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Daily Pivots: (S1) 209.48; (P) 211.61; (R1) 212.73; More...

GBP/JPY accelerates lower and breached 209.61 support. But overall price actions from 214.83 are still seen as a consolidation pattern. Downside should be contained by 38.2% retracement of 197.47 to 214.83 at 208.19 to bring rebound. Break of 214.83/98 is expected at a later stage to resume larger up trend. However, firm break of 208.19 will argue that larger scale correction has already started.

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.

Daily Pivots: (S1) 182.72; (P) 184.36; (R1) 185.27; More...

While EUR/JPY's current fall is steep, overall price actions from 186.86 are still seen as a consolidation pattern. Downside should be contained by 38.2% retracement of 172.24 to 186.86 at 181.27 to bring rebound. Break of 186.86 resistance is expected at a later stage to resume the larger up trend. However, sustained break of 181.27 will indicate that larger scale correction is already underway.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Upside momentum has been diminishing as seen in bearish divergence condition in D MACD. But there is not clear sign of topping yet. On resumption, next target is 78.6% projection of 124.37 to 175.41 from 154.77 at 194.88 next. Meanwhile, outlook will stay bullish as long as 55 W EMA (now at 174.22) holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8695; (P) 0.8709; (R1) 0.8731; More…

Intraday bias in EUR/GBP remains neutral for the moment. On the upside, firm break of 0.8744 resistance will argue that fall from 0.8863 has completed at 0.8611 as a correction. Further rally should be seen back to retest 0.8863 high. On the downside, sustained break of 38.2% retracement of 0.8221 to 0.8663 at 0.8618 will carry larger bearish implications and turn outlook bearish.

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 0.8629) 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) 1.6782; (P) 1.6818; (R1) 1.6848; More...

EUR/AUD's fall is resuming by breaking 1.6759 support. Intraday bias is back on the downside. Next target is 138.2% projection of 1.8554 to 1.7245 from 1.8160 at 1.6351. On the upside, however, break of 1.7060 resistance will indicate short term bottoming, and turn bias back to the upside for stronger rebound.

In the bigger picture, fall from 1.8554 medium term top is still in progress. Sustained break of 38.2% retracement of 1.4281 to 1.8554 at 1.6922 will argue that it's already reversing whole up trend from 1.4281 (2022 low). Deeper fall would be seen to 61.8% retracement at 1.5913. For now, risk will stay on the downside as long as 55 D EMA (now at 1.7303) holds even in case of strong rebound.

Daily Pivots: (S1) 0.9105; (P) 0.9125; (R1) 0.9155; More....

Intraday bias in EUR/CHF remains on the downside at this point. Current down trend should extend to 261.8% projection of 0.9394 to 0.9268 from 0.9347 at 0.9017 next. On the upside, however, break of 0.9180 resistance will now indicate short term bottoming, and bring lengthier consolidations.

In the bigger picture, down trend from 0.9928 (2024 high) is still in progress with falling 55 W EMA (now at 0.9334) intact. Next target is 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. Outlook will stay bearish as long as 0.9394 resistance holds, in case of recovery.

Markets

Some more disappointing data came yesterday on the heels of last week’s sub-par set of labour market data. US retail sales failed to grow at the end of last year, missing expectations for a solid 0.4% expansion. The Q4 Employment Cost Index meanwhile rose at the slowest pace since 2021. It may ease some of the remaining concerns at the Fed about upside inflation risks. US yields dropped between 3.3 and 7.4 bps in a market that was already on high alert going into the delayed payrolls (and annual 2025 revision) release today ever since Fed Waller’s “Zero. Zip. Nada.” speech flagged the risk of basically no employment growth throughout last year. Long end outperformance pushed the likes of the 10-yr yield below 4.2% support to the YtD lows. German yields dropped 0.9-3.7 bps in sympathy. Corporate bond markets were all about Alphabet’s massive (AI) financing spree in which a 10-times oversubscribed sterling centennial obviously drew the biggest attention. JPY stood out in FX markets, rallying against all major peers on continued hopes for a Japanese revival under PM Takaichi and her supermajority. JGBs by the way also gave the government the benefit of the doubt from a fiscal perspective by dropping 6-8 bps at the long end of the curve. USD/JPY closed near the intraday lows just north of 153. EUR/JPY neared the January troughs around 182. EUR/USD stabilized near 1.19, EUR/GBP bounced back above 0.87 with sterling’s grace period following PM Starmer’s survival apparently already ending.

