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For the 24 hours to 23:00 GMT, the USD rose 0.34% against the JPY and closed at 111.59 on Friday.

In the Asian session, at GMT0400, the pair is trading at 111.40, with the USD trading 0.17% lower against the JPY from Friday’s close.

The pair is expected to find support at 111.24, and a fall through could take it to the next support level of 111.07. The pair is expected to find its first resistance at 111.63, and a rise through could take it to the next resistance level of 111.85.

With no major economic releases in Japan today, Yen investors would focus on global macroeconomic events for further direction.

The currency pair is trading below its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.18% against the CHF and closed at 0.9798.

In economic news, Switzerland’s industrial production advanced 8.6% YoY in the third quarter of 2017, compared to a revised gain of 3.2% in the prior quarter.

In the Asian session, at GMT0400, the pair is trading at 0.9807, with the USD trading 0.09% higher against the CHF from Friday’s close.

The pair is expected to find support at 0.9786, and a fall through could take it to the next support level of 0.9766. The pair is expected to find its first resistance at 0.9827, and a rise through could take it to the next resistance level of 0.9848.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD slightly declined against the CAD and closed at 1.2711 on Friday.

In the Asian session, at GMT0400, the pair is trading at 1.2714, with the USD trading a tad higher against the CAD from Friday’s close.

The pair is expected to find support at 1.2689, and a fall through could take it to the next support level of 1.2665. The pair is expected to find its first resistance at 1.2743, and a rise through could take it to the next resistance level of 1.2773.

Amid a lack of macroeconomic releases in Canada today, investors would focus on global macroeconomic news for further direction.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

EURUSD

The EURUSD had a significant bullish momentum last week, broke above 1.1900 key resistance as you can see on my H4 chart below. My major technical bias is now neutral. The bias is bullish in nearest term testing 1.2000 – 1.2090 resistance area. Immediate support is seen around 1.1900. A clear break below that area could lead price to neutral zone in nearest term testing 1.1850 or lower but could give the bearish scenario another chance as we may have a false breakout situation.

GBPUSD

The GBPUSD had a bullish momentum last week and now struggling around 1.3330 key resistance. The bias is bullish in nearest term especially if price able to make a clear break above 1.3330 targeting 1.3615 region this week. Immediate support is seen around 1.3280. A clear break below that area could lead price to neutral zone in nearest term testing 1.3225/00 region but as long as stay above 1.3000 I remain bullish and any downside pullback should be seen as a good opportunity to buy.

USDJPY

The USDJPY continued its bearish momentum last week bottomed at 111.06. The bias is bearish in nearest term testing 110.65 area as a part of the bearish pin bar scenario as you can see on my daily chart below. Immediate resistance is seen around 111.65. A clear break above that area could lead price to neutral zone in nearest term testing 112.00 region. Overall I remain neutral but my short-term technical bias is bearish.

USDCHF

The USDCHF had a bearish momentum last week bottomed at 0.9783. The bias is bearish in nearest term testing 0.9750/00 region. Immediate resistance is seen around 0.9835. A clear break above that area could lead price to neutral zone in nearest term testing 0.9875 area. Overall I am neutral on this pair but my short-term bias is bearish.

STOCKS

Dow (23557.99, +0.14%) has inched up a bit to move towards 23600. Our medium term target of 23750-23800 remains on the cards for the coming sessions. The rise could be slow and small and could take some time to reach 23800. Note 23800 could act as a decent resistance and could keep the index range bound before letting another sharp up move in the longer term. Overall trend looks bullish.

Dax (13059.84, +0.39%) may trade sideways in the 12800-13200 region. Unless a break on either side is seen, Dax may continue to remain range-bound in the near term.

22760 is an important resistance on Nikkei (22482.16, -0.30%) and while that holds, a test of 22200-22000 is possible in the near term. For at least the next 2-3 sessions, 22000-22760 region is likely to hold.

