Sterling dips notably against other major currencies in an other wise rather quiet Asian session. Selloff in the Pound is seen as a reaction to news that Prime Minister May is preparing for Scotland to call for another independence referendum. And that would come as May triggers the Article 50 for Brexit negotiation with EU by the end of March. It's reported that May could agree to the vote on condition that it happens after completing the Brexit process. While Sterling weakens broadly, it's so far kept well in range against Dollar and Euro. The larger move is seen in GBP/JPY which is heading back to 138.53 support.

Dollar mixed as focus turns to Trump's Congress address

Meanwhile, Dollar is mixed as attention turns to US president Donald Trump's first address of Congress on Tuesday. Trump is expected to reveal his plan to dismantle the Affordable Care Act. Treasury Secretary Steven Mnuchin said that Trump would not touch social security spending and Medicare for now. But Mnuchin and Trump have been delivering contrasting messages about currency manipulation recently. Hence, what Trump would talk about is still wildcard.

There are also much expectation on Trump to deliver tax reform. It should be noted again that the bullish run in stocks was based on expectation of Trump's expansive fiscal policy. However, yield topped back in December, suggesting that bond investors have turned cautious very early. And the lack of details on Trump's economic policies also limited rally attempts in Dollar. Much volatility could be triggered by Trump's address this week. And, the greenback could be vulnerable to selloff if Trump fails to live up to expectations again.

Busy economic calendar ahead with BoC

The economic calendar is very busy this week. But unlike the usual practice, NFP will not be released this Friday. BoC rate decision will catch some attention but would likely be a non-event. Here are some highlights for the week ahead:

• Monday: Eurozone M3; US durable goods, pending home sales
• Tuesday: New Zealand trade balance, NBNZ business confidence; Australia current account; Japan industrial production, retail sales; French GDP; Swiss KOF; US GDP revision, trade balance, S&P case-shiller house price, Chicago PMI, consumer confidence
• Wednesday: New Zealand terms of trade; Australia GDP; China PMIs; Swiss UBS consumption indicator; German CPI; Eurozone PMI finals; UK PMI manufacturing, mortgage approvals; BoC rate decision; US personal income and spending, ISM manufacturing, Fed's Beige Book
• Thursday: Australia building approvals, trade balance; Swiss GDP, retail sales; German import prices; UK construction PMI; Eurozone CPI flash, PPI, unemployment rate; Canada GDP, US jobless claims
• Friday: Japan CPI, unemployment rate, household spending, consumer confidence; UK PMI services; Eurozone retail sales; US ISM non-manufacturing

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.2412; (P) 1.2490; (R1) 1.2534; More...

GBP/USD dips notably today but stays in range of 1.2346/2705. Intraday bias remains neutral first and outlook is unchanged. Price actions from 1.1946 are viewed as a consolidation pattern, with rise from 1.1986 as the third leg. In case of another rise, we'd expect upside to be limited by 1.2774 to bring larger down trend resumption. On the downside, below 1.2346 will revive the case that such consolidation is completed at 1.2705 already. In that case, intraday bias will turn back to the downside for retesting 1.1946 low.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Economic Indicators Update

STOCKS

Overall stacks are mixed. Dax and Shanghai looks bullish while Dow and Nifty could pause near resistance levels. Nikkei is in a contraction and could remain range-bound.

Dow (20821.76, +0.05%) is trading higher and testing immediate resistance at current levels. A pause near 21000-20890 region is expected in the near term. A short dip towards 20000 is possible before continuing the rally.

Dax (11804.03, -1.20%) came off from 12031 levels but while the 11680 level acts as an immediate support, it could bounce back towards 11930-12000 in the near term,

Nikkei (19060.19, -1.16%) move higher towards 19400 again over today and tomorrow. Clear contraction is visible in the daily charts and the resistance on the weekly charts may indicated limited upside for the near term. The near term contraction could keep the index range-bound for some more time. (Refer to FOREX section below)

Shanghai (3250.10, -0.10%) is in a near term uptrend and could rise towards 3275-3300 in the coming sessions. 3300 could act as an intermediate resistance which could hold in the medium term.

Nifty (8939.50, +0.14%) is trading just below the crucial resistance at 9000. A sharp dip is possible from 9000. Only a break above 9000, if seen could negate the near term bearish view.

