USD/CHF edged higher to 1.0056 last week but failed to sustain above 1.0037 resistance. A short term top is formed on bearish divergence condition in 4 hour MACD> Initial bias is mildly on the downside this week. Deeper pull back could be seen to trend line support (now at 0.9761). At this point, we'd expect strong support from there to bring rally resumption. On the upside, sustained break of 1.0037 will resume recent rise for 1.0342 key resistance next.

In the bigger picture, medium term decline from 1.0342 has completed with three waves down to 0.9186. Rise from there is currently viewed as a leg inside the long term range pattern. Hence, while further rally would be seen, we'd be cautious on strong resistance from 1.0342 to limit upside. For now, further rise is expected as long as 38.2% retracement of 0.9186 to 1.0056 at 0.9724 holds.

In the long term picture, price actions from 0.7065 (2011 low) are not clearly impulsive yet. Thus, we'll treat it as developing into a corrective pattern, at least, until a firm break of 1.0342 resistance.

AUD/USD edged lower to 0.7411 last week but formed a short term bottom there and rebounded. Initial bias is mildly on the upside this week for recovery to 0.7642 support turned resistance. But we'd expect upside to be limited by 38.2% retracement of 0.8135 to 0.7144 at 0.7688 to bring fall resumption. Below 0.7411 will resumed the fall from 0.8135 and target cluster support at 0.7328 (61.8% retracement of 0.6826 to 0.8135 at 0.7326).

In the bigger picture, medium term rebound from 0.6826 is seen as a corrective move. Decisive break of 0.7500 key support suggests that such correction is completed at 0.8135. Deeper decline would be seen back to retest 0.6826 low. In case of another rise, we'd expect strong resistance from 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside to bring long term down trend resumption eventually.

In the longer term picture, 0.6826 is seen as a long term bottom. Rise from there could either reverse the down trend from 1.1079, or just develop into a corrective pattern. At this point, we're favoring the latter. And, as long as 38.2% retracement of 1.1079 to 0.6826 at 0.8451 holds, we'd anticipate another decline through 0.6826 at a later stage. But strong support should be seen between 0.4773 (2001 low) and 0.6008 (2008 low).

USD/CAD edged higher to 1.2996 last week but formed a short term top there and retreated sharply. Further decline is mildly in favor in initially this week. But after all, we're favoring the bullish case that rebound from 1.2061 hasn't completed. Therefore, downside should be contained well above 1.2526 support and bring rebound. On the upside, above 1.2859 will bring retest of 1.2996 first. However, firm break of 1.2526 will resume the fall from 1.3124 to 1.2246 support and likely below.

In the bigger picture, current development suggests 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

In the longer term picture, 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048 remains a key support level to watch. As long as this level holds, we'll treat fall from 1.4689 as a correction and expect another rally through this level. However, sustained break of 1.2048 will turn favors to the case that rise from 0.9056 (2007 low) is a three wave corrective move that's completed at 1.4689. And retest of 0.9056/9406 support zone could be seen in medium to long term.

GBP/JPY engaged in consolidation above 147.04 last week and outlook is unchanged. Initial bias remains neutral this week first. In case of stronger recovery, upside should be limited below 150.60 support turned resistance to bring fall resumption. Below 147.04 will target 144.97 first. Break there will resume the fall from 156.59 and target 100% projection of 156.59 to 144.97 from 153.84 at 142.22 next.

In the bigger picture, for now, we're treating price actions from 156.59 as a corrective move. Therefore, while deeper fall is expected, strong support should be seen above 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) to contain downside and bring rebound. There is still prospect of extending the rise from 122.36. However, considering that GBP/JPY failed to sustain above 55 month EMA (now at 153.94), firm break of 139.29 will confirm trend reversal and turn outlook bearish.

In the longer term picture, the failure to sustain above 55 month EMA (now at 153.94) is mixing up the outlook. Nonetheless, as long as 139.29 holds, rise from 122.26 is in favor to extend to 50% retracement of 195.86 (2015high) to 122.36 (2016 low) at 159.11, and possibly further to 61.8% retracement at 167.78 before completion. However, firm break of 139.29 will turn focus back to 116.83/122.36 support zone instead.

EUIR/JPY dropped to 129.22 last week but formed a short term bottom there and recovered. Initial bias remains neutral this week for consolidations. As long as 4 hour 55 EMA holds (now at 130.69), the consolidation should be relatively brief. Below 129.22 will target 128.94 support. Break will resume whole decline from 137.49 and target 61.8% projection of 137.49 to 128.94 from 133.47 at 128.18 next. Overall, near term outlook will stay bearish as long as 133.47 resistance holds and downside breakout is expected eventually.

In the bigger picture, for now, price actions from 137.49 are viewed as a corrective pattern only. Hence, while, deeper decline would be seen, strong support is expected at 38.2% retracement of 109.03 to 137.49 at 126.61 to contain downside and bring rebound. Up trend from 109.03 (2016 low) is expected to resume afterwards. Though, sustained break of 126.61 will be an important sign of trend reversal and will turn focus to 124.08 resistance turned support.

