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GBP/USD dips on Friday morning following much bigger than expected drop in UK retail sales, which fell by 3.2% in July after 1.6% drop in June and strongly beating forecast for 2.2% fall.

Traders sold pound after downbeat data further boosted fears about the negative impact on the economy, already hit by high inflation and 14 consecutive interest rate increases, which push the borrowing cost to 5.25%.

Fresh weakness cracked pivotal supports at 1.2724/17 zone (daily cloud base / Fibo 38.2% of 1.2616/1.2787 recovery leg / daily Tenkan-sen) but needs to register close below these levels to confirm bearish signal.

Although recent weakness was contained by daily Ichimoku cloud and subsequent recovery was moving along with rising cloud top, long upper shadows of daily candles in past three days, warned of strong offers and persisting risk of recovery stall, as near-term bulls likely got trapped above 20DMA (1.2770).

Daily studies are bearishly aligned as momentum indicator remains in the negative territory and RSI is heading south, with sustained break below the base of rising and thickening daily cloud, to boost reversal signal and allow for deeper drop.

Conversely, failure to clearly break below cloud base would reduce immediate downside risk and likely keep near-term action in a sideways mode, while under pivotal barriers at 1.2817/18 (Fibo 38.2% of 1.3141/1.2616 fall / Aug 10 spike high.

Res: 1.2765; 1.2787; 1.2817; 1.2879.
Sup: 1.2701; 1.2681; 1.2656; 1.2616.

Daily Pivots: (S1) 185.52; (P) 185.99; (R1) 186.41; More...

Intraday bias in GBP/JPY is turned neutral with current retreat. Firm break of 184.67 minor support will suggests that deeper pull back in underway to 55 D EMA (now at 180.44). Nevertheless, break 186.45 will resume larger up trend to 61.8% projection of 158.24 to 183.99 from 176.29 at 192.20.

In the bigger picture, up trend from 123.94 (2020 low) is in progress. Next target is 195.86 (2015 high). This will now remain the favored case as long as 176.29 support holds, even in case of deeper pull back.

Daily Pivots: (S1) 158.11; (P) 158.73; (R1) 159.21; More....

Break of 158.17 minor support indicate short term topping at 159.32. Intraday bias in EUR/JPY is mildly on the downside for deeper pull back to 55 D EMA (now at 155.31). On the upside, though, break of 159.32 will resume larger up trend to 61.8% projection of 139.05 to 157.99 from 151.39 at 163.09 next.

In the bigger picture, rise from 114.42 (2020 low) is in progress. Next target is 100% projection of 124.37 to 148.38 from 139.05 at 163.06. Sustained break there will pave the way to retest long term resistance at 169.96. This will now remain the favored case as long as 151.39 support holds, even in case of deep pull back.

Daily Pivots: (S1) 0.8516; (P) 0.8537; (R1) 0.8551; More...

Intraday bias in EUR/GBP stays on the downside despite today's recovery. Decisive break of 0.8502 low will resume larger decline from 0.8977. On the upside, above 0.8592 minor resistance will mix up the outlook and extend sideway trading.

In the bigger picture, the down trend from 0.9267 (2022 high) is seen as part of the long term range pattern from 0.9499 (2020 high). Firm break of 0.8717 support turned resistance will argue that it has completed with three waves down to 0.8502. Further break of 0.8977 will bring retest of 0.9267 high. Nevertheless, rejection by 0.8717, followed by break of 0.8502 will resume the decline towards 0.8201 (2022 low).

Daily Pivots: (S1) 1.6908; (P) 1.6987; (R1) 1.7058; More...

Intraday bias in EUR/AUD remains on the upside at this point. Current rally is part of the up trend from 1.4281. Next target is 1.7377 projection level next. On the downside, break 1.6737 support is needed to indicate short term topping. Otherwise, outlook will stay bullish in case of retreat.

In the bigger picture, the rise from 1.4281 (2022 low) is in progress. Next target is 100% projection of 1.5254 to 1.6785 from 1.5846 at 1.7377. For now, outlook will stay bullish as long as 1.5846 support holds, even in case of another pull back.

