Sample Category Title

USD/CHF stayed in range above 0.9058 last week and outlook is unchanged. Initial bias remains neutral this week first. On the upside, firm break of 0.92879 resistance will confirm short term bottoming at 0.9058, and bring stronger rise to 0.9407 resistance. On the downside, however, sustained break of 0.9058 will resume larger decline from 1.0146 instead.

In the bigger picture, rise from 0.8756 (2021 low) has completed at 1.0146, well ahead of 1.0342 long term resistance (2016 high). Based on current downside momentum, fall from 1.0146 should be a medium term down trend itself. Next target is a test on 0.8756 low. Strong support should be seen there to bring rebound. Still, further decline will now be expected as long as 0.9407 resistance holds, in any case.

In the long term picture, long term sideway pattern from 1.0342 (2016 high) is extending and it's probably in another medium term down leg. Downside will likely be contained by 0.8756 support in case of deeper fall. Overall, range trading should continue until further development.

AUD/USD's corrective fall from 0.7156 extended to 0.6854 last week but recovered since then. Initial bias remains neutral this week first and another fall is mildly in favor. Break of 0.6854 will target 38.2% retracement of 0.6169 to 0.7156 at 0.6779. On the upside, break of 0.7010 will turn bias back to the upside for retesting 0.7156 high instead.

In the bigger picture, corrective decline from 0.8006 (2021 high) should have completed with three waves down to 0.6169 (2022 low). Further rally should be seen to 61.8% retracement of 0.8006 to 0.6169 at 0.7304. Sustained break there will pave the way to retest 0.8006. This will now remain the favored case as long as 0.6721 support holds.

In the long term picture, current development suggests that fall from 0.8006 was merely a correction to the rise from 0.5506 (2020 low). Sustained trading above 55 month EMA (now at 0.7186) will raise the chance of up trend resumption through 0.8006 at a later stage.

USD/CAD struggled to sustain above 55 day EMA (now at 1.3441) last week and retreated. Initial bias stays neutral this week first. The choppy decline from 1.3704 might still extend lower, but strong support is expected to 1.3224 key support to bring rebound. On the upside, above 1.3519 resistance will confirm short term bottoming, and turn intraday bias back to the upside for retesting 1.3704 resistance. However, decisive break of 1.3224 would carry larger bearish implication.

In the bigger picture, as long as 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) holds, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 high at a later stage. However, firm break of 1.3222/3 will indicate that the trend might have reversed. Deeper fall would be seen to next cluster support at 1.2726 (61.8% retracement at 1.2758).

In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern only, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as 55 month EMA (now at 1.2962) holds.

GBP/JPY stayed in range above 155.33 last week and outlook is unchanged. Initial bias stays neutral this week and further decline is in favor. On the downside, break of 155.33 low will resume the fall from 172.11 to 153.70 fibonacci level next. On the upside, sustained trading above 55 day EMA (now at 161.04) will turn bias to the upside, for stronger rise back to 169.26/172.11 resistance zone.

In the bigger picture, as long as 163.02 support turned resistance holds, decline from 172.11 medium term top is expected to continue to 38.2% retracement of 123.94 to 172.11 at 153.70. Sustained break there will raise the change of trend reversal and target 61.8% retracement at 142.34. Nevertheless, break of 163.02 support turned resistance will argue that the decline has completed, and retain medium term bullishness.

In the longer term picture, as long as 55 month EMA (now at 152.38) holds, rise from 122.75 could still extend higher at a later stage.

EUR/JPY stayed in range of 137.37/142.84 last week and outlook is unchanged. Further decline is mildly in favor. Break of 137.37 will resume the whole fall from 148.38 to 135.40 fibonacci level. On the upside, however, break of 142.84 will argue that the correction from 148.38 has completed at 137.37 already. Further rise would be seen to 146.71 resistance next.

In the bigger picture, as long as 55 week EMA (now at 138.87) holds, larger up trend from 114.42 (2020 low) is still in progress for 149.76 long term resistance. However, firm break of 55 week EMA will bring deeper fall to 38.2% retracement of 114.42 to 148.38 at 135.40. Sustained break there will raise the chance of trend reversal, and target 61.8% retracement at 127.39.

In the long term picture, outlook will stay bullish as long as 134.11 resistance turned support holds (2021 high). Sustained break of 149.76 (2014 high) will open up further rally, as resumption of the rise from 94.11 (2012 low), towards 169.96 (2008 high).

