GBP/USD edged higher to 1.4376 last week but reversed and dropped sharply to close at 1.3995. Initial bias remains on the downside this week for 1.3965 support first. Break there will pave the way to 1.3711 key support level. On the upside, above 1.4069 minor resistance will turn intraday bias neutral and bring consolidations. But for now, near term risk will stay on the downside as long as 4 hour 55 EMA (now at 1.4173 holds).

In the bigger picture, bearish divergence condition in daily MACD is raising the chance of medium term reversal. Also, note that GBP/USD has just failed to sustain above 55 month EMA (now at 1.4257). Focus is back on 1.3711 support. Firm break there will confirm medium term reversal and target 38.2% retracement of 1.1936 (2016 low) to 1.4376 at 1.3448 first. Break will target 61.8% retracement at 1.2874 and below. For now, sustained break of 55 month EMA is needed to confirm medium term upside momentum. Otherwise, we won't turn bullish 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. Focus stays on 55 month EMA (now at 1.4257. Rejection from there will turn focus back to 1.1946 low and could probably extend the down trend from 2.1161. On the other hand, sustained break of the EMA would at least bring further rally to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

USD/CHF's rally continued last week and reached as high as 0.9758. Initial bias stays on the upside this week. Rise from 0.9186 should target 0.9900 fibonacci level next. On the downside, below 0.9702 minor support will turn bias neutral and bring consolidations. But outlook will stay bullish as long as 0.9576 support holds.

In the bigger picture, fall from 1.0342 is seen as a medium term down trend. The break of 38.2% retracement of 1.0342 (2016 high) to 0.9186 (2018 low) at 0.9626 suggests that it's likely completed at 0.9186 already. Further rally would be seen back to 61.8% retracement at 0.9900 and above. Sustained break there would pave the way to retest 1.0342 key resistance next. This will now be the preferred case as long as 0.9576 support 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 higher to 0.7812 last week but was rejected by near term channel resistance and dropped sharply. Initial bias stays on the downside this week for 0.7642 first. Break will resume the fall from 0.8135 to 0.7500 key support level. On the upside, above 0.7702 minor resistance will turn intraday bias neutral first.

In the bigger picture, medium term rebound from 0.6826 is seen as a corrective move. It might still extend higher but 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. On the downside, break of 0.7500 support will now be an important signal that such corrective rebound is completed. In that case, AUD/USD would be heading back to 0.6826 low in medium term.

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 rebounded strongly last week after edging lower to 1.2526. Further rise could be seen initially this week. At this point, we're holding on to the view that rebound from 1.2061 has completed with three waves up to 1.3124. Hence, we'd expect strong resistance below 1.2814 support turned resistance to limit upside and bring another fall. On the downside, below 1.2658 minor support will turn bias back to the downside for 1.2526. However, firm break of 1.2814 will invalidate our view and bring stronger rally to retest 1.3124 instead.

In the bigger picture, for now, we're slightly favoring the view that rise from 1.2061 is a corrective three wave pattern that's completed at 1.3124, after hitting 38.2% retracement of 1.4689 to 1.2061 at 1.3065. And, fall from 1.3124 is resuming larger down trend from 1.4689 (2015 high). However, break of 1.3124 will revive the case of bullish reversal. That is, the down trend from 1.4689 has completed at 1.2061 already.

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's sharp fall last week indicates that corrective rise from 144.97 has completed at 153.84 already. Decline from 153.84 should the third leg of the pattern fro 156.69. Initial bias remains on the downside this week for deeper fall to 148.30 support. Break till bring retest of 144.97 low. On the upside, above 151.68 minor resistance will turn intraday bias neutral first. But near term risk will now stay on the downside as long as 153.84 holds.

In the bigger picture, price actions from 156.59 are viewed as a corrective pattern. For now, we'd expect at least one more fall for 38.2% retracement of 122.36 to 156.59 at 143.51 before the consolidation completed. Though, firm break of 156.59 will resume whole up trend from 122.36 (2016 low) to 50% retracement of 195.86 (2015high) to 122.36 at 159.11 next.

In the longer term picture, current development suggests that rise from 122.36 (2016 low) is not completed yet. Such rally could extend to 61.8% retracement of 195.86 (2015high) to 122.36 at 167.78 before completion. This will now be the preferred case as long as 139.29 support holds.