Shanghai (3325.74, -0.84%) is trading near support levels and is on the verge of breaking on the downside in the next couple of sessions. A sustained break below 3320 could initiate fresh weakness coming in and could take down the index towards 3250 or lower.

Nifty (10389.70, +0.40%) could test immediate resistance near 10450-10500 region and see a sharp rejection from there back towards 10350-10300 in the near term. Immediate view is bullish with a possible correction coming up soon.

COMMODITIES

Gold (1289.55) and Silver (17.04) are almost stable. Silver may trade in the 16.90-17.25 region in the coming sessions while Gold could attempt a test of 1295-1297.

Brent (63.75) could be stable for a couple of sessions before trying to move up towards 65 while WTI (58.65) has already tested its immediate resistance near 59 and is trading slightly lower just now. 59 is a crucial weekly resistance on the WTI and while that holds, the price could possibly come off towards 57 in the near term.

Copper (3.1635) has been moving up slowly and could test 3.25 as we have been mentioning for quite some time now. A ejection from 3.25 is possible bringing the price back towards 3.15 in the medium term.

FOREX

Dollar Index (92.829), as per our expectations, has fallen to support near 92.70 on the daily charts and seems poised for a bounce from current levels to move towards 93.25 in this week. Recovery in US 10 yr yields (see Interest Rates below) and continued bullishness in crude prices are likely to enable this bounce.

Euro (1.1923) as predicted is also on course to test resistance on monthly charts (not featured here) at 1.1950 (earlier mentioned as 1.1900 in Friday’s briefing). With a likelihood of dollar strength resurfacing, the resistance should hold; however, a breach could prove to be bullish with levels beyond 1.22 opening up in the medium term.

Dollar-Yen (111.40) is trading around similar levels as on Friday and still shows possibility of going down to test 110 on the weekly charts, as long as Dollar weakness persists. However, we might just be looking at an immediate reversal in trend here, which would yield a new support level around 111.00-111.50. We’ll have to wait and watch to be certain about this.

Pound (1.3320) is trading near resistance at 1.335 on the daily charts. A dip from here could see resumption of another round of range wise oscillation between 1.3 and 1.335; however, a breach of this resistance to test 1.35 on the weekly charts is also on the cards.

Dollar Rupee (64.7075) may move up towards 64.80 while support at 64.60 holds. Only on a break below 64.60, (if seen) could open up chances of testing 64.40 on the downside.

INTEREST RATES

US Yields have managed to remain above the Supports mentioned on Thursday. The 5Yr (2.07%) has Support at 2.06% while the 30Yr (2.76%) has Support at 2.75%. But, it is to be seen if they are able to rise above 2.10% and 2.80-85% respectively.

Again, as mentioned on Thursday, there should be some scope for Curve Steepening in the USA, as the 30-5Yr Spread (0.69%) has channel Support near current levels.

Recent moves in the currency market are diverging from the bond market. Dollar-Yen (111.38) has been falling from 114.00 in the beginning of November even as the US-Japan 10Yr Spread (2.31%) has remained steady. Similarly, the Euro (1.1927) has moved up sharply last week even though the German-US 10Yr Spread (-1.98%) has been stalling between -2.05% and -1.95%. Perhaps the market wants to be sure of a fresh increase in US yields as a reason to buy the US Dollar.

In the meanwhile, the German 2Yr (-0.69%) could be threatening to break its downtrend from 0.2% (March 2014). Need to keep a watch on this. Similarly, the Japanese 10Yr (0.03%) is fighting with Resistance near current level. This too needs to be watched.

The Indian 10Yr GOI (7.0015%) managed to close above 7.0% on Friday after a week. It will be interesting to see how the market moves today after the news that the S&P rating has been kept stable.

Daily Pivots: (S1) 111.23; (P) 111.42; (R1) 111.68; More...

