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Daily Pivots: (S1) 1.0521; (P) 1.0548; (R1) 1.0570; More...

Intraday bias in EUR/USD is turned neutral with current recovery. Another decline is still in favor as long as 1.0693 resistance fall. Below 1.0523 will target 38.2% retracement of 0.9534 to 1.1032 at 1.0463. Strong support could be seen there to bring reversal. However, sustained break of 1.0463 will carry larger bearish implications.

In the bigger picture, as long as 1.0482 support holds, rise from 0.9534 (2022 low) should continue to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. However, sustained break of 1.0482 will bring deeper fall to 61.8% retracement of 0.9534 to 1.1032 at 1.0106, even as a corrective pull back.

Daily Pivots: (S1) 1.1813; (P) 1.1836; (R1) 1.1868; More...

Intraday bias in GBP/USD remains neural first. Firm break of 1.1914 resistance turned support will indicate short term bottoming, and bring stronger rebound to 55 day EMA (now at 1.2055). On the downside, though, break of 1.1801 will resume the fall form 1.2446 to 38.2% retracement of 1.0351 to 1.2446 at 1.1646.

In the bigger picture, break of 1.1840 support argues that a double top pattern (1.2445, 1.2446) was formed after rejection by 55 week EMA (now at 1.2228). Deeper decline should be seen back to 38.2% retracement of 1.0351 to 1.2446 at 1.1646. Sustained break there will raise the chance of trend reversal and target 61.8% retracement at 1.1151. Nevertheless, strong rebound from current level, followed by firm break of 55 day EMA, will invalidate this bearish view and indicate that rise from 1.0351 is still in progress.

Daily Pivots: (S1) 0.9390; (P) 0.9414; (R1) 0.9440; More...

Intraday bias in USD/CHF stays neutral and outlook is unchanged. On the upside, break of 0.9439 will resume the rise from 0.9058 for 38.2% retracement of 1.0146 to 0.9058 at 0.9474. Decisive break there will carry larger bullish implications. On the downside, break of 0.9284 will turn bias back to the downside for retesting 0.9058 low instead.

In the bigger picture, decline from 1.0146 is seen as part of a long term sideway pattern. As long as 38.2% retracement of 1.0146 to 0.9058 at 0.9474 holds, another fall is in favor through 0.9058. However, sustained trading above 0.9474 will indicate that the medium term trend has reversed, and open up further rally to 61.8% retracement at 0.9730 and above.

Daily Pivots: (S1) 136.59; (P) 137.25; (R1) 138.02; More...

Intraday bias in USD/JPY remains neutral for consolidation below 137.90 temporary top. Further rally is expected as long as 135.35 support holds. Break of 137.90 will resume the rally from 127.20 to next fibonacci level at 142.48. However, break of 135.35 will bring deeper pull back to 55 day EMA (now at 134.30) instead.

In the bigger picture, the break of 38.2% retracement of 151.93 to 127.20 at 136.64 suggests that whole down trend from 151.93 has completed at 127.20 already. Tentatively, rise from 127.20 is seen as the second leg the medium term pattern from 151.93. Further rally is expected to 61.8% retracement at 142.48. This will now remain the favored case as long as 55 day EMA (now at 134.10) holds.

Yen is gaining ground against its major counterparts today, as traders are probably lightening up short positions ahead of BoJ policy decision tomorrow. Sterling is also showing signs of strength. However, overall, market sentiment remains cautious, with Dollar retraces some of this week's gains. The most significant upcoming events for the week are scheduled for tomorrow, including the release of UK GDP, US non-farm payroll figures, and Canada's employment report. These data releases are expected to impact market sentiment and drive currency movements in the short-term.

Technically, a major focus for the rest of the week would be on whether selling in US stocks would take off again. S&P 500 is so far holding above last week's low at 3928.16, and the outlook is neutral at worst. But firm break of 3928.16 will raise the chance that whole rebound from 3491.58 has completed and target 3764.49 support for confirmation.

In Europe, at the time of writing, FTSE is down -0.58%. DAX is down -0.24%. CAC is down -0.29%. Germany 10-year yield is up 0.0235 at 2.669. Earlier in Asia, Nikkei rose 0.63%. Hong Kong HSI dropped -0.63%. China Shanghai SSE dropped -0.22%. Singapore Strait Times dropped -0.38%. Japan 10-year JGB yield closed down -0.0026 at 0.504.

US initial jobless claims rose to 211k, above expectations

US initial jobless claims rose 21k to 211k in the week ending March 4, above expectation of 195k. Four-week moving average of initial claims rose 4k to 197k.

Continuing claims rose 69k to 1718k in the week ending February 25. Four-week moving average of continuing claims rose 10k to 1680k.