COMMODITIES

Recent weakness in Dollar index has boosted almost all the commodities across the board. Gold (1257) has broken its bullish channel resistance of 1247. Immediate resistance is at 1274 and from there it may correct towards 1244.Short term outlook is bullish. Only a close below 1215 could hamper its upward momentum. Silver (18.35) is hovering around its long term trend line resistance of 18.38.We might see short term correction towards 18 but will remain bullish until it is trading above 17.75. We have US FOMC member speech at 9.30 pm IST, which may add some more clarity towards the future price action of Dollar Index.

Copper (2.68) is also holding its crucial support of 2.60. A close above 2.72 could open up 2.81.We have US Core durable good order report at 7.00 pm IST,which may add some volatility into the copper price movement.

Brent (56.14) was almost unchanged within its recent price range of 54.20-57.5 but WTI (54.32) moved a bit higher. A close above 54.50 could take the towards 56.40.

FOREX

The US president is expected to clarify his stance and possible steps for the highly awaited tax reforms and infrastructure spending tomorrow night. The markets may be quiet till then but major directional moves can be expected from 28th Feb night. Almost all the currencies are in an indecisive state now with no clear bias.

Dollar Index (101.13) spent the previous week in the range of 100.40-101.70 just as expected. The range has narrowed down to 100.85-101.85 for the current week and which may see a breakout and a major move within the next couple of sessions. Bias neutral at this point.

Euro (1.0566) is marking time within the range of 1.05-1.06 in line with expectations with a higher chance of a break below 1.05 while below 1.07. Any major move in Dollar Index is expected to influence Euro to the same degree too.

Dollar-Yen (112.19), contrary to expectations, has declined to the near term support zone of 112.00-111.50 as the uncertainty over the US policies continue. It is not clear at this point if this support zone will hold and trigger a bounce or give in for the lower levels of 110.00. A breakout from the 3-month range 18700-19500 of Nikkei (19060.19, -1.16%) may be decisive for Dollar Yen too. Keep an eye.

A failed attempt to sustain above the resistance 1.2525 has modified the near term range for Pound (1.2418) to 1.2350-1.2600, in which it may spend the next 2-5 sessions with no directional bias. The near term support zone of 1.2400-1.2350 is expected to hold.

Aussie (0.7688) has neither broken above the major resistance of 0.77-0.78 nor dropped below the support of 0.7650. It may spend another couple of sessions at least in this range of 0.7650-0.7800 before deciding on a direction.

Dollar-Rupee (66.83) has weakened with a close below 66.90 and now it may go either way from the current levels. Drop to 66.65 and rise to 67.00 are both equally likely.

INTEREST RATES

German and Japan spreads with the US 10Yr yield indicates bearishness in the near term which could lead to Euro weakness and Strength in the Japanese Yen but we need to wait for some confirmation from the price itself.

The German-US 2Yr (-2.11%) looks as if it is ready to dive in to lower levels in the near term breaking below the previous low of -2.11%. While the spread looks bearish it could indicate a fall in Euro in the near term.

The US-Japan 10Yr (2.25%) has broken below the immediate support at 2.28% and if this moves down further, it could also indicate a fall in Dollar-Yen in the coming sessions.

The US yields have fallen sharply as expected, breaking below the immediate supports and could be headed lower for another session before pausing. The resistances on the longer term charts are holding well.

The Japanese yields have fallen sharply, breaking below immediate supports. The 5Yr (-0.15%) and the 30YR (0.81%) could fall some more while the 10Yr (0.06%) could pause near current levels.

EUR/USD

The American dollar closed the week with a soft tone across the board, despite Friday's sharp recovery, higher weekly basis, however, against the EUR, as the common currency remains undermined by political uncertainty in the region, centered at the time being in the upcoming French presidential elections, as Marine Le Pen, the most popular candidate, has pledged to call for a "Frexit" referendum, should she win the election. Confidence in the USD was eroded by an unclear FED on when the next rate hike will come, and the absence of economic announcements from the new US administration.

On Friday, the EUR/USD pair advanced up to 1.0617, but quickly retreated below the 1.0600 figure, to close the week around 1.0560, despite US data was far from encouraging. Consumer confidence fell in February for the first time since the US election, according to the University of Michigan's monthly survey, as the index came in at 96.3 from January's 98.5. Sales of new homes during January rose at a slower-than-expected pace, as sales climbed by 3.7% to an annualized pace of 555,000. The upcoming week will be quite a busy one in the US, starting with the release of Durable Goods Orders for January this Monday, expected to have improved from December's figures.