Intraday bias in USD/JPY remains neutral for consolidation above 111.06 temporary low. Near term outlook remains bearish as long as 112.71 resistance holds and deeper decline is expected. Below 111.06 will target 61.8% retracement of 107.31 to 114.73 at 110.14. For the moment, we're still favoring the case medium term corrective pattern from 118.65 has completed at 107.31 already. Hence, we'll looking for bottoming below 110.14 to bring another rise.

In the bigger picture, medium term rise from 98.97 (2016 low) is not completed yet. It should resume after corrective fall from 118.65 completes. Break of 114.49 resistance will likely resume the rise to 61.8% projection of 98.97 to 118.65 from 107.31 at 119.47 first. Firm break there will pave the way to 100% projection at 126.99. This will be the key level to decide whether long term up trend is resuming. However, firm break of 111.64 support will dampen this view and turn focus back to 107.31 instead.

Daily Pivots: (S1) 1.2678; (P) 1.2713; (R1) 1.2735; More....

Intraday bias in USD/CAD remains neutral for the moment. Correction from 1.2916 is still in progress and deeper fall could be seen. But we'd expect downside to be contained by 1.2598 resistance turned support and bring rebound. Above 1.2836 minor resistance will turn bias back to the upside for 1.2916 first. Further break of 1.2916 will resume whole rally from 1.2061 to 38.2% retracement of 1.4689 to 1.2061 at 1.3065. However, sustained break of 1.2598 will argue that rebound from 1.2061 has completed after hitting 55 week EMA (now at 1.2895). Near term outlook will be turned bearish in this case.

In the bigger picture, USD/CAD should have defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. Rise from 1.2061 medium term bottom should now target 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Firm break there will target 1.3793 key resistance next (61.8% retracement at 1.3685). We'll now hold on to this bullish view as long as 1.2450 support holds.

Weekly

    •    Last Candlesticks pattern: Dark cloud cover
    •    Time of formation: 10 Jul 2017
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Evening doji
    •    Time of formation: 7 Aug 2017
    •    Trend bias: Down

USD/JPY – 111.47

Although the greenback dropped to as low as 111.07 late last week, the subsequent recovery suggests consolidation above this level would be seen and corrective bounce to the Tenkan-Sen (now at 112.29) is likely, however, reckon upside would be limited to the Kijun-Sen (now at 112.91) and bring another decline later, below said support would add credence to our view that temporary top has been formed at 114.74 earlier and bearishness remains for the fall from there to extend weakness to the lower Kumo (now at 110.41), then towards 110.00, having said that, oversold condition would limit downside to 109.50-60 and price should stay well above 109.00-10.

On the upside, whilst initial recovery to 112.00, then test of the Tenkan-Sen (now at 112.29) cannot be ruled out, reckon the Kijun-Sen (now at 112.91) would attract renewed selling interest and bring another decline later. A daily close above the Kijun-Sen would suggest a temporary low is formed instead, bring a stronger rebound to 113.30-35 but still reckon upside would be limited to resistance at 113.91 and price should falter well below said recent high at 114.74, bring another retreat later. 

Recommendation : Sell at 112.90 for 110.90 with stop above 113.90

On the weekly chart, as the greenback has remained under pressure after recent retreat from 114.47 top and broke below indicated support at 111.65, adding credence to our view that a temporary top has been formed there, hence consolidation with mild downside bias remains for weakness to the Kijun-Sen (now at 111.03), a sustained breach below there would confirm and bring retracement of the rise from 107.32 low to 109.50-60, then towards 109.00 which is likely to hold from here due to near term oversold condition. 

On the upside, expect recovery to be limited to the upper Kumo (now at 112.32) and the Tenkan-Sen (now at 112.91) should hold and bring another decline later. A weekly close above the Tenkan-Sen would bring test of indicated resistance at 113.91 but only break there would revive bullishness and signal the retreat from 114.74 has ended instead, bring retest of this level. Once this resistance is penetrated, this would extend recent rise from 107.32 to 115.51-62 resistance area, break there would add credence to our view that early erratic decline from 118.66 has ended at 107.32, then headway to 116.50-60 and possibly 117.00-10 would follow.

