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Daily Pivots: (S1) 187.37; (P) 187.80; (R1) 188.41; More...

A temporary top is in place at 188.26 in GBP/JPY and intraday bias is turned neutral for consolidations. Downside should be contained by 55 4H EMA (now at 185.86) to bring rebound. Break of 188.26 will resume larger up trend to 161.8% projection of 178.02 to 183.79 from 180.74 at 190.07.

In the bigger picture, as long as 178.02 support holds, larger up trend from 123.94 (202 low) should still be in progress, next target is 195.86 (2015 high). For now, outlook will stay bullish as long as 183.79 resistance turned support holds, in case of deep pullback.

Daily Pivots: (S1) 163.45; (P) 163.84; (R1) 164.60; More....

EUR/JPY's rally continues today and intraday bias stays on the upside. Next near term target is 61.8% projection of 139.05 to 159.75 from 154.32 at 167.11. On the downside, below 163.05 minor support will turn intraday bias neutral and bring consolidations first, before staging another rally.

In the bigger picture, rise from 114.42 (2020 low) is in progress. Next target is 169.96 (2008 high). On the downside, break of 159.75 resistance turned support is needed to be the first sign of medium term topping. Otherwise, outlook will remain bullish even in case of deep pullback.

Daily Pivots: (S1) 0.8685; (P) 0.8708; (R1) 0.8727; More....

EUR/GBP's strong rally and break of 0.8754 confirms resumption of whole rise from 0.8491. Intraday bias is back on the upside. Next target is 61.8% projection of 0.8491 to 0.8752 from 0.8648 at 0.8809. On the downside, break of 0.8687 support is needed to indicate short term topping. Otherwise, further rally remains in favor in case of retreat.

In the bigger picture, current development suggests that whole down trend from 0.9267 (2022 high) has completed with three down to to 0.8491. Rise from 0.8491 is seen as another leg inside that pattern from 0.9499 (2020 high). Further rally should be seen to 0.8977 resistance and above. This will remain the favored case as long as 0.8648 support holds.

Daily Pivots: (S1) 1.6612; (P) 1.6688; (R1) 1.6738; More...

EUR/AUD recovered quickly after dipping to 1.6631 and intraday bias remains neutral at this point. On the upside, sustained break of 1.6843 will resume the rebound from 1.6319 for retesting 1.7062 high next. On the downside, however, below 1.6631 minor support will turn bias back to the downside for 1.6449 support instead.

In the bigger picture, while 1.7062 is a medium term top, there is no clear sign of trend reversal as EUR/AUD continues to draw strong support from the medium term trend line. Break of 1.7062 will resume the larger up trend from 1.4281 (2022 low) to 1.7691 fibonacci level. Nevertheless, break of 1.6449 support will argue that deeper correction is underway to 38.2% retracement of 1.4281 to 1.7062 at 1.6000.

Daily Pivots: (S1) 0.9613; (P) 0.9644; (R1) 0.9665; More...

A temporary top was formed at 0.9678 in EUR/CHF, ahead of 0.9691 resistance. Intraday bias is turned neutral first. Another rise is expected as long as 0.9595 support holds. Firm break of 0.9691 will argue that whole decline from 1.0095 has completed, just ahead of 0.9407 support (2022 low). Nevertheless, break of 0.9595 support will indicate short term topping, and turn bias back to the downside for deeper pull back.

In the bigger picture, fall from 1.0095 (2023 high) might have completed at 0.9416, just ahead of 0.9407 support (2022 low). Sustained break of 0.9691 cluster resistance (38.2% retracement of 1.0095 to 0.9416 at 0.9675) will pave the way to 61.8% retracement at 0.9836 and above. However, rejection by 0.9691 will maintain medium term bearishness for another test on 0.9407 at least.

The euro (EUR) corrected throughout Wednesday and lost 0.3% after a substantial rise on Tuesday.

Possible effects for traders

Strong Retail Sales report and indications of easing inflation bolstered the U.S. dollar, contributing to beliefs about a 'soft landing' of the U.S. economy. This scenario suggests the Federal Reserve might delay rate cuts and keep the base rate high longer. Eurozone Industrial Production figures showed a month-over-month decrease of 1.1% in September, a drastic difference compared to a 0.6% increase previously. Annually, the production showed a decline of 6.9%, a larger one than the prior 5.1% decrease. Lower Industrial Production figures put a substantial downward pressure on the euro.

In today's Asian trading session, EURUSD lost momentum as increased U.S. dollar demand exerted bearish pressure on the pair. Market participants will closely observe the European Central Bank (ECB) President Christine Lagarde's speech at 11:30 a.m. UTC today and the release of the U.S. weekly Initial Jobless Claims at 12:30 p.m. UTC. The data could affect the euro's price.

Markets

US eco data yesterday ranged from lower-than-expected PPIs over a decent headline but underlying weak NY manufacturing index to above-consensus retail sales. In the end, markets focused mainly on the latter, allowing yields to claw back some of the sharp CPI driven losses the day before. Treasury yields added between 7.3 and 8.7 bps with the belly of the curve outperforming. In an interview with the Financial Times, Fed’s Daly welcomed the deceleration in price rises but warned against proclaiming victory over inflation just yet. A stop-start (announcing the end of the hiking cycle only to reverse course again later) mentality would hurt credibility, she added. Daly, voting next year, noted that rate cuts are not happening for a while. German yields rose 2.2-5.7 bps in a steepener. In both regions, however, markets hold on to the idea of central banks starting to cut rates around mid-2024 with tentative pricing for an even earlier move in either May (Fed) or April (ECB). Against this backdrop, bourses stayed resilient despite the yield rise. It’s all about expectations for a one-in-a-lifetime soft landing scenario. European stocks rose 0.55% (EuroStoxx50), Wall Street added up to 0.47% (Dow Jones). The trade-weighted US dollar bounced off 104 support to close around 104.38. EUR/USD returned a fraction of Tuesday’s massive gain. The pair finished at 1.0848. Sterling slid after a tiny miss in CPI also sealed the BoE’s fate in the eyes of markets. EUR/GBP rose to 0.8736.

