Sample Category Title

Pivot (invalidation): 14.3900

Our preference Short positions below 14.3900 with targets at 14.2400 & 14.1900 in extension.

Alternative scenario Above 14.3900 look for further upside with 14.4300 & 14.5000 as targets.

Comment As Long as 14.3900 is resistance, look for choppy price action with a bearish bias.

Pivot (invalidation): 1229.00

Our preference Short positions below 1229.00 with targets at 1220.00 & 1215.50 in extension.

Alternative scenario Above 1229.00 look for further upside with 1233.00 & 1236.00 as targets.

Comment As Long as the resistance at 1229.00 is not surpassed, the risk of the break below 1220.00 remains high.

Daily Pivots: (S1) 144.46; (P) 145.15; (R1) 145.76; More...

GBP/JPY is still bounded in range of 144.02/145.99 as consolidation continues. Intraday bias remains neutral first. As long as 145.99 resistance holds, further decline is mildly in favor. On the downside, break of 144.02 will resume the fall from 149.48 and target 139.39/47 key support zone. On the upside, above 145.99 support turned resistance could bring stronger rebound. But near tem outlook will be neutral at best as long as 149.70 key resistance holds.

In the bigger picture, as long as 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) holds, up trend from 122.36 (2016 low) would still extend beyond 156.69 high. However, decisive break of 139.29/47 will suggest that such up trend is completed and turn outlook bearish. In that case, next target is 61.8% retracement at 135.43.

Daily Pivots: (S1) 128.87; (P) 129.08; (R1) 129.51; More....

Intraday bias in EUR/JPY is mildly on the upside and further recovery could be seen. But after all, price actions from 127.49 are seen as a corrective pattern. And, near term outlook remains mildly bearish as long as 130.14 resistance holds. On the downside, below 128.24 minor support will target 126.63 support first. Break there will resume whole fall from 133.12 and target 124.08/89 support zone. On the upside, however, break of 130.14 will resume the rebound from 126.63 towards 133.12 resistance.

In the bigger picture, as long as 124.08 key resistance turn supported holds, larger up trend from 109.03 (2016 low) is still in progress. Firm break of 137.49 structural resistance will target 141.04/149.76 resistance zone next. However, decisive break of 124.08 will argue that such rise from 109.03 has completed and turn outlook bearish. In that case, deeper fall would be seen to 61.8% retracement of 109.03 to 137.49 at 119.90.

• Rates: Will EMU inflation readings further undermine Draghi's view?
  EMU inflation readings risk undermining ECB President Draghi's rhetoric about vigorous upward core inflationary pressures ahead after eco data already tackled his view on the “temporary” economic dip. The combination could cause dovish positioning into the December 13 ECB meeting. The Trump/Xi Jingping meeting might keep some investors at bay today.
• Currencies: Dollar decline slows ahead of Xi-Trump meeting
  The USD remained in the defensive after Friday's perceived soft comments from Fed Powell, but soon showed tentative signs of a bottoming out process. Soft EMU inflation data are a risk for the euro today. However, currency markets will keep a close eye at the Xi-Trump meeting. A positive outcome might be (moderately) EUR/USD supportive.

The Sunrise Headlines

• US stock markets (-0.25%) couldn't build on Thursday's impressive gains suggesting some over interpretation of Fed Powell's comments. Most Asian bourses cling to small gains with Korea and Australia underperforming.
• FOMC Minutes pave the way for a December rate hike, but show that the Fed might reduce its forward guidance by changing the reference to “further gradual rate hikes” into something more related to data dependence.
• The Fed might cut the IOER (interest on excess reserves rate; 2.2%) ahead of the December meeting to keep the Fed funds rate, which has risen to the IOER well within the 2%-2.25% target range
• The WSJ reports that the US and China are exploring a trade deal with the US holding off additional tariffs through spring in exchange for talks looking at big changes in Chinese economy policy.
• The Bank of Korea hiked its policy rate for the 1st time this year and the 2nd time this cycle, from 1.5% to 1.75%, to ease financial imbalances. Two dissenters pointed to high economic uncertainty, but policy is still seen as accommodative.
• November Chinese PMI's fell more than expected in the services (53.4) and manufacturing (50) sector. Mixed Japanese data showed an uptick of the jobless rate (2.4%), unchanged inflation (1% Y/Y) and strong production (1.9% M/M).
• Today's economic calendar contains EMU inflation and unemployment rate, Chicago PMI and speeches by Fed Williams, ECB Mersch and ECB Coeuré. G20 leaders convene in Buenos Aires.

Currencies: Dollar Decline Slows Ahead Of Xi-Trump Meeting

Dollar decline slows ahead of Trump-Xi meetig

Global (FX) markets adapted positions yesterday in the wake of Thursday's perceived soft Powell comments. However, the ‘Powell momentum-trade' eased rather soon. Equities ran into resistance, the decline in US yields halted and so did the setback in USD. US spending en income data were OK, but price deflators marginally softer than expected. EUR/USD retested the 1.14 area, but the USD prevented further losses. The Fed minutes suggested the FOMC will act more data dependent next year. There was no big market reaction. EUR/USD closed the day at 1.1393. USD/JPY also bottomed after an initial decline in Asian trading, despite the erosion of equity sentiment. The pair finished at 113.48. Trading on most Asian equity markets develops in a guarded fashion overnight as investors await the outcome of the meeting between President Trump and Chinese President Xi Jinping. The official Chinese PMI's were below consensus and suggest a further slowdown, but had no big impact on trading. The (tradeweighted) dollar is going nowhere.

