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Daily Pivots: (S1) 0.9262; (P) 0.9286; (R1) 0.9299; More....

Intraday bias in EUR/CHF remains neutral for the moment. Another fall will remain mildly in favor as long as 0.9347 resistance holds. Below 0.9253 will extend the decline from 0.9394 towards 0.9178 low. Nevertheless, firm break of 0.9347 will indicate that fall from 0.9394 has completed as a correction, and bring stronger rally to retest this resistance.

In the bigger picture, persistent bullish convergence condition in W MACD is a medium term bullish sign. Firm break of 0.9394 resistance should bring sustained trading above 55 W EMA (now at 0.9360). That should indicate medium term bottoming at 0.9178. Further break of 0.9452 resistance will bring stronger medium term rally towards 0.9928 resistance next, even still as a corrective bounce. Nevertheless, rejection by 55 W EMA will retain bearishness for another fall through 0.9178 at a later stage.

Eurozone business activity showed little momentum at the start of 2026, with January PMI data pointing to a fragile and uneven recovery. Manufacturing PMI improved modestly from 48.8 to 49.4, but remained in contraction. Services PMI eased from 52.4 to 51.9, leaving Composite PMI unchanged at 51.5, a level consistent with only modest growth.

According to Cyrus de la Rubia of Hamburg Commercial Bank, the recovery “still looks rather feeble.” Manufacturing continues to signal weakness, while services growth has moderated.

For the ECB, the details are "anything but reassuring". Services inflation has risen sharply in terms of sales prices, while input cost inflation remains elevated. That dynamic is likely to reinforce the Governing Council’s preference to hold rates steady, with some hawkish members potentially arguing that the next move should be up rather than down.

Country-level divergences persist. Services activity in Germany expanded at a relatively solid pace in January, while French services slipped into contraction. In manufacturing, France marginally outperformed Germany, though output growth in both remains weak.

Full Eurozone PMI flash release here.

Daily Pivots: (S1) 0.6782; (P) 0.6813; (R1) 0.6873; More...

AUD/USD's rally continues today and and intraday bias stays on the upside. Next target is 61.8% projection of 0.5913 to 0.6706 from 0.6420 at 0.6910. On the downside, below 0.6794 minor support will turn intraday bias neutral and bring consolidations. But pullback should be contained above 0.6667 support to bring another rally.

In the bigger picture, current development argues that rise from 0.5913 (2024 low) is reversing whole down trend from 0.8006 (2021 high). Further rally should be seen to 61.8% retracement of 0.8006 to 0.5913 at 0.7206. This will remain the favored case as long as 0.6420 support holds, even in case of deep pullback.

Daily Pivots: (S1) 1.3764; (P) 1.3805; (R1) 1.3826; More...

Intraday bias in USD/CAD remains neutral at this point. On the downside, firm break of 1.3789 support will suggest that rebound from 1.3641 has completed. Bias will be back on the downside for 1.3538/3641 support zone. However, strong rebound from current level, followed by break of 1.3927, will resume the rebound from 1.3641, as part of the corrective pattern from 1.3538, towards 1.4139.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen as the pattern extends, and break of 1.3538 will target 61.8% retracement of 1.2005 to 1.4791 at 1.3069. For now, medium term outlook will be neutral until there are signs that the correction has completed.

Daily Pivots: (S1) 1.1698; (P) 1.1727; (R1) 1.1785; More….

Intraday bias in EUR/USD remains neutral at this point. Also, risk stays on the upside with 55 4H EMA (now at 1.1684) intact. Break of 1.1807 will resume whole rally from 1.1467, and target a retest on 1.1917 key resistance level. However, sustained trading below 55 4H EMA will bring deeper fall back to 1.1576 support instead.

In the bigger picture, as long as 55 W EMA (now at 1.1413) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 1.3434; (P) 1.3471; (R1) 1.3539; More...

Breach of 1.3494 resistance suggests that GBP/USD's pullback from 1.3567 has completed at 1.3342. Intraday bias is back on the upside for 1.3567. Firm break there will resume the rally from 1.3008 to retest 1.3787 high. However, break of 1.3342 will resume the fall from 1.3567 towards 1.3008.

In the bigger picture, price actions from 1.3787 (2025 high) are seen as a correction to the larger up trend from 1.3051 (2022 low). Deeper decline could be seen as the pattern extends, but downside should be contained by 38.2% retracement of 1.0351 to 1.3787 at 1.2474 to bring rebound. Break of 1.3787 for up trend resumption is expected at a later stage.

Daily Pivots: (S1) 0.7864; (P) 0.7915; (R1) 0.7941; More….