Eyes in the Asian session this morning were on the Biden-Xi encounter, the first in-person meeting in a year. Both sides hailed the progress made but it comes with little impact on markets. The US Senate approved a stopgap funding bill overnight. In doing so, Congress avoided a looming shutdown threat this Friday only to postpone it to early next year. The recurring debacle is rarely a topic of importance for markets. But these last-minute deals do highlight the continued polarization which was cited by several rating agencies (Moody’s most recently) as one of the reasons for downgrading the credit outlook. The eco calendar later today has little to offer but the weekly US jobless claims. There’s an avalanche of (high-profile) ECB and Fed speeches scheduled for release. They serve as a wildcard for trading. In any case we don’t think they’ll be able to dramatically turn the tide on core bond yields. The force of gravity remains strong for the time being with next support in the US 10-y yield kicking in at 4.34% and around 2.50% in the German 10-y yield. The dollar remains vulnerable if bets on a soft landing continue to support equity markets. EUR/USD 1.0945 is the upside reference on the technical charts.

News & Views

The Australian economy in October added 55k additional jobs, data from the Australian Statistics Office showed. Markets expected a gain of about 24k. Most of the growth came from part time jobs (37.9 k). However, the reacceleration followed modest job growth in September. In this respect the average increase over the past two months was even slightly lower than the average of the previous year. The unemployment rate increased from  to 3.7% as the participation rate jumped from 66.8% to 67%. Growth of hours worked slowed recently as an indication of softening labour demand. Job growth mainly being driven by part-time rather than full time jobs points in the same direction. In this respect, the strong headline data probably don’t ask for immediate further action from the Reserve Bank of Australia. The 2-y Australia government bond yield currently holds little changed at 4.23%. After yesterday’s rebound, the Aussie dollar is again losing the AUD/USD 0.65 big figure. (0.6475).

Czech central Bank Vice governor Jan Frait yesterday in an interview said that he sees external and domestic conditions as being in favour of lowering borrowing costs. Frait was one of the two MPC members that voted for but didn’t get a first 25 bps rate cut at the November policy meeting. He admitted that he can’t predict when the majority of policymakers will back a rate cut. He noted that central bankers are facing a big dilemma as they ‘are concerned about the last mile and whether inflation won’t remain entrenched in people’s heads and whether they won’t demand significantly higher wages’ that are not in line with bringing inflation sustainably back to the 2.0% target. Frait said that other MPC members’ caution at the November meeting also occurred as they want to assess the extent of the traditional price increases in January. Frait sees less such need as the Bank should be forward looking. Next CNB policy meetings are scheduled for December 21 and February 8 next year.

Daily Pivots: (S1) 1.0824; (P) 1.0855; (R1) 1.0878; More...

Intraday bias in EUR/USD is turned neutral with 4H MACD crossed below signal line. Some consolidations would be seen below 1.0886 temporary top first. Downside of retreat should be contained by 1.0755 resistance turned support to bring another rally. On the upside, above 1.0886 will resume the rebound from 1.0447 to 61.8% retracement of 1.1274 to 1.0447 at 1.0958 next.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern to rise from 0.9534 (2022 low). Rise from 1.0447 is tentatively seen as the second leg. Hence while further rally could be seen, upside should be limited by 1.1274 to bring the third leg of the pattern. However, break of 1.0447 will resume the fall to 61.8% retracement of 0.9543 to 1.1274 at 1.0199.

Daily Pivots: (S1) 1.2379; (P) 1.2441; (R1) 1.2477; More...

Intraday bias in GBP/USD remains neutral for consolidations below 1.2504 temporary top. Downside should be contained by 55 4H EMA (now at 1.2311) to bring another rally. On the upside, break of 1.2504 will resume the whole rebound from 1.2036. Sustained trading above 38.2% retracement of 1.3141 to 1.2036 at 1.2458 will pave the way to 61.8% retracement at 1.2716.

In the bigger picture, price actions from 1.3141 are seen as a corrective pattern to rise from 1.0351 (2022 low). Strong rebound from 38.2% retracement of 1.0351 (2022 low) to 1.3141 at 1.2075 will argue that current rise from 1.2036 is already the second leg. However, while further rally could be seen, upside should be limited by 1.3141 to bring the third leg of the pattern.

Daily Pivots: (S1) 0.8837; (P) 0.8933; (R1) 0.8988; More....

Intraday bias in USD/CHF stays on the downside at this point. Fall from 0.9243 is in progress and should target 100% projection of 0.9243 to 0.8886 from 0.9111 at 0.8754. On the upside, above 0.8901 minor resistance will turn intraday bias neutral and bring consolidations first. But recovery should be limited well below 0.9051 resistance to bring another decline.

In the bigger picture, price actions from 0.8551 are currently seen as a correction to the decline from 1.0146. Fall from 0.9243 is seen as the second leg for now. Deeper fall would be seen to 61.8% retracement of 0.8551 to 0.9243 at 0.8815. Sustained break there will bring retest of 0.8551 low. For now, this will remain the favored case as long as 0.9111 resistance holds.