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Daily Pivots: (S1) 208.89; (P) 209.87; (R1) 211.28; More...

Intraday bias in GBP/JPY remains on the upside for the moment. Pull back from 214.98 has completed as a near term correction at 207.20. Further rise would be seen to retest 214.98 first. Firm break there will resume larger up trend. For now, risk will stay on the upside as long as 207.20 holds, in case of retreat.

In the bigger picture, current development argues that price actions from 214.98 might be a near term consolidation pattern only. That is, larger up trend from 123.94 (2020 low) is still in progress. Firm break of 214.98 will target 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. On the downside, though, break of 207.20 will revive that case that it's already in a larger scale correction.

Daily Pivots: (S1) 182.42; (P) 183.30; (R1) 184.44; More...

Intraday bias in EUR/JPY stays mildly on the upside for the moment. Near term corrective fall from 187.86 could have completed at 180.78. Further rise should be seen back to retest 186.22/86 resistance zone. On the downside, though, below 181.96 will bring another decline to 38.2% retracement of 172.24 to 186.86 at 181.27.

In the bigger picture, current development suggests that price actions from 186.86 are merely a near term corrective pattern. In other words, the long term up trend is still in progress. Firm break of 186.86 will pave the way to 78.6% projection of 124.37 (2022 low) to 175.41 (2025 high) from 154.77 at 194.88 next. This will now remain the favored case as long as 180.78 support holds.

Daily Pivots: (S1) 1.6641; (P) 1.6696; (R1) 1.6736; More...

Intraday bias in EUR/AUD is back on the downside with break of 1.6620 support. Fall from 1.8554 is resuming and should target 138.2% projection of 1.8554 to 1.7245 from 1.8160 at 1.6351 next. Near term outlook will remain bearish as long as 1.6830 resistance holds, in case of recovery.

In the bigger picture, fall from 1.8554 medium term top is seen as reversing the whole up trend from 1.4281 (2022 low). Deeper decline should be seen to 61.8% retracement of 1.4281 to 1.8554 at 1.5913, which is slightly below 1.5963 structural support. For now, risk will stay on the downside as long as 1.7245 support turned resistance holds, even in case of strong rebound.

Daily Pivots: (S1) 0.8710; (P) 0.8727; (R1) 0.8745; More…

Intraday bias in EUR/GBP remains neutral for the moment. On the upside, decisive break of 0.8744 resistance. should confirm that fall from 0.8863 has completed as a correction at 0.8661. Further rise should then be seen back to retest 0.8663 high. On the downside, break of 0.8685 support will turn bias back to the downside for 0.8611. 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 0.8636) 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) 0.9100; (P) 0.9123; (R1) 0.9135; More....

EUR/CHF is still bounded in consolidations above 0.9092 and intraday bias remains neutral. Stronger rebound might be seen but upside should be limited by 38.2% retracement of 0.9394 to 0.9092 at 0.9207. On the downside, firm break of 0.9092 will resume larger down trend.

In the bigger picture, down trend from 0.9928 (2024 high) is still in progress with falling 55 W EMA (now at 0.9326) 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 rebound.

Markets

AI and tariff related uncertainty moved a bit to the back ground yesterday as drivers for daily trading/sentiment. (US) equities recovered (Nasdaq +1.04%) as investors pondered how to position in the wake of the recent debate on the potential disruptive effects of AI on (separate) economic sectors. For now its far less easy to draw any firm conclusions of the AI-debate for central bank policy and rates’ markets. Fed governor Lisa Cook yesterday elaborated on the topic, but her main message is that it might take plenty of time for the Fed to have a clear view on how AI will affect its policy and what it means for the neutral rate. A bit remarkable, Lisa Cook indicated that it might not be appropriate/evident for the Fed to counter an AI-driven rise in unemployment with a stimulative demand-side policy. Whatever, for now, most Fed members (Goolsbee, Collins, Barkin,…) are holding to the line that more confirmation on goods disinflation is needed for the Fed to cut rates further. US yields held relatively tight ranges, changing between +2.3 bps (2-y) and -2 bps (30-y). US consumer confidence (Conference Board) was better than expected both on the assessment for current conditions and expectations, but had hardly any impact on trading. German yields changed less than 1 bp across the curve. The dollar gained marginally, but also mostly held tight ranges (DXY close 97,84; EUR/USD close 1.17). The yen underperformed on headlines that PM Takaichi in a meeting with the BOJ governor Ueda showed concerns on a more restrictive BOJ policy. In a hearing before the UK Parliament’s Treasury Select Committee, BoE governor Bailey confirmed that he expects inflation to drop to 2% in Spring, but didn’t formally engage on March rate cut yet (“It’s a genuinely open question”), amongst others as services inflation didn’t decline as much as hoped. The BoE governor also elaborated on higher productivity causing some dishoarding of labour in the economy. BoE economist Phil still warned on upside underlying inflation risks. Even so, UK gilts’ performance didn’t profoundly deviated from Bunds. UK Money markets still see about 75% chance of a March 25 bps rate cut. Sterling gained marginally on the day (EUR/GBP close 0.873).