Japan’s yen is extending this week’s rebound today but we should add that it happens in thinned trading with Japanese markets closed for National Foundation Day. The US dollar remains in the defensive while Treasuries (in the futures market) are rising going into what possibly are going to be pivotal payrolls. The January edition is combined with the annual revision of last year. The risk for 2025 is that the +/- 600k cumulative job growth is going to be wiped out and more: expectations are for a -825k downward adjustment. This is where Fed Waller and his repeated calls for rate cuts to support a weakening labour market come into play. The bar for January is set at a 65k job growth with unemployment stabilizing at 4.4%. There are nuances to today’s numbers, such as seasonal effects, deportation efforts (leading to lower employment but with less impact on the unemployment rate as the supply pool shrinks) and productivity growth (leading to GDP expansion despite fewer or even no hirings). But we doubt these will be given any consideration in the current circumstances. We see asymmetric market risks with the bigger reaction – a weaker dollar, front-end curve outperformance and potentially weaker stocks – in case of a downside surprise. Belgium takes center stage in European politics with the European Industry Summit today ahead of tomorrow’s informal summit to boost European competitiveness.

News and views

China’s January price data published this morning confirmed the deflationary tendencies. Consumer price inflation was reported that 0.2% M/M, reducing the Y/Y measure from 0.8% in December to 0.2%. Both goods price (0.3% Y/Y from 1%) and services inflation (0.1% Y/Y from 0.6%) eased, suggesting absence of demand pressures. Core inflation slowed to 0.8% Y/Y from 1.2%. Producer prices turned slightly less negative in a yearly perspective, ‘rising’ from -1.9% Y/Y to -1.4% Y/Y, the ‘highest’ level since July 2024. Prices of producer goods to some extent have improved due to higher raw materials costs. However, prices of consumer goods leaving the factory gate declined further (-1.7% Y/Y from -1.3%). The yuan this morning maintains its recent gains. At USD/CNY 6.91, the yuan trades near the strongest levels against the US dollar since May 2023.

Deputy Governor of the Reserve Bank of Australia, Andrew Hauser, warned that too high inflation remains a challenge for the monetary policy committee. Hauser assessed that the some of the recent rebound in inflation ‘reflects growing underling pressure about a pick-up in demand against supply constraints in the economy’. The risk is for higher inflation to persist, a scenario the RBA can’t allow to occur. The RBA last week raised its policy rate by 25 bps to 3.85% after (trimmed mean) core inflation rose further north of the 2-3% inflation target. Markets see an 80% chance for a rate hike in May. The Aussie dollar extended gains after the comments, with AUD/USD jumping north of 0.71, nearing the early 2023 top.

Daily Pivots: (S1) 1.1878; (P) 1.1904; (R1) 1.1920; More….

Intraday bias in EUR/USD remains mildly on the upside for retesting 1.2081 high. Decisive break there and sustained trading above 1.2 psychological level will carry larger bullish implications. On the downside, however, sustained trading below 55 D EMA (now at 1.1749) will raise the chance of reversal on rejection by 1.2 psychological level, and target 1.1576 support for confirmation.

In the bigger picture, as long as 55 W EMA (now at 1.1470) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will add to the case of long term bullish trend reversal. Next medium term target will be 138.2% projection of 0.9534 to 1.1274 from 1.0176 at 1.2581. 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) 153.53; (P) 154.91; (R1) 155.76; More...

Intraday bias in USD/JPY stays on the downside for 152.07 support. Price actions from 159.44 are still seen as a corrective pattern only. Hence, downside should be contained by 38.2% retracement of 139.87 to 159.44 at 151.96 to bring rebound. On the upside, above 154.57 minor resistance will turn intraday bias neutral first. However, sustained break of 151.96 will argue suggests that it's reversing the rise from 139.87 already.

In the bigger picture, outlook is unchanged that 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. This will remain the favored case as long as 55 W EMA (now at 151.68) holds. However, sustained break of 55 W EMA will argue that the pattern from 161.94 is extending with another falling leg.

Daily Pivots: (S1) 1.3621; (P) 1.3660; (R1) 1.3682; More...

Intraday bias in GBP/USD remains neutral and outlook is unchanged. On the upside, firm break of 1.3732 resistance will suggest that pullback from 1.3867 has completed as a correction at 1.3507. Retest of 1.3867 should be seen first. Firm break there will resume larger up trend towards 1.4284 key resistance. On the downside, however, sustained trading below 55 D EMA (now at 1.3497) will raise the chance of larger scale correction, and target 1.3342 support for confirmation.

In the bigger picture, rise from 1.0351 (2022 low) is resuming by breaking through 1.3787 high. Further rally should be seen to 1.4284 key resistance (2021 high). Decisive break there will add to the case of long term bullish trend reversal. For now, outlook will stay bullish as long as 1.3008 support holds, even in case of deep pullback.

Daily Pivots: (S1) 0.7645; (P) 0.7666; (R1) 0.7704; More….

USD/CHF's fall is in progress and intraday bias stays on the downside for retesting 0.7603 low. Decisive break there will resume larger down trend to 0.7382 projection level next. On the upside, though, above 0.7687 minor resistance will delay the bearish case and extend the corrective pattern from 0.7603 with another leg.

In the bigger picture, larger down trend from 1.0342 (2017 high) is still in progress. Next target is 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 55 W EMA (now at 0.8152) holds.