Intraday bias in USD/CHF remains neutral for the moment. Also, risk stays on the downside with 55 4H EMA (now at 0.7951) intact. Firm break of 0.7860 support will argue that larger down trend is ready to resume through 0.7828 low. Nevertheless, sustained break of 55 4H EMA will bring stronger rebound towards 0.8039 resistance. Overall, price actions from 0.7828 are seen as a corrective pattern, which could still extend.

In the bigger picture, price actions from 0.7828 are seen as a correction. Larger down trend from 1.0342 (2017 high) is still in progress. Break of 0.7828 will target 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).

Daily Pivots: (S1) 158.10; (P) 158.50; (R1) 158.82; More...

USD/JPY drops sharply in early European session, but stays in range below 159.44. Intraday bias remains neutral at this point. Also, with 156.10 support as well as 55 D EMA (now at 156.03) intact, further rise is expected. On the upside, break of 159.44 will resume the rise from 139.87 towards 161.94 high. However, firm break of 156.10 will confirm short term topping, and turn bias back to the downside for deeper pullback.

In the bigger picture, corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. Decisive break of 158.86 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 154.38 support will dampen this bullish view and extend the corrective range pattern with another falling leg.

Yen staged a sharp rebound in early European session on suspected intervention, interrupting a renewed bout of selling that followed the Bank of Japan policy decision. The bounce came after markets judged the BoJ’s message insufficiently hawkish to arrest currency weakness.

Before the reversal, USD/JPY pushed beyond 159, extending gains after BoJ Governor Kazuo Ueda stopped short of signaling imminent tightening. The move was swiftly countered, with the pair knocked down to 157.30 in a sharp, one-way drop characteristic of official action. Yet the rebound quickly stalled. Demand re-emerged above 157, keeping USD/JPY trapped within a 157.40–159.40 range, indicating that intervention has stabilized, but not reversed, the broader trend.

The price action nevertheless highlights an important point: Japanese authorities appear unwilling to tolerate a sustained move above 160. That line in the sand may deter momentum traders in the near term, but history suggests it will be retested once volatility fades.

The underlying policy story remains a headwind for Yen. The BoJ failed to offer any sense of urgency around further hikes, with just one policymaker advocating a move toward 1%. That vote count reinforces the view that the board remains cautious. Although the BoJ raised growth forecasts, inflation projections were left broadly unchanged, weakening the case for front-loaded tightening. The message remains one of gradualism rather than acceleration.

Incoming data have also sent mixed signals. Core inflation slowed sharply, partly due to energy subsidies, while PMI readings were exceptionally strong, highlighting solid activity momentum but limited near-term inflation pressure. Taken together, there is no strong signal for an April hike. Market pricing has converged decisively on June as the earliest realistic timing for the next BoJ move.

Elsewhere in FX, Kiwi eased modestly, likely reflecting profit-taking after stronger-than-expected inflation data earlier. Even so, the broader trend remains supportive, with markets increasingly pulling forward expectations for the first RBNZ hike, now seen as “odds on” by December 2026, with upside risk toward even earlier action. Aussie also remains firm. Strong PMI data added to the momentum built earlier in the week by robust employment figures, reinforcing expectations of a sooner-than-expected RBA hike.

On a weekly basis, Yen remains the worst-performing currency, despite today’s bounce. Dollar follows closely, still weighed down by lingering transatlantic political strains, with Loonie next weakest. At the top, Kiwi leads, followed by Aussie and Swiss Franc, while Euro and Sterling sit in the middle of the pack.

In Asia, Nikkei rose 0.29%. Hong Kong HSI rose 0.45%. China Shanghai SSE rose 0.33%. Singapore Strait Times is up 1.20%. Japan 10-year JGB yuield rose 0.012 to 2.252. Overnight, DOW rose 0.63%. S&P 500 rose 0.55%. NASDAQ rose 0.91%. 10-year yield fell -0.004 to 4.249.

BoJ holds rates, upgrades growth outlook, hawkish dissent keeps hike risk alive

The BoJ left its benchmark interest rate unchanged at 0.75%, in line with expectations, but the decision revealed persistent internal debate. Hawkish board member Hajime Takata proposed a hike toward 1%, citing upside risks to inflation, though the motion was voted down by the majority.

The central bank maintained its assessment that the 2% inflation target will be achieved in the latter half of the three-year projection period through fiscal 2027, keeping its medium-term normalization narrative intact despite near-term caution.

At the post-meeting press conference, Governor Kazuo Ueda reiterated a data-dependent tightening bias. He said the BoJ would "continue to raise rates if economic and price forecasts materialize", stressing that the pace and path of hikes would be determined meeting by meeting as conditions evolve.

In its quarterly outlook report, the BoJ upgraded growth forecasts, reflecting the impact of fiscal stimulus under Prime Minister Sanae Takaichi. The economy is now seen growing 0.9% in the current fiscal year and 1.0% next year, up from 0.7% previously. Inflation projections were largely unchanged, aside from a 0.1pp upward revision to 1.9% for fiscal 2026.

