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USDJPY (111.01): The USDJPY currency pair maintained strong gains as the price inches closer to 111.21. We expect to see a reversal at this level which could see some downside in the currency pair. The lower support at 109.74 remains a key level of interest, and the USDJPY could maintain a sideways range as a result. If the bullish momentum will push the USDJPY higher, then we could expect further gains on a successful breakout above 111.21.

EURUSD (1.1278): The euro currency reversed gains after a brief rally to the resistance level of 1.1327. However, price action failed to capitalize on the benefits and ended up breaking down lower. This leads to a divergence on the charts with the current lows reflected with a higher low in price. A bullish follow through here could see the EURUSD retesting the resistance level of 1.1327 followed by a move to 1.1435.

Daily Pivots: (S1) 1.1233; (P) 1.1288; (R1) 1.1315; More.....

Break of 1.1257 suggests decline resumption in EUR/USD. Intraday bias is back on the downside for 1.1215 support. Break will resume larger down trend from 1.2555 to 1.1186 fibonacci level. On the upside, break of 1.1341 resistance is needed to indicate short term bottoming. Otherwise, outlook will remain cautiously bearish in case of recovery.

In the bigger picture, as long as 1.1814 resistance holds, down trend down trend from 1.2555 medium term top is still in progress and should target 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. However, break of 1.1814 will confirm completion of such down trend and turn medium term outlook bullish.

The U.S. dollar recovered from the losses from Wednesday led by slightly better inflation report and budget deficit narrowed to $13.5 billion year on year from $23.2 billion.

On the economic front, data from the UK showed inflation fell more than expected to 1.8%. Economists polled were expecting a decline to 1.9%. The core inflation rate increased steadily to 1.9%.

In the Eurozone, industrial production decreased more than expected to 0.9%. Economists forecast a decline to 0.4% on the month.

Sweden's Riksbank held its monetary policy meeting yesterday. The repo rate kept at -0.25% as expected. The central bank signaled that it would hike rates once more during the second half of the year which would bring the repo rate to zero percent.

In the United States, consumer prices stayed flat during January. The core inflation rate rose by 0.2% which was within expectations. However, yearly, headline inflation rose to 1.6%, which scored better than expected, while core inflation kept stable at 2.2%.

More data

The markets opened to the quarterly GDP data from Japan. Data showed that Japan’s GDP in the fourth quarter of 2018 advanced 0.3% This was slightly slower than the median expectations of a 0.4% increase. Still, the fourth quarter GDP was better compared to the third quarter's contraction of 0.6%.

China released the monthly trade balance figures which advanced to 39.2 billion against expectations of a decline to $33.5 billion.

The European trading session will start with the GDP figures for Germany for the fourth quarter. Data should show that Germany’s GDP advanced 0.1% on the quarter ending December 2018. This follows a 0.2% decline in the second quarter marking a contraction in the economy.

The flash GDP figures for the Eurozone are next and no changes are expected as the Eurozone’s economy is expected to be confirmed at 0.2% growth rate for the fourth quarter of 2018.

The NY trading session will see the manufacturing sales report from Canada followed by the retail sales report from the United States.

U.S. retail sales should see a 0.1% increase this month, slightly lower than the 0.2% increase from the month before. Core retail sales are expected to remain flat during the month after increasing 0.2% previously.

Producer prices index data is also on the tap today. Headline PPI should rise by 0.1% on the month while core PPI is expected to grow by 0.2% following a 0.1% decline in December.

Daily Pivots: (S1) 1.2808; (P) 1.2883; (R1) 1.2922; More....

GBP/USD's break of 1.2832 temporary low suggests resumption of fall from 1.3217. Intraday bias is back on the downside. As noted before, we're holding on to the view that rebound from 1.2391 has completed at 1.3217 already, after rejection by 1.3174 key resistance. Further decline should be seen to retest 1.2391 low. On the upside, break of 1.2958 resistance is needed to be the first sign of short term bottoming. Otherwise, further decline is expected even in case of recovery.

