EUR/GBP dipped to 0.8449 last week but recovered since then. Initial bias is neutral this week first. Overall, the cross is bounded in a corrective pattern that started at 0.8303. Below 0.8449 will turn bias to the downside for retesting 0.8303 first. Break there will extend the whole fall from 0.9304. In that case, we'll look for bottoming signal again at around 0.8116. On the upside, sustained break of 38.2% retracement of 0.9304 to 0.8303 at 0.8685 will revive the case of near term reverse and bring further rise to 61.8% retracement at 0.8922 and above.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support around 55 weeks EMA (now at 0.8243) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

In the long term picture, firstly, price action from 0.9799 is seen as a long term corrective pattern and should have completed at 0.6935. Secondly, rise from 0.6935 is likely resuming up trend from 0.5680 (2000 low). Thirdly, this is supported by the impulsive structure of the rise from 0.6935 to 0.9304. Hence, after the consolidation from 0.9304 completes, we'd expect another medium term up trend to target 0.9799 high and above.

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EUR/CHF stayed inside tight range above 1.0677 last week and outlook is unchanged. Initial bias stays neutral this week first. Price actions from 1.1198 are seen a corrective pattern that is still unfolding. Below 1.0677 will target 1.0620 key support level. On the upside, above 1.0762 will turn focus back to 1.0897 resistance. Decisive break there will suggest reversal and turn near term outlook bullish.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Such correction is still in progress and retest of 38.2% retracement of 0.9771 to 1.1198 at 1.0653 could be seen. Sustained trading below 1.0653 will target 50% retracement at 1.0485. Meanwhile, break of 1.0897 resistance will argue that the larger up trend is finally resuming for above 1.1198.

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Daily Pivots: (S1) 1.0519; (P) 1.0567 (R1) 1.0654; More.....

Intraday bias in EUR/USD remains neutral for the moment. As long as 1.0652 holds, outlook stays bearish and another decline is expected. Break of 1.0339 will extend the larger down trend to parity next. However, break of 1.0652 will now confirm short term bottoming and turn near term outlook bullish for stronger rebound to 1.0872 resistance first.

In the bigger picture, break of 1.0461 key support indicates that consolidation from there has completed as a triangle at 1.1298. And, the down trend from 1.6039 (2008 high) is resuming. Current downtrend is now expected to target 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.

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Daily Pivots: (S1) 1.2313; (P) 1.2373; (R1) 1.2475; More...

Intraday bias in GBP/USD remains neutral for the moment. With 1.2509 minor resistance intact, outlook remains bearish. We'd still expect upside of consolidation to be limited by 1.2509 resistance and bring fall resumption. Corrective rise from 1.1946 has completed at 1.2774. Below 1.2200 will target a test on 1.1946 low. Decisive break there will confirm larger down trend resumption.

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.

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Daily Pivots: (S1) 1.0048; (P) 1.0134; (R1) 1.0182; More.....

USD/CHF is still staying in the consolidation pattern from 1.0342 and intraday bias remains neutral. Deeper fall cannot be ruled out. But we'd expect strong support from 1.0019 to contain downside and bring rally resumption. Firm break of 1.0342 will confirm up trend resumption. However, firm break of 1.0019 will indicate near term reversal and could bring deeper fall bring to 0.9443/9548 support zone.

In the bigger picture, the corrective fall from 1.0327 should have completed at 0.9443 already. Rise from 0.9443 could be resuming the long term rally from 2011 low at 0.7065. But decisive break of 1.0327 is needed to confirm. In that case, next medium term upside target will be 38.2% retracement of 1.8305 to 0.7065 at 1.1359. Rejection from 1.0327 will extend the sideway pattern with another fall back to 0.9443/9548 support zone.

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Daily Pivots: (S1) 114.56; (P) 115.99; (R1) 116.77; More...

USD/JPY recovers ahead of 114.76 support but stays in range below 118.65. Intraday bias remains neutral first. Outlook stays bullish with 114.76 intact and further rise is expected. Above 118.65 will extend the whole rise from 98.97 to 125.85 key resistance next. However, sustained break of 114.76 will confirm short term topping and bring deeper pull back to 55 day EMA (now at 112.76) and possibly below.

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 corrective 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.

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Dollar is trying to rebound after non-farm payroll report but struggles to find sustainable buying. Headline NFP showed 156k growth in December, below expectation of 178k. Nonetheless, prior month's figure was revised up from 178k to 204k. Unemployment rate rose to 4.7% as expected. Wages showed strong growth with average hourly earnings increased 0.4% mom, above expectation of 0.3%. Also from US, trade deficit widened to USD -45.2b in November. On the other hand, Canadian dollar rises on job data which showed an impressive 53.7k growth in December. Unemployment rate in Canada also rose to 6.9%. Canada trade balance turned into CAD 0.5b surplus in November.