From a technical point of view, the pair is biased lower, as Friday's spike was contained by a daily descendant trend line coming from this year high of 1.0828, whilst the price settled below the 23.6% retracement of the post-US election rally, at 1.0565, the immediate resistance. In the daily chart, indicators have turned south within negative territory, whilst the price remained well below bearish 20 and 100 SMAs all the week, supporting some further slides on a break below 1.0520. In the 4 hours chart, the price settled around a flat 20 SMA, whilst the Momentum indicator has turned sharply lower and is about to cross its 100 level, while the RSI indicator presents a modest bearish slope around 45, also supporting a bearish extension on a break below the mentioned support.

Support levels: 1.0520 1.0470 1.0440

Resistance levels: 1.0590 1.0635 1.0660

USD/JPY

The USD/JPY pair fell down to 111.93 on Friday to settle a few pips above the 112.00 level, undermined by plummeting US Treasury yields and a soft tone in equities all through the day. Asian and European ones closed in the red, while US indexes managed to post marginal gains, after being under pressure for most of the session. Tepid US data, with worse-than-expected US New Home Sales and Michigan Consumer Confidence, also weighed on the pair. Yields closed at their lowest levels for the year, with the 10-year not benchmark down to 2.32% and the 30-year note yield falling to 2.96% from previous 3.02%. In the daily chart, the price has closed the day below its 100 DMA for the first time since early October, whilst the RSI indicator heads south around 40. The Momentum indicator, however, remains flat around its 100 level, whilst the pair has bottomed this February around 111.60, meaning that it will take a break below this last to confirm a bearish extension. In the 4 hours chart, the price is well its moving averages, whilst the Momentum indicator heads south at 1-week lows and the RSI consolidates around 30, in line with the longer term technical outlook.

Support levels: 111.90 111.60 111.20

Resistance levels: 112.50 113.00 113.45

GBP/USD

The GBP/USD pair closed at 1.2460, little changed for a third consecutive week. The pair retreated from a weekly high of 1.2569, bounded in its usual range, despite positive news coming from the UK, as according to the British Banks' Association, mortgage approvals surged to their highest in a year in January, up to 44,657 mortgages in January, up from 43,581 in December. During the upcoming days, the House of Lords will discuss amendments for the Brexit bill particularly focused on guarantee the rights of EU citizens to stay in the UK after Brexit and to ensure the Parliament has a binding vote on the final departure deal before it's too late for it to be changed, an effective veto. If PM Theresa May is defeated by parliamentarians the Pound will likely come under selling pressure. Technically, the pair remains neutral, although with an increasing bearish potential, as the price settled below a bearish 20 SMA, whilst technical indicators have turned modestly lower around their mid-lines. In the 4 hours chart the neutral stance persists, with the price moving back and forth around its 20 SMA and technical indicators heading nowhere around their mid-lines. The pair has been finding buying interest around 1.2380, while February low converges with the 50% retracement of the latest bullish run at 1.2345, the level to break to confirm a bearish breakout.

Support levels: 1.2430 1.2380 1.2345

Resistance levels: 1.2485 1.2530 1.2565

GOLD

Gold prices surged to their highest in over three months, after FED's Minutes failed to confirm a rate hike for March and over increasing uncertainty over the economic impact of US's new administration policies. Spot gold surged up to $1,260.07 a troy ounce and closed the week at 1,256.62, above the 61.8% retracement of the post-US election slump. Political uncertainty in Europe and the US maintain safe-haven assets on demand, with gold and yen poised to extend their gains during the upcoming days. Gold's daily chart shows that the price accelerated further above a bullish 20 DMA, but met some selling interest around the 200 DMA, the immediate resistance at 1,260.10. In the same chart, the Momentum indicator has lost upward strength, but remains within positive territory, whilst the RSI indicator maintains its bullish slope within overbought readings. In the 4 hours chart, the price is far above all of its moving averages, with the 20 SMA having accelerated its advance, now around 1,240.00 and technical indicators holding within overbought territory.

Support levels: 1,253.20 1,242.50 1,230.00

Resistance levels: 1,261.10 1.273.20 1,281.70

WTI CRUDE

Crude oil prices retreated on Friday, with West Texas Intermediate crude oil prices settling at $54.00 a barrel, undermined by news that non-OPEC countries which joined efforts with the organism to trim output, has compiled with around 50% of the cut pledged last November. Increasing US production and stockpiles also weighed on prices this past week. On Friday, Baker Hughes reported that the number of active US rigs drilling for oil rose by 6 to 597 this week, the fifth consecutive weekly advance. Crude has been range bound pretty much since last December, leaving a neutral stance in the daily chart, as the price holds above a horizontal 20 DMA, while technical indicators head nowhere around their mid-lines. In the shorter term, and according to the 4 hours chart, the price settled a few cents below a modestly bearish 20 SMA, whilst technical indicators diverge from each other within neutral territory, as the Momentum aims higher, whilst the RSI lower.

