Daily Pivots: (S1) 1.4323; (P) 1.4385; (R1) 1.4433; More...

Intraday bias in EUR/AUD remains neutral for the moment. On the downside, below 1.4322 will target 1.4702 low first. Break of 1.4072 will extend the correction from 1.6587 towards next key support level 1.3671. Meanwhile, decisive break of 1.4880 resistance will indicate that such correction from 1.6587 is completed and turn near term outlook bullish for 1.5094 resistance next.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a consolidative pattern. 50% retracement of 1.1602 to 1.6587 at 1.4095 was already met. While further fall cannot be ruled out, we'd expect strong support above 1.3671 to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.5094 will be the first sign of resumption of up trend from 1.1602 and target retesting of 1.6587 resistance first.

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Daily Pivots: (S1) 1.0713; (P) 1.0725; (R1) 1.0742; More...

Intraday bias in EUR/CHF remains neutral for the moment as consolidation from 1.0677 continues. 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) 122.16; (P) 122.94; (R1) 123.47; More...

Intraday bias in EUR/JPY remains neutral as consolidation from 124.08 continues. Overall, further rally is in favor as long as 120.90 support holds. Above 124.08 will target 126.09 key resistance next. As rise from 109.20 is still seen as a corrective pattern, we'd be cautious on topping around 126.09. Meanwhile, break of 120.90 will indicate short term topping and turn bias to the downside for 55 days EMA (now at 120.27) and below.

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. There is prospect of another rise towards 126.09 key resistance level before completion. But even in that case, we'd expect strong resistance between 126.09 and 141.04 to limit upside, at least on first attempt. Sustained trading below 55 day EMA will pave the way to retest 109.20.

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Daily Pivots: (S1) 140.18; (P) 142.01; (R1) 142.99; More...

GBP/JPY's fall from 148.42 resumed by taking out 142.16 and reaches as low as 140.60 so far. The development confirms short term topping at 148.42 too. Intraday bias is back on the downside for 38.2% retracement of 122.36 to 148.42 at 138.46. As note before, rise from 122.36 is seen as a corrective move. Sustained trading below 138.46 and downside acceleration will indicate that such correction is finished too. And in that case, deeper fall should be seen to 61.8% retracement at 132.31 and below. On the upside, break of 145.38 resistance is needed to confirm completion of the fall from 148.42. Otherwise, near term outlook stays bearish in case of recovery.

In the bigger picture, the down trend from 195.86 top (2015 high) should have made a medium term bottom at 122.36 after hitting 100% projection of 195.86 to 154.70 from 163.87 at 122.71. Price actions from there are expected to develop into a medium term corrective pattern. Upside should be limited by 38.2% retracement of 195.86 to 122.36 at 150.4 for setting the medium term range.

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Sterling remains the weakest major currency this week as pressured by uncertainties over Brexit. UK prime minister Theresa May blamed the fall in the Pound's exchange rate on media's misinterpretation of what she said yesterday. She clarified that "I am tempted to say that the people who are getting it wrong are those who print things saying I'm talking about a hard Brexit, it is absolutely inevitable it is a hard Brexit. I don't accept the terms soft and hard Brexit." She emphasized that "what we are doing is going to get an ambitious, good and best possible deal for the United Kingdom, in terms of trading with and operating within the European single market." Earlier in the day, May said in a televised interview that Brexit is about "getting the right relationship" and the right relationship is about being "have control of our borders, control of our laws".

German Chancellor Angle Merkel repeated her stance that without accepting EU's "four freedoms", there would be restricted access to the single markets. The four freedoms include movement of goods, people, services and capital over borders. Merkel emphasized that "one can't carry out these negotiations as an exercise in cherry-picking. That would have fatal consequences for the other 27 member states, and we can't allow such consequences." Meanwhile, Merkel also urged European unity beyond Brexit and said urged the member states to have "have joint positions on a range of issues, including trade, climate to domestic security." And without it, "Europe won't be able to develop its strength."

In US, Atlanta Fed president Dennis Lockhart said that "the job of cyclical recovery is largely done". And, Fed is "quite close to achieving its mandated policy objectives of full employment and stable prices." And, the economy is "well positioned for moderate growth and steadily improving conditions". Meanwhile, Boston Fed president Eric Rosengren said that "appropriate monetary policy will need to normalize more quickly than over the past year." And, Rosengren also said that it "seems reasonable if we continue to see real GDP growing faster than the so-called 'potential' rate."