In the long term picture, at this point, EUR/JPY is staying in long term sideway pattern, established since 2000. Rise from 109.03 is seen as a leg inside the pattern. As long as 124.08 support holds, further rally is in favor in medium to long term through 149.76 high. However, break of 124.08 could extend the fall through 109.03 low instead.

EUR/GBP's near term outlook is a bit mixed as it struggled to break through medium term trend line resistance. Yet, there was no sustainable selling. Initial bias is neutral this week first. On the upside, break of 0.8844 will revive the case of bullish trend reversal. Intraday bias will be turned back to the upside for 0.8967 cluster resistance (50% retracement of 0.9305 to 0.8620 at 0.8963) to confirm. On the downside, however, below 0.8727 will target a test on 0.8620 low instead.

In the bigger picture, for now, the decline from 0.9305 is seen as a leg inside the long term consolidation pattern from 0.9304 (2016 high). Such consolidation pattern could extend further. Hence, in case of strong rally, we'd be cautious on strong resistance by 0.9304/5 to limit upside. Meanwhile, in another decline attempt, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

In the long term picture, we're holding on to the view that rise from 0.6935 (2015 low) is resuming the up trend from 0.5680 (2000 low). Hence, after the consolidation from 0.9304 completes, we'd expect another medium term up trend through 0.9799 to 100% projection of 0.5680 to 0.9799 from 0.6935 at 1.1054.

EUR/AUD's decline from 1.6139 extended lower to 1.5774 last week. As long as 1.5962 resistance holds, deeper fall is expected through 1.5773. Nonetheless, price actions from 1.6189 are viewed as a consolidation pattern. Therefore, downside should be contained above 1.5621 support to bring rebound. On the upside, above 1.5962 will turn bias to the upside for 1.6139 resistance and above.

In the bigger picture, while there is bearish divergence condition in daily MACD, there is no clear sign of reversal yet. Current rally from 1.3624 could extend to 1.6587 key resistance (2015 high). Nonetheless, we'd expect further loss of upside momentum, and strong resistance from 1.6587 to limit upside and bring reversal. On the downside, sustained break of 1.5621 support should confirm reversal and turn outlook bearish for 1.5153 support and below.

In the longer term picture, the rise from 1.1602 long term bottom (2012 low) isn't over yet. We'll keep monitoring the development but there is prospect of extending the rise to 61.8% retracement of 2.1127 to 1.1602 at 1.7488 and above. However, sustained trading below 1.3671 should indicate long term reversal and target 1.1602 long term bottom again.

EUR/CHF's sharp fall last week finally confirmed short term topping at 1.2004, after failing to sustain above 1.2 handle. Initial bias stays neutral this week for more consolidation. As long as 1.2004 holds, the consolidation will extend with risk of deeper pull back. But in that case, we'd expect strong support from 38.2% retracement of 1.1445 to 1.2004 at 1.1790 to contain downside and bring rebound. Nonetheless, decisive break of 1.2004 will confirm up trend resumption.

In the bigger picture, long term up trend in EUR/CHF is still in progress. Prior SNB imposed floor at 1.2000 was already met but there is no sign of reversal yet. As long as 1.1445 support holds, we'd expect the up trend to extend to 2013 high at 1.2649 next. However, considering bearish divergence condition in daily MACD. Break of 1.1445 will be an indication of medium term reversal and will turn outlook bearish.

Canadian Dollar surged broadly last week following the rally in oil prices. Weaker than expected employment capped the Loonie's gain, but it ended as the strongest still. Sterling survived BoE super Thursday and ended up against all but Canadian. That's a clear indication that markets didn't see BoE announcements that dovish. On the other hand, RBNZ was the real dovish one, sending New Zealand Dollar broadly and deeply lower against most. Yen followed as the second weakest as global treasury yields recovered. Meanwhile, Dollar has entered into a consolidation phase after core CPI miss and ended the week mixed.

Canadian Dollar in solid up trend on BoC outlook and oil price

The nature in the strength of Canadian Dollar and Sterling last week was very different. Technically, Canadian Dollar ended above prior week's high against all but Yen and Aussie. For the month, it's trading above April's high against all but Dollar and Yen. Fundamentally, BoC is on course for another rate hike this year. The question is just on the timing. Outcome of NAFTA renegotiation and trade conflicts with the US is a factor. The pass through of prior rate hikes and the impact on businesses and households is another factor. For the latter, BoC policy makers and the markets will get more idea with CPI and retail sales to be released this week.

Additionally, the surge in oil price after Trump's announcement to withdraw from the NAFTA deal gave Canadian Dollar a solid boost. WTI crude oil extended the medium term up trend to as high as 71.89 last week before closing at 70.70. As long as 66.66 near term support holds, we'd expect further rally in WTI to 61.8% retracement of 107.68 to 26.05 at 76.50. Over bought condition in weekly chart might limit upside around there. But we'll see.

