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GBPUSD managed to close Monday’s downside opening gap, rallying back above the 1.3100 handle. The MACD has flattened slightly above its red signal line and in positive territory, while the RSI has somewhat improved but continues to hold near its 50-neutral mark, both suggesting a neutral-to-positive bias in the short-term. Trend signals are also positive as far as the 20-day (simple) moving average (MA) continues to increase its distance above the 50-day MA and the price trades above the Ichimoku cloud.

An extension higher is expected to find immediate resistance around 1.3216, a frequently approached level in the past five months. Slightly above market actions may retest the area between 1.3256 and 1.3297 formed by the peaks on October 12 and September 20 respectively, while in case bulls overcome that obstacle too, the next level to watch could be July’s high of 1.3361. Additional gains above that mark would confirm that the rebound off 1.2660 is sustainable and thus the upward trend may continue.

Alternatively, a dip in the price may meet support around the 1.3100 psychological level, while lower the 1.3048 mark which restricted both upside and downside corrections in the past would be in focus as well. In case of steeper declines, bears may target July’s trough of 1.2956 ahead of the 1.2922 bottom on October 3.

In the medium-term picture, GBPUSD remains neutral as long as the 1.3161-1.2660 range holds active.

Daily Pivots: (S1) 146.47; (P) 147.03; (R1) 147.56; More...

Intraday bias in GBP/JPY remains neutral as consolidation from 149.70 is extended. Deeper pull back cannot be ruled out. After fall, outlook remains cautiously bullish as long as 145.67 resistance turned support holds. On the upside, above 149.70 will target 153.84/156.69 resistance zone next. However, break of 145.67 will suggest that the rebound from 139.88 has completed and turn near term outlook bearish again.

In the bigger picture, current development suggests that GBP/JPY has successfully defended 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47). And, the rally from 122.36 (2016 low) is still intact. Such medium to long term rise would extend through 156.96 high. This will now be the preferred case as long as 145.67 near term support holds. However, break of 145.67 will turn focus back to 139.29/47 key support zone.

Daily Pivots: (S1) 129.06; (P) 129.48; (R1) 129.85; More....

EUR/JPY recovers quickly after hitting 129.11 and intraday bias is turned neutral first. Further decline remains in favor as long as 130.70 resistance holds. Below 129.11 will target 127.85 support first. Break there will confirm completion of rebound from 124.89 at 133.12 and bring retest of this low. On the upside, though, above 130.70 minor resistance will turn bias back to the upside for 133.12 instead.

In the bigger picture, current development suggests that EUR/JPY could have defended key support level of 124.08 key resistance turned support. And, the 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. This will be the preferred case as long as 127.85 near term support holds. However, break of 127.895 will turn focus back to 124.08 key support level.

Daily Pivots: (S1) 0.8784; (P) 0.8815; (R1) 0.8835; More...

Intraday bias in EUR/GBP remains neutral and with 0.8847 support turned resistance intact, deeper fall is expected. On the downside, break of 0.8772 will target 0.8620 low first. Decisive break there will resume whole down trend from 0.9304. In that case, next target will be 100% projection of 0.9305 to 0.8620 from 0.9097 at 0.8412.

In the bigger picture, EUR/GBP is seen as staying in long term range pattern started at 0.9304 (2016 high). Current development suggests that fall from 0.9303, as a down leg in the pattern, is still in progress. But in case of deeper fall, downside should be contained by 0.8116 cluster support, 50% retracement of 0.6935 (2015 low) to 0.9304 at 0.8120, to bring rebound.

Daily Pivots: (S1) 1.6207; (P) 1.6239; (R1) 1.6266; More....

Intraday bias in EUR/AUD remains neutral at this point. Also, further rise is still in favor. On the upside, sustained break of 1.6353 will resume larger up trend and target 1.6587 key resistance next. On the downside, however, break of 1.6145 support will likely extend the corrective pattern from 1.6353 with another leg back to 1.5984.

In the bigger picture, up trend from 1.3624 (2017 low) is still in progress. Further rise should be seen to retest 1.6587 (2015 high). Decisive break there will resume the long term rally and target 1.7488 fibonacci level. On the downside, break of 1.5984 support is need to be the first sign of medium term reversal. Otherwise, outlook will remain bullish in case of deep pull back.

Daily Pivots: (S1) 1.1401; (P) 1.1441; (R1) 1.1468; More...

