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Daily Pivots: (S1) 1.3409; (P) 1.3447; (R1) 1.3504; More...

Intraday bias in GBP/USD remains neutral at this point. On the upside, break of 1.3567 will resume the rally from 1.3008 towards 1.3787 high. On the downside, break of 1.3389 will resume the fall from 1.3567. Sustained break of 55 D EMA (now at 1.3374) will argue that the decline is another falling leg in the corrective pattern from 1.3787. In this case, deeper fall should be seen back to 1.3008 support.

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) 0.7949; (P) 0.7984; (R1) 0.8011; More….

No change in USD/CHF's outlook and intraday bias remains neutral at this point. Corrective pattern from 0.7828 low is extending. On the upside, above 0.8016 will target 0.8123 resistance next. Nevertheless, break of 0.7905 support will resume the fall from 0.8123 to retest 0.7828 low. Firm break there will resume larger down trend.

In the bigger picture, price actions from 0.7828 are seen as a correction. Larger down trend from 1.0342 (2017 high) is in 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) 0.6686; (P) 0.6704; (R1) 0.6729; More...

AUD/USD is still bounded in consolidations below 0.6765 and intraday bias remains neutral. Further rally is in favor with 0.6659 support intact. On the upside, break of 0.6765 will resume the whole rise from 0.5913 and target 61.8% projection of 0.5913 to 0.6706 from 0.6420 at 0.6910. However, considering bearish divergence condition in 4H MACD, firm break of 0.6659 will confirm short term topping, and bring deeper correction back towards 0.6592 support.

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.

Daily Pivots: (S1) 1.3860; (P) 1.3889; (R1) 1.3911; More...

USD/CAD is staying in consolidations below 1.3917 temporary top and intraday bias remains neutral. Further rise is expected as long as 1.3789 minor support holds. Rise from 1.3641 is seen as the third leg of the corrective pattern from 1.3538. Above 1.3917 will target 1.4139 first. Break there will target 100% projection of 1.3538 to 1.4139 from 1.3641 at 1.4242.

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) 0.8653; (P) 0.8673; (R1) 0.8684; More…

EUR/GBP is extending consolidations above 0.8643 and intraday bias remains neutral. Risk stays on the downside with 0.8720 support turned resistance intact. On the downside, decisive break of 0.8631 cluster support (38.2% retracement of 0.8221 to 0.8663 at 0.8618) will pave the way to 61.8% retracement at 0.8466. Nevertheless, sustained break of 0.8720 will bring stronger rally back to 0.8796 resistance instead.

In the bigger picture, rise from 0.8221 medium term bottom (2024 low) is seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8622) should confirm that this corrective bounce has completed. In this case, deeper fall would be seen back to 0.8201/21 key support zone. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.

Daily Pivots: (S1) 1.7360; (P) 1.7399; (R1) 1.7426; More...

EUR/AUD is extending consolidations above 1.7287 and intraday bias remains neutral. Risk will stay on the downside as long as 1.7477 support turned resistance holds. Current decline is seen as the third leg of the corrective pattern from 1.8554. Below 1.7287 will target 1.7245 support, and then 1.6922 fibonacci level. Nevertheless, firm break of 1.7477 will indicate short term bottoming, and bring stronger rebound back to 55 D EMA (now at 1.7619).

In the bigger picture, the break of 55 W EMA (now at 1.7468) argues that fall from 1.8554 medium term top is already correcting whole up trend from 1.4281 (2022 low). Deeper decline is in favor to 38.2% retracement of 1.4281 to 1.8554 at 1.6922, and possibly below. Risk will stay on the downside as long as 1.8160 resistance holds, in case of strong rebound.

Daily Pivots: (S1) 0.9294; (P) 0.9308; (R1) 0.9319; More....

Intraday bias in EUR/CHF remains neutral at this point. On the downside, break of 0.9268 support will revive near term bearishness. Fall from 0.9394 should resume to retest 0.9178 low. Nevertheless, break of 0.9324 will extend the rebound form 0.9268 to 0.9394 resistance instead.

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 0.9362). 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.

Daily Pivots: (S1) 183.96; (P) 184.31; (R1) 184.88; More...

EUR/JPY's up trend resumed by breaking through 184.89 and intraday bias is back on the upside. Next target is 186.31 fibonacci level. Firm break there will pave the way to 138.2% projection of 151.06 to 173.87 from 172.24 at 189.94. For now, outlook will remain bullish as long as 182.60 support holds, in case of retreat.

In the bigger picture, up trend from 114.42 (2020 low) is in progress and should target 61.8% projection of 124.37 (2021 low) to 175.41 (2024 high) from 154.77 (2025 low) at 186.31. Firm break there will target 78.6% projection at 194.88. Outlook will remain bullish as long as 175.41 resistance turned support holds, even in case of deep pullback.

