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The USD/JPY broke below the support line of the critical uptrend channel (dotted blue) and price is now building a bearish breakout below the 110 round level.

The bearish price action could be a wave A (blue) correction within a larger wave E triangle from the daily chart. Price could have completed a wave Y (pink) of a wave D (light purple) at the most recent top.

The USD/JPY made a strong bearish continuation which was a wave 3 (green) momentum. The pullback within wave 4 (green) stopped at the 50% Fibonacci retracement level and reversed back down. Price is now probably in a wave 5 (green), although the bearish price action could extend itself. Once the wave A is completed, then traders could expect an ABC correction within wave B.

XAUUSD (1295.19): Gold prices continue to remain consolidating near the current levels. Price action is seen stuck between the 1304 - 1301 level of resistance and 1282 level of support. We expect this sideways movement to continue until price breaks out from either of these levels. To the upside, a close above 1304 - 1301 resistance could signal a move toward 1325 level. To the downside, a break down below 1282 would keep gold prices subdued to test the 1250 support.

USDJPY (109.46): The USDJPY currency pair fell sharply as price action failed to capitalize on a modest rebound. USDJPY is now seen trading near the support level at 109.57 - 109.43 region. We can expect to see a rebound in price action in the near term. However, the gains are likely to be short lived but there is a potential for USDJPY to retrace the losses all the way back to the resistance level at 110.85. In the near term, a break down below the current support level could signal a decline to the next lower support at 109.90.

Finally, there's some good news from the UK. Headline retail sales jumped 1.6% mom in April, much higher than expectation of 0.7%. Excluding auto and fuel, retail sales also jumped solidly by 1.3% mom, versus expectation of 0.4% mom.

The ONS noted that "the effects of the adverse weather on sales introduces further volatility to the monthly growth rate in April 2018." And, "combining March and April to compare the two months with the same two months a year earlier provides a more stable picture of the year-on-year growth".

Combining both March and April, sales grew 1.3% in 2018, much lower than 2.9% back in 2017. Full release here.

Nonetheless, Sterling is lifted immediately by the release. GBP/USD's focus will be back on 1.3441 minor resistance.

EURUSD (1.1700): The EURUSD currency pair slipped past the 1.1730 level of support to briefly touch down to 1.1672 level before pulling back. Price action remains subdued at the current levels although the EURUSD could be seen attempting to post a reversal in the near term. The 4-hour Stochastics continues to remain the oversold level and a breakout above 1.1730 on a 4-hour basis could potentially signal a move to the upside. Still, price action needs to breakout from the falling price channel to confirm this upside in price.

It was a busy day for the markets yesterday with a number of economic releases lined up. The Eurozone flash services and manufacturing PMI's showed that activity in both the sectors fell to 18-month and a 16-month low. This brought the Eurozone composite output index to an 18-month low.

The euro was little changed on the news although the common currency was trading broadly weaker. In the UK, the inflation data showed that consumer prices rose at a pace of 2.4% which was less than forecast. The core inflation rate was seen rising at 2.1%, which also missed estimates of a 2.2% increase. The weak inflation data stoked speculation that it could delay the Bank of England's rate hike plans for the month of August. The British pound was seen weakening after the release.

The NY trading session saw the release of Markit's flash manufacturing and services PMI's which were broadly in line with estimates.

The Fed meeting minutes were released yesterday. The data did not add any new information to the markets. The minutes revealed that officials were upbeat about the economy and that the next rate hike would be appropriate. The minutes confirmed the market views that the FOMC will be hiking interest rates at the next Fed meeting June.

Data for the day ahead starts off with the German final quarterly GDP estimates. Forecasts point to an unchanged print of 0.3% in the first quarter. The BoE Governor Mark Carney is scheduled to speak earlier in the day. The UK's retail sales report is due later with estimates showing a 0.8% increase on a monthly basis.

The ECB will be releasing the monetary policy meeting minutes thereafter. Data from the U.S. will see the release of the existing home sales report. Fed members are also scheduled to speak over the day.

USDJPY has been plunging since Tuesday’s trading session after the strong bounce off the four-month high of 111.40. The pair almost pared the previous week’s gains and slipped below the 38.2% Fibonacci retracement level of the downleg from 118.60 to 104.60, near 109.95. The short-term technical indicators are bearish and point to more weakness in the market.

Looking at the daily timeframe, prices also fell below the 20-day simple moving average (SMA), while the RSI indicator dived near the neutral threshold of 50 with strong momentum. Moreover, the MACD oscillator created a bearish cross with its trigger line in the positive area.

If price action remains below the aforementioned obstacles, there is scope to test the next immediate support of 108.65, which holds near the 40-day SMA. Falling below it would see prices re-test the 107.80 barrier, which is near with the 23.6% Fibonacci mark. This is considered to be a strong support zone which has been rejected a few times in the past.

