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Daily Pivots: (S1) 0.8729; (P) 0.8740; (R1) 0.8756; More…

Intraday bias in EUR/GBP remains neutral with focus on 0.8744 resistance. Decisive break there should confirm that fall from 0.8863 has completed as a correction. Further rally should then be seen back to retest 0.8863 high. On the downside, sustained break of 38.2% retracement of 0.8221 to 0.8663 at 0.8618 will carry larger bearish implications and turn outlook bearish.

In the bigger picture, rise from 0.8221 medium term bottom (2024 low) is seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8631) should confirm that this corrective bounce has completed. In this case, deeper fall would be seen back to 0.8201/21 key support zone. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.

Daily Pivots: (S1) 1.6634; (P) 1.6704; (R1) 1.6749; More...

EUR/AUD is staying in consolidations above 1.6620 and intraday bias remains neutral at this point. With 1.7060 resistance intact, outlook stays bearish and further decline is expected. On the downside, break of 1.6620 will resume larger down trend from 1.8554 to 138.2% projection of 1.8554 to 1.7245 from 1.8160 at 1.6351 next. However, firm break of 1.7060 will indicate short term bottoming, and bring stronger rebound.

In the bigger picture, fall from 1.8554 medium term top is seen as reversing the whole up trend from 1.4281 (2022 low). Deeper decline should be seen to 61.8% retracement of 1.4281 to 1.8554 at 1.5913, which is slightly below 1.5963 structural support. For now, risk will stay on the downside as long as 1.7245 support turned resistance holds, even in case of strong rebound.

Daily Pivots: (S1) 0.9097; (P) 0.9114; (R1) 0.9140; More....

EUR/CHF is still bounded in consolidations from 0.9092 and intraday bias stays neutral. Further decline is expected with 0.9180 resistance intact. On the downside, firm break of 0.9092 will resume larger down trend and target 261.8% projection of 0.9394 to 0.9268 from 0.9347 at 0.9143. However, considering bullish convergence condition in 4H MACD, decisive break of 0.9180 will indicate short term bottoming, and bring stronger rebound towards 55 D EMA (now at 0.9224).

In the bigger picture, down trend from 0.9928 (2024 high) is still in progress with falling 55 W EMA (now at 0.9258) intact. Next target is 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. Outlook will stay bearish as long as 0.9394 resistance holds, in case of recovery.

Daily Pivots: (S1) 1.1743; (P) 1.1775; (R1) 1.1809; More….

Intraday bias in EUR/USD remains on the downside as fall from 1.2081 continues today. Sustained trading below 55 D EMA (now at 1.1763) will raise the chance of reversal on rejection by 1.2, and target 1.1576 support for confirmation. For now, risk will stay mildly on the downside as long as 1.1928 resistance holds, in case of recovery.

In the bigger picture, as long as 55 W EMA (now at 1.1485) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will add to the case of long term bullish trend reversal. Next medium term target will be 138.2% projection of 0.9534 to 1.1274 from 1.0176 at 1.2581. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 154.58; (P) 154.96; (R1) 155.38; More...

USD/JPY's rally from 152.25 continues today and intraday bias stays on the upside for 157.65 resistance first. Break there will target a retest on 159.44 high. On the downside, below 154.33 minor support will turn intraday bias neutral and bring consolidations. Overall, with 38.2% retracement of 139.87 to 159.44 at 151.96 intact rise from 139.87 is expected to resume through 159.44 at a later stage.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 151.77) holds. However, sustained break of 55 W EMA will argue that the pattern from 161.94 is extending with another falling leg.

Daily Pivots: (S1) 1.3428; (P) 1.3473; (R1) 1.3511; More...

Intraday bias in GBP/USD remains on the downside as fall from 1.3867 is in progress. Current development suggests that the decline is at least correcting the uptrend from 1.2099. Break of 1.3342 support will solidify this case, and target 161.8% projection of 1.3867 to 1.3507 from 1.3711 at 1.3129. On the upside, above 1.3516 minor resistance will turn intraday bias neutral again first. But risk will stay on the downside as long as 1.3711 resistance holds, in case of recovery.

In the bigger picture, rise from 1.0351 (2022 low) still in progress and should target 1.4284 key resistance (2021 high). Decisive break there will add to the case of long term bullish trend reversal. For now, outlook will stay bullish as long as 1.3008 support holds, even in case of deep pullback.

Daily Pivots: (S1) 0.7726; (P) 0.7745; (R1) 0.7768; More….

No change in USD/CHF's outlook as price actions from 0.7603 are seen as a consolidation pattern in the larger down trend. Intraday bias remains neutral. While stronger rebound cannot be ruled out, upside should be limited by 55 D EMA (now at 0.7838) to complete the pattern. On the downside, break of 0.7603 will resume larger down trend, and target 0.7382 projection level next. However, sustained break of 55 D EMA will indicate that a larger scale corrective bounce in underway and target 0.8039 resistance next.

In the bigger picture, down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8123 resistance holds.

Daily Pivots: (S1) 1.3662; (P) 1.3689; (R1) 1.3708; More...

No change in USD/CAD's outlook and price actions from 1.3480 are seen as a consolidation pattern in the larger decline. Intraday bias stays neutral at this point. While stronger rebound cannot be ruled out, upside should be limited by 55 D EMA (now at 1.3742) to complete the pattern. On the downside, firm break of 1.3480 will resume larger down trend from 1.4791 to 61.8% projection of 1.4791 to 1.3538 from 1.4139 at 1.3365.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen as the pattern extends, to 61.8% retracement of 1.2005 to 1.4791 at 1.3069. For now, medium term outlook will be neutral at best, until there are signs that the correction has completed, or that a bearish trend reversal is confirmed.