Intraday bias in EUR/CHF remains neutral and this point, but further rise is in favor. We're holding on to the view on bullish trend reversal after EUR/CHF drew support from 1.1154/98 zone. On the upside above 1.1491 will target 1.1713 resistance for confirmation. Break there will target a test on 1.2004 high next. Meanwhile, note that upside momentum is not to convincing so far. Break of 1.1360 minor support will argue that the rebound has completed and turn bias back to the downside for 1.1154/98 zone again.

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 1.1234) 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.

The EUR/USD bounced at the 50% Fibonacci level of wave B (blue) but price was unable to make a higher high. Price needs to break above the resistance line (red) to confirm the wave C (blue) breakout.

The EUR/USD seems to be building a bullish ABC (blue) pattern within wave B (purple) unless price breaks below the 100% Fib level of wave B vs A. A break below support (blue) indicates a potential deeper retracement within wave B (blue).

The EUR/USD is either building a 123 or ABC wave pattern, which depends on whether price bounces at the support level (green). A bearish break indicates a move down to theFibonacci support levels of wave B (blue) whereas a bullish break could see price move higher towards the Fibonacci targets.

The EURUSD currency pair has formed an emerging cup with a handle pattern.The 'Cup and Handle' pattern is a bullish continuation pattern that begins with a consolidation period, followed by a breakout. The consolidation period is captured within the handle. At this point, the pattern consolidation has formed exactly at the 50,0 Fib, and the Admiral Pivot Point. Regarding fundamentals, the data will be light for the EUR/USD currency pair. The USD news that might slightly move the market is the JOLTS (Job Openings and Labor Turnover Summary) data that represents the number of job openings during the reported month, excluding the farming industry. Don't forget to follow our Forex calendar for all regular updates on the news,economic announcements, forecasts and much more.

Technically, the EUR/USD currency pair could bounce from the POC zone towards the handle top around 1.1610. A close above the R1 resistance 1.1634 should the move price towards the 1.1694 zone and the R2 resistance. The pair is also supported by a rising trend line that crisscrosses the S1 supporting pivot that marks the uptrend. It all adds up to the bullish confluence. Ideally the pair should remain above 1.1530 to remain bullish. Make sure to always follow the price action closely.

Pivot Lines - Weekly Support and Resistance

POC - POC - Point Of Confluence (The zone where we expect the price to react - aka the entry zone)

The USD/JPY currency pair made a new low yesterday, which is probably part of a bearish wave 5 (purple) of a larger wave A (pink). The main target of the 5th wave (purple) is the -27.2% Fibonacci level at 111.21. The bearish price action is probably part of an ABC zigzag pattern (pink) within wave E (purple).

The USD/JPY currency pair broke below the support trend line (dotted blue), but bullish candlestick patterns are probably indicating a retracement within the downtrend. A break above the resistance trend lines however, could indicate an uptrend.

The USD/JPY currency pair has reached a potential support zone, which offers a potential breakout or bounce.

General Trend:

• Asian equity markets trade mixed; Shanghai pares gain
• Tech sector weighs on the Hang Seng
• Japan markets supported by gains in Real Estate, Iron/Steel and IT companies
• Softbank rises after declines of over 6% in prior session
• Rio Tinto rises after Q3 production update
• New Zealand Q3 CPI above ests, remains below mid-point of 1-3% target
• China Sept CPI data in line, core inflation slows
• China fixed the yuan firmer for the first time in over 3 weeks
• Chipmaker Nanya Technology expected to report Q3 results
• US companies expected to report on Tuesday (including afterhours) include BlackRock, CSX, Domino’s Pizza, Goldman Sachs, IBM, J&J, Lam Research, Morgan Stanley, Netflix, United Continental, UnitedHealth and WW Grainger
• BHP is expected to issue its quarterly production update on Wed (Oct 17th)

Headlines/Economic Data

• Japan
• Nikkei 225 opened +0.1%
• (JP) Moody's: Outlook for Japan's banking system is stable, although challenges are apparent
• (JP) Japan Trade Min Seko: Finance ministers can handle any US/Japan currency talks
• 4552.JP Receives FDA Orphan Designation for treatment of Mucopolysaccharidosis Type II (MPS II) or Hunter Syndrome [-1%]
• (JP) Japan Fin Min Aso: US and Japan have agreed FX chiefs to talk about currency; Downside risks posed by emerging market economies are increasing
• (JP) Japan MOF sells ¥2.0T v ¥2.0T indicated in 0.10% 5-yr JGB: avg yield: -0.055% v -0.076% prior, bid to cover: 4.88x v 3.95x prior
• 5002.JP To merge with Idemitsu: Share Exchange Ratio 1 Idemitsu share to 0.41 Showa shares; to be delisted March 27th ahead of merger