Today's eco calendar contains the Chicago PMI and EMU inflation. Fed Williams speaks in New York. EMU inflation is expected to ease from 2.2% to 2.1% (core stable 1.1%). A negative surprise, especially in the core measure, might question the ECB's intentions to normalize policy. However, the impact on EUR/USD might be modest with markets also pondering the Fed rate hike path. Global FX markets will proably stay in wait-and-see mode awaiting any progress in the Chinese-US trade dispute. A construtive outcome might be slightly EUR/USD positive.

Wednesday's Powell comments capped recent USD strength, allowing EUR/USD to rebound in the 1.1217/1.1621 range. Some more USD softness might be on the card, but we don't expect the USD to weaken beyond key technical levels. Interest rate markets are already positioned for a very soft 2019 Fed scenario (about one hike). We don't expect a EUR/USD topside break anytime soon. Sterling declined further yesterday as UK PM May formally repeated that the rejection of her Brexit plan will likely result in a chaotic no deal scenario. EUR/GBP rebounded north of 0.89. Of late, there is ever more talk that a rejection of May's Brexit deal might lead to a second referendum on the issue. However, for now, the path toward the Brexit vote and its possible consequences is too foggy for markets to already draw any positive conclusions for sterling.

EUR/USD returns into ‘neutral' territory after Fed Powell's comments

Daily Pivots: (S1) 0.8871; (P) 0.8896; (R1) 0.8938; More...

Intraday bias in EUR/GBP remains neutral first. On the upside, firm break of 0.8939 resistance will confirm completion of the fall from 0.9098 and turn outlook bullish for this resistance. On the downside, below 0.8810 will turn bias to the downside for 0.8655 low instead.

In the bigger picture, EUR/GBP is seen as staying in long term range pattern started at 0.9304 (2016 high). Sustained break of 0.8939 resistance will confirm that it's in a medium term rising leg for 0.9098 and above. And for now, in case of another fall, downside will likely be contained by 0.8620/55 support zone to bring rebound.

Daily Pivots: (S1) 1.5518; (P) 1.5554; (R1) 1.5604; More....

EUR/AUD recovered after breaching 1.5519 and intraday bias is turned neutral first. On the downside, sustained break of 1.5519 will resume the fall from 1.6357 and target 1.5271/5313 cluster support zone next. On the upside, above 1.5633 minor resistance will delay the bearish case and extend the consolidation from 1.5519 with another rise. But upside should be limited by 38.2% retracement of 1.6357 to 1.5519 at 1.5839 to bring fall resumption eventually.

In the bigger picture, current development argues that up trend from 1.3624 (2017 low) is possibly completed at 1.6357, ahead of 1.6587 (2015 high). This is supported by bearish divergence condition in weekly MACD. Deeper decline is now in favor to 1.5271 cluster support (38.2% retracement of 1.3624 to 1.6357 at 1.5313). Break will target 61.8% retracement at 1.4668. On the upside, break of 1.5984 support turned resistance is now needed to revive the prior medium term up trend. Otherwise, further decline will be in favor even in case of strong interim rebound.

Daily Pivots: (S1) 1.1307; (P) 1.1330; (R1) 1.1370; More...

EUR/CHF rebounded strongly after hitting 1.1260 and intraday bias is turned neutral first. On the upside, firm break of 1.1356 resistance will argue that the pull back from 1.1501 has completed at 1.1260. In that case, further rise would be seen back to retest 1.1501.

In the bigger picture, price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by support zone of 1.1198 (2016 high) and 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to complete it and bring rebound. This cluster level is in proximity to long term channel support (now at 1.1240) too. A break of 1.2 key resistance is still expected in the medium term long term. However, sustained break of the mentioned support zone will mark reversal of the long term trend. In that case, 1.0629 key support will be back into focus.

EUR/USD

Current level - 1.1392

A possible test around the 1.1420 zone. If the test to surpass the level fails, we can expect continuation of the downtrend move seen on the higher time frames, with first bullish resistance at 1.1300.

USD/JPY

Current level - 113.37

We witnessed first test of the key support level 113.20. It's possible to see some upward move in the short term, but the lack of new highs on the bigger time frames can suggest loss of momentum and possible range coming. Critical resistance for the upward move is the 114.00 level.

GBP/USD

Current level - 1.2781

The political tensions around the Brexit deal weigh on the pound. We can see a third test for this month a a possible breakthrough of 1.2730. This will clear the way to continue the down move to 1.2200  To witness an alternative scenario the pair must break the key resistance at 1.2860 and afterwards 1.3300.

USDCAD returned some of the gains that posted on November 28, completing a five-month high around 1.3360. The pair has been trading in an ascending movement over the last almost two months, but in case of a penetration of the trend line it could move lower in the near term. Also, when looking at the bigger picture the pair has a clear upside trend after its rebound on the 1.2060 support level.

From the technical point of view, the RSI indicator is flattening in positive territory, failing to provide a sustained move higher, while the MACD oscillator is moving sideways near the trigger line in the bullish zone. The 20- and 40-simple moving averages (SMAs) could act as strong support levels for traders, as the price holds above them.

If the price successfully surpasses the 1.3360 multi-month high, it could hit the 1-year peak of 1.3385, achieved on June 27. More advances could send the market even higher, increasing the chances of a fresh high in the long-term view. The next resistance is coming from the 1.3550 level, where it topped on May 28.

In the event of negative pressures and a slip below the short-term rising trend line as well as below the 20-day simple moving average (SMA) the pair could challenge the 40-SMA level near 1.3136, before heading towards the 23.6% Fibonacci retracement level of the upleg from 1.2060 to 1.3385, around 1.3072.

Overall, the pair seems to be in an upside tendency in the short- and long-term view, as it holds above both rising trend lines.