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Daily Pivots: (S1) 1.2035; (P) 1.2072; (R1) 1.2109; More...

GBP/USD is staying in consolidation from 1.1960 and intraday bias stays neutral. Fall from 1.2446, as the third leg of the corrective pattern from 1.2445, could still extend lower. Below 1.1960 will target 1.1840 support and possibly below. But downside should be contained by 38.2% retracement of 1.0351 to 1.2445 at 1.1645 to bring rebound. On the upside, firm break of 4 hour 55 EMA (now at 1.2168) will bring retest of 1.2445/6.

In the bigger picture, rise from 1.0351 medium term bottom is at least correcting whole down trend from 1.4248 (2021 high). Further rise is expected as long as 1.1644 resistance turned support holds. Next target is 61.8% retracement of 1.4248 to 1.0351 at 1.2759. Sustained break there will pave the way back to 1.4248.

Daily Pivots: (S1) 1.0696; (P) 1.0728; (R1) 1.0747; More...

EUR/USD is staying in consolidation above 1.0668 and intraday bias remains neutral. Correction from 1.1032 short term top could still extend lower. Break of 1.0668 will target 38.2% retracement of 0.9534 to 1.1032 at 1.0463. Nevertheless, firm break of 4 hour 55 EMA (now at 1.0804) will bring retest of 1.1032 high instead.

In the bigger picture, current development suggests that 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.

Price actions in Asian session remain indecisive. Euro is staying as the worst performer today, weighed down by cross selling against Swiss Franc and, to a lesser extent, Sterling. Aussie and Kiwi are the stronger ones but overwhelmed by the Franc. Dollar and Yen are mixed for now awaiting further guidance from risk sentiment. US stocks closed lower overnight as consolidations continued while major Asian indexes are mixed.

Technically, overall price actions suggest that Dollar's near term rebound isn't over yet. But, to have more sustainable rally, USD/CHF will have to break through 0.9287/9 resistance zone decisively to confirm short term bottoming at 0.9058. USD/JPY will also have to break through 132.89 to resume the rebound from 127.20. Otherwise, rise in the greenback elsewhere could remain half-hearted.

In Asia, at the time of writing, Nikkei is down -0.13%. Hong Kong HSI is up 1.00%. China Shanghai SSE is up 0.97%. Singapore Strait Times is down -0.78%. Japan 10-year JGB yield is up 0.0017 at 0.498. Overnight, DOW dropped -0.61%. S&P 500 dropped -1.11%. NASDSAQ dropped -1.68%. 10-year yield dropped -0.021 to 3.653.

Fed Waller: I am prepared for a longer fight to get inflation down

Fed Christopher Waller said in a speech that while some believe that inflation will come down quite quickly this year, "I'm not seeing signals of this quick decline in the economic data".

"I am prepared for a longer fight to get inflation down to our target," he added.

"Though we have made progress reducing inflation, I want to be clear today that the job is not done," Waller said.

"It might be a long fight, with interest rates higher for longer than some are currently expecting. But I will not hesitate to do what is needed to get my job done."

Fed Kashkari: We need to do more to bring labor market into balance

Minneapolis Fed President Neel Kashkari said yesterday, "there's not yet much evidence, in my judgment, that the rate hikes that we've done so far are having much effect on the labor market."

"We need to bring the labor market into balance so that tells me we need to do more," he added.

He noted that Fed will likely need to raise interest rates to around 5.4% in order to bring inflation down to the 2% target.

BoC minutes: The bar for additional rate increases now higher

BoC published a minutes-like document yesterday for the first time to improve transparency. The minutes noted, "members were in broad agreement that, going forward, it would be appropriate to pause any additional tightening to allow economic developments to unfold."

"The bar for additional rate increases was now higher". Also, the council "would need an accumulation of evidence to determine whether further rate increases would be required." Yet, it was important to be clear about the "conditionality" of the pause, and the Governing Council "would be prepared to raise the policy rate further if these upside risks materialized."

Looking ahead

EU economic forecasts will be a major focus today. Meanwhile, US will publish jobless claims on a Thursday as usual.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.0696; (P) 1.0728; (R1) 1.0747; More...

EUR/USD is staying in consolidation above 1.0668 and intraday bias remains neutral. Correction from 1.1032 short term top could still extend lower. Break of 1.0668 will target 38.2% retracement of 0.9534 to 1.1032 at 1.0463. Nevertheless, firm break of 4 hour 55 EMA (now at 1.0804) will bring retest of 1.1032 high instead.

In the bigger picture, current development suggests that 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.