The BoJ highlighted risks from overseas growth and prices, adding "exchange rate developments are, compared to the past, more likely to affect prices."

Japan's CPI core falls to 2.4% with sharp energy drag, limited core-core cooling

Japan’s December CPI report showed sharp moderation in headline inflation, largely reflecting energy relief rather than broad-based disinflation. Headline CPI slowed to 2.1% yoy from 2.9%, the weakest pace since early 2022. Core CPI (ex-fresh food) fell from 3.0% to 2.4%, helped by government measures to stabilize gasoline prices.

However, the decline was far less pronounced beneath the surface. Core-core CPI (ex-fresh food and energy) edged down just 0.1pp to 2.9% yoy, highlighting the stickiness of domestic inflation. Food prices excluding fresh items remained elevated at 6.7% yoy, though the pace eased slightly from 7.0%. Rice prices were still up 34.4%, even as inflation in the staple continued to cool gradually from prior peaks.

Energy prices were the key drag, reversing into a -3.1% yoy decline as gasoline prices fell -7.1%, reflecting higher subsidies and preparation for a gasoline tax cut late in the month. While these policy measures are temporarily easing inflation readings, the modest pullback in core-core CPI suggests underlying price pressures remain too firm to ignore.

Japan PMI composite jumps to 52.8, manufacturing returns to growth

Japan’s January PMI readings delivered an upbeat signal, indicating a broadening recovery across the private sector, with PMI data pointing to the strongest expansion in 17 months. Manufacturing PMI rose from 50.0 to 51.1, returning to expansion. Services PMI jumped from 51.6 to 53.4. As a result, Composite PMI climbed from 51.1 to 52.8, signaling broad-based growth momentum.

According to Annabel Fiddes of S&P Global Market Intelligence, the data show a "solid start" to the year, supported primarily by accelerating services activity. Also, manufacturing output rose for the first time since June 2025, marking an important shift after a prolonged period of weakness.

The improvement was reinforced by the first increase in manufactured goods sales in more than three-and-a-half years, alongside rise in new export orders for the first time since early 2022.

However, business optimism weakened, reflecting concerns over rising costs, global uncertainty, labour shortages, and Japan’s ageing population, suggesting growth momentum may face headwinds later in the year.

Australia PMI composite surges to 55.0, manufacturing and services in solid expansion

Australia’s business activity accelerated sharply in January, pointing to a strong start to 2026. PMI Manufacturing rose from 51.6 to 52.4, while PMI Services surged from 51.1 to 56.0. As a result, PMI Composite jumped from 51.0 to 55.0, marking the joint-highest level since April 2022 and signaling a broad-based expansion.

According to Jingyi Pan of S&P Global Market Intelligence, the flash PMI data show that growth has become "more balanced", with "solid expansions evident across both manufacturing and services". The readings reflect resilient domestic demand and improving momentum entering the new year.

That said, forward-looking indicators were mixed. Faster new order growth contrasted with declining business confidence, particularly among service providers.

While output price inflation eased, driven by softer service-sector charges, rising manufacturing input costs remain a risk factor, suggesting inflation pressures could re-intensify later in the quarter.

NZ CPI pushes above target as RBNZ Breman's tone shifts

New Zealand inflation accelerated again. Headline CPI rose 3.1% yoy, up from 3.0% and above expectations of 3.0%, pushing inflation back above the RBNZ’s 1–3% target band. It marked the highest annual rate since Q2 2024.

The composition of inflation showed renewed pressure from tradeable prices. Tradeable CPI jumped from 2.2% yoy to 2.6% yoy, while non-tradeable CPI held steady at 3.5% yoy.

On a quarterly basis, CPI rose 0.6% q/q, exceeding expectations of 0.5%, with both tradeable (0.7% qoq) and non-tradeable (0.6% qoq) components contributing.

Notably, RBNZ Governor Anna Breman struck a firmer in a Bloomberg interview, pledging that policymakers will ensure inflation returns to the midpoint of the target band. She declined to push back against market pricing for a rate hike, saying policy decisions would be based on a "holistic view" of incoming data at the February meeting—marking a clear shift from her more neutral comments earlier this month.

USD/JPY Daily Outlook

Daily Pivots: (S1) 158.10; (P) 158.50; (R1) 158.82; More...

USD/JPY drops sharply in early European session, but stays in range below 159.44. Intraday bias remains neutral at this point. Also, with 156.10 support as well as 55 D EMA (now at 156.03) intact, further rise is expected. On the upside, break of 159.44 will resume the rise from 139.87 towards 161.94 high. However, firm break of 156.10 will confirm short term topping, and turn bias back to the downside for deeper pullback.