Support levels: 53.40 53.00 52.50

Resistance levels: 54.75 55.30 56.00

DJIA

Following a soft opening, US indexes managed to close the day marginally higher and at all-time highs, with the Dow Jones Industrial Average up 11 points or 0.05%, and settling at 20,821.76, its eleventh consecutive record in-a-row. The Nasdaq Composite added 9 points on Friday and closed at 5,845.31, while the S&P advanced 3 points, to 2,367.34. The positive momentum in sentiment eased following comments from US Treasury Secretary Mnuchin, indicating that the new policies will take longer-than-expected to be implemented, but speculative interest took the early slide as a buying opportunity keeping the euphoria alive, at least within equity traders. Banks were the worst performers, following the lead of their European counterparts, with Goldman Sachs Group topping losers' list, down by 1.53%, followed by JPMorgan Chase that shed 0.88%. Energy-related equities suffered from lower oil prices, with Exxon Mobil down 0.86%. Wal-Mart lead gainers, up 1.51%, followed by Intel that added 0.97%. From a technical point of view, the daily chart shows that technical indicators have lost upward strength, turning horizontal in extreme overbought levels, still far from supporting a bearish corrective move, whilst the index is far above bullish moving averages. In the 4 hours chart, the index closed above a still bullish 20 SMA, after briefly falling below it, the RSI indicator resumed its advance around 59, but the Momentum indicator eases within positive territory, indicating that the market will need a strong trigger to resume buying.

Support levels: 20,730 20,692 20,637

Resistance levels: 20,839 20,860 20,900

FTSE 100

The FTSE 100 closed at 7,243.70, down by 27 points, weighed by the Royal Bank of Scotland as the bank posted a loss of 6.96 billion pounds for 2016, its ninth consecutive year of losses. The bank lost 4.49% topping losers' list, followed by mining and energy equities, with Rio Tinto down 3.00% and BHP Billiton losing 2.93%. International Consolidated Airlines Group was the best performer, up 4.46%. The index trimmed most of its daily losses ahead of the close, but bouncing from a fresh two-week low on Pound's weakness. Technical readings in the daily chart show that the benchmark closed above its 20 DMA and that the Momentum indicator holds flat above its 100 level, while the RSI indicator kept correcting overbought conditions, now around 55, all of which limits chances of a sustainable decline. In the 4 hours chart, the 20 SMA gains bearish strength above the current level, now around 7,282 whilst technical indicators bounced from oversold readings, maintaining their bullish slopes, but still below their mid-lines, indicating that a recovery above the mentioned resistance is required to confirm further gains ahead.

Support levels: 7,238 7,200 7,165

Resistance levels: 7,282 7,315 7,342

DAX

The German DAX closed the week at 11,804.03, down on Friday 142 points or 1.20%, with financials and auto-makers leading the way lower. Banks were among the worst performers, with Commerzbank down 3.22% and Deutsche Bank shedding 2.74%, after the Royal Bank of Scotland reported a £6.96 billion pounds' lost for 2016. Only 5 components closed with gains, with Deutsche Lufthansa being the best performer, up 0.58%. The sharp retracement in the German benchmark is a first sign of warning against the dominant bullish trend, but it´s still not enough to confirm a sustainable reversal. In the daily chart, the index bounced strongly after testing its 20 SMA, currently at 11,737, while the Momentum indicator continues consolidating within positive territory, and the RSI indicator retreated from overbought readings, heading south now around 57. In the 4 hours chart, the index bounced strongly from a bullish 100 SMA, but established far below its 20 SMA, the Momentum indicator maintains its bearish strength within negative territory, while the RSI turned modestly higher around 45, in line with the longer term perspective at supporting a bearish extension only with a break below the mentioned support.

Support levels: 11,781 11,737 11,692

Resistance levels: 11,860 11,902 11,945

GOLD - The commodity closed higher the past week leaving it to strengthen further on trend resumption. On the downside, support comes in at the 1,250.00 level where a break will turn attention to the 1,240.00 level. Further down, a cut through here will open the door for a move lower towards the 1,230.00 level. Below here if seen could trigger further downside pressure targeting the 1,220.00 level. Conversely, resistance resides at the 1,260.00 level where a break will aim at the 1,270.00 level. A turn above there will expose the 1,280.00 level. Further out, resistance stands at the 1,290.00 level. All in all, GOLD looks to strengthen further.

