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Sterling is trading the the biggest loser today as it gapped down on negative Brexit news. It's getting unlikely to have breakthrough in the sticky issue of Irish border at the EU summit this week. Elsewhere risk aversion is back in Asian markets as selloffs in stocks resume. Reactions in the currency markets are back to "normal". Yen is trading as the strongest one followed by Swiss Franc, and then Dollar. Australian and New Zealand Dollar are weakest, following the Pound.

At the time of writing, Nikkei is trading down -1.62%, Singapore Strait Times down -0.46%, Hong Kong HSI down -1.18%. China Shanghai SSE is down -0.79% at 2586.26, but it's some way above last week's low at 2536.66. In other markets, Gold trades firmer at 1221 for now, with sight on last week's high at 1226.40. WTI crude oil is mildly higher at 72.11, up 1.08%.

Technically, GBP/USD's break of 1.3132 minor support argues that rebound from 1.2921 has completed at 1.3257. Deeper fall is in favor back to 1.2921 support. It's not overwhelmingly bearish for the Pound yet, at least not until EUR/GBP breaks 0.8847 resistance and GBP/JPY breaks 145.67 support. On the other hand, EUR/USD is pressing 1.1534 minor support now and break there is needed to give more evidence on strength of Dollar.

Sterling gapped lower as Brexit talks stalled at Irish border backstop again

Sterling gapped lower as the week started with negative Brexit news again. The backstop on Irish border remained an unresolved issue despite efforts from both sides. And furthermore, as the negotiations stalled, there will be no more scheduled talks before the EU summit on later this week.

EU chief Brexit negotiator Michel Barnier tweeted after meeting UK Brexit secretary Dominic Raab in Brussels that "Despite intense efforts, some key issues are still open, including the backstop for IE/NI (Ireland/Northern Ireland) to avoid a hard border."

Brexit Ministry said that there was progress "in a number of key areas". "However there remain a number of unresolved issues relating to the backstop. The UK is still committed to making progress at the October European Council."

PBoC Yi: Yuan volatility is normal, rate at reasonable and equilibrium level

China's PBoC Governor Yi Gang tried to talk down recent Yuan depreciation despite having USD/CNH nearing the psychological important 7 level. Yi insisted that "the Yuan's volatility is normal" and its rate is at a "reasonable and equilibrium level". And, in spite of recent measures in stabilizing the markets, Yi also insisted that PBoC is having a "neutral" monetary policy stance. He said "So if you look at the broad money, if you look at the interest rate and you look at monetary conditions, basically you can have the conclusion that we have a prudent and neutral stance monetary policy."

Regarding trade war, Yi said "downside risks from trade tensions are significant." But he's confidence that the PBoC has "plenty of monetary instruments in terms of interest rate policy, in terms of required reserve ratio." And, PBoC has "plenty of room for adjustment, in case we need it". Besides, he's also confidence that China is on track to meet its growth target of 6.5% in 2018 and "maybe a little bit more".

Yi also pledged in a statement that "China will continue to let the market play a decisive role in the formation of the RMB exchange rate". And, we will not engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions."

BoJ Kuroda: Rise of protectionism and tightening of financial conditions call for vigilance

BoJ Governor Haruhiko Kuroda warned that "recent rise of protectionist moves and tightening of financial conditions in some economies remind policymakers of the importance of being vigilant at all times:. And he urged to "pay more attention to protectionist moves, as global economies have become increasingly interdependent through global value chains."

Domestically, Kuroda said "when 2 percent inflation target is met or is close to be met, of course we can change the target, the monetary operating target of interest rate." But he also reiterated that "at this moment, inflation is only 1 percent, so we will continue the current yield curve control at the current level of interest."

Kuroda also talked down the impact of the planned sales tax hike in 2019 and said "at this stage, there would not be any major negative impact on the economy". He expected to impact of growth would be "much, much smaller" than from an increase in 2014.

The week ahead: There's something for every major currencies.

The coming week features a number of events that involves almost every major currencies. For the US, retail sales is a piece of key data to watch while FOMC minutes will be scrutinized. But we actually do not expect them to be more market moving that trade war development and treasury yields. Canada will release retail sales and CPI, which could seal the case for BoC rate hike on October 24.

