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The prevailing pattern that has guided ZAR/JPY for the past two-and-a-half months is a channel up. The latest test of its upper boundary occurred on December 27 when the South African Rand reversed from the 9.27 area. Along the way, a descending triangle was likewise formed with the bottom boundary being the 8.9871 mark and the upper—a declining trend-line. The positioning of both patterns and the strength of the nearest resistance cluster suggest that the pair is likely to decline within this week. The pair should largely respect the triangle until the bottom channel boundary is reached in the 8.95/9.05 territory. Meanwhile, the dashed short-term channel is unlikely to hold for long, as the pair is expected to decline in a flatter manner.

GBP/CAD was guided by an ascending channel since mid-August prior to breaching this pattern last Friday in response to solid Canadian employment data. As a result, the Pound fell to the monthly S1 at 1.6778. From theoretical point of view, the pair should go for a retracement from the bottom channel line circa 1.6950. However, given that the 55-hour SMA and the weekly PP are located nearby, this scenario might not be realised in this session, thus leaving the rate in the 1.6800/50 territory. Technical indicators suggest that there might be a change in sentiment within the following trading sessions, thus allowing for the rate to reach the aforementioned 1.6950 are, likewise reinforced by the 100– and 200-hour SMAs and the 23.60% Fibo retracement.

The Australian Dollar strengthened against the US, following strong Australia’s property market data. The AUD/USD exchange rate added 0.10% or 8 base points to reach the intraday high of 0.7865.

Approvals to construct new houses in Australia rose to the strongest level in 15 months in November, with more apartment towers getting permission, a surprising return to strength, which is likely to drive hiring and activity within the economy. The Australian Statistics Bureau revealed that building approvals increased 11.7% in November, confounding expectations for a 0.1% decrease. Prior gains were suppressed by higher interest rates, though this time muted inflation growth allowed the RBA to keep rates unchanged for 17 months.

The British Pound rose slightly against the Greenback on the country’s house price data. The GBP/USD exchange rate was up to the 1.3542 level, which was easily overstepped during the trading session.

The UK house prices declined unexpectedly in December to mark the first decline in six months, providing additional signs of slack in the country’s property market. The mortgage lender Halifax stated that house prices fell 0.6% month-over-month in December, following a 0.3% gain in November. Analysts anticipate the market to decelerate further to draw Britain’s house prices’ growth of 0.1% in 2018, which would indicate property values declining in real terms, when adjusted for consumer price inflation.

WTI oil remains well supported and posted new high at $62.53 on Tuesday (the highest since mid-May 2015).

Oil price spiked higher after a narrow three-day consolidation, generating signal of bullish continuation

Overall bullish sentiment remains supported by production cut from major world oil producers as well as reduced US drilling activity.

Fresh strength pressures key med-term barrier at $62.71 (13 May 2015 high) break of which would open way towards next target at $66.72 (50% retracement of larger $107.40/$26.04 fall).

However, traders remain cautious as overbought daily studies continue to warn that bulls may stall and spark corrective action.

Initial bearish signal could be expected on break and close below rising 10SMA ($60.89) which would risk pullback towards psychological $60.00 support and rising 20SMA ($59.25) in extension.

Res: 62.19, 62.53, 62.71, 63.00
Sup: 61.32, 61.08, 60.89, 60.00

The Aussie accelerated sharply lower in early European hours, erasing brief gains made overnight on upbeat Australian data.

Fresh strength of the greenback put its antipodean counterpart under fresh pressure. The pair trades in red for the second day, with fresh easing testing top of daily cloud (0.7816) and seeing risk of further weakness after Doji reversal pattern was completed on daily chart.

Cloud top is reinforced by rising 10SMA and marks pivotal support, break of which would generate fresh bearish signal.

Extended pullback would face strong support provided by rising 4-hr cloud (spanned between 0.7800 and 0.7745) and next pivot at 0.7728 (Fibo 61.8% of 0.7637/0.7874).

Conversely, extended consolidation with reduced downside risk could be expected while rising 10 SMA holds.

