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Silver spiked as high as 14.89 on Tuesday, reaching the highest price since August 28, though gains proved short-lived, with the market pulling back afterwards. In the short-term, traders could expect some recovery in the four-hour timeframe, as the Stochastics turned north after a bullish cross below the 20 oversold threshold. The RSI seems to be rebounding on the 50-neutral level, giving additional positive signals. However, a sideways move in the price cannot be ruled out as long as the RSI holds near 50.

Should the market indeed increase positive momentum, nearby resistance could come between 14.66 and 14.70, an area formed by the 23.6% Fibonacci of upleg from 13.92 to 14.89 and the September 28 peak. Above that zone, the rally could stretch towards 14.80 where the price paused on Wednesday before the bulls retest the 14.89 top.

On the flip side, if bearish forces dominate and the market weakens, 14.54 which is marginally above the 38.2% Fibonacci may act as a barrier to downside movements. Note that the level also restricted bullish actions during September. In case of steeper declines, the 50% Fibonacci of 14.41 should be in focus as well, while the 61.8% fibo of 14.29 may be a bigger challenge since any decisive close below that point and thus below the Ichimoku cloud would increase the chances for further downside corrections.

ECB Governing Council member Olli Rehn said "financial market expectations concerning the timing of the first interest rate rise are consistent with the Governing Council's statements." That is, ECB said in forward guidance that interest rates will remain at present levels at least through summer of 2019.

Meanwhile, he also added that "the need for extended forward guidance on monetary policy will also diminish, once inflation has reached sufficient progress towards the price stability objective."

Regarding a hot recent topic of Italy, Rehn said ECB's Governing Council "primarily looks at the development of the whole euro zone, and firstly from the mid-term price stability target point of view". And, "monetary policy will be done based on that, not looking at just one member state but the whole euro zone."

Here are the latest developments in global markets:

FOREX: The dollar index is higher on Thursday (+0.29%), extending the impressive gains it recorded in the previous session as US yields raced higher. The US currency touched a fresh 11-month high against the yen, buoyed by strong US data and confident remarks by Fed chief Powell. Meanwhile, the antipodean currencies underperformed, with both aussie/dollar and kiwi/dollar tumbling to fresh 2½-year lows.

STOCKS: The Dow Jones (+0.20%) closed at a fresh record high for a second session in a row on Wednesday, as risk appetite firmed amid easing concerns around Italy’s budget situation. The S&P 500 (+0.07%) came within a hair’s breadth of its own all-time highs, while the tech-heavy Nasdaq Composite gained 0.32%. That said, futures tracking the Dow, S&P, and Nasdaq 100 are pointing to a much lower open today, which is likely owed to the surge in US bond yields. Higher yields, theoretically, render bonds more attractive to hold, curbing demand for stocks. Accordingly, Asia was mostly in the red on Thursday. Japan’s Nikkei 225 and Topix edged lower by 0.56% and 0.09% respectively, while the Hang Seng in Hong Kong plunged by 1.68%. Likewise, in Europe all the major indices are set to open lower today, futures suggest.

COMMODITIES: Oil rallied to fresh four-year highs on Wednesday, even despite the weekly EIA crude inventory data showing the largest build in stockpiles this year. Oil prices also defied media reports suggesting Saudi Arabia and Russia struck a deal to raise their output in order to cool prices. Some suggest that given the already-low spare capacity in both nations, such an increase in production would imply output can’t rise much further moving forward. The risk-on appetite in markets likely aided the surge in oil as well. In precious metals, dollar-denominated gold is up by 0.13% today near $1,200 per ounce. Interestingly, the yellow metal tumbled by much less than one would have expected yesterday given the remarkable gains in the dollar, which suggests that demand may be slowly picking up.

Major movers: “King dollar” reigns supreme as US yields surge

The dollar outperformed all major currencies on Wednesday, buoyed by US bond yields rising to multi-year highs. Yields on 10-year US treasuries soared to 3.23%, a high last seen in 2011, amplifying the greenback’s allure. The moves were powered initially by a set of robust data releases, which confirmed the US economy continues to fire on all cylinders. The ADP employment report for September beat expectations, while the ISM non-manufacturing PMI for the same month surged by much more than anticipated, reaching its highest since the index was created in 2008.