ECB Villeroy: Inflation will halve by year end

ECB Governing Council member Francois Villeroy de Galhau said "what is very important is the inflation expectations".

"The peak will come this semester, and then inflation will halve by the end of the year," he added.

The Bank of France head also expect France's inflation to peak in first half of the year.

AUD/JPY and NZD/JPY break support ahead of Kuroda's last BoJ meeting

Yen is seeing a broad recovery today as investors anticipate Haruhiko Kuroda's last BoJ monetary policy meeting tomorrow. As with four of his predecessors, Kuroda is unlikely to make any changes to policy during this last meeting, with his comments expected to echo what has been said numerous times before. Specifically, he is likely to reiterate that the current ultra-loose monetary policy is still appropriate until there is sustained inflation above the 2% target led by wage growth.

Meanwhile, the government's nominees for the next BoJ Governor and Deputy Governors have been approved by the lower house of parliament today. The upper house will vote on the nominees tomorrow. Kazuo Ueda will officially replace Kuroda on April 8, and chair his first monetary policy meeting on April 27-28. The two deputy governor nominees, Shinichi Ueda and Ryozo Himino, will take office from March 20.

Yen is making progress today by breaking through near term resistance levels against commodity currencies. AUD/JPY's break of 90.21 support argues that corrective rise from 87.00 has completed at 93.02. Sustained trading below channel support (now at 89.91) will affirm this bearish case and target 87.00/88.10 support zone.

NZD/JPY's break of 83.59 support also argue that corrective pattern from 81.02 has completed at 85.20. Sustained trading below trend line support (now at 83.44) will bring deeper fall to 82.31 support first, and then 81.02 low.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 136.59; (P) 137.25; (R1) 138.02; More...

Intraday bias in USD/JPY remains neutral for consolidation below 137.90 temporary top. Further rally is expected as long as 135.35 support holds. Break of 137.90 will resume the rally from 127.20 to next fibonacci level at 142.48. However, break of 135.35 will bring deeper pull back to 55 day EMA (now at 134.30) instead.

In the bigger picture, the break of 38.2% retracement of 151.93 to 127.20 at 136.64 suggests that whole down trend from 151.93 has completed at 127.20 already. Tentatively, rise from 127.20 is seen as the second leg the medium term pattern from 151.93. Further rally is expected to 61.8% retracement at 142.48. This will now remain the favored case as long as 55 day EMA (now at 134.10) holds.

Economic Indicators Update

US initial jobless claims rose 21k to 211k in the week ending March 4, above expectation of 195k. Four-week moving average of initial claims rose 4k to 197k.

Continuing claims rose 69k to 1718k in the week ending February 25. Four-week moving average of continuing claims rose 10k to 1680k.

Full release here.

It would appear investors are taking a cautious stance ahead of tomorrow's jobs report, a little spooked by Powell's comments in Congress and fearful of being caught on the wrong side of another hot jobs report.

That's clearly the danger at this point, that we get another hot report that confirms January was no blip and instead indicative of a labour market that not only isn't cooling but perhaps getting hotter. The trend pre-January across many indicators pointed to a cooling in the economy and that was expected to catch up to the jobs market eventually but a variety of data points at the start of the year threw that narrative into doubt.

I expect the February data and that of the months that follow will see the pre-January trend continue, even accelerate given the additional tightening that will have worked its way through to the economy since. But following Powell's comments, we may need to see clear evidence of that on Friday or further cracks could appear in equity markets.

We're already seeing a move back to 50 basis point hikes being priced in, with that now seen as more likely than 25 in two weeks. Powell's comments obviously fuelled that although I still believed he chose his words very carefully to ensure it's an option that's taken seriously rather than the base case. The data over the next couple of weeks could potentially cement it.

Steady after Powell hit

Oil prices are treading water today, continuing to stabilize after Tuesday's plunge on the back of Jerome Powell's comments. There remain two dominant forces in the markets and recent activity has been evidence of that.

Anything that threatens the US economic outlook is a big downside risk while stronger numbers from China are providing the bullish case. But with neither certain, we may continue to see very choppy but ultimately range-bound trade. Tomorrow's jobs report will be the next test of that. ​

Holding ahead of jobs data

Gold once again ran into support around $1,800-$1,810 this week but that may only prove temporary if we get another hot jobs report tomorrow. It may well be that the proximity to the report is what's saved it for now, with technical support kicking in. Suddenly two levels are really standing out, the support mentioned above and $1,860, a move above which would represent the break of a double bottom neckline and potentially indicate that a strong recovery, at least, is on the cards.

A major test

The crypto headlines have not been helpful this past week and have come at a time when broader market sentiment is crumbling, resulting in bitcoin breaking back below $22,000 and looking likely to go further. Previous lows around $21,500 now offer the next test of support, a break of which could be a massive blow after such an encouraging start to the year.