EUR/GBP's retreat from 0.8977 extended lower last week but stays well above 0.8720 support. Initial bias remains neutral this week first. On the upside, break of 0.8977 will resume whole rebound from 0.8545 towards 0.9267 high. On the downside, however, break of 0.8270 will turn near term outlook bearish again.

In the bigger picture, the notable support from 55 day EMA (now at 0.8780) retains near term bullishness. Break of 0.8896 should target 0.9267 (2022 high) and possibly above, to resume whole up trend from 0.8201 (2022 low). However, break of 0.8270 support and sustained trading below 55 day EMA will set the stage for 0.8545 and below.

In the long term picture, long term range pattern is extending. But rise from 0.6935 (2015 low) is expected to extend at a later stage, to 0.9799 (2009 high).

While EUR/AUD dropped notably last week, downside is contained well above 1.5254/71 support zone. Initial bias stays neutral first. On the downside, firm break of 1.5254/71 will carry larger bearish implication and resume the fall from 1.5976. On the upside, above 1.5650 will resume the rebound to 1.5749 resistance.

In the bigger picture, it's still early to confirm if rise from 1.4281 represents bullish trend reversal. But as long as 1.5271 support holds, such rally is in favor to continue. Break of 1.5976 will target 1.6434 key resistance next. On the other hand, firm break of 1.5271 will retain medium term bearishness instead.

In the longer term picture, focus stays on 55 month EMA (now at 1.5595). Sustained trading above there will raise the chance of bullish trend reversal, and at least bring further rally to 1.6434 cluster resistance, 38.2% retracement of 1.9799 (2020 high) to 1.4281 at 1.6389. However, rejection by 55 month EMA will suggest that down trend from 1.9799 is still in progress for another low below 1.4281.

EUR/CHF's corrective pattern from 1.0095 continued last week and dropped to 0.9858. Further decline could still be seen this week. But downside be contained by 38.2% retracement of 0.9407 to 1.0095 at 0.9832 to bring rebound. On the upside, break of 0.9905 minor resistance will turn bias back to the upside for 4 hour 55 EMA (now at 0.9927) and above.

In the bigger picture, the rejection by 55 week EMA (now at 1.0039) mixed up the outlook. On the upside, sustained trading above 55 week EMA will raise the chance of bullish trend reversal. Rise from 0.9407 should then target 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484). However, firm break of 0.9832 support will revive medium term bearishness and bring retest of 0.9407 low instead.

In the long term picture, it's still way to early too call for bullish trend reversal with upside capped well below 55 month EMA and 1.0505 support turned resistance (2020 low).

While the economic calendar was relatively light, the week was full of surprise. The biggest one was the big wagers that put on Fed interest rate peaking at 6%. Rumors and speculations about the next BoJ Governor triggered some volatility. Meanwhile, the blockbuster Canadian job data came in and blew everyone away.

Canadian Dollar eventually ended as the best performer, followed by Sterling and Swiss Franc. The latter two were clearly helped by selloff in Euro, which ended as the worst performer. Kiwi were the second worst, followed by Yen. Aussie was just mixed after hawkish RBA hike. Dollar was also mixed, and need some inspirations from the upcoming CPI report.

Market expecting Fed to peak at 5.00-5.25%, despite big wagers on 6%

The juiciest news last week was probably the big wagers in the US on betting Fed interest rate hitting 6% this year, comparing to Fed's own projection of 5.10%. The move came after prior week's stellar non-farm payroll data, as well as hawkish comments from Fed officials, including Chair Jerome Powell.

In short, for one of the traders, they would make as much as USD 135m if Fed continues tightening until September. That is, there will by five more 25 bps hike in March, May, June, July, and September, to bring interest rate target from current 4.50-4.75% to 4.75-6.0%. The trade will break even at if Fed hikes to 5.6%, and USD 60m at 5.8%.

But after all, speculations of some traders are not the whole of the markets. Fed funds futures are now pricing in a pause after two more 25bps hikes in March and May, to 5.00-5.25%. The majority seemed finally giving a nod to Fed officials' views. Nevertheless, they're still seeing more than 50% of a cut in December. Let's see when the markets will change their mind.

More upside in 10-year yield after completing correction

In the US stock markets, sentiment was a little bit "off" but the pullback was so far shallow. Further rally is expected in S&P 500 as long as 55 day EMA (now at 3982.54) holds. Current rise form 3491.58 should still extend higher, even as a corrective move, to 4325.28 cluster resistance (61.8% retracement of 4818.62 to 3491.58 at 4311.69).

