revised up marginally to 2.6% from 2.5% previously. Net exports remained a significant drag (with an unwind of Q3/16's surge in food exports a major factor) while a stronger inventory build provided some offset.

Our Take:

Offsetting revisions to Q4/16's expenditure detail left growth unchanged, and it remains the case that a pickup in domestic spending relative to Q3/16 made for a more encouraging report than the headline GDP figure suggests. The upward revision to consumer spending indicates strong momentum in the household sector toward the end of the year, but a more modest increase in business investment is somewhat discouraging, leaving less evidence of rebalancing in domestic growth toward the end of last year. While the latter trend is less positive than previously estimated, we continue to expect non-residential investment will pick up modestly this year alongside improving business sentiment, supplementing another strong contribution to growth from consumer spending. Our forecast has also built in some fiscal stimulus, though much of the boost to annual growth could fall more in 2018 as indications that tax reform might not come before late-summer limit the scope for an add from fiscal policy this year.

The second estimate of U.S. real GDP growth for the fourth quarter of 2016 was unchanged at 1.9%(annualized), slightly disappointing expectations for an upward revision.

Consumers did not disappoint, however. Spending growth was revised up to 3.0%, from 2.5% in the advance estimate. Spending on both goods are services was revised higher.

One source of disappointment was a downward revision to non-residential business investment from 2.4% (adv.) to 1.3%. Spending on both equipment and intellectual property was revised lower. Meanwhile, the contraction in structures investment was slightly smaller than initially reported.

Residential investment saw only a very modest downgrade to 9.6%, from 10.2% in the advance estimate.

The drag from net-exports was unchanged, as a smaller contraction in exports offset slightly stronger growth in imports.

The contribution from inventory investment was revised down to 0.9 %-points (from 1.0 %-points previously).

Key Implications

The domestic economy is picking up speed. While GDP growth was unchanged, private domestic demand was revised up to 3.0% (from 2.8%), an acceleration from 2.4% in the third quarter. Looking ahead to the first quarter of 2017, we continue to expect a decent follow-through of around 2%. As a result, economic slack will continue to diminish and the Fed will continue to push interest rates higher. While we expect the first hike to come in June, a March hike is certainly not off the table if economic data surprises to the upside.

Over the past six quarters, real GDP growth has been revised up 0.7 percentage points (at an annualized rate) between the BEA's advance and third estimate. The fourth quarter of 2016 has bucked that trend, so far, but here is still a good chance growth could be revised up in the third estimate.

The downward revision to business investment is a tad disappointing, but there is ample scope for optimism over the year ahead. Business spending has been the missing piece in economic growth over the past several years. We continue to see a confluence of factors driving stronger spending growth in 2017 (please see our recent report for more details).

The big question mark for the outlook is the future of fiscal policy. The new Congress and President's first priority is repealing and replacing the Affordable Care Act, likely dealing with tax reform and infrastructure spending later this spring and summer. Unless the President shows his hand in his speech tonight, we are likely going to be waiting a while longer to know the precise details of fiscal policy. At this point, it is safe to say it is more of a 2018 story, with limited impact this year. (For more details, please see our recent report on the ins and outs of tax reform.)

USD/CAD has posted slight losses and is under pressure in the Tuesday session. Early in North American session, the pair is trading slightly above the 1.32 level. On the release front, Canadian RMPI, which measures manufacturing inflation, dropped to 1.7%, but this beat the estimate of 1.3%. In the US, revised GDP remained unchanged at 1.9%, shy of the forecast of 2.1%. Next is CB Consumer Confidence, which is expected to drop to 111.3 points. As well, President Donald Trump will address a joint session of Congress.

Canadian inflation levels were unexpectedly strong in January, as higher gasoline and crude prices boosted inflation. CPI, climbed 0.9%, and RMPI rose 1.7%, as both indicators beat expectations. Still, the unexpected rise in inflation is unlikely to sway any opinions at the Bank of Canada, which is expected to hold rates at 0.50% at its policy meeting on Wednesday. Last year, the BoC adopted three new indicators to measure inflation, and these averaged 1.6% in January, below the central bank's inflation target of 2.0%. So, the central bank is in no rush to raise interest rates for now.

President Trump delivers his first speech before Congress on Tuesday, and the speech could have huge ramifications for the financial markets. Since Trump's election win, the stock markets are sharply higher, but the markets will be expecting some details about Trump's economic agenda. Trump recently promised to unveil a "phenomenal" tax reform package and significant spending on infrastructure, but hasn't provided any details. Tuesday's speech marks a critical opportunity for the new administration, which is still trying to find its bearings after a rocky first month. If Trump fails to present specifics in terms of numbers or at least some timelines, market sentiment will likely sour and this could hurt the US dollar.

Daily Pivots: (S1) 1.0548; (P) 1.0589 (R1) 1.0627; More.....

Intraday bias in EUR/USD strays neutral as consolidation from 1.0493 temporary low continues. With 1.0678 minor resistance intact, deeper decline is still expected. We're viewing fall from 1.0828 as resuming the larger down trend. Below 1.0493 will target 1.0339 low first. Break will confirm our bearish view and target parity. However, break of 1.0678 will dampen our view and turn focus back to 1.0828 resistance instead.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.