Yen is seeing a broad recovery today as investors anticipate Haruhiko Kuroda's last BoJ monetary policy meeting tomorrow. As with four of his predecessors, Kuroda is unlikely to make any changes to policy during this last meeting, with his comments expected to echo what has been said numerous times before. Specifically, he is likely to reiterate that the current ultra-loose monetary policy is still appropriate until there is sustained inflation above the 2% target led by wage growth.

Meanwhile, the government's nominees for the next BoJ Governor and Deputy Governors have been approved by the lower house of parliament today. The upper house will vote on the nominees tomorrow. Kazuo Ueda will officially replace Kuroda on April 8, and chair his first monetary policy meeting on April 27-28. The two deputy governor nominees, Shinichi Ueda and Ryozo Himino, will take office from March 20.

Yen is making progress today by breaking through near term resistance levels against commodity currencies. AUD/JPY's break of 90.21 support argues that corrective rise from 87.00 has completed at 93.02. Sustained trading below channel support (now at 89.91) will affirm this bearish case and target 87.00/88.10 support zone.

NZD/JPY's break of 83.59 support also argue that corrective pattern from 81.02 has completed at 85.20. Sustained trading below trend line support (now at 83.44) will bring deeper fall to 82.31 support first, and then 81.02 low.

The Japanese yen is showing strength on Thursday. In the European session, USD/JPY is trading at 136.27, down 0.79%.

Kuroda’s last hurrah

After 10 years at the helm of the Bank of Japan, Governor Kuroda chairs his final policy meeting on Friday. Traditionally, BoJ governors have not made policy changes at their last meeting, and in all likelihood, Kuroda will not go out into the night with guns blazing.

Still, Kuroda likes to keep the markets guessing and his tweak of the 10-year yield target range in December completely blindsided traders and jolted the financial markets. This has kept the markets on alert for Kuroda tweaking or even abandoning the BoJ’s yield curve control (YCC) policy. The bond market remains dysfunctional due to the YCC, even with the band widening in December. Governor-elect Ueda has stated that the current policy is appropriate, but this is to be expected at this sensitive time of changing the guard at the BoJ. Ueda will be under pressure right away to make changes to the YCC, and that could occur as soon as he takes over in April.

Fed Chair Powell didn’t add anything new at a second day of testimony on Capitol Hill, but the markets have been scrambling since his hawkish comments to lawmakers a day earlier. Powell’s said that the Fed would accelerate the pace of interest rate increases if that was what the data dictated. The markets have fallen in line and have priced a 50-basis point hike at the March 22 meeting at 77% according to the CME Group, compared to 25% before Powell’s testimony on Tuesday.

Powell’s hawkish stance has also fuelled expectations that the peak rate will be higher than expected. In December, the Fed projected a rate of 5.1%, but that is clearly out of date. The markets have priced in a peak rate of around 5.5% and Blackrock, the world’s largest asset manager sees rates peaking at 6%. Currently, the benchmark rate stands at 4.75%.

USD/JPY Technical

• 136.06 is under pressure in support. 13502 is next
• 136.86 and 1.37.90 are the next resistance lines

Market picture

The total capitalisation of the crypto market is back below $1 trillion, down 1.1% over the last 24 hours. We note that sellers drive the market during periods of reduced liquidity – in the early hours of the Asian session, as was the case today.

Bitcoin lost $300 in a sharp move to $21.7K, approaching the February lows and the critical signal level of $21.5K. A break below this level would change the status of the current events from a “typical correction” to a “methodical sell-off”.

In that case, the road to $18K for bitcoin is open, and the capitalisation of the entire crypto market could fall back to $820B, as the rally from the beginning of the year would look like a blip in a bear market, not the start of a long uptrend. Many, including ourselves, saw the latter scenario as the main one until the end of last week.

News background

Eric Pearce, CEO of One River Digital Asset Management, believes that the fall in the crypto market is temporary and that bitcoin has the potential to rise again. The key to the rally, he says, will be accelerating institutional adoption of crypto assets.

According to a new Paxos survey, 89% of US crypto investors continue to entrust their funds to centralised exchanges, despite the collapse of several major companies in the cryptocurrency industry. 75% of US citizens are still interested in cryptocurrencies.

US banking giant JPMorgan is ending its banking relationship with Gemini, a cryptocurrency exchange Cameron and Tyler Winklevoss owned.

According to PeckShield, the US government seized 48,998 BTC (worth about $1.08 billion) from the Silk Road darknet marketplace. The 9,825 BTC went to Coinbase, with the rest going to two new wallets.

According to the court ruling, Binance’s US unit could buy the assets of bankrupt cryptocurrency lender Voyager Digital.