Korea

• Kospi opened +0.5%
• (KR) South Korea to announce a set of measures in Oct to help generate new jobs; views employment as being "at a critical situation" based on data - Korean press
• (KR) South Korea brokerages expect BOK to keep policy on hold at Thursday's meeting; 4 companies see 25bp hike in November meeting - Korean press

China/Hong Kong

• Hang Seng opened +0.6%, Shanghai Composite flat
• (CN) CHINA SEPT CPI Y/Y: 2.5% V 2.5%E (7-month high); PPI y/y: 3.6% v 3.5%e
• (CN) China should curb the pace of IPOs in order to ease stock supply - Chinese press
• (CN) China PBoC Open Market Operation (OMO): Skips OMO v skipped prior: Net: nil v nil prior
• (CN) China PBoC set yuan reference rate: 6.9119 v 6.9154 prior
• (HK) Certain home purchases in Hong Kong said to have forfeited their deposits in the past 2 weeks - Local Press
• (CN) China the largest recipient of foreign direct investment (FDI) in H1 of 2018, with estimated $70B of inflows - China press citing UN data
• (CN) S&P: China local governments' debts kept off balance sheet could be as high as CNY40T ($6.0T) or more

Australia/New Zealand

• ASX 200 opened +0.1%
• (NZ) NEW ZEALAND Q3 CPI Q/Q: 0.9% V 0.7%E; Y/Y: 1.9% V 1.7%E
• (AU) Reserve Bank of Australia (RBA) Oct Meeting Minutes: Uncertain consumption outlook still important consideration
• VAH.AU Shareholder HNA rejected US consortium offer of A$0.175 for 19.8% stake - Australian
• RIO.AU Reports Q3 Pilbara iron ore production 82.5Mt (100% basis) v 85.0Mt y/y; shipments 81.9Mt (100% basis) v 82.5Mte v 85.8Mt y/y
• TLS.AU Affirms FY19 (A$) EBITDA 8.7-9.4B v 8.8Be; Rev 26.2-28.1B v 26.6Be; CAPEX 3.9-4.4B – AGM
• (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: 119.5 v 117.3 prior
• (NZ) Reserve Bank of New Zealand (RBNZ): Has invited Treasury Secretary to observe policy decisions from Oct, invitation accepted by Treasury Sec Makhlouf
• (NZ) NEW ZEALAND RBNZ Q3 SECTORAL FACTOR MODEL INFLATION Y/Y: 1.7% V 1.7% PRIOR; SECTORAL FACTOR MODEL NON-TRADEABLE (CORE) Y/Y: 2.8% V 2.7% PRIOR

Other

• (MY) Think tank Malaysian Institute of Economic Research (MIER):: Cuts 2018 GDP Malaysia growth forecast to 4.7% from 5.5% - financial press
• (PH) Philippines Budget Sec: Cuts 2018 GDP growth forecast to 6.5-6.9% (7-8% prior); Sees 2018 CPI at 4.8-5.2%

North America

• (US) Centers for Medicare and Medicaid Services (CMS) proposes rule to require manufacturers to disclose drug prices in TV ads (as suggested earlier by Pres Trump)
• (MX) US said to seek to impose quotas on Mexico steel exports - financial press
• AAPL Reportedly investigating Apple ID thefts in China - Chinese press

Europe

• (UK) Ministers held meeting to discuss concerns on PM May Brexit plan - UK press
• (EU) Analysts continue to expect the ECB to end bond buying program within 3-months - press

Levels as of 01:30ET

• Hang Seng -0.1%; Shanghai Composite +0.1%; Kospi +0.2%; Nikkei225 +0.9%; ASX 200 +0.6%
• Equity Futures: S&P 500 +0.4%; Nasdaq100 +0.6%, Dax +0.5%; FTSE100 +0.4%
• EUR 1.1592-1.1567; JPY 112.11-111.74 ; AUD 0.7143-0.7119;NZD 0.6593-0.6562
• Dec Gold -0.1% at $1,229/oz; Nov Crude Oil +0.2% at $71.92/brl; Dec Copper -0.1% at $2.77/lb