The development in 10-year yield is worth much attention in the coming weeks. Strong support from 55 day EMA (now at 3.607) is certainly a bullish sign. Correction from 4.333 has likely completed with three waves down to 3.373, after hitting medium term channel support. Further rise should be seen to 3.905 resistance first. Decisive break there could set the stage to 4.333 and possibly long term up trend resumption, in the latter half of the year. That, if happens, would be an indication of prolonged above target inflation and Fed tightening.

As for the Dollar Index, the break of 103.44 resistance last week should confirm short term bottoming at 100.82, on bullish convergence condition in daily MACD. Immediate focus is now on 55 day EMA (now at 104.02). Sustained break there will bring stronger rebound back to 38.2% retracement of 114.77 to 100.82 at 106.14, even as a corrective move. If that happens, it would likely mean that Fed is likely to continue the tightening cycle longer, even longer than the ECB which may pause after May.

CAD surges after job data, EUR/CAD in correction

The blockbuster Canadian job report was another surprise in the week. While the 150k headline growth blew all expectations away, the details were also exceptional strong, with gains concentrated in full-time jobs in the private sector, and more working hours. Probably, the only goods news to BoC is the slowdown in wage growth.

Talking about BoC, it made itself clear in the minutes that the pause in tightening is "conditional" while "the bar for additional rate increases was now higher". One set of data is definitely not enough to alter BoC's course. But it should have definitely made the board nervous and raise the chance of going back to rate hikes at a later stage.

EUR/CAD was the top mover last week, losing -1.51%. The development now suggests that a short term top was at least formed at 1.4640. Indeed, fall from there should be correcting whole up trend from 1.2867. Firm break below 1.4232 support will set the stage for 38.2% retracement of 1.2867 to 1.4640 at 1.3963.

Considering that 55 week EMA is now sitting at 1.3955, downside on pullback should be contained by 1.3963, at least on first attempt, to bring rebound.

Risk on Yen tilted to the downside on BoJ nomination

Lots of jitters were seen in Japanese Yen last week, on news regarding the new BoJ Governor, after Haruhiko Kuroda's term ends in April. Initially, there was talks that current deputy Masayoshi Amamiya would be nominated by the government. Yen gapped down the week as Amamiya was seen as continuation of Kuroda's ultra loose policy.

Then, Yen was shot up later in the week on reports that academic, and former BoJ board member, Kazuo Ueda would be nominated instead. That's seen a an intention of the government to direct away from the current path. Yet, Ueda sounded composed in telling NTV that "The Bank of Japan's current policy is appropriate and monetary easing needs to be continued at this point." Then Yen came down.

The question on who the next BoJ is should be answered rather soon, as the government would table nomination on February 14.

Risks to Yen could now be a bit skewed to the downside. While Ueda is not the "dove" as Kuroda as perceived by some, he's not likely the "hawk" that some would hope for.

While USD/JPY's pull back from 132.89 was deeper than expected, it's looking more like a corrective move than not. That is, rebound from 127.20 is likely not over yet. Break of 131.88 minor resistance will bring retest of 132.89 first. Decisive break there will resume the rebound to 38.2% retracement of 151.93 to 127.20 at 136.64.

EUR/USD Weekly Outlook

EUR/USD's decline last week indicates that it's already in correction to whole up trend from 0.9534. Rejection by 4 hour 55 EMA maintains near term bearishness and favors more downside. Break of 1.0668 temporary low this week will bring deeper fall to 38.2% retracement of 0.9534 to 1.1032 at 1.0463. Nevertheless, on the upside, break of 1.0790 minor resistance will turn bias back to the upside for retesting 1.1032 high instead.

In the bigger picture, the rally from 0.9534 low (2022 low) is a medium term up trend rather than a correction. Further rise is in favor to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 next. This will remain the favored case as long as 1.0482 support holds.

In the long term picture, while it's too early to call for long term trend reversal at this point, the strong break of 1.0635 support turned resistance (2020 low) should at least turn outlook neutral. Focus will turn to 55 month EMA (now at 1.1189). Rejection by this EMA will revive long term bearishness.

Monday, Feb 13, 2023

Tuesday, Feb 14, 2023

Wednesday, Feb 15, 2023

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Friday, Feb 17, 2023