EURUSD - With the pair following through lower the past week, further weakness is likely in the new week. On the upside, resistance comes in at 1.0600 level with a cut through here opening the door for more upside towards the 1.0650 level. Further up, resistance lies at the 1.0700 level where a break will expose the 1.0750 level. Conversely, support lies at the 1.0500 level where a violation will aim at the 1.0450 level. A break of here will aim at the 1.0400 level. Its daily RSI is bearish and pointing lower suggesting further weakness. All in all, EURUSD faces further downside pressure on declines.

If you follow the blog, you'd remember we had been watching this AUD/JPY higher time frame resistance zone that gave us multiple chance to get short on pullbacks. A zone that if you click on the link to that previous blog, definitely gave us plenty of opportunity to build a short position out of.

Here is the zone once again. It doesn't really get much clearer that this:

AUD/JPY Daily:

You can see that we're still underneath the daily resistance zone and that price had consolidated thanks to Aussie fundamentals driven strength, before the technical sellers took over once again and momentum pushed price down to a new swing low.

If price is below the higher time frame resistance zone, then it's shorts that are in play.

AUD/JPY Hourly:

Therefore, it's from here that we can look for a pullback back into short term support turned resistance to manage our risk around. This marked level looks like today's in-play level that we want to see.

The economic calendar looks light on AUD sensitive news to start the week, so lets see how far the technical sellers can push price down. Looking back up at that daily chart, there sure is a lot of white space for price to drop down into from here.

Politics, Politics, Politics

Politics will be in focus this week with President Trump addressing a joint session of Congress on Tuesday. While the recent dollar ranges remain intact, the Greenback is on the verge of a broader surrender. Dollar bulls who were beating the tax reform drum are now faced with a somewhat slower timeline than expected, which could ice dollar demand if President Trump does not offer further clarity on the tax proposal. This now leaves dealers begging the question if the US administration will live up to the market’s towering expectations on tax reform. Expect a topsy-turvy Tuesday to lead into wicked Wednesday for the Trump Trade if the President does not fire on all economic cylinders.

The USD could feel serious pressure near term. Market sentiment is starting to turn on the Trump trade hard as it appears the administration is lacking the political movers and shakers that might be necessary to negotiate the key initiatives. If the USD comes under threat post the Congress address, there will be no amount of hawkish Fed rhetoric or bullish economic data to assist the cause of the dollar, as it’s going to take a March rate hike to keep the USD trade viable.

Euro

Keep your head down as things could get messy on the Euro. Outside of the Trump event, EU risk should continue to dominate sentiment. The peculiar duality in France continues to unfold, with a mixture of populist and intellectual discourse keeping Parisian coffee shops abuzz with political banter while the divisive run up to the French elections unfolds. All the while global capital market participants remain on edge. This uncertainty is hanging over the EU like a dark cloud and could cripple investment flow into the continent. With EUR crosses joining the fray, it is certainly pointing to broader EUR weakness.

Australian Dollar

The Australian dollar simply does not trade ably above .7700 and after another failure to break above .7750 , this suggests there will be more interest to sell in this area on rallies. Price action has been a let down on the crosses of late, with the AUD feeling the weight of risk aversion and as the Yen is seeing inflow from all major crosses, including the Australian Dollar. Given most of the G10 currency ranges remain intact, I think the Australian dollar will continue to honour near term ranges as well. There is no imminent cause for alarm with US 2 through 10 year Bond yield sagging, as that should keep the Aussie yield appeal in place. In addition, the RBA appears comfortable with the current domestic conditions and policy levels. As such, I suspect it will take a huge miss in CPI to pressure the RBA into a rate cut scenario.

Japanese Yen

USDJPY has now broken through support at 112.50. If this current move picks up steam we could see a continuation to 111.60. EU political risk aversion is playing out through EURJPY, as Yen crosses come into favour and political risk in EUR heightens. For the dollar in general, I think we’re still a long way off the tipping point, which I view as the 110 level. However, a move towards that zone could trigger a broader US dollar capitulation.