Economic Indicators Update

Silver ended cycle from 9.1.2022 low as a 5 waves impulse Elliott Wave structure. Up from there, wave (1) ended at 20 and pullback in wave (2) ended at 17.97. The metal extends higher in wave (3) towards 24.54 and pullback in wave (4) ended at 22.98. Final leg higher wave (5) ended at 24.6 which completed wave ((1)) in higher degree. Pullback in wave ((2)) is in progress to correct cycle from 9.1.2022 low in 3, 7, or 11 swing before the rally resumes.

Internal subdivision of wave ((2)) is in progress as a zigzag Elliott Wave structure. Down from wave ((1)), wave 1 ended at 23.4 and wave 2 ended at 23.598. The metal extends lower in wave 3 towards 22.13 and rally in wave 4 ended at 22.427. Final leg wave 5 ended at 22.03 which completed wave (A). Wave (B) rally is now in progress as a zigzag structure in lesser degree. Up from wave (A), wave A ended at 22.53 and dips in wave B ended at 22.19. Expect the metal to extend higher in wave C of (B) and rally to fail below 24.6 for another leg lower in wave (C). Near term, as far as pivot at 24.6 high stays intact, expect rally to fail in 3, 7, or 11 swing for further downside.

Silver 60 Minutes Elliott Wave Chart

Key Highlights

• AUD/USD is attempting an upside correction from the 0.6850 support.
• It is facing resistance near 0.7000 and 0.7020 on the 4-hours chart.
• EUR/USD might continue to move down towards 1.0620.
• The US initial jobless claims could increase from 183K to 190K.

AUD/USD Technical Analysis

The Aussie Dollar declined from the 0.7150 resistance against the US Dollar. AUD/USD even traded below the 0.7000 level before the bulls appeared.

Looking at the 4-hours chart, the pair traded as low as 0.6855 before it started an upside correction. There was a move above the 0.6880 and 0.6900 levels. The pair even settled above the 200 simple moving average (green, 4-hours).

On the upside, the pair is facing resistance near the 0.7000 barrier and the 100 simple moving average (red, 4-hours). It is close to the 50% Fib retracement level of the downward move from the 0.7157 swing high to 0.6855 low.

The next major resistance is near the 0.7050 level. A clear move above the 0.7050 resistance might start a steady increase towards the 0.7120 resistance zone.

Any more gains could open the doors for a move towards the 0.7180 level. The next key hurdle is near 0.7200, above which the pair could climb towards the 0.7250 resistance zone.

If there is no move above 0.7000, the pair might resume its decline. An immediate support is near the 0.6920 level. The next major support is near the 0.6850 zone. If there is a downside break, the pair could decline towards the 0.6760 level.

Looking at crude oil price, there was a decent recovery wave and the price was able to climb above the $76.50 resistance zone.

Economic Releases

• German Consumer Price Index for Jan 2023 (YoY) – Forecast +8.9%, versus +8.6% previous.
• German Consumer Price Index for Jan 2023 (MoM) – Forecast +0.9%, versus -0.8% previous.
• US Initial Jobless Claims - Forecast 190K, versus 183K previous.

BoC published a minutes-like document yesterday for the first time to improve transparency. The minutes noted, "members were in broad agreement that, going forward, it would be appropriate to pause any additional tightening to allow economic developments to unfold."

"The bar for additional rate increases was now higher". Also, the council "would need an accumulation of evidence to determine whether further rate increases would be required." Yet, it was important to be clear about the "conditionality" of the pause, and the Governing Council "would be prepared to raise the policy rate further if these upside risks materialized."

Full minutes here.

Fed Christopher Waller said in a speech that while some believe that inflation will come down quite quickly this year, "I'm not seeing signals of this quick decline in the economic data".

"I am prepared for a longer fight to get inflation down to our target," he added.

"Though we have made progress reducing inflation, I want to be clear today that the job is not done," Waller said.

"It might be a long fight, with interest rates higher for longer than some are currently expecting. But I will not hesitate to do what is needed to get my job done."

Full speech here.

Minneapolis Fed President Neel Kashkari said yesterday, "there's not yet much evidence, in my judgment, that the rate hikes that we've done so far are having much effect on the labor market."

"We need to bring the labor market into balance so that tells me we need to do more," he added.

He noted that Fed will likely need to raise interest rates to around 5.4% in order to bring inflation down to the 2% target.

ECB Governing Council member Klaas Knot said, "I consider it highly unlikely that the March hike will be our endpoint."

"If underlying inflation pressures do not materially abate, maintaining the current pace of hikes into May could well remain warranted," he added.

He also noted that ECB's focus "has shifted from energy, headline inflation to breaking underlying inflation." It will take "some time before core inflation slows down."

"Once we see a clear and decisive turn in underlying inflation dynamics, I therefore expect us to move to smaller steps," he said. "But absent such a turn, the ECB will continue to stay the course on its steady pace upwards, in pursuit of price stability."