Markets

Markets yesterday morning were pondering the chances and/or the potential reach of a revival of the ‘Sell America’ trade as the US Department of Justice served Fed Chair Jerome Powell and the Fed with subpoenas related the renovation of the Fed building. Powell reacted forcefully to what he sees an new attack on Fed independence. In a first reaction in Aisa and Europe, US equities, the dollar and especially the ultra-long end of the curve suffered from rising US risk premia. However, tensions soon eased. If anything it turned out to be only a very light version of Sell America. US equities reversed early declines and even closed with marginal gains (S&P 500 +0.16%). The dollar indeed returned a limited part of its recent rebound. However, at a DXY close of 98.86 and EUR/USD at 1.167 the move was technically insignificant. US Treasuries underperformed Bunds, but bigger early session yield rises ended with a negligible steepening (2-y + 0.2 bps; 30-y +1.5 bps). The 3-y ($58 bln) and especially 10-y ($39 bln) US Treasury auction also met more than decent investor buying interest. Maybe the pushback also from Republican Senators on the attack against Fed independence mitigated the market reaction. In Europe, interest markets extended the recent (corrective?) easing with German yields declining between 1.2 bps (2-y) and 2.6 bps (30-y). Expected softer inflation at the start of the year made markets conclude that the debate on an ECB rate hike is premature.

Especially Japanese markets show rather forceful moves this morning as press reports indicate a growing chance of PM Takaichi calling snap elections that might already take place mid-February. Japanese equities this morning are rising sharply on an the prospect of a potential ongoing fiscal stimulus . At the same time, risk premia at the long and of the yield curve are rising sharply (30-y +8.1 bp to 3.5%). The yen at the same time weakens (USD/JPY 158.9, weakest level of the yen since July 2024). Japanese Fin Min Katayama expressing concerns on this one-way decline of the yen in a meeting with US Fin Min Scott Bessent, for now didn’t provide much support. In the US, President Trump added another layer of uncertainty on already complicated US trade relations as he announced a tariffs of 25% on goods from countries that are doing business with Iran. For now, it is unclear which countries will be affected and how this will be implemented. US (equity) markets take a wait-and-see approach. Futures show negligible losses. Regarding the eco data, the US December CPI takes center stage. Markets expect 0.3% M/M and 2.7% Y/Y both for core and headline inflation. Figures still might feel some noise from the shutdown. We don’t have a strong view on the risk to the outcome. Even so, a big downwards surprise is probably needed to reopen the debate on frontloading additional Fed easing. NY Fed president John Williams in comments overnight at least suggested that after the three consecutive rate cuts in H2 last year, the Fed is now well poisoned to stabilize the labour market and bring inflation back to target. There are few data in EMU, but we look out on any potential spill-overs from the sell-off at the long end of the Japanese yield curve to other markets. In this respect, the US Treasury also sells 30-y bonds. The dollar (except for USD/JPY) shows little of a clear directional trend.

News & Views

The European Commission in a plan outlined yesterday is considering a minimum price system for Chinese electric vehicles that would replace current import tariffs. The latter range up to 35% and were introduced after the EC concluded Chinese-made EVs enjoyed an unfair advantage from subsidies at home. Beijing retaliated but negotiations have since taken place to avoid the matter spiraling into an all-out trade war. The plan, under which Chinese exporters submit a minimum price proposal, annual volume limits as well as future investments in the region, all for the EC to then assess, should be seen in this context of defusing tensions.

The British Retail Consortium’s retail sales gauge rose by 1.2% in December, well below the 12-month average of 2.3%. Food sales rose 3.1%. The non-food category posted a 0.3% annual decline with both in-store and online sales falling in yearly terms. Same store sales rose 1% with a similar divergence seen in food (+2.7% y/y) and non-food (-0.5% y/y). BRC’s Chief Executive Dickinson noted “It was a drab Christmas for retailers, as sales growth slowed for the fourth consecutive month.” She explained food sales rose mainly due to ongoing food inflation and added that non-food sales fell flat as gifting items did worse than expected and consumers were holding out for discounts. Dickinson concluded that “These figures show that consumer spending remains cautious, with households squeezed by the rising cost of living. Now is the time to support struggling families […]”.

Daily Pivots: (S1) 212.07; (P) 212.55; (R1) 213.47; More...

GBP/JPY's rally accelerates higher today and intraday bias on the upside. Current up trend should now target 100% projection of 184.35 to 205.30 from 199.04 at 219.99 next. For now, outlook will stay bullish as long as 210.28 support holds, in case of retreat.

In the bigger picture, up trend from 123.94 (2020 low) is in progress. Next target is 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. On the downside, break of 205.30 resistance turned support is needed to indicate medium term topping. Otherwise, outlook will stay bullish even in case of deep pullback.