In case of an upward movement above the 38.2% Fibonacci level, then the focus would shift to the upside towards the four-month high. Slightly above it, the price could hit the 50.0% Fibonacci, which is acting as a strong resistance level at 111.60, before being able to challenge the 112.00 handle.

In the longer timeframe, USDJPY has been trading within a channel tilted slightly to the downside since December 2016.

NZDUSD remains under pressure as it has failed to create a significant movement either to the upside or downside. The price has been developing below 0.6974 and the 23.6% Fibonacci retracement level of 0.6978; as calculated in the downleg from 0.7395 to 0.6850 since May 11.

From the technical point of view, in the 4-hour chart, prices are struggling within the 20- and 40-simple moving averages (SMAs) over the last couple of hours. Furthermore, the RSI indicator is pointing marginally south in the negative zone, suggesting bearish movement, while the MACD oscillator is flattening near the zero line.

In the wake of further negative pressures, the market could meet support at the 0.6870 barrier before it heads lower to the 0.6850 support level. A successful close below this level could see a retest of the previous low of 0.6820, taken from the bottom on December 2017, while in case of steeper declines, the pair could breach this trough, diving to the 0.6780 hurdle which used to provide support during last November.

On the flip side, a move to the upside could see immediate resistance at the 0.6974 high, achieved on Tuesday but should the market increase positive momentum above this area. 0.6985 could be the next level in focus. The aforementioned levels are close to each other and a penetration to the upside of this area could open the way for a bullish run towards the 0.7050 region.

Overall, the pair is fairly neutral as long as it holds within the 0.6850 support and the 0.6974 resistance and the technical indicators seem to be flat as well.

Here are the latest developments in global markets:

FOREX: The US dollar index is down by 0.1% on Thursday, after the Fed minutes downplayed expectations for three more rate increases this year. Note though, that the index touched its highest level for 2018 yesterday, before the minutes triggered a pullback. The yen continued to advance, while both the euro and sterling retreated following soft economic data.

STOCKS: Wall Street closed higher yesterday despite signals from the White House that more tariffs may be coming, boosted by the Fed minutes which played down expectations for aggressive rate hikes this year. The Nasdaq Composite advanced 0.64%, while the S&P 500 and Dow Jones climbed by 0.32% and 0.21% respectively. Futures tracking the Dow, S&P, and Nasdaq 100, are all currently in negative territory, pointing to a slightly lower open today. In Asia, Japan’s Nikkei 225 and the Topix plunged 1.1% and 1.2% correspondingly, as the latest surge in the yen dampened the prospects for Japanese exporters. In Hong Kong, the Hang Seng was up, but only by 0.07%. In Europe, futures tracking the major indices were all in the green, with the only exception being the German DAX 30.

COMMODITIES: Oil prices edged down on Wednesday and are trading lower today as well, after the weekly EIA crude inventory data surprisingly showed a massive build in stockpiles, instead of the anticipated drawdown. WTI fell by 0.35% and Brent by 0.4% today, though both benchmarks remain elevated close to the multi-year highs they achieved recently. Some talk that OPEC is considering to “open the taps” soon and offset any declines in output from Venezuela and Iran may have aided the pullback. In precious metals, gold is up by nearly 0.2% today, extending gains from yesterday. The metal is currently trading near $1,296 per ounce, and looks to be headed for a test of the psychological $1,300 level.

Major movers: Dollar advance halted by Fed minutes; euro and sterling lose ground as yen roars back

The minutes from the Fed’s May policy meeting confirmed the Committee would be comfortable allowing inflation to overshoot its 2% inflation goal for a while without raising rates more aggressively. And while policymakers signaled that another hike is likely needed “soon”, cementing expectations for such action in June, they stopped short of indicating support for faster rate hikes than they have already penciled in.

These signals likely enhanced the narrative the Fed will only raise rates another two times this year, and not three as several investors expect. In fact, while two more 25bps are still fully priced in for 2018, the implied probability for a third one has fallen to below 10% according to the Fed fund futures. The yields on 10-year US Treasuries dipped, while the dollar tumbled, giving back some of the gains it had posted earlier.

On the trade front, President Trump announced yesterday the US is considering tariffs on imported cars and trucks, once again pouring cold water on expectations the “trade war” narrative is about to quiet down. Unlike the previous tariffs aimed mainly at China though, these ones seem to be directed predominantly towards Germany and Japan, both of which export a considerable number of automobiles to the US.

Meanwhile, the yen skyrocketed yesterday on safe-haven flows, gaining roughly 200 pips against both the euro and the pound, which were on the back foot following soft data out of the eurozone and UK respectively. The euro stumbled after the bloc’s PMIs for May fell by more than expected, adding credence to the theme that the economy is losing momentum and the ECB may be even more hesitant to head for the stimulus-exit door. The currency still seems vulnerable to some more downside in the near-term, especially if the ECB minutes today confirm policymakers are becoming warier.

