Sample Category Title

Daily Pivots: (S1) 1.0368; (P) 1.0401; (R1) 1.0461; More...

Intraday bias in EUR/USD remains neutral for the moment. On the upside, firm break of 1.0435 resistance will extend the rebound from 1.0176 to 38.2% retracement of 1.1213 to 1.0176 at 1.0572. Rejection by 1.0435 will keep the correction from 1.0176 relatively short. Firm break of 1.0176 will resume whole fall from 1.1213.

In the bigger picture, fall from 1.1274 (2023 high) should either be the second leg of the corrective pattern from 0.9534 (2022 low), or another down leg of the long term down trend. In both cases, sustained break of 61.8 retracement of 0.9534 to 1.1274 at 1.0199 will pave the way back to 0.9534. For now, outlook will stay bearish as long as 1.0629 resistance holds, even in case of strong rebound.

Daily Pivots: (S1) 1.2291; (P) 1.2333; (R1) 1.2359; More...

Intraday bias in GBP/USD remains neutral as consolidation pattern from 1.2099 is still extending. Further decline is expected with 1.2486 support turned resistance intact. On the downside, break of 1.2099 will resume the fall from 1.3433 to 100% projection of 1.3433 to 1.2486 from 1.2810 at 1.1863.

In the bigger picture, rise from 1.0351 (2022 low) should have already completed at 1.3433, and the trend has reversed. Further fall is now expected as long as 1.2810 resistance holds. Deeper decline should be seen to 61.8% retracement of 1.0351 to 1.3433 at 1.1528, even as a corrective move.

Daily Pivots: (S1) 0.9039; (P) 0.9062; (R1) 0.9090; More…

Intraday bias in USD/CHF stays neutral as consolidations continue below 0.9200. Further rally is expected with 0.9007 support intact. On the upside, decisive break of 0.9223 will carry larger bullish implications. However, break of 0.9007 will turn bias back to the downside for deeper pull back to 55 D EMA (now at 0.8950).

In the bigger picture, as long as 0.9223 resistance holds, price actions from 0.8332 (2023 low) are seen as a medium term corrective pattern. That is, long term down trend is in favor to resume through 0.8332 at a later stage. However, sustained break of 0.9223 will be an important sign of bullish trend reversal.

Daily Pivots: (S1) 155.68; (P) 156.20; (R1) 157.04; More...

Intraday bias in USD/JPY stays neutral for the moment, and some more sideway trading might be seen. On the downside, sustained trading below 55 D EMA (now at 154.73) will extend the correction from 158.86 to 38.2% retracement of 139.57 to 158.86 at 151.49 next. However, firm break of 158.86 will resume the whole rally from 139.67 to retest 161.94 high.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). The range of medium term consolidation should be set between 38.2% retracement of 102.58 to 161.94 at 139.26 and 161.94. Nevertheless, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Canada’s retail sales were flat in November, falling short of the expected 0.2% mom increase. The data revealed mixed performance across sectors, with declines in six out of nine subsectors.

Sales at food and beverage retailers dropped by -1.6% mom, driving much of the weakness in the report. However, gains in motor vehicle and parts dealers (+2.0% mom) and gasoline stations and fuel vendors (+0.7% mom) helped offset the broader declines, preventing an outright contraction in overall retail activity.

Core retail sales, which exclude the more volatile categories of motor vehicles and gasoline, declined by a notable -1.0% mom.

Full Canada retail sales release here.

US initial jobless claims rose 6k to 223k in the week ending January 18, above expectation of 220k. Four-week moving of initial claims rose 750 to 213.5k.

Continuing claims rose 46k to 1899 in the week ending January 11, highest since November 13, 2021. Four-week moving average of continuing claims rose 500 to 1866k.

Full US jobless claims release here.

The Canadian dollar is showing limited movement on Thursday. In the European session, USD/CAD is trading at 1.4396, up 0.13% on the day. The Canadian dollar started the week with sharp gains of over 1% but has since given up about half of those gains.

Canada’s retail sales expected to have declined in November

Canada’s retail sales are projected to have decelerated in November and that could be bad news for the Canadian dollar. Retail sales are expected to have eased to 0.2% m/m, down from 0.6% in October. Consumer spending has shown some robustness, with four straight months of strong gains, in response to interest rate cuts from the Bank of Canada. A major test for retail sales will be the November and December reports, which reflects consumer spending during the critical Christmas season.

The central bank has been aggressive in its easing cycle, chopping borrowing costs by 175 basis points since June 2024, including a 50-bp cut at the December meeting. The cash rate of 3.25% is much lower than the Federal Reserve’s rate of 4.25%-4.5% and the BoC will have to tread carefully. The Fed has sounded more hawkish lately and is not expected to cut more than one or two times due to the strong US economy. If the BoC is more aggressive than the Fed in lowering rates, it would widen the US/Canada rate differential and put further downward pressure on the weak Canadian dollar.