In the bigger picture, corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. Decisive break of 158.86 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 154.38 support will dampen this bullish view and extend the corrective range pattern with another falling leg.

Markets

Yesterday’s risk rebound lifted key US and European stock indices by 0.5% to 1.25%. Changes on US and German bond markets were minimal, but the dollar faced a tough time. EUR/USD moved from 1.1684 to 1.1755, closing in on first resistance at 1.1773/1.1808 (upside closing triangle formation/December top). A refocus on peace between Ukraine and Russia might be at play. New talks involving the US are scheduled in UAE. Today’s eco calendar contains global PMI’s, but these are unlikely to set the tone for trading. We look to overall risk sentiment and keep in mind that US President Trump in 2026 so far liked to “surprise” over the weekend. His pick of the new Fed chair is high on the agenda.

The Bank of Japan kept its policy rate unchanged this morning at 0.75% in an 8-1 majority vote. BoJ member Takata considered that the price stability target had been more or less achieved and that, with overseas economies being in a recovery phase, risks to prices in Japan were skewed to the upside. He proposed lifting the policy rate to 1%. In its quarterly outlook for economic activity and prices, the BoJ lifted its short-term growth path, mainly due to the effects of the government’s economic measures. It now expects real GDP growth of 0.9% and 1% in fiscal years 2025 & 2026 (up from 0.7% for both in October). The growth projection for FY 2027 was lowered from 1% to 0.8%. The headline inflation path was unchanged apart from a 0.1 ppt upward revision for FY 2026: 2.7%-1.9%-2%. More importantly, core-core CPI (excl. fresh food and energy) is now seen at 3%-2.2%-2.1% over the policy horizon up from 2.8%-2%-2% three months ago. The main factors that determine underlying inflation are an improving trend in the output gap towards positive territory and a greater than expected tightening of labor market conditions, partly due to a deceleration in the pace of increase in labor force participation of women and seniors. Upward pressure on wages and prices is likely to be stronger than suggested by the output gap, given that firms in many industries have started to face labor supply constraints. Risks to both economic activity and prices are generally balanced, but the BoJ mentions two specific upside inflation risks: firms’ wage- and price-setting behavior and its impact on inflation expectations and future development in FX rates and import prices. If the aforementioned outlook for economic activity and prices will be realized, the Bank of Japan will continue to raise the policy interest rate and adjust the degree of monetary accommodation. Japanese money market currently fully discount a next hike to 1% by the June meeting and see the EoY policy rate between 1.25% and 1.5%. The JGB yield curve flattens this morning with the front end creeping 3.4 bps higher while the very long end remains more in correction mode following this week’s earlier violent sell-off (-3 bps). Interestingly, BoJ governor Ueda at the press conference said that the BoJ will maintain close cooperation with government on deciding whether to conduct possible stabilizing bond (buying operations). USD/JPY holds near the recent highs (158.75) despite an overall weaker USD.

News and views

New Zealand inflation was higher than expected in Q4 2025 at 0.6% Q/Q and 3.1% Y/Y (from 3% in Q3) and returned north of the Reserve Bank of New Zealand’s 1-3% target range. It was the fastest pace since Q2 2024. While inflation slowed considerably from its 2022 peak, Statistics New-Zealand also mentions that inflation increased each quarter since Q4 2024. The largest contributors to annual inflation are electricity, local authority rates and rent. In a quarterly perspective, an increase in air transport prices was an important diver for higher prices. Tradeable inflation increased to 0.7% Q/Q. Price for non-tradeables rose by 0.6% Q/Q. The Q4 2025 outcome was also above the November RNBZ projection (2.7% Y/Y). At that meeting, the RBNZ in a 5-1 vote still cut the policy rate by 25 bps to 2.25% as it preferred to support output, even as there were already tentative signs of an economic rebound admittedly with still ample spare capacity. Markets now see two 25 bps rate hikes by end this year. While this might be a bit premature, the 2-y government bond yield today rises by 5 bps (3.32%). The Kiwi dollar yesterday already gained sharply against an overall weaker dollar and holds north of NZD/USD 0.59 (vs 0.57 one week ago).

Indian private sector growth recovered after losing some momentum at the end of last year. The composite output PMI rose to 59.5 (from 57.8), with both services activity (59.3) and manufacturing output (59.9) improving. The improvement was supported by job creation and a rebound in business confidence. At the same time, aggregate rates of input cost and output charge inflation remained moderate despite quickening since December. On another topic related to the Indian economy Bloomberg this morning runs an article that India’s holdings of US Treasures have fallen to $174bn, a five-year low, referring to US government data published last week. The move is linked to India and other regional countries diversifying their reserves away from US assets, including raising the share of gold in their reserves. Central bank action to support the local currency might also be in play.