Some relatively hawkish comments from Fed chair Powell a few hours later added fuel to the surge in the dollar. He said the Fed may have to raise rates past levels considered “neutral” to restrain inflation, and that we are still a long way from even reaching “neutral”. While neither comment was particularly new, investors still took the opportunity to price in a greater degree of tightening in 2019. Against this backdrop, dollar/yen skyrocketed to a fresh 11-month high of 114.50, as improved risk appetite in markets also weighed on the yen.

Euro/dollar pared earlier gains to close the session much lower as the dollar advanced, breaking below the key 1.1500 juncture, to stabilize around 1.1480. The euro’s losses came even despite encouraging news from Italy, where the government confirmed it will lower its budget deficits in the comings years, helping to calm concerns of an imminent clash with the EU. With Italian concerns fading for now, at least until the government releases the details of its budget, risk sentiment was boosted – triggering a rotation out of bonds (hence higher yields) and into equities.

In the UK, there was little of note in PM May’s remarks at the Conservative party conference. Now, the focus turns back to the talks, which are expected to resume this week. Media reports have floated potential “compromises” by both sides recently, and it will be crucial to see which of those turn into formal proposals.

Elsewhere, the antipodean currencies got slammed amid the dollar’s resurgence, with the aussie and kiwi being the worst performing G10 currencies, each losing around 1.2% against the greenback on Wednesday. Aussie/dollar and kiwi/dollar softened on Thursday too, both touching fresh 2½-year lows.

Day ahead: US factory orders & weekly jobless claims due; Italian politics and Brexit monitored

Thursday’s a quiet data day, with US factory orders attracting some interest; even those do not typically act as a major market mover. In the absence of anything major on the economic calendar, updates relating to Italian politics and Brexit will be monitored.

According to a government spokeswoman, details relating to economic growth projections that would support Italy’s budget plans will be published today. After much controversy and rising odds for an Italy-EU clash, the country’s budget deficit target for 2019 is at 2.4%, while it pledged to reduce it to 2.1% in 2020 and 1.8% in 2021.

In the UK, any Brexit updates following the Tory Party Conference will be closely watched; should hopes for a breakthrough from the current deadlock in negotiations rise, then sterling is likely to post a relief rally.

On the data front, US factory orders are scheduled for release at 1400 GMT. A rebound is forecast in August, with orders expected to grow by 2.1% m/m, after contracting by 0.8% in July on the back of subdued aircraft demand. Weekly jobless claims data out of the nation are due earlier in the day (1230 GMT).

Canada’s September Ivey PMI is also due at 1400 GMT.

ECB policymaker and Bank of Finland Governor Olli Rehn will be talking about monetary policy and the global economic situation at 0800 GMT. Other policymakers on the agenda are the ECB’s Nouy (0930 GMT) and Coeure (1400 GMT), as well as the Fed’s Quarles (permanent FOMC voting member – 1315 GMT).

Technical Analysis: EURGBP short-term bearish, trades near 2½-month low levels

EURGBP only managed to finish higher in two of the eight preceding trading days. At the moment, the pair is trading not far above 0.8847, this being September 20’s two-and-a-half-month low. The Tenkan- and Kijun-sen lines are negatively aligned in support of a bearish short-term picture. The RSI, which has been declining overall since late September, also lends credence to the view for a negative bias, though notice that it does not maintain a steep negative slope; negative momentum may be weakening.

Positive Brexit momentum is likely to push the pair lower. Immediate support to losses may take place around the 50% Fibonacci retracement level of the upleg from 0.8620 to 0.9098 at 0.8858; the two-and-a-half-month low of 0.8847 is also part of the area around this point. Further below, the 61.8% Fibonacci mark of 0.8802 would be eyed.

Rising odds for a no-deal Brexit on the other hand, are expected to elevate EURGBP. A first line of resistance could occur around the current level of 100-day moving average line at 0.8873. Stronger gains would turn the attention to the 38.2% Fibonacci point at 0.8915; the Ichimoku cloud bottom (0.8911), Tenkan-sen (0.8922), 50-day MA (0.8938) and the Kijun-sen (0.8949) all lie in proximity to this level.

EUR/USD

Current level - 1.1472

The bias is bearish after 1.1590 peak, targeting 1.1440 static support. The latter should provide a base for a rebound towards 1.1730. Initial intraday resistance lies at 1.1500 and crucial on the upside is 1.1500.

USD/JPY

Current level - 114.38

My outlook is counter-trend, for a reversal and slide towards 113.20 area. Initial intraday support lies at 114.00.

GBP/USD

Current level - 1.2932

The downtrend has been renewed after the failure at 1.3020 and the pair is heading towards 1.2870. Crucial on the upside is 1.3020.