For UK, the rhetorics leading up to EU summit on Brexit, as well as the outcome could finally tell us the chance of really hitting a deal in November. UK will also release employment, inflation and retail sales data. For Euro, the main focus will be on German ZEW economic sentiment, as well as EU's formal reaction to Italy's budget.

In Asia Pacific, China's set of data including GDP will further reveal how the economy is performing after trade war with the US started. RBA minutes will likely reveal nothing new. Australian Dollar would be more sensitive to Chinese data and its own employment data. New Zealand Dollar will look at CPI. Japan will also release CPI and trade balance too.

• Monday: US retail sales, Empire State Manufacturing index, business inventories; Canada BoC business outlook survey
• Tuesday: New Zealand CPI; RBA minutes; China CPI, PPI; German import prices; UK employment; Eurozone trade balance; German ZEW; Canada foreign securities purchases; US industrial production, NAHB housing market index
• Wednesday: UK CPI, PPI; Eurozone CPI final; Canada manufacturing sales; US housing starts and building permits; FOMC minutes
• Thursday: Japan trade balance; Australia employment; UK retail sales; US Philly Fed survey, jobless claims, leading indicators
• Friday: Japan CPI; China GDP, fixed asset investment, industrial production retail sales, unemployment rate; Eurozone current account; UK public sector net borrowing; Canada retail sales, CPI; US existing home sales.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.3113; (P) 1.3185; (R1) 1.3225; More...

GBP/USD's sharp fall and break of 1.3132 support suggests that rebound form 1.2921 has completed at 1.3257. Intraday bias is turned back to the downside for 1.2921 support first. Break there will resume the fall from 1.3297 and target 1.2661/2784 support zone. On the upside, in case of another rally, we'd continue to expect strong resistance at 1.3316 key fibonacci level to bring down trend resumption eventually.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA. The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Economic Indicators Update

BoJ Governor Haruhiko Kuroda warned that "recent rise of protectionist moves and tightening of financial conditions in some economies remind policymakers of the importance of being vigilant at all times:. And he urged to "pay more attention to protectionist moves, as global economies have become increasingly interdependent through global value chains."

Domestically, Kuroda said "when 2 percent inflation target is met or is close to be met, of course we can change the target, the monetary operating target of interest rate." But he also reiterated that "at this moment, inflation is only 1 percent, so we will continue the current yield curve control at the current level of interest."

Kuroda also talked down the impact of the planned sales tax hike in 2019 and said "at this stage, there would not be any major negative impact on the economy". He expected to impact of growth would be "much, much smaller" than from an increase in 2014.

Asia Markets

Asia shares are trading this morning led my losses on the Nikkei which is down 1.4 % ahead of a supplementary budget but the usual themes are weighing on local sentiment. Concerns over China -U.S. trade tensions, a possible slowdown in the Chinese economy and higher U.S. interest rates continue to sour market views as domestic investors are better sellers than buyers of risk, despite US market showing signs of stabilizing on Friday. Indeed the fear around US tariff increases due to take effect in January 2019 is factoring. And when compounded by the Bank of Communications suggesting China home prices are likely to fall in the next two quarters will indeed weigh on China markets. Indeed echoes of October pasts are reverberating across global capital markets .

Oil Markets update

After the initial spike higher on Saudis threat to hit back again any sanctions news, markets are settling in as the dueling narratives unfold. The lack of a current fundamental supply deficit in oil markets as supported by International Energy Agency monthly Oil Market Report indicating global demand is lower and terming supplies “adequate for now” Versus the spare production capacity argument especially if the market underestimates the supply crunch from Iran sanctions and Venezuela production. But let’s face it, we are little more than on supply disruption for prices shooting higher over the near term with traders now eyeing Libya after the NOC warned of a possible closure of Zawiya refinery if security is not shored up. The markets continue to trade gingerly with a positive bias as the Saudi narrative unfolds with Saudi suggesting $200 per barrel Oil not out of the question.

Gold Markets

Gold remains supported by escalating Geopolitical tensions as smoldering embers in the the Middle East are yet set to ignite again on the latest Saudi developments. Adding the the mix is the though may consider pausing their widely expected rate hike in December if global equity markets continue to falter . But an abrupt shift in Fed policy will likely lead to a lack of confidence in the worlds most important central bank and could destabilize markets further.