Another headache for the BoC is the Trump factor. The new US President has threatened to levy 25% tariffs on Canada as early as February 1. Ever the deal maker, Trump may be leveraging this threat to wring concession from Ottawa. Still, Trump’s tariff threat has to be taken seriously as such a move would damage the weak Canadian economy, which is very dependent on the US.

USD/CAD Technical

• USD/CAD is putting pressure on resistance at 1.4412. Above, there is resistance line in 1.4447
• 1.4357 and 1.4322 are the next support levels

WTI Oil remains at the back foot on Thursday, but moving at the lower pace, compared to a steep fall in past few sessions when oil price was down around four dollars.

Key drivers of oil price were signals of increased US oil production on new policies of Trump’s administration and calmer geopolitical situation in the Middle East.

Global oil demand could be also dampened by trade tariffs, which might be imposed on a number of countries, potentially to the EU that would send additional shockwaves through the market.

Unexpected rise of US crude stocks (API report) added to negative near term outlook.

While fundamentals remain weak, technical picture is slightly brighter.

Daily studies remain positive overall, as MA’s are in bullish configuration, momentum is still positive and the price is facing strong supports at $74.70 zone (Fibo 38.2% retracement of $66.98/$79.35 / converged 20/200DMA about to form golden cross), with today’s action being so far shaped in daily Doji and suggesting that near-term bears off $79.35 peak, might be losing traction.

However, these initial signals will require confirmation on extension through initial trigger at $76.00 zone (base of thick 4-hr cloud) then $76.43 (broken Fibo 23.6%) and finally lift above 10DMA ($76.98) to generate reversal signal.

Otherwise, limited upticks would signal that bears might be consolidating for fresh push lower, but sustained break through 200DMA will be needed to signal bearish continuation.

Res: 76.09; 76.43; 76.98; 77.18.
Sup: 75.01; 74.76; 74.62; 74.02.

The Japanese yen is slightly lower on Thursday. In the European session, USD/JPY is trading at 156.25, down 0.16% on the day.

BoJ expected to hike rates

All eyes are on the Bank of Japan, which meets early on Friday. The BoJ is expected to raise interest rates by 25 basis points which would bring the cash rate to 0.50%. The BoJ has said that it will raise rates if it sees higher wage growth, which would indicate that inflation is sustainable. BoJ policymakers have expressed confidence that wages are moving higher and Deputy Governor Himino said last week that many firms plan to raise wages at least as much as last year.

Investors will be keeping a close eye on the BoJ’s rate statement. The tone of the statement could be dovish as BoJ policymakers are concerned about President Donald Trump’s threats to levy trade tariffs as early as Feb. 1, a move which could destabilize the financial markets. The BoJ will have to be cautious as it gauges the ‘Trump factor”.

Another factor supporting a rate hike is the poor performance of the Japanese yen, which has declined around 9% in the past three months. The Federal Reserve is sounding more hawkish and might raise rates only once or twice this year. If the BoJ stays on the sidelines again, the yen could fall further.

Overshadowed by the BoJ meeting, Japan releases December core CPI. Japan’s core inflation rate has been climbing higher and is expected to climb to 3% y/y, up from 2.7% in November which was a three-month high. The core rate, which is closely watched by the BOJ, has hovered above the central bank’s target of 2% for over two years.

USD/JPY Technical

• USD/JPY is testing support at 156.20. Below, there is support at 155.68
• 157.04 and 157.56 are the next resistance lines

• USD/JPY rebounds near 50-day EMA ahead of BoJ’s rate decision.
• Technical signals improve, but a close above 156.65 still needed.

USDJPY found fresh buying interest near its 50-day exponential moving average (EMA) around 154.70 and gently rose back to the key resistance area of 156.65 ahead of the Bank of Japan’s rate decision on Friday. Analysts expect a 25-bps rate hike to 0.50% - this will be the third increase since March 2024. Japan’s national CPI figures will also be out earlier in the day.

The technical indicators have started to look a bit more promising, with the RSI entering the bullish area above 50 and the stochastic oscillator starting a new positive cycle.

But for the bulls to get excited, the pair will need to knock down the wall around 156.65. If that proves to be the case, the price could advance straight to the 158.65-159.20 constraining territory, which has functioned as a ceiling recently. Beyond that, the rally could stretch toward the 160.20 handle, which was a key obstacle to price movements in April and July 2024, and then fight for the 162.00 level.

Should selling pressures resurface, with the price tumbling below the support trendline and the 23.6% Fibonacci retracement of the September-January upleg at 154.30, the 153.30 zone may attempt to pause the fall. If not, the decline could stretch toward the 200-day EMA at 152.00 and the 38.2% Fibonacci of 151.50. A deeper pullback could see a test near the 50% Fibonacci of 149.13.

In a nutshell, USDJPY has not overcome downside risks despite exhibiting improving technical signals. A close above 156.65 could be a good sign, but only a break above 158.65-159.20 would put the pair back in an uptrend.