Daily Pivots: (S1) 0.9537; (P) 0.9562; (R1) 0.9576; More...

Outlook in EUR/CHF is unchanged and intraday bias remains neutral. On the upside, break of 0.9647 will resume the rebound from 0.9520. Further sustained break of 0.9670 will be the first sign of bullish reversal and target 0.9840 resistance for confirmation. On the downside, break of 0.9520 will resume the whole fall from 1.0095 towards 0.9407 low.

In the bigger picture, medium term outlook is staying bearish as the pair is capped well below falling 55 W EMA (now at 0.9859). Down trend from 1.2004 (2018 high) is in favor to continue. Sustained break of 0.9407 will target 61.8% projection of 1.1149 to 0.9407 from 1.0095 at 0.9018. For now, this will remain the favored case as long as 0.9840 resistance holds, in case of strong rebound.

RBNZ Assistant Governor Karen Silk said today, "Near term, there are still some risks on the upside to inflation." She further identified the housing market as a significant factor, mentioning, "The OCR track is slightly higher and we're saying potentially retaining rates at a higher level for longer. Probably the biggest driver of that is really housing."

The bank's recent projections indicate that OCR could reach its peak at 5.59% by mid-2024, and then slightly pull back to 5.36% by early 2025. This revised forecast surpasses earlier predictions laid out in the previous Monetary Policy Statement.

Silk expressed uncertainty regarding how the stability observed in the housing market, combined with a potential recovery next year, might impact inflation.

"We are looking at it as a gradual resumption in house price trend," Silk elaborated, "but in an environment where labor market pressures continue to ease and at the same time you've got a higher interest rate environment."

Additionally, Silk pointed out broader concerns beyond the local scenario. "One of the medium-term risks for us is global growth," she said. Expressing a keen interest in international trajectories, she added, "We're really focused on global growth and in particular how weak is China. Is China really going to be able to deliver the growth that they're suggesting?"

Daily Pivots: (S1) 145.46; (P) 146.01; (R1) 146.40; More...

Intraday bias in USD/JPY remains neutral for consolidation below 146.55. On the upside, sustained break of 61.8% projection of 129.62 to 145.06 from 137.22 at 146.76 will pave the way to retest 151.93 high. However, considering bearish divergence conditio in 4H MACD, firm break or 143.88 resistance turned support will be a sign of reversal, and turn bias back to the downside for 55 D EMA (now at 141.79).

In the bigger picture, overall price actions from 151.93 (2022 high) are views as a corrective pattern. Rise from 127.20 is seen as the second leg of the pattern and could still be in progress. But even in case of extended rise, strong resistance should be seen from 151.93 to limit upside. Meanwhile, break of 137.22 support should confirm the start of the third leg to 127.20 (2023 low) and below.

Daily Pivots: (S1) 1.3510; (P) 1.3533; (R1) 1.3568; More....

USD/CAD's rally is still in progress and intraday bias stays on the upside. As noted before, corrective fall from 1.3976 should have completed with three waves down to 1.3091. Further rise would be seen to retest 1.3653 resistance next. Break there will further confirm this case and target 1.3976 high. For now, further rally is expected as long as 1.3371 support holds, in case of retreat.

In the bigger picture, price actions from 1.3976 are viewed as a corrective fall only. Upon completion, rise from 1.2005 (2021 low) would resume through 1.3976 towards 1.4667/89 long term resistance zone. In case of another fall, downside should be contained by 61.8% retracement of 1.2005 to 1.3976 at 1.2758.

Daily Pivots: (S1) 0.6362; (P) 0.6407; (R1) 0.6448; More...

AUD/USD's decline is still in progress and intraday bias stays on the downside. Next target is 100% projection of 0.7156 to 0.6457 from 0.6894 at 0.6195. On the upside, above 0.6479 minor resistance will turn intraday bias neutral and bring consolidations first, before staging another fall.

In the bigger picture, the down trend from 0.8006 (2021 high) could still be in progress. Break of 0.6457 support affirms this bearish case. Further break of 0.6169 will target 61.8% projection of 0.8006 to 0.6169 to 0.7156 at 0.6021. This will now remain the favored case as long as 0.6894, in case of strong rebound.