On the data front, UK BRC retail sales monitor rose 1.0% yoy in December. Australia retail sales rose 0.2% mom in November. China CPI rose 2.1% yoy in December, PPI rose 5.5% yoy. Swiss will release unemployment rate in European session. Canada will release housing starts and building permits later in US session.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 140.18; (P) 142.01; (R1) 142.99; More...

GBP/JPY's fall from 148.42 resumed by taking out 142.16 and reaches as low as 140.60 so far. The development confirms short term topping at 148.42 too. Intraday bias is back on the downside for 38.2% retracement of 122.36 to 148.42 at 138.46. As note before, rise from 122.36 is seen as a corrective move. Sustained trading below 138.46 and downside acceleration will indicate that such correction is finished too. And in that case, deeper fall should be seen to 61.8% retracement at 132.31 and below. On the upside, break of 145.38 resistance is needed to confirm completion of the fall from 148.42. Otherwise, near term outlook stays bearish in case of recovery.

In the bigger picture, the down trend from 195.86 top (2015 high) should have made a medium term bottom at 122.36 after hitting 100% projection of 195.86 to 154.70 from 163.87 at 122.71. Price actions from there are expected to develop into a medium term corrective pattern. Upside should be limited by 38.2% retracement of 195.86 to 122.36 at 150.4 for setting the medium term range.

Economic Indicators Update

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It was not a very good start of us in the first week of 2017, we bought euro against yen initially at 122.60 but the retreat from 123.86 turned out deeper than expected, the position was stopped at 122.25 but euro found support just above 122 level and has rebounded in latter part of the week.

We sold aussie at 0.7350 but in view of the strength of the rebound from 0.7158, we exited the position around break-even and the pair continued edging higher since.

Another short position was entered in EUR/GBP at 0.8615 but euro found renewed buying interest at 0.8450 and rallied, the position was stopped at 0.8655 and the pair broke above previous resistance at 0.8669.

In short, 3 positions were entered last week with total loss of 70 points and the positions are listed below.

4 Jan : EUR/JPY - Long at 122.60, exited at 122.25 (- 35 points)
6 Jan : AUD/USD - Short at 0.7350, exited at 0.7345 (+ 5 points)
9 Jan : EUR/GBP - Short at 0.8615, exited at 0.8655 (- 40 points)

| AUD EUR/JPY EUR/GBP CAD
Jan + 5 -35 - 40
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Y-T-D

We had a fairly good start in the first week of 2017, we sold cable at 1.2305 and our downside target at 1.2205 was met quite soon, we then entered three positions in USD/JPY, two long and one short, the two long position only made small profit whilst the short position entered at 116.65 met our downside target at 115.65 with another 100 points profit.

On the other hand, the two positions entered in EUR/USD and USD/CHF (short and long respectively) didn't work very well, both went in the wrong direction and stops were tripped.

In short, 6 positions were entered among all 4 currency pairs with total profit of 152 points and the positions are listed below:

3 Jan : GBP/USD - Short at 1.2305, exited at 1.2205 (+100 points)
4 Jan : USD/JPY - Long at 117.35, exited at 117.50 (+15 points)
4 Jan : EUR/USD - Short at 1.0470, exited at 1.0505 (- 35 points)
5 Jan : USD/CHF - Long at 1.0170, exited at 1.0140 (- 30 points)
5 Jan : USD/JPY - Short at 116.65, exited at 115.65 (+100 points)
9 Jan : USD/JPY - Long at 116.50, exited at 116.52 (+ 2 points)

| JPY EUR CHF GBP

Jan + 117 - 35 - 30 +100
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Y-T-D

Daily Pivots: (S1) 1.0497; (P) 1.0558 (R1) 1.0591; More.....

Intraday bias in EUR/USD remains neutral as consolidation from 1.0339 continues. 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, 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.

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Daily Pivots: (S1) 1.0117; (P) 1.0149; (R1) 1.0208; More.....

Intraday bias in USD/CHF remains neutral for the moment as consolidation from 1.0342 continues. In case of another fall, 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, sustained 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) 115.61; (P) 116.39; (R1) 117.72; More...

Intraday bias in USD/JPY remains neutral as consolidation from 118.65 continues. 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 112.96) 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 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 125.05 and below will extend the consolidation with another falling leg before up trend resumption.

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