In the bigger picture, the rejection by 1.3174 key resistance revived the original view on GBP/USD. That is, decline from 1.4376 is possibly resuming long term down trend from 2.1161 (2007 high). Firm break of 1.2391 will solidify this bearish case and target 1.1946 (2016 low). However, decisive break of 1.3174 will invalidate this bearish case again and turn outlook bullish.

The US dollar is now testing the key 111.00 level against the Japanese yen currency after buyers easily broke through the 110.80 resistance area. Strong technical resistance is seen around the 111.10 level, although the 111.40 level remains the target for bulls. The USDJPY pair risks losing recent bullish momentum if sellers force price back under the 110.40 support level.

The USDJPY pair is strongly bullish while trading above the 110.80 level, key technical resistance is found at the 111.10 and 111.40 levels.

If the USDJPY pair moves below the 110.80 level, sellers may test towards the 110.40 and 110.00 support levels.

Daily Pivots: (S1) 110.59; (P) 110.83; (R1) 111.23; More...

USD/JPY's rally extends to as high as 111.13 so far today. The sustained break of 61.8% retracement of 114.54 to 104.69 at 110.77 dampened our bearish view. Intraday bias is remains on the upside and further rise would be seen to 114.54 resistance. On the downside, break of 110.34 is now needed to be the first sign of short term topping. Otherwise, outlook will stay mildly bullish in case of retreat.

In the bigger picture, the stronger than expected rebound from 104.69 and firm break of 55 day EMA argues that decline from 114.54 has completed at 104.69 already. Such decline is seen as a leg in the corrective pattern from 118.65, which might be finished too. Decisive break of 114.54 will confirm this case and target 118.65 and above. On the downside, break of 108.49 support will turn focus back to 104.62/9 support zone instead.

The euro has fallen to fresh monthly trading low against the greenback after the eurozone economy posted much weaker than expected data and the US dollar reversed direction. The EURUSD pair is heavily bearish while trading below the 1.1260 level and may soon challenge its multi-year trading low, around the 1.1215 level. Traders now await the release of key eurozone GDP this morning, with a weaker than expected figure likely to put further downward pressure on the euro.

The EURUSD pair is heavily bearish while trading below the 1.1260 level, key technical support is found at the 1.1215 and 1.1180 levels.

If the EURUSD pair holds above the 1.1260 level, buyers may test towards the 1.1280 and 1.1310 resistance levels.

Bitcoin is trading inside a triangle pattern on the lower time frames, with the BTCUSD pair once again confined to extremely narrow ranges. Bulls failed to make progress about the $3,700 level, as the former weekly rally in the number one cryptocurrency stalls. A break below the triangle pattern would likely provoke a technical test of the important $3,460 support level.

The BTCUSD pair is strongly bullish while trading above the $3,700 level, key technical resistance is found at the $3,960 and $4,200 levels.

If the BTCUSD pair trades below the $3,460 level, key support remains at the $3,280 and $3,120 levels.

Daily Pivots: (S1) 1.0059; (P) 1.0077; (R1) 1.0110; More....

USD/CHF's rise resumed after brief retreat and intraday bias is back on the upside. Current rise from 0.9716 is in progress for 1.0128 resistance. Decisive break there will confirm resumption of up trend from 0.9186. Next target will be 100% projection of 0.9541 to 1.0128 from 0.9716 at 1.0303. On the downside, below 1.0043 minor support will turn intraday bias neutral and bring consolidation again.

In the bigger picture, USD/CHF drew strong support from medium term trend line and rebounded. That suggests rise from 0.9186 is still in progress. Further break of 1.0128 will confirm up trend resumption and target 1.0342 key resistance. Nevertheless, break of 0.9716 will dampen this bullish view and at least bring deeper fall to 0.9541 key support.