EUR/JPY edged higher to 133.08 last week but continued to lose upside momentum, as seen in 4 hour MACD. Breach of 132.10 minor support argues that corrective rebound from 128.94 could have completed. Initial bias is turned to the downside this week for retesting 128.94 low. On the upside, above 133.08 will extend such rebound. But upside will likely be limited by 61.8% retracement of 137.49 to 128.94 at 134.22 and below.

In the bigger picture, price action from 137.49 medium term top are developing into a corrective pattern. Strong support from 55 week EMA (now at 129.91) suggests that the first leg has completed at 128.94 already. Nonetheless, break of 137.49 is needed to confirm resumption of the rise from 109.03 (2016 low). Otherwise, we'd expect more corrective range trading, with risk of another fall to 38.2% retracement of 109.03 to 137.49 at 126.61 before completion.

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 edged lower to 0.8620 last week but rebounded strongly since then. A short term bottom should be formed after hitting 61.8% projection of 0.9305 to 0.8745 from 0.8967 at 0.8621. Initial bias remains on the upside this week for 0.8796 resistance first. Break will target key cluster resistance at 0.8967 (50% retracement of 0.9305 to 0.8620 at 0.8963) next. On the downside, break of 0.8688 minor support will dampen the bullish case and turn focus back to 0.8620 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 rebound from 1.5773 extended higher last week but it's staying below 1.6059 minor resistance. Initial bias remains neutral this week first. On the downside, below 1.5847 minor support will suggest that rebound form 1.5773 has completed and fall from 1.6189 is resuming. Intraday bias would be turned back to the downside for 1.5773 and then 1.5621 key support level next. On the upside, though, above 1.6059 will turn bias to the upside for 1.6189 instead.

In the bigger picture, the case for medium term reversal is building up in EUR/AUD. Bearish divergence condition in daily MACD indicates further loss of upside momentum ahead of 1.6587 key resistance (2015 high). Break of 1.5621 should confirm medium term topping and bring deeper fall back to 1.5153 and possibly below. Meanwhile, even in case of up trend resumption, we'd be cautious on strong resistance from 1.6587 to limit upside and bring reversal.

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 rally continued last week and reached as high as 1.2004. But it struggled to sustain above 1.2 handle and retreated. With 4 hour MACD below signal line, initial bias is neutral this week first, for consolidations. Further rally is expected as long as 1.1888 minor support holds. Firm break of 1.2 will pave the way to 61.8% projection of 1.0629 to 1.1832 from 1.1445 at 1.2188. However, consider bearish divergence condition in 4 hour MACD, break of 1.1888 will indicate short term topping. In that case, deeper pull back would be seen back to 1.1445/1832 support zone.

In the bigger picture, long term up trend in EUR/CHF is still in progress. Prior SNB imposed floor at 1.2003 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.

Dollar ended broadly higher last week as boosted by surge in treasury yields. 10 year yield finally completed its consolidation that started back in February, and rose through 2.943 high to close strongly at 2.951. That came with the background that recent comments from Fed officials affirmed its gradual tightening path. In addition, Fed will continue to unwind its treasury holdings this year, and the US government will need to issue more debts to fund its spending. Another key development to note is that spread between 2 year note and 10 year note widened back to about 0.5% and eased some concerns over flattening or even inverted yield curve. US equities, on the other hand, reversed almost all of its earlier gains and closed just marginally higher.

Receding rate expectation hammered Sterling, boosted FTSE

The strength in US Dollar was also helped by weakness in others. Sterling was pressured after triple data misses including wage growth, CPI and retail sales. But it was BoE Governor Mark Carney's comment that accelerated the selloff. In short, Carney acknowledged weakness in recent data and pointed out that there are other BoE meetings ahead in addition to May. Now that after the week, the case of two hikes by BoE this year, one in May and another one in November is very stretched. And even a May hike is back on the table as BoE could wait a bit longer before acting.

Such development regarding BoE hike was reflected in the late selloff in the Pound, which ended as the second weakest one for the week after New Zealand Dollar. It's also reflected in the strength of FTSE which extended the rebound from 6866.93 to close at 7368.17. It's clearly decoupled from US stocks. FTSE is now expected to rise further to 61.8% retracement of 7792.56 to 6866.93 at 7438.96 and above. This will be the favored case as long as 7189.85 support holds.

