Sample Category Title

Dollar ended as the worst performer, followed by Yen and Swiss Franc. The US stock markets traded with risk-on sentiment, on talks that Fed would start slowing down tightening pace after one more 75bps hike. But it should be noted that such sentiment was not seen everywhere in the world, in particular China. Thus, rally in commodity currencies was somewhat capped.

Sterling and Euro were the best performers. The Pound was supported by stabilization in UK politics, and expectations of a 75bps hike by BoE. There is prospect of further rally in Sterling ahead, especially in crosses, if the new again UK government could restore investor confidence with the budget to be announced in the middle of the month.

DOW surged on earnings and Fed pivot talks

DOW registered the fourth straight week of gains and closed strongly last week. Sentiment was partly supported by strong earnings of some stocks. Additionally, investors were raising bets that Fed will start slowing down tightening pace later in the year.

For now, fed fund futures are still pricing in 82.2% chance of a 75bps hike to 3.75-4.00% on November 2, the coming Wednesday. But change of another 75bps hike to 4.50-4.75% dropped below 50%. The move came as some central banks, like RBA and BoC, have already "pivot" to a smaller hikes.

DOW's strong rise now raises the chance that corrective down trend from 36952.65 has completed at 28600.94 already. Firm break of trend line resistance (now at 33380) will affirm this bullish case and target 34281.36 resistance for confirmation. Even in case of retreat, near term bias will stay on the upside as long as 55 day EMA (now at 31014.89) holds.

Nevertheless, it should be noted that NASDAQ is lagging far far behind in the rebound. Thus, overall sentiment was not overwhelmingly positive.

But it's risk-off in China and Hong Kong

Also, risk-on sentiment was not shared evenly globally. In particular, stocks in China and Hong Kong suffered steep selling as aftermath of the 20th Communist Party Congress. The Shanghai SSE hit the lowest level since May. Hong Kong HSI even fell to lowest level since 2009.

Current downside momentum in HSI suggests that it could well dive further to 161.8% projection of 33484.07 to 21139.26 from 31183.35 at 11209.44 before finding a bottom.

Risk-off sentiment in China is a factor capping rallies in Aussie and Kiwi, and could continue to do so.

It could be a pivot week for Dollar

As for Dollar index, corrective pattern from 114.77 continued with another dip last week and touched 55 day EMA. (now at 110.45). It's now close to an important support zone, with 109.29 resistance turned support and medium term channel support. There is prospect of DXY completing the three wave pattern from 114.7. Strong bounce from current level will push DXY through 114.77 to resume larger up trend. However, sustained break of this support zone will indicate medium term topping, and bring deeper correction pack towards 104.63 support.

The next move will very much depends on FOMC decision and statement, as well as the set of economic data including ISM indexes and non-farm payroll. It could be a pivot week for Dollar, even if it's too early for Fed.

Sterling rose broadly as policy situation stabilized

Sterling was the best performer last week as the political situation appeared to have stabilized for now. Rishi Sunak was confirmed as the new UK Prime Minister, and he kept Jeremy Hunt in the position of Finance Minister. The new budget is delayed from October 31 to November 17, and there are expectations of some spending cuts and tax hikes to restore fiscal health of the country.

As for BoE, markets are now expecting 75bps hike on the coming Thursday. New economic projections might not be too meaningful given that the government's budget won't be ready.

GBP/CHF extended the rebound from 1.0183 and is just inch below 61.8% projection of 1.0183 to 1.0893 to 1.1283 at 1.1573. Firm break of 1.1573 will target cluster level at 100% projection at 1.1993 and 61.8% retracement of 1.3070 to 1.0183 at 1.1967. In any case, further rally is in favor as long as 55 day EMA (now at 1.1251) holds.

EUR/GBP is resuming the decline from 0.9267 with late breach of 0.8577 support. Outlook will stay bearish as long as 0.8779 resistance holds. Next target is 0.8201/8338 support zone.

GBP/JPY's up trend also resumed with late break of 170.57 resistance. Outlook will now stay bullish as long as 164.99 support holds. Next target is 100% projection of 148.93 to 165.69 from 159.71 at 176.47.