The Aussie dollar broke through key support at 0.7085 (11 Sep low) and hits new lows (the lowest since Feb 2016) in extension of Wednesday's strong bearish acceleration which resulted in 1.2% fall in one day.

Break below 0.7085 marked full retracement of 0.7085/0.7314 correction and generated strong bearish signal which needs confirmation on close below 0.7085 pivot.

Negative sentiment is boosted by strengthening dollar on upbeat US economic data and signals of more aggressive Fed in the near future.

Firmly bearish daily/weekly techs add to negative outlook, with psychological 0.70 support and 0.6972 (Feb 2016 low) being in immediate focus, violation of which would expose key longer-term support at 0.6825 (15 Jan 2016 low, the lowest since 2009).

Deeply oversold daily slow stochastic continues to head south, but gives warns of corrective action in the coming sessions.

Res: 0.7085, 0.7111, 0.7140, 0.7160
Sup: 0.7072, 0.7030, 0.7000, 0.6972

Strong bullish acceleration on Wednesday (the biggest one-day gain since 11 July) hit new eleven-month high at 114.54, as dollar enjoyed strong support from upbeat US data and hawkish tone of comments from Fed chief Powell.

Bulls are taking a breather in early Thursday's trading with easing from new high seen as positioning for fresh upside.

Strong bullish bias was confirmed by monthly close above pivotal barriers at 113.18/30 (weekly 200SMA/Fibo 61.8% of 118.66/104.63 descend).

Bulls eye immediate target at 114.73 (06 Nov 2017 high) and could extend towards important Fibo barrier at 115.35 (76.4% of 118.66/104.63).

Pullback approaches round-figure support at 114.00 (reinforced by rising 5SMA), with deeper dips to be contained by rising 10SMA (113.43) to keep pivotal supports (broken Fibo 61.8%/weekly 200SMA) intact.

Res: 114.54, 114.73, 115.00, 115.35
Sup: 114.00, 113.43, 113.30, 113.18

Cable bounces on Thursday after two-day fall approached key supports at 1.2911/04 (daily cloud base/Fibo 61.8% of 1.2661/1.3297 rally). Oversold slow stochastic and strong headwinds from 1.29 support zone signal consolidation before bears resume. Strong dollar on upbeat US data and Brexit concerns continue to weigh on sterling and support bearish scenario. Firm break below 1.29 zone pivots would open way for extension towards next supports at 1.2811/1.2785 (Fibo 76.4% / 05 Sep trough). Cluster of barriers which starts with converging 55/5SMA's (1.2985/90), followed by psychological 1.30 level / daily cloud top (1.3012) and30SMA (1.3021) is expected to cap upticks.

Res: 1.2990, 1.3012, 1.3021, 1.3054
Sup: 1.2922, 1.2904, 1.2811, 1.2785

The Euro is consolidating above new five-week low at 1.1463 in early Thursday's trading, following strong bearish acceleration on Wednesday, sparked by upbeat US private sector jobs data and Services sector showing the strongest activity since 1997. Strong data boosted expectations for surprise in US NFP data on Friday and keep the greenback well supported. Wednesday's close below pivotal 1.15 support zone (Fibo 61.8% of 1.1300/1.1815 upleg/weekly 100SMA) was strong bearish signal for further weakness towards 1.1422 (Fibo 76.4%) and key supports at 1.1328/00 (weekly 200SMA / 15 Aug low) in extension. Slow stochastic on daily chart is moving sideways, deeply in oversold zone and suggesting that bears may take a breather, but so far without firmer signal. Consolidative / corrective action faces initial resistance in broken former strong support at 1.1500, with extended upticks to be capped by the base of thick weekly cloud (1.1562) to keep bears intact.

Res: 1.1500, 1.1526, 1.1562, 1.1593
Sup: 1.1463, 1.1422, 1.1394, 1.1328

Pivot (invalidation): 6.0270

Our preference Long positions above 6.0270 with targets at 6.0900 & 6.1200 in extension.

Alternative scenario Below 6.0270 look for further downside with 5.9920 & 5.9700 as targets.

Comment The RSI calls for a new upleg.

Pivot (invalidation): 0.7125

Our preference Short positions below 0.7125 with targets at 0.7080 & 0.7035 in extension.

Alternative scenario Above 0.7125 look for further upside with 0.7145 & 0.7160 as targets.

Comment The RSI advocates for further downside.