Euro resislient on cross buying, but vulnerable on data and ECB

Euro, on the other hand, was very resilient even though data continued to point to slower growth in the region. The ECB seemed to have done a much better job in managing market expectations. The markets are still debating whether it would stop, taper, or extend the asset purchase program after September. Unlike the BoE, there was no sharp change in the policy path expectations. Additionally, Euro was firstly supported by cross buying from Swiss Franc, and then from Sterling.

The weakness in Swiss Franc and strength in Yen argued that safe haven out flow mainly happened in Europe. That was of course also reflected in European stocks too. For example, CAC's strong rally now put focus back to 5567.08 high for the near term. However, firstly, EUR/CHF's up trend is now looking a bit stretched after touching the historical 1.2 level. Eurozone PMIs to be released this week might continue to paint a less optimistic picture. And more importantly, ECB meeting this week could give the markets a dose of dovish flavor. Hence, Euro might be vulnerable to deeper selloff against Dollar and Yen ahead.

Canadian Dollar weakned on non-commital BoC and data, helped by Oil

Canadian Dollar also suffered much selling pressure as BoC delivered a much less hawkish than expected statement after keeping interest rate unchanged at 1.25%. The central bank even revised lower 2018 growth forecast by -0.2 percentage point, to 2% for this year. There is clearly no timeline for another rate hike. Selloff even came worse after both CPI and retail sales missed market expectations.

Meanwhile, the Loonie was lucky to be just the fourth weakest as part of the selling pressure was offset by the surge in oil price. Riding on the prior week's strength, WTI crude oil reached as high as 69.56 before paring some gains to close at 68.38. For now, near term outlook will stay bullish as long as last week's low at 65.56 holds. Long term rise from 26.05 is on course for 61.8% retracement of 107.68 to 26.05 at 76.50 next.

US yield could be reversing multi-decade down trend

Now back to the US, 10 year yield's break of 2.943 indicates resumption of up trend from 2.034 and 1.336. Further rise should be seen to 3.036 (2013 high) next. Decisive break there will pave the way to 100% projection of 1.336 to 2.621 from 2.034 at 3.318.

Sustained break of 3.036 could also mean reversal of multi decade down trend in TNX. As seen in the monthly chart, that would be in form of double bottom (1.394, 1.336) on bullish convergence condition in monthly MACD. Of course, the falling channel resistance should be taken out too. And in that case, it would the mark of the end of an historical era of persistent decline in US benchmark yield.

Dollar index bounded in range, but upside breakout now favored

Dollar index was held in range, due to Euro's resilience. The strength in TNX now tilts favor to the case of upside breakout. That is, further rise in TNX would push DXY through long term falling trend line resistance and 91.01 key support turned resistance.

In that case, it would be a reversal of the trend from 2017 high at 103.82, after being supported by 50% retracement of 72.69 to 103.82 at 88.25. And further rise should be seen to 55 week EMA (now at 93.01) at least, and likely to 38.2% of 103.82 to 88.25 at 94.19 to confirm reversal.

The coming two weeks, with ECB meeting on Apr 26, and non-farm payroll on May 4, could set the tone for the rest of the year. Sit tight.

GBP/USD Weekly Outlook

GBP/USD edged higher to 1.4376 last week but reversed and dropped sharply to close at 1.3995. Initial bias remains on the downside this week for 1.3965 support first. Break there will pave the way to 1.3711 key support level. On the upside, above 1.4069 minor resistance will turn intraday bias neutral and bring consolidations. But for now, near term risk will stay on the downside as long as 4 hour 55 EMA (now at 1.4173 holds).

In the bigger picture, bearish divergence condition in daily MACD is raising the chance of medium term reversal. Also, note that GBP/USD has just failed to sustain above 55 month EMA (now at 1.4257). Focus is back on 1.3711 support. Firm break there will confirm medium term reversal and target 38.2% retracement of 1.1936 (2016 low) to 1.4376 at 1.3448 first. Break will target 61.8% retracement at 1.2874 and below. For now, sustained break of 55 month EMA is needed to confirm medium term upside momentum. Otherwise, we won't turn bullish 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. Focus stays on 55 month EMA (now at 1.4257. Rejection from there will turn focus back to 1.1946 low and could probably extend the down trend from 2.1161. On the other hand, sustained break of the EMA would at least bring further rally to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.