GBP/USD Weekly Outlook

GBP/USD's rebound from 1.0351 resumed last week and hit 1.1644 before retreating. Initial bias stays neutral this week first, but further rise is expected as long as 1.1256 minor support holds. Break of 1.1644 will resume rise form 1.0351 to 100% projection of 1.0351 to 1.1494 from 1.0922 at 1.2065. However, break of 1.1256 will turn bias back to the downside for 1.0922 support and below.

In the bigger picture, fall from 1.4248 (2018 high) is part of the long term down trend from 2.1161 (2007 high). Outlook will stay bearish as long as 1.1759 support turned resistance holds. Parity would be the next target on resumption. Nevertheless, firm break of 1.1759 will confirm medium term bottoming, and open up stronger rise back to 55 week EMA (now at 1.2392).

In the longer term picture, as long as 1.4248 resistance holds (2021 high), there is no confirmation of long term bottoming yet. That is, down trend from 2.1161 (2007) could still resume for another low through 1.0351.

EUR/USD's rebound from 0.9534 resumed last week but retreated after hitting 1.0092. Initial bias is neutral this week first. Further rise is in favor as long as 0.9847 minor support holds. Break of 1.0092 will target 38.2% retracement of 1.1494 to 0.9534 at 1.0283. However, break of 0.9847 will turn bias back to the downside for 0.9534/9630 support zone instead.

In the bigger picture, the case of medium term bottoming at 0.9534 building up, with bullish convergence condition in daily MACD. While it is too early to call for trend reversal, firm break of 0.9998 opens up stronger rebound back to 55 week EMA (now at 1.0630) even as a corrective rise. However, sustained trading back below 55 day EMA (now at 0.9938) will revive medium term bearishness for another fall through 0.9534 low.

In the long term picture, long term down trend from 1.6039 (2008 high) is extending. Next target is 100% projection of 1.3993 to 1.0339 from 1.2348 at 0.8694. This will now remain the favored case as long as 1.0635 support turned resistance holds.

USD/JPY stayed in consolidation below 151.93 last week and outlook is unchanged. Initial bias remains neutral this week first. Another fall could be seen, but downside should be contained by 38.2% retracement of 130.38 to 151.93 at 143.69 to bring rebound. On the upside, above 149.69 minor resistance will bring stronger rebound back towards 151.93 high. But upside should be limited there to continue the corrective pattern.

In the bigger picture, up trend from 101.18 is still in progress, as part of the whole up trend from 75.56 (2011 low). 147.68 (1998 high) was already met and there is no clearly sign of topping yet. In any case, break of 140.33 support is needed to be the first sign of medium term topping. Otherwise, further rise is in favor to next target at 160.16 (1990 high).

In the long term picture, rise from 101.18 is seen as part of the up trend from 75.56 (2011 low). Sustained break of 100% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 149.26, will pave the way to 138.2% projection at 168.47. This will remain the favored case as long as 130.38 support holds.

GBP/USD's rebound from 1.0351 resumed last week and hit 1.1644 before retreating. Initial bias stays neutral this week first, but further rise is expected as long as 1.1256 minor support holds. Break of 1.1644 will resume rise form 1.0351 to 100% projection of 1.0351 to 1.1494 from 1.0922 at 1.2065. However, break of 1.1256 will turn bias back to the downside for 1.0922 support and below.

In the bigger picture, fall from 1.4248 (2018 high) is part of the long term down trend from 2.1161 (2007 high). Outlook will stay bearish as long as 1.1759 support turned resistance holds. Parity would be the next target on resumption. Nevertheless, firm break of 1.1759 will confirm medium term bottoming, and open up stronger rise back to 55 week EMA (now at 1.2392).

In the longer term picture, as long as 1.4248 resistance holds (2021 high), there is no confirmation of long term bottoming yet. That is, down trend from 2.1161 (2007) could still resume for another low through 1.0351.

USD/CHF's correction from 1.0146 extended lower last week but stayed above 0.9779 support. Initial bias remains neutral this week and further rise is still expected. Break of 1.0146 will resume larger up trend to 1.0283 projection level. However, firm break of 0.9779 will be a sign of reversal, and bring deeper decline back to 0.9478 support instead.