CNH

Focus back in the CNH has Pboc suggests there is plenty of room for monetary policy adjustment amid trade war. But tempered rhetoric by suggesting the currency was near fair value.

Reuters

They Yuan is fixed firmer than expected, however, and the market is not taking USDCNH higher.

Malaysia

China has agreed to purchase 500K tons of palm oil, which should support those local constituents on the Bursa Malaysia. No currency reaction to this news so far.

Brexit

So much for the defining moment in the Brexit negotiations after a tense standoff overnight, PM May sent Brexit Secretary Dominic Raab to Brussels, who then hightailed it home after only 1 hour after meeting with Barnier. The Pound has traded lower but finding tentative support around 1.31 as the Brexit roller coaster continues.

German Politics

Perhaps flying under the radar Angela Merkel’s sister party has suffered massive losses in Bavaria’s state elections, exit polls suggest, in a blow to the German chancellor. The Euro hasn’t reacted to much to this news as I suspect dealers have bigger fish to fry as Italy’s budget is set to be offered up to the EU committee.

STOCKS

Stocks are mixed. While there are support levels for some equity indices, shanghai and Dax looks weak in the near term. Nifty and Nikkei could bounce back from supports. Overall the indices are in a phase from where a positive up move can be seen soon.

Dow (25339.99, +1.15%) seems to be holding above the support near 25000 as seen in the 3-day candle charts. While the bounce sustains, there is some chances of seeing a rise back towards 26000 or higher in the near term. A break below 25000, if seen would make the index vulnerable to a further fall towards 23500. Preference is for the current bounce to sustain.

Dax (11523.81, -0.13%) came down to test 11514, breaking below the weekly candle support at 11600. It would be crucial to see if the index manages to bounce back above 11600 in the near term or continues its downtrend. Failure to bounce back immediately would take it lower towards 11200-11000 levels soon.

Nikkei (22387.52, -1.35%) has seen a bounce from support near 22000. This bounce will have to sustain to keep the index bullish for the near term targeting levels of 23000 and higher in the coming sessions. Unless the support breaks on the downside, preference is bullish for the near term.

Shanghai (2593.83, -0.51%) is stuck in the 2650-2530 region and could possibly see some range trade in this zone before rising back towards 2700 and higher in the medium term. Below 2530, crucial support is seen at 2450 which is likely to hold in the longer run.

Nifty (10472.50, +2.32%) bounced back well to close last week on a positive note. While the rise sustains, the wedge like formation on the daily chart may hold, indicating further bullishness in the near term. Immediate rise towards 10600 could be seen in the next couple of sessions.

COMMODITIES

Brent (81.33) has much room on the downside towards 78 when seen on the weekly candles. But while the immediate support near 79 holds, the price could test 84 on the upside before coming off from there.

WTI (72.10) has indeed sought support near 70.50 on the daily candles and has risen to trade higher just now. A rise towards 73-74 is possible in the near term. But on the weekly chart, there is still some scope of testing 68 on the downside which could be seen in the medium term.

Gold-WTI spread (17.01) has bounced back from levels near 16 and is currently testing channel resistance. If the resistance holds, the spread could come off towards 16 in the near term, else a break above 17, if seen and sustains, could trigger an upmove for the medium term.

Gold (1224.80, +0.23%) has immediate resistance at 1230 and while that holds, we could see some trade in the 1230-1210 region before the price attempts to move up beyond 1230.

Copper (2.8160, +0.55%) is gradually moving up to re-test 2.85-2.90. If the price manages to break on the upside, it could be bullish towards 3 in the near to medium term, indicating bullishness for the coming weeks. Some range trade is possible in the 2.75-2.90 region before a sharp upmove begins.

FOREX

Euro and Aussie could see some strength towards 1.161 and 0.72 in this week. Meanwhile, watch support near 73.35 on Dollar Rupee.

Euro (1.1550) could move back up towards 1.1614 (21 days MA) from current levels itself, or after a test of support near 1.152-1.150 in today's session. The 21 days MA needs to be crossed for higher trendline resistance near 1.17 to be tested in the next 1-2 weeks.

Dollar Index (95.31) is midway between support near 94.75 and resistance near 96. It should come off towards the support in the next 1-2 sessions, either immediately or after testing 95.5-95.7 on the upside.