Sterling resilient as BoE was stayed hawkish, but fate depends on data

Sterling's resilience was mainly due to the fact that a May rate hike was totally priced out well before the meeting. And the overall BoE announcements were, at least, better than the least hawkish scenario as we argued here. Currently, markets are only having full pricing of the next hike in February 2019. But we have to emphasize that in BoE's condition path for Bank Rate, there could be a hike as early as in Q3. Depending on the strength of the rebound in Q2 and Q3, the chance of a November, or even an August hike is there. And that's the main reason that Sterling didn't break down. Though, it's still vulnerable to data misses. And job and wage data on Tuesday will be a key event to watch.

With receding expectation of BoE hike, FTSE extended recent strong rally to as high as 7728.89 last week. The index is on course for 7792.56 high. Based on current momentum, the resistance will likely be taken out without much trouble. And the larger up trend would then be resuming for channel resistance at around 8165.

Australian Dollar rebound could be temporary

Australian Dollar ended as the third strongest one last week, partly thanks to the cross buying in AUD/NZD, and partly on rebound in China iron ore price. New Zealand dollar tumbled sharply as new RBNZ Governor Adrian Orr sound more dovish than most expected as he noted that the direction of next move "is equally balanced, up or down". RBNZ also downgraded both inflation and growth forecast. AUD/NZD surged to as high as 1.0841 last week as a reaction. The development suggested that medium term fall from 1.1289 has completed at 1.0486 already. As long as 1.0656 support holds, further rise should be seen back to 61.8% retracement of 1.1289 to 1.0486 at 1.0982 and above.

But other than those, we're not seeing more factor in support the Aussie. RBA May meeting minutes to be released this Tuesday will remind the markets that it's in no rush to rate interest rate. And most expected RBA to stay on hold through this year. Australia will also release job data on Thursday. Risks are skew on the downside and we don't expect an upside surprise to have lasting bullish impact on Aussie. But downside surprise could declare the completion of this week's rebound. And bear in mind there is a head and shoulder top pattern (ls: 88.17; h: 90.29, rs: 89.09) in AUD/JPY. Australia data miss, coupled with falling fall global treasury yields, will push AUD/JPY through 80.48 low to 61.8% retracement of 72.39 to 90.29 at 79.22.

Dollar turned into consolidation phase as yield to gyrate lower

Dollar's late pull back last week suggested that it has turned into consolidation phase, after long-stretched rally. Retail sales, housing, regional Fed surveys and industrial production will be released from the US this week. But we don't expect them to be too market moving. Instead, Eurozone data like German ZEW could move the greenback more. Anyway, a short term top is formed at 93.41 in Dollar index, after hitting 55 week EMA. Deeper retreat is in favor in near term. But for now, we'd expect strong support from 38.2% retracement of 88.25 to 93.41 at 91.43 to contain downside to bring rise resumption.

We're holding on to the view that medium term corrective fall from 103.82 has completed at 88.25, after drawing support from 88.25 long term fibonacci level. Rebound from there should at least have a test on 38.2% retracement of 103.82 to 88.25 at 94.19. And there is prospect of extending further to 61.8% retracement at 97.87.

The rebound in 10 year yield last last week proved to be temporary. TNX failed to hold above 3% handle and ended at 2.971. The consolidation from 3.035 is still in progress and TNX will likely gyrate lower to 55 day EMA (now at 2.866). As it's close to medium term channel line, we'd expect strong support from there to contain downside and bring rise resumption. TNX should have another take of 3.036 key resistance at a latter stage. By then, we would ideally see Dollar index ended its own pull back too.

GBP/USD Weekly Outlook

GBP/USD edged lower to 1.3459 last week but drew support from 55 week EMA and 1.3448 fibonacci level and recovered. A short term bottom is likely formed and initial bias is neutral this week first. On the upside, break of 1.3617 minor resistance will turn bias to the upside for stronger recovery. But upside should be limited by 38.2% retracement of 1.4376 to 1.3459 at 1.3809. On the downside, sustained break of 1.3448 fibonacci level will confirm resumption of whole fall from 1.4376 and target next fibonacci level at 1.2874.

In the bigger picture, current development suggests that whole medium term rebound from 1.1936 (2016 low) has completed at 1.4376 already, with trend line broken, on bearish divergence condition in daily MACD, after rejection from 55 month EMA (now at 1.4223). 38.2% retracement of 1.1936 (2016 low) to 1.4376 at 1.3448 was almost met. Break there will target 61.8% retracement at 1.2874 and below. Outlook will stay bearish as long as 55 day EMA (now at 1.3861) holds, even in case of strong rebound.

In the longer term picture, rise from 1.1946 (2016 low) is viewed as a corrective move, no change in this view. Rejection from 55 month EMA argues that it might be completed already. Larger down trend from 2.1161 (2007 high) could extend to a new low. This will now be the preferred case as long as 1.4376 resistance holds.

Monday, May 14, 2018

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Tuesday, May 15, 2018

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Wednesday, May 16, 2018

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Thursday, May 17, 2018

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Friday, May 18, 2018

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