Res: 0.7864, 0.7874, 0.7886, 0.7897
Sup: 0.7814, 0.7800, 0.7785, 0.7745

Here are the latest developments in global markets:

FOREX: The US dollar index – which tracks the greenback's performance against a basket of six major currencies – traded slightly lower on Tuesday, after posting some gains on Monday.

STOCKS: Asian markets extended their recent winning streak, with Japan's Nikkei 225 and Topix indices trading higher by 0.6% and 0.5% respectively as the nation returned from a holiday; both indices hovered near multi-decade highs. In Hong Kong, the Hang Seng climbed 0.3%, while in Europe, futures tracking the Euro Stoxx 50 suggest the index may open slightly lower. Over in the US, the S&P 500 and the Nasdaq Composite closed at yet another record high. Meanwhile, although the Dow Jones broke an all-time high as well, it did not manage to sustain its gains, closing at 25,283 after touching the 25,308 mark earlier. Futures tracking the Dow, S&P, and Nasdaq 100 are all currently in the green, albeit marginally.

COMMODITIES: In energy markets, WTI and Brent crude oil were up 0.8% and 0.5% respectively as traders remained bullish on the precious liquid. Data released on Fridayshowed a decline in the number of active US oil rigs, easing concerns that US supply may rise due to the recent increase in prices. Gold was trading down by 0.2%. Given the continued gains in equity markets and the broader risk-on environment, the yellow metal will likely struggle to advance from current levels, at least in the absence of some risk-off event.

Major movers: Yen spikes higher on BoJ operations, but is this a signal or noise?

The Japanese yen jumped overnight, after the Bank of Japan (BoJ) bought fewer longer-dated Japanese government bonds (JGBs) under its regular operations, generating speculation that the days of ultra-easy monetary policy may be approaching their end. Dollar/yen fell by more than 0.2%, last trading near 112.70 after having touched 112.49 earlier.

The key question here is whether this was a signal of what is to come from the BoJ, or whether it is merely noise in the bigger picture. On balance, this appears more like noise. Under its current QQE with yield-curve control framework, the BoJ has committed to buying enough bonds so as to keep the yields on longer-dated JGBs anchored near 0%. The fact that the BoJ bought fewer bonds today while yields remained near 0% simply shows that the Bank needed to intervene less in the market in order to achieve its goal, which can hardly be read as a policy signal. Indeed, it would be quite strange for the BoJ to begin taking its foot off the stimulus-gas with inflation still so far away from its target. Still, the yen's jumpy reactions to any hawkish BoJ headlines signify that when the Bank does finally signal a policy change, the currency is likely to experience substantial movements.

Elsewhere, the commodity-linked currencies traded higher against their US counterpart. Dollar/loonie was down almost 0.2%, as the gains in oil prices and expectations for a rate hike by the Bank of Canada (BoC) next week kept the Canadian currency under demand. According to Canada's overnight index swaps, a rate increase by the BoC on January 17 is now almost fully priced in, with the implied probability for such an action currently resting at 86%. Aussie/dollar and kiwi/dollar were both up by a little more than 0.2%.

Day ahead: Eurozone unemployment, Canadian housing starts and JOLTS job opening out of the US on today's agenda

The eurozone's unemployment rate for the month of November will be released at 1000 GMT. It is forecast to fall by 0.1% relative to October, matching its lowest since January 2009 of 8.7% and pointing to a labor market that continues to improve. A positive surprise could instill further confidence in the eurozone growth story, leading to long euro positions. Forex markets are expected to react accordingly to a negative surprise as well.

Canadian housing starts for December are due at 1315 GMT, with loonie traders keeping an eye on the release.

The most important reading out of the US will pertain to the JOLTS job openings report, scheduled for release at 1500 GMT. The number of openings is expected to stand at around 6 million. Deviations from analysts' projections have in the past led to positioning on the dollar.

Minneapolis Fed President Neel Kashari, who voted against all three 25 bps rate hikes delivered last year, is scheduled to participate in a Q&A session at 1500 GMT. It is of note that he will not be holding voting rights in the FOMC during 2018.