Yield treasury yield suffered sharp selloff on Friday. 30 year yield closed below 3.000 handle at 2.955, down -0.068. 10 year yield also lost -0.071 to close at 2.317 and carried near term bearish implications. Markets are getting increasing dissatisfied on the lack of progress from US president Donald Trump's administration regarding fiscal stimulus. There was no detail on the so called "phenomenal" tax reform yet. Instead, Trump just continued his attack on media, intelligence agencies and other countries like China. There were talks that Trump could eventually deliver virtually no fiscal stimulus that has an impact of this year's growth. All eyes will turn to his address to Congress on February 28. And reactions could be even more apparent if Trump fails to deliver anything concrete. Dollar also suffered and ended the week mixed.

10 year yield heading to 2.130

10 year yield's firm break of 55 day EMA and breach of 2.325 support last week dampened the triangle scenario. Instead, corrective move from 2.621 is now more likely to head lower to 38.2% retracement of 1.336 to 2.621 at 2.130 before completion. Such development would likely limit any rally attempt in the greenback.

Dollar index could dip through 99.23

Dollar index's rally attempt last week already failed below 101.76 near term resistance. Focus is now back on 100.41 minor support. Break there would likely extend the corrective fall from 103.82 through 99.23. And in that case, such correction is likely of larger degree and would probably target 95.88 support before completion.

Political worries persist in Europe

Yen, on the other hand, ended the week as the strongest major currency last week. Falling US yields was seen as a major factor. Risk aversion in Europe was another one. FTSE ended Friday down -27.67 pts or -0.38%, at 7243.70 after dipping to as low as 7192.45. DAX lost -143.8 pts, or -1.2% to close at 11804.03. CAC lost -46.05 pts, or -0.94%, to close at 4845.24. Investors were getting more concerned with political uncertainties with eyes on elections in France, the Netherlands and Germany. In particular, risk of Frexit would jump should far-right Marine Le Pen wind presidency. Euro and Swiss Franc ended the week as the weakest major currencies.

DAX might topped in near term

The sharp fall in DAX on Friday is rising the chance of near term reversal, on bearish divergence in daily MACD and RSI. A test on 55 day EMA (now at 11532.07) would likely be seen at least. But key level lies in 11479.78 support. Break there should confirm failure ahead of 12390.75 historical high and should turn near term outlook bearish for 108.27. Such development would likely drag EUR/JPY further lower.

To sell EUR/JPY as short term trade

Recapping the developments, there are downside risks in both US yield and European stocks. The uncertainty over French elections will not go away any time soon. And there are also risks that Trump would fail to deliver anything concrete. Hence, firstly, we'd expect some more upside in Yen in near term. Dollar, however, might have a mild upper against Euro due to resilience in US stocks. Thus, we'll try to sell EUR/JPY at market this week, with a stop at 119.90. 114.88 is the target for a short term trade. But we could get out of EUR/JPY earlier, depending on the development.

EUR/JPY Weekly Outlook

EUR/JPY's decline from 124.08 extended lower last week and breached 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39). The development argues that whole rebound from 109.20 has completed at 124.08 already. Initial bias is mildly on the downside this week. Deeper fall would be seen to 61.8% retracement at 114.88 and below. On the upside, though, break of 119.85 minor resistance will indicate short term bottoming and turn bias back to the upside for 121.32 resistance instead.

In the bigger picture, price actions from 109.20 medium term bottom are seen as part of a medium term corrective pattern from 149.76. Current development argues that it's completed at 124.08, ahead of 126.09 key resistance level. Deeper fall would be seen back to 109.20 low. Break there will extend the whole medium term down trend from 149.76 high.

In the long term picture, medium term decline from 149.76 is seen as part of a long term sideway pattern from 88.96. Decisive break of 126.09 will indicate that such decline is completed and EUR/JPY has started another medium term rally already. Before that, deeper fall is mildly in favor towards 94.11 low.

EUR/USD dipped to 1.0493 last week but quickly recovered. Initial bias remains neutral this week first. Though, with 1.0713 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.

In the long term picture, the down trend from 1.6039 (2008 high) is still in progress and there is no clear sign of completion. We'd expect more downside towards 0.8223 (2000 low) as long as 1.1298 resistance holds.

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USD/JPY gyrated lower last week but stayed above 111.58 low. Initial bias remains neutral this week first. The corrective fall from 1118.65 could extend lower. But we'd still expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. On the upside, above 114.94 resistance should confirm completion of pull back from 118.65. In such case, intraday bias will be turned back to the upside for retesting 118.65.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

In the long term picture, the rise from 75.56 long term bottom to 125.85 medium term top is viewed as an impulsive move. Price actions from 125.85 are seen as a corrective move which could still extend. But, up trend from 75.56 is expected to resume at a later stage for above 135.20/147.68 resistance zone.

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