Eurozone confidence indicators came in generally better than expectations. Business climate indicator rose to 0.79 in December, up from 0.41, above consensus of 0.47. Economic confidence rose to 107.8, up from 106.6, above consensus of 106.8. Industrial confidence rose to 0.1, up from -1.1, above consensus of -0.4. Services confidence rose to 12.9, up from 12.2, above consensus of 12.0. Consumer confidence rose to -5.1, up from -6.2, above expectation of -5.3. Eurozone retail sales dropped -0.4% mom in November, in line with expectations. German factory orders dropped -2.5% mom in November, retail sales dropped -1.8% mom.

Elsewhere, Swiss foreign currency reserves dropped to CHF 645b in December. Australia trade balance turned into surplus of AUD 1.24b in November, first surplus since 2014. Japan labor cash earnings rose 0.2% yoy in November.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 114.56; (P) 115.99; (R1) 116.77; More...

USD/JPY recovers ahead of 114.76 support but stays in range below 118.65. Intraday bias remains neutral first. Outlook stays bullish with 114.76 intact and further rise is expected. Above 118.65 will extend the whole rise from 98.97 to 125.85 key resistance next. However, sustained break of 114.76 will confirm short term topping and bring deeper pull back to 55 day EMA (now at 112.76) and possibly below.

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 corrective 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.

Economic Indicators Update

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Although the greenback did find support at 1.2461 in H1 2016 and rebounded, as the move from there still looks corrective in nature, suggesting only wave A of wave iv from 1.4690 (wave iii top) has ended at 1.2461 and the recovery from there is only a wave B, hence upside should be limited to 1.3790-00 and price should falter below 1.4100-10, bring another decline later in wave C of iv. Below 1.3000 would bring test of 1.2820-25 but a sustained breach below 1.2760-65 support is needed to signal C leg of iv is unfolding for another test of said support at 1.2461, below there would extend the fall from 1.4690 for retracement of medium term upmove to 1.2160-70 (50% Fibonacci retracement of the wave iii from 0.9633) but downside should be limited to 1.2000 and support at 1.1920 should hold, bring another rise in late 2017.

On the upside, whilst marginal gain to 1.3790-00 cannot be ruled out, reckon upside would be limited to 1.4000 and resistance at 1.4103 should cap this wave B, bring wave C decline later. A sustained breach above 1.4100-10 would suggest the correction from 1.4690 has possibly ended and bring a stronger rebound to 1.4300 and then 1.4500. Looking ahead, only break of said wave iii top at 1.4690 would confirm upmove has resumed in wave v for headway to 1.4900 and then psychological resistance at 1.5000 but reckon upside would be limited to 1.5410-20 (1.5 times projection of 0.9058-1.3064 measuring from 0.9407).

Euro's rally from 0.6936 (2015 low) above previous resistance at 0.9083 adds credence to our view that the correction from 0.9803 has possibly ended there and although price has retreated quite sharply from 0.9576 and pullback to 0.8300-05 is likely, reckon downside would be limited to 0.8115-20 (previous resistance) and bring another rise later, above 0.9045-50 would bring test of said resistance at 0.9576 but break there is needed to signal early upmove has resumed for subsequent retest of 0.9803 (2008 high) which is likely to hold on first testing, eventual upside target is pointing at psychological level at 1.0000.

On the downside, whilst pullback to 0.8300-10 and 0.8250 is likely, reckon downside would be limited to 0.8200 and previous resistance at 0.8117 should hold, bring another rise later. A drop below 0.8000 psychological level would defer our bullishness and risk weakness to 0.7940-45 (61.8% Fibonacci retracement of 0.6936-0.9576), then 0.7850 but downside should be limited to 0.7700 and support at 0.7565 should remain intact, bring another rise in late 2017.

Daily Pivots: (S1) 0.8502; (P) 0.8542; (R1) 0.8579; More...

Intraday bias in EUR/GBP remains neutral for the moment. On the downside, below 0.8449 will target 0.8303 and break will resume the whole fall from 0.9304. In that case, we'd look for bottoming again at around 0.8116. Meanwhile, sustained break of 38.2% retracement of 0.9304 to 0.8303 at 0.8685 will revive the case of near term reversal. In that case, stronger rise should be seen to 61.8% retracement at 0.8922 and above.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support around 55 weeks EMA (now at 0.8230) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

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