In oil markets, the API weekly report including information on US crude oil stocks is due at 2130 GMT.

In politics, the talks between North Korea and South Korea – the first such talks in more than two years – could continue further ahead. The 2018 Winter Olympic Games and North Korea's potential participation fueled the talks, but nevertheless they're seen as a positive step for a more peaceful coexistence between the two countries.

Technical Analysis: USDJPY looking neutral in short-term

USDJPY has been moving sideways over the last five weeks between roughly 112.00 and 113.74. The RSI is projecting a neutral picture for the pair in the short-term: the indicator has been moving sideways in recent weeks and in proximity to the 50 neutral-perceived level.

A stronger-than-expected JOLTS report out of the US could push the pair higher. The current level of the 50-day moving average at 112.85 might act as resistance to upside movements in price – note that this level failed to provide support as the pair headed lower earlier in the day. Further above, the focus would shift to December 12's two-month high of 113.74 for additional resistance.

Weaker US data would turn the attention to the area around the current level of the 100-day MA at 112.17 as potential support. The range around this mark was congested in the past and encapsulates the 112.00 handle as well, this being a potential psychological level.

On Sunday, the price of bitcoin continued to slide after Bloomberg reported of a planned crackdown on miners. According to the report, Chinese authorities were planning to phase out gradually mining operations in the country.

To many miners and traders, the planned crackdown was expected. In September, the country banned ICOs and in November, it banned cryptocurrencies exchanges.

This news is significant because China is home to some of the biggest bitcoin miners in the world. This is because of its low energy prices and accessible mining technology.

According to Bloomberg, many bitcoin mining companies were trying to relocate their operations to other countries. Russia has been receptive to them.

If bitcoin were a commodity, the news from China would have been bullish because of reduced supply and increased demand. However, bitcoin is unique because the relocation of miners would make mining expensive and thus go against the role of bitcoin as a cheaper currency.

In the chart below, we can see that bitcoin started a bullish trend on Thursday, moving from a low of $14,194 and reached a high of $17,190 where it formed a double top. It then started moving lower, forming a perfect Elliot Wave pattern, which ended yesterday. It then started to form a reversal Elliot Wave. We expect its price to touch the $15,600, which happens to be a significant resistance zone and a 50% retracement level.

The pair is slightly higher in early European trading, following sharp fall to 112.50 in Asia, as Bank of Japan trimmed the amount of its bond purchases.

Market saw the announcement from BoJ as initial signal of possible complete withdrawal of the stimulus, despite BoJ Governor Kuroda's repeated dismissals of such scenario, sending the dollar sharply lower.

Fresh weakness penetrated daily cloud (cloud top at 112.78 was strong support) on spike to 112.50, with subsequent bounce still unable to return above the cloud, keeping near-term bias negative.

Doji reversal pattern that formed on daily chart adds on downside pressure.

While the price holds in the cloud, fresh attempts lower could be anticipated.

Daily cloud base marks strong support at 112.32, followed by 100SMA at 112.13. Daily techs softened on fresh weakness and support negative scenario.

Conversely, return and close above cloud top would sideline immediate bearish threats.

Res: 112.95, 113.17, 113.38, 113.63
Sup: 112.72, 112.50, 112.32, 112.13

Cable moved lower in early European trading on Tuesday after the action in Asia moved within narrow range and repeatedly rejected at 1.3580 zone.

Daily indicators are turning lower and signaling that broader bulls may be running out of steam following several failures at 1.3600/1.3580 zone.

Fresh easing eyes strong support at 1.3500 (rising 10SMA/low of n/t congestion/near Fibo 38.2% of 1.3301/1.3612) which should ideally hold to keep overall bulls intact.

Such scenario includes extended consolidation above 1.3500 before eventual break through 1.3600 pivot for attack at key resistance at 1.3655 (2017 high).

Otherwise, increased risk of deeper pullback could be expected on sustained break below 1.3500 pivot.

Res: 1.3585, 1.3600, 1.3612, 1.3655
Sup: 1.3522, 1.3500, 1.3489, 1.3457