In the UK, sterling was pressured by disappointing inflation data. The headline CPI rate surprisingly ticked down instead of remaining unchanged as projected, while the core rate declined by more than anticipated. The fact that inflation is declining faster than the Bank of England (BoE) expects, lessens the pressure on policymakers to raise interest rates. Indeed, the implied probability for a BoE hike in August fell to 32% and in case the UK retail sales figures disappoint today as well, that percentage could drift even lower, and the pound may follow suit.

In emerging markets, Turkey’s central bank raised interest rates by 300bps in an emergency move to arrest the lira’s freefall. While the currency rebounded – erasing the hefty losses it had posted yesterday – it has since started to weaken again and remains close to all-time lows, perhaps signaling that more needs to be done before the situation stabilizes.

Day ahead: UK retail sales, ECB minutes and US home sales on the horizon

The highlights in terms of releases out of Thursday’s calendar are expected to be UK retail sales, the ECB’s official record of its latest meeting, and US existing home sales.

At 0830 GMT, the UK will be on the receiving end of retail sales data for the month of April. Sales are forecast to rise by 0.7% m/m, exhibiting a notable rebound relative to March when they contracted by 1.2%. However, the yearly rate of growth is anticipated at just 0.1%; this is due to an exceptionally strong reading in April of last year. Core retail sales, the measure that excludes fuel, will also be monitored. Sterling suffered yesterday – falling to a five-month low of 1.3303 versus the US currency – on the back of weaker-than-anticipated CPI figures. It will be interesting to see whether today’s release can allow the currency to move from the aforementioned multi-month nadir.

The European Central Bank will be releasing the minutes pertaining to its late April meeting at 1130 GMT. An upbeat sounding ECB that views the recent softness in eurozone data as not worrisome is likely to boost the euro; the implication being that policymakers remain committed to further scale down the Bank’s Asset Purchase Programme in Q4 and then completely phase it out by the end of the year. The opposite holds true as well.

Weekly jobless claims and existing home sales data will be released out of the US at 1230 GMT and 1400 GMT respectively. Existing home sales are projected to decrease by 0.2% m/m in April after rising by 1.1% in March.

Policymakers sharing remarks during today’s trading include Bank of England Governor Mark Carney (0800 GMT) and outgoing New York Fed President William Dudley (0815 GMT – the New York Fed President holds permanent voting rights within the FOMC). They will both be speaking at the BoE Markets Forum 2018, while Carney will also be appearing before the London’s Society of Professional Economists at 1910 GMT. Comments by ECB chief economist Peter Praet (0830 GMT and 1030 GMT), regional Fed Presidents Raphael Bostic (voter – 1435 GMT), Robert Kaplan (non-voter – 1435 GMT) and Patrick Harker (non-voter – 1800 GMT) are also on the agenda.

Meanwhile, US President Trump considering to impose new tariffs on imported cars, and the political situation in Italy are two other stories that will be closely followed during today’s trading. With respect to Trump, an interview of his on the “Fox and Friends” show will be airing today at 1000 GMT.

Technical Analysis: GBPJPY short-term bearish, not far above 3-month low

GBPJPY posted a near three-month low of 145.93 during Wednesday’s trading, while it is currently trading roughly 40 pips above that level. The RSI is in bearish territory below 50 and continues to decline, supporting the case for negative short-term momentum.

Stronger-than-expected UK retail sales data are anticipated to boost the pair. Resistance to advances might come around the 147 and 148 round figures.

Conversely, poor data releases are likely to amplify losses. Support to a falling GBPJPY could come around yesterday’s low of 145.93 (including the 146 handle). Further below and in case of steeper losses, the eight-month low of 144.98 from early May would be eyed next.

Daily Pivots: (S1) 1.2788; (P) 1.2856; (R1) 1.2905; More.....

USD/CAD is still stuck in range of 1.2728/2996 and intraday bias remains neutral. We'd maintain our view that price actions from 1.3124 as a corrective move that could be completed at 1.2526 already. Break of 1.2996 will turn bias to the upside and extend the rise from 1.2526 to 1.3124 key resistance next. However, break of 1.2728 will dampen this bullish view and bring deeper fall back to 1.2526 and possibly below.

In the bigger picture, we're favoring the case that that rebound from 1.2061 has not completed yet. Focus is back on 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Sustained trading above there will confirm medium term bullish reversal. That is, down trend from 1.4689 has completed at 1.2061 already. In that case, next target will be 61.8% retracement at 1.3685. However, break of 1.2526 support will dampen this bullish view again. And, focus will be back on 1.2061 key support level, which is close to 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048.