In the bigger picture, current development suggests that up trend from 0.8756 (2021 low) is still in progress. Next target is 100% projection of 0.9149 to 1.0063 from 0.9369 at 1.0283, and then 1.0342 (2016 high). For now, this will remain the favored case as long as 0.9779 support holds, even in case of deep pull back.

In the long term picture, outlook is mixed with deeper than expected fall from 1.0063, but some support was seen from 55 week EMA (now at 0.9528). Overall, though, USD/CHF is seen as in sideway pattern from 1.0342 (2016 high). Range trading should continue until further development.

AUD/USD's rebound from 0.6169 continued last week but failed to break through 0.6539 resistance and retreated. Initial bias is neutral this week first. On the upside, decisive break of 0.6535, and sustained trading above 55 day EMA (now at 0.6564), will raise the chance of medium term bottoming, and target 0.6680 support turned resistance next. On the downside, below 0.6371 minor support will turn bias back to the downside for retesting 0.6169 low instead.

In the bigger picture, down trend form 0.8006 (2021 high) is expected to continue as long as 0.6680 support turned resistance holds. Medium term momentum remains strong and retest of 0.5506 (2020 low) cannot be ruled out. But firm break of 0.6680 will be the first sign of reversal, and bring stronger rebound back to 0.7135 resistance.

In the long term picture, current medium term downside momentum raises the chance of resumption of long term down trend from 1.1079 (2011 high). It's still a bit early to judge the chance. But break of 0.5506 will target 0.4773 (2001 low).

USD/CAD's correction from 1.3976 continued last week, but was supported by 1.3501 support. Initial bias remains neutral this week first. On the upside, firm break of 1.3976 will target 200% projection of 1.2005 to 1.2947 from 1.2401 at 1.4285. However, firm break of 1.3501 will bring deeper correction to 55 day EMA (now at 1.3439) and possibly below.

In the bigger picture, up trend from 1.2005 (2021 low) is still in progress. Based on current impulsive momentum, it could be resuming long term up trend from 0.9056 (2007 low). Whether it is or it isn't, retest of 1.4689 (2016 high) should be seen next. This will now remain the favored case as long as 1.3222 resistance turned support holds.

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 long as 1.2061 support holds, which is close to 50% retracement of 0.9406 to 1.4689 at 1.2048.

GBP/JPY's up trend resumed by breaking through 170.07 last week. Initial bias is now on the upside this week. next target is 100% projection of 148.93 to 165.69 from 159.71 at 176.47. On the downside, break of 168.71 minor support will turn intraday bias neutral and bring consolidations, before staging another rally.

In the bigger picture, up trend from 123.94 (2020 low), as part of the trend from 122.75 (2016 low) is still in progress. Further rise would be seen to 161.8% projection of 122.75 to 156.59 (2018 high) from 123.94 at 178.69. This will now remain the favored case as long as 148.93 support holds.

In the longer term picture, as long as 55 month EMA (now at 151.36) holds, rise from 122.75 could still extend higher at a later stage. Next target is 195.86 (2015 high).

EUR/JPY stayed in consolidation below 148.38 last week and outlook is unchanged. Initial bias stays neutral this week first. In case of another fall, downside should be contained 140.88/144.06 support zone to bring another rally. Break of 148.38 will resume larger up trend to 100% projection of 133.38 to 145.62 from 137.32 at 149.56, which is close to 149.76 long term resistance.

In the bigger picture, the up trend from 114.42 (2020 low) is still in progress for 149.76 (2014 high). Decisive break there will pave the way to 161.8% projection of 114.42 to 134.11 from 124.37 at 156.22. This will now remain the favored case as long as 137.32 support holds.

In the long term picture, there is sign of upside acceleration with strong break of long term channel resistance. Outlook will stay bullish as long as 134.11 resistance turned support holds. 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 fall resumes by breaking 0.8577 last week. Initial bias is back on the downside this week. Fall from 0.9267 should target 0.8201/8388 support zone. For now, near term outlook will remain bearish as long as 0.8779 resistance holds, in case of recovery.

In the bigger picture, current development suggests that fall from 0.9267 is a down leg inside long term range pattern. Deeper fall could be seen towards 0.8201/8338 support zone. But strong support should be seen there to bring reversal.

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).