Dollar Yen (112.11) is coming close to crucial support levels – first an interim one near 111.75 and lower down near 111.25. Current preference is for the supports to hold in the near term.

Euro-Yen (129.49) could have some support near current levels and also slightly lower down near 129.36 (21 weeks MA). While above these levels, there are chances of a rise towards 131-132. However, a break below these could make it bearish towards 127 in the next 2-3 weeks.

Pound's (1.3111) could fall to support near 1.300-1.298 in the next couple of sessions. If this support also breaks, then it could become bearish towards lower support near 127.5 in the next 2-3 weeks. On the upside Pound faces two crucial resistances – the 89 weeks MA at 1.3202 and if that is breached, then the 55 weeks MA at 1.342 – it should stay below these levels in the next 1-2 months.

Aussie (0.7107) hasn't been able to break below 0.7041. While above that, it could rise towards resistance near 0.72 in the next 1-2 weeks. A break above 0.72 and then above 0.732 (21 weeks MA) would be required to negate the possibility of a downside below 0.705 in the next 1-2 months.

Dollar Rupee (73.565): Market hugely Oversold in the near-term chart now, unlikely to break below 73.35 easily. Instead, more likely to see a rally to 74.00-25 over today-tomorrow. Can again start coming down from there, to move down towards 73.00 or lower in the medium term.

INTEREST RATES

India 10 year yield (7.98%) has could move down towards support near 7.90% in this week – below that, there is support near 7.8% which should hold in the next 1-2 months. Conversely, a break below that would be very bearish.

The US 10 Year (3.15%) : US 10 year could have support near 3.12%-3.13%. If it breaks below that, then we can look at lower levels. While above this support, it could retest resistance near 3.25%.

10 Year German-US spread (-2.65%) could again move up towards important resistance at -2.60% which should hold in the near term and take the spread lower towards -2.80%.

German 10 year yield (0.50%) could come off towards 0.45% in the near term while resistance near 0.57%-0.60% continues to hold.

China's PBoC Governor Yi Gang tried to talk down recent Yuan depreciation despite having USD/CNH nearing the psychological important 7 level. Yi insisted that "the Yuan's volatility is normal" and its rate is at a "reasonable and equilibrium level". And, in spite of recent measures in stabilizing the markets, Yi also insisted that PBoC is having a "neutral" monetary policy stance. He said "So if you look at the broad money, if you look at the interest rate and you look at monetary conditions, basically you can have the conclusion that we have a prudent and neutral stance monetary policy."

Regarding trade war, Yi said "downside risks from trade tensions are significant." But he's confidence that the PBoC has "plenty of monetary instruments in terms of interest rate policy, in terms of required reserve ratio." And, PBoC has "plenty of room for adjustment, in case we need it". Besides, he's also confidence that China is on track to meet its growth target of 6.5% in 2018 and "maybe a little bit more".

Yi also pledged in a statement that "China will continue to let the market play a decisive role in the formation of the RMB exchange rate". And, we will not engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions."

Sterling gapped lower as the week started with negative Brexit news again. The backstop on Irish border remained an unresolved issue despite efforts from both sides. And furthermore, as the negotiations stalled, there will be no more scheduled talks before the EU summit on later this week.

EU chief Brexit negotiator Michel Barnier tweeted after meeting UK Brexit secretary Dominic Raab in Brussels that "Despite intense efforts, some key issues are still open, including the backstop for IE/NI (Ireland/Northern Ireland) to avoid a hard border."

https://twitter.com/MichelBarnier/status/1051529045505126405

Brexit Ministry said that there was progress "in a number of key areas". "However there remain a number of unresolved issues relating to the backstop. The UK is still committed to making progress at the October European Council."

Key Highlights

• The Euro started an upside correction after trading as low as 1.1432 against the US Dollar.
• There was a break above a major bearish trend line with resistance at 1.1500 on the 4-hours chart of EUR/USD.
• The Euro area Industrial Production in August 2018 increased 0.9%, better than the -0.2% forecast.
• Today, the US Retail Sales for Sep 2018 will be released, which is forecasted to increase 0.3% (MoM).