Overnight, in his State of the Union address, US president Trump basically defended his policy, including his cost of living approach, but didn’t flag much new policy initiatives. Asian (equity) markets mostly start the day in risk-on modus, joining yesterday’s rebound in the US. US yields gain a few bps. The dollar eases modestly. The yen again underperforms (see below). The yuan extends its uptrend (USD/CNY 6.868). The eco calendar in the US and EMU is again very thin. After the close of US markets Nvidia will publish results. Markets also will continue to keep an eye on the results of software companies as the debate on the impact of AI on other sectors develops.

News & Views

Australian inflation slowed from 1% M/M to +0.4% M/M in January, but this helped stabilizing the annual number at 3.8% Y/Y. Consensus was looking for a slight moderation to 3.7%. The largest contributor to annual inflation was housing (6.8% Y/Y from 5.5% in December). Electricity prices (+32.2% Y/Y from 21.5% Y/Y) remain influenced by government rebate programmes. Food inflation remains high at 3.9% Y/Y. A key measure of underlying inflation (for the Reserve Bank of Australia), the trimmed mean, accelerated from 0.2% M/M to 0.3% M/M and from 3.3% Y/Y to 3.4% Y/Y. Today’s inflation numbers bolster bets that the central bank could already follow up on its inaugural 25 bps rate hike (earlier this month) by the time of the May policy meeting (92%). The market implied probability of back-to-back action in March is slim (16%). AUD/USD profits this morning, moving back above 0.71 and targeting the YtD high at 0.7147.

Japanese PM Takaichi nominated two candidates to fill seats opening up on the Bank of Japan’s policy board. Both Toichiro Asada and Ayano Sato are considered to share the PM’s reflationist views. Yesterday the Japanese yen already lost ground after the PM in a meeting with BoJ governor Ueda voiced opposition against more rate hikes. The two nominees, if approved by both houses of Japanese parliament, are expected to tilt the balance on the BoJ board to the dovish side. The Japanese yield curve bear steepens this morning with the long end rising by up to 7.6 bps higher (driven by inflation expectations). USD/JPY initially spiked from 155.50 to 156, but the move petered out.

Daily Pivots: (S1) 1.1760; (P) 1.1779; (R1) 1.1791; More….

Intraday bias in EUR/USD remains neutral for the moment, as range trading continues. Near term risk will remain on the downside as long as 1.1928 resistance holds. Below 1.1740 temporary low will target 1.1576 support next. Firm break there should confirm rejection by 1.2 key psychological level and turn near term outlook bearish. However, break of 1.1928 argue that fall from 1.2081 has completed as a correction, and revive near term bullishness. Retest of 1.2081 should then be seen next.

In the bigger picture, as long as 55 W EMA (now at 1.1494) 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) 0.7727; (P) 0.7746; (R1) 0.7762; More….

Intraday bias in USD/CHF remains neutral for the moment and outlook is unchanged. Consolidation pattern from 0.7603 is still in progress. In case of stronger rise, upside upside should be limited by 55 D EMA (now at 0.7828) to complete the pattern. On the downside, below 0.7627 will bring retest of 0.7603. Firm break there will resume larger down trend, and target 0.7382 projection level next. However, sustained break of 55 D EMA will indicate that a larger scale corrective bounce in underway and target 0.8039 resistance next.

In the bigger picture, 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 0.8123 resistance holds.

Daily Pivots: (S1) 1.3460; (P) 1.3498; (R1) 1.3527; More...

Intraday bias in GBP/USD remains neutral for the moment as range trading continues above 1.3432. On the downside, below 1.3432 will resume the fall from 1.3867 to 1.3342 support. Firm break there should confirm that it's already correcting the whole rise from 1.2099. However, break of 1.3711 resistance will argue that the decline has completed as a near term correction, and turn bias back to the upside for retesting 1.3867.

In the bigger picture, as long as 1.3008 support holds, rise from 1.3051 (2022 low) should still be in progress for 1.4284 key resistance (2021 high). Decisive break there will add to the case of long term bullish trend reversal. However, firm break of 1.3008 will raise the chance of medium term bearish reversal and target 1.2099 support next.

Daily Pivots: (S1) 154.86; (P) 155.57; (R1) 156.61; More...

USD/JPY's rise from 152.25 is still in progress and intraday bias remains on the upside for 157.65 resistance. Firm break there will target a retest on 159.44 high. On the downside, below 153.98 minor support will turn intraday bias neutral again first. Overall, with 38.2% retracement of 139.87 to 159.44 at 151.96 intact, price actions from 159.44 are seen as a corrective pattern. Also, rise from 139.87 is expected to resume through 159.44 at a later stage.

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 151.93) holds. However, sustained break of 55 W EMA will argue that the pattern from 161.94 is extending with another falling leg.