Markets

Geopolitics remain the dominant trading theme as US President Trump weighs his options in the Middle East. After amassing the largest amount of US troops in the region since the 2003 Iraq invasion, he might effectively deploy them in order to get a nuclear deal with Iran. He has given a 10-day ultimatum to Tehran or “really bad things” will happen. Last year, Trump launched an attack against three Iranian facilities three days after a similar deadline. Operation Midnight Hammer happened on a Sunday… The WSJ yesterday reported on a “limited-strike option” as a reprimand for Iran’s failure to make a deal, but also pave the way for a US-friendly accord. People close to the matter suggest that Trump could ratchet up his attacks, starting small before ordering larger strikes until the Iranian regime either dismantles its nuclear work or falls. Brent crude prices work they way through $72/b this morning, the highest level since last summer and to be compared with $67.75/b closing price at the end of last week. Middle East stress translated in a risk-off setting yesterday with European and US stock markets respectively losing around 1% and 0.5%. The US dollar took up his safe haven role with the trade-weighted greenback (DXY) testing first resistance at 97.99. The attempt is ongoing this morning. EUR/USD is in the same vein losing first support at 1.1766 with GBP/USD already well below 1.3509. Strong January UK retail sales (+1.8% M/M & +4.5% Y/Y) this morning offer some relief for GBP. The dollar is able to play this role after throwing off the shackles of a possible March Fed rate cut. Last week’s payrolls and CPI report dismissed the case with this week’s Fed comments and FOMC Minutes also favouring a longer “hold”. Even Fed governor Miran – temporarily appointed by President Trump end last year and echoing the administration’s dovish views – said in an interview with The Peg yesterday that he’s going to undo what he did his December projections. In the quarterly dot plot, he had the policy rate falling to 2%-2.25% by the end of the year. Latest labor market data came in a little bit better than he expected while he also saw some signs of even more firming in goods inflation. Therefore, he’s inclined to go back to his September projection (2.5%-2.75%) which would still only put him on par with the second most dovish voice inside the FOMC. Today’s eco calendar contains global PMI and US Q1 GDP. Our KBC nowcast now predicts 2.74% Q/Qa growth for Q4 (vs +3% consensus); however, if we filter out the gold effects, only 1.6% Q/Qa would remain. We don’t think the numbers will be able to offset caution going into the weekend with US action against Iran looming.

News & Views

Belgium’s Court of Audit has serious doubts whether the federal budget will comply with the EU’s expenditure growth cap. The government led by PM De Wever aims to do so through 2029 and end last year agreed on some €8bn in additional efforts to remain on track. The Court of Audit is skeptical on the €1.9bn in savings that the government is counting on through activating people that have been out of a job due to long-term sickness. Anti-fraud measures are expected to yield €1.2bn but the Court noted that there’s still no plan in place. It also raised questions on the hundreds of millions that VAT changes would deliver for the 2026 budget, because some measures need a complete overhaul (eg. takeaway) while others (most) are only introduced no sooner than Q2 or later still. The Court of Audit is similarly less optimistic than the government on the revenues coming from, amongst others, changes to wage indexation, the increased reduced withholding tax and the capital gains tax. The news from the Court of Audit comes after the jab from the Federal Planning Bureau last week. The FPB in updated forecasts assumes the deficit to be €3bn larger in 2029 compared to government estimates due to changes in personal income taxes. In GDP terms, the deficit would rise from 4.9% this year to 5.7% in 2029 (vs 5.3% in government forecasts). Deficits would continue to rise in the years thereafter, with a 6.3% shortage in 2031. Government debt would spiral from 109.4% this year to 116.6% in 2029 and 122.2% in 2031.

Japanese inflation came in slightly below expectations in January. Headline CPI eased from 2.1% to 1.5% while core inflation (ex. fresh food and energy) decelerated from 2.9% to 2.6%. The Bank of Japan’s preferred inflation gauge (ex. fresh food) matched the 2% bar (from 2.4% in December). Government measures to reduce cost of living are paying off, including in reduced fuel costs through tax measures that pushed overall energy prices down 5.2% y/y. Fresh food (-6.9%) weighed on prices as well with the annual reading correcting from last year’s (p)rice surge. It is expected that inflation would drop below 2% in core gauges in coming months as government utility measures kick in. The Bank of Japan had been expecting the slowing price growth and stressed they remain focused on the underlying trend. As such, the outcome today shouldn’t bring the BoJ off-track with rate hikes still due in coming months. USD/JPY rises slightly to north of 155. Front-end Japanese yields trade little changed.

Daily Pivots: (S1) 0.7029; (P) 0.7054; (R1) 0.7085; More...

AUD/USD edges lower today as correction from 0.7146 extends, and intraday bias remains neutral. Deeper retreat might be seen, but downside should be contained above 0.6896 support to bring another rally. On the upside, above 0.7146 will resume larger up trend to 100% projection of 0.5913 to 0.6706 from 0.6420 at 0.7213.

In the bigger picture, current development argues that rise from 0.5913 (2024 low) is reversing whole down trend from 0.8006 (2021 high). Further rally should be seen to 61.8% retracement of 0.8006 to 0.5913 at 0.7206. This will remain the favored case as long as 0.6706 resistance turned support holds, even in case of deep pullback.