EURUSD Technical Analysis

The Euro declined heavily below 1.1500 before buyers appeared around 1.1430 against the US Dollar. The EUR/USD pair traded as low as 1.1432 and later started a decent upside correction.

Looking at the 4-hours chart, the pair traded above the 1.1480 and 1.1500 resistance levels. More importantly, there was a break above a major bearish trend line with resistance at 1.1500.

Later, the pair climbed above the 1.1550 resistance area, but it faced a strong selling interest near the 1.1600-1.1610 zone. Moreover, the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours) are also positioned near the 1.1620 zone.

Therefore, the Euro buyers are likely to face a strong resistance near the 1.1600-1.1620 zone. If there is a daily close above 1.1620 and both SMA’s, there could be a decent upward move towards the 1.1750 level in the near term.

On the other hand, if the pair fails to clear the 1.1620 resistance, there could be a downside move towards the 1.1500 support area. Below 1.1500, the next major support is positioned near the 1.1465 level.

GBP/USD also moved higher above the 1.3200 level, but it failed to hold gains above 1.3240 and later corrected lower. On the other hand, USD/JPY started a major downside correction and declined below the 113.00 and 112.50 support levels.

Economic Releases to Watch Today

• US Retail Sales Sep 2018 (MoM) – Forecast +0.5%, versus +0.1% previous.
• US Retail Sales ex Autos Sep 2018 (MoM) – Forecast +0.3%, versus +0.3% previous.

Rethinking it

Risk sentiment stabilised primarily on the back of reports that the Treasury Department will NOT recommend China be labelled a currency manipulator along with headlines that Trump and Xi will meet on trade seems to be enough reason for the equity sell-off to cool. But indeed never has so much been riding on the contributions of so few.

Once again market sentiment is being driven by rhetoric from US administration and Trump himself who has been quick to point fingers at just about anyone and everyone. Whether its the Fed has gone crazy, OPEC is causing an oil spike, China at fault for trade tension and declaring his policies are hurting China. But from my chair, the message is loud and clear, all designed to stir his support base into a frenzy ahead of the November midterms.

It ain’t over till it’s over

Initially, the market was interpreting higher US rates as a signal to deleverage given that most of the economic expansion was assisted by QE, both in the US and globally. So draining the punch bowl and tightening rates were weighing on sentiment. Ok, we get that! But gradually moving interest rates higher in themselves are not necessarily a bad thing for markets especially coming off historically low rates. Most market participants have never traded a rate hike cycle, and for some of the dinosaurs, it appears they have forgotten what rate hike cycle is. When in fact it’s the moment the Feds shift toward a dovish defensive stance after a period of tightening is the time to worry! Presumably, the Federal Reserve Board tightens when the economy is on hot, and the eases when it’s not.

Maybe and just maybe investors are waking up to the fact that much of this market frothiness is a result of financial engineering aided by the intravenous drip of seemingly endless supplies of cheap money. The result could very end up being a stock market built on a leveraged House of Cards which is about to topple after the US tax cuts have run there course. Indeed, credulousness may be giving way to the facts on the ground.

The possible Fed implication

If the equity markets continue to fall into December, the Fed will most certainly consider pausing raising interest rates. You can imagine what type of signal that will suggest to investors who in the face of soaring equity valuations, escalating global trade tensions and divergence in the whole growth narrative especially now that their fingers are glued to the sell button after last weeks carnage. And while the bar is exceedingly high for the Fed to pause in December, it’s not as high this morning as it was a week ago!

Oil Markets

WTI prices have shot higher at the NYMEX futures open after Saudi Arabia warned Sunday it would respond to any “threats” against it as its stock market plunged following President Donald Trump’s warning of “severe punishment” over the disappearance of Washington Post contributor Jamal Khashoggi.

Given that oil supply is Saudia Arabia ‘s” ace in the hole” The Kingdom has motioned it could use oil supply as leverage against any sanctions. Another geopolitical hotspot for the US administration to navigate but this one extremely testy given that President Trump has been pressuring Saudi to up supply to counter the US-led Iran oil sanction

Despite oil prices making a fast retreat last week and e global growth downgrades at this week IMF in Bali. The spare production capacity argument should continue to support oil over the short term. The IEA pegged spare capacity at around 2 million barrels per day. But the markets know these reserves have never been tested raising the questing how much spare capacity can be brought online immediately But in the meantime until additional supplies are made available, that crimp in supply should be enough to support OIl prices until proven otherwise.

Oil Bears came out of hibernation last week even despite falls in Libya’s crude output. But price actions were driven primarily by an Oct. 8 report from the IMF, in which it downgraded global economic growth forecasts for 2018 and 2019 to 3.7 per cent per annum, from 3.9 per cent, which would consequently lower oil demand. Then pandemonium was unleashed across global markets as the worldwide stock markets tanked triggering an exit from riskier assets. And while the S &P stabilised well and continued to roll with the punches, but Oil markets were so eager to snap back. Oil prices initially struggled to follow the equity market lead, after the International Energy Agency monthly Market Report adjusted demand lower by 110,000 bpd for both 2018 and 2019, reported an increase of 100,000 bpd in September OPEC production while pointing out OECD data suggest oil stocks are at the highest level since February. While advising the markets are adequate supplies which again highlights uncertainty of supply once the US sanctions on Iran take effect. Lordy Lordy, it’s a noise market

Despite managing to eek out a win on the day, Brent was lagging WTI on Friday highlighting the lack of fundamental deficit in the oil market, with the International Energy Agency monthly Oil Market Report demand lower and terming supplies “adequate for now”.And WTI could still be drawing support from Hurricane Micheal induced outages.

Drillers added eight oil rigs in the week to Oct. 12 according to Baker Hughes. Mainly attributed to the November 1 Plains All American Pipeline Project which is set to start flowing on Nov 1 and should ease pipeline bottlenecks that have lower crude prices in the Permian Basin. The Sunrise Pipeline has a reported capacity of about 500,000 barrels per day.

Oil COT report

The Commitment of Traders data, HEDGE FUND net position changes in the week to Oct 9:
Brent -6mn
WTI -37mn

Gold Markets

The precious complex is trading of the intersession highs as one would expect after the larges jump in years. In reflection, the move was a combination of a haven and full short covering. But this would leave the current landscape extremely shaky if both stocks and US rates markets recovered significantly in the days ahead. But with geopolitical noise ratcheting higher in Saudi Arabia

Currency Markets

EURO

Given all these tectonic shift in market sentiment, currency markets have this air of unpredictability about them, not more so then the EURO as its completely unclear if Friday’s move was confirmation of the downtrend or nothing more than weekend position squaring. Talking to my circle of G-10 traders this morning I get the feeling that more are coming to a conclusion ahead of the US midterms and wobble equity markets, the USD is there for the taking. After the market’s reaction to Nikki Halley resignation when the USD sold off, its probably a sign of things to come as the pendulum swings between the GOP keeping or losing control of Congress

Japanese Yen

Kuroda and company have been floating trial balloons the IMF conference in an attempt to gauge market sentiment and prepare currency traders for the inevitable rate hike. The BoJ desperately wants to help Japan’s banking sector and improve the monetary transmission mechanism channels to allow the banks to raise the cost of borrowing, after a decade of struggling

The Malaysian Ringgit

Traders are awaiting US Treasury Department’s currency report on Monday/ Tuesday, where it rumored they won’t classify China as a currency manipulator which could avert an EM Asia currency meltdown and would forestall an escalation of the U.S.-China trade war. Oil prices look supportive in early trade but the overhang from fiscal concerns around the upcoming budget should temper any strengthening in the local note.

The IMF Bash in Bali

IMF Managing Director Christine Lagarde doubled down on the messaging.

“Our message was very clear: de-escalate the tensions,” she told Bloomberg Television in an interview, about US-China tensions. But with no hints of a resolution or fixed purpose for that matter, the parties are no closer than they were before the soiree.

EURUSD bull recovery remains intact as more strengthen is envisaged. But with price hesitation seen on Friday that strength may subside a bit. On the upside, resistance comes in at 1.1600 level. A break through there opening the door for more upside towards the 1.1650 level. Further up, resistance lies at the 1.1700 level where a break will expose the 1.1750 level. On the downside, support lies at the 1.1550 level where a violation will aim at the 1.1500 level. A break of here will aim at the 1.1450 level. Below here will open the door for more weakness towards the 1.1400. All in all, EURUSD still faces further upside pressure on corrective recovery but with caution.

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