Daily Pivots: (S1) 0.7601; (P) 0.7617; (R1) 0.7627; More...

AUD/USD weakens mildly today as recovery from 0.7531 lost momentum after hitting 0.7638. Intraday bias remains neutral at this point. Near term outlook remains bearish with 0.7729 resistance intact and deeper decline is expected. Break of 0.7531 will resume whole decline from 0.8124 and target next key cluster level at 0.7322/8. However, considering bullish divergence condition in 4 hour MACD, break of 0.7729 will indicate near term reversal and bring stronger rebound back to 0.7896 resistance and above.

In the bigger picture, corrective rise from 0.6826 medium term bottom is likely completed at 0.8124, after hitting 55 month EMA (now at 0.8049). Decisive break of 0.7328 key cluster support (61.8% retracement 0.6826 to 0.8124 at 0.7322) will confirm. And in that case, long term down trend from 1.1079 (2011 high) will likely be resuming. Break of 0.6826 will target 61.8% projection of 1.1079 to 0.6826 from 0.8124 at 0.5496. This will now be the favored case as long as 0.7729 near term resistance holds.

Dollar recovers broadly today, except versus Japanese yen. But momentum in the greenback doesn't warrant a sustainable rebound yet. For the moment, Euro is still in the driving seat in the forex markets. Political news out of Germany over the weekend looked positive as Chancellor Angela Merkel secured support form her allies on grand coalition. This will remain a major topic of attention for the week ahead. Besides, US Senate is set to floor their version of tax bill and could trigger some volatilities on the markets. The economic calendar is light today but will build up intensity towards the end of the week. In particular, inflation data from Eurozone, US and Japan are the highlights.

Merkel got support for grand coalition ahead of meeting with SPD

In Germany, Chancellor Angela Merkel met several leaders in her Christian Democratic party in Berlin over the week end. Merkel got some support for reforming the grand coalition with SPD After the meeting Daniel Günther, A CDU member and Minister President of Schleswig-Holstein said that effectiveness won't come from a minority government but "instead an alliance with a parliamentary majority. That is a grand coalition." Leader of the Christian Social Union Horst Lorenz Seehofer also said that "an alliance of the conservatives and the SPD is the best option for Germany - better anyway than a coalition with the Free Democrats and the Greens, new elections or a minority government."

Foreign Minister Sigmar Gabriel, the former leader of the SPD, sounded no committal as he said that no one should take the grand coalition for granted. But he added that Germany needs "a sufficiently courageous, majority-equipped government that is capable of action" as the leader in EU. Merkel will meet with SPD leader Martin Schulz, CSU leader Seehofer and President Frank-Walter Steinmeier on Thursday.

Irish border surfaced as another sticky point for Brexit negotiation

In the Brexit negotiation between UK and EU, the topic of Irish border surfaced as a tough one over the weekend. UK's international trade secretary Liam Fox warned that "we can't come to a final answer to the Irish question until we get an idea of the end state." That is, according to Fox, the decision on Irish border won't be made before reaching a trade agreement with EU. And Fox blamed that "the quicker we can do that the better, and we are still in a position where the EU doesn't want to do that." UK Prime Minister Theresa May would have to provide further proposals to EU on the three main ares, divorce bill, Irish border and citizens right, before December 4.

Senate to make last minute changes to tax bill before flooring

In the US, it's reported that Senate Republicans are considering some last-minute changes to the tax bill to secure the votes before flooring this week. Republicans have only a slim 52 majority in the Senate and could afford losing two votes. Ron Johnson and Steve Daines have already expressed concerns that the current bill favors large corporations over other businesses. President Donald Trump also hinted changes as he tweeted "the Tax Cut Bill is getting better and better". Generally, it's seen that this week is a "make or break" for the tax plan.

For the week ahead

The economic calendar will be very busy towards the end of the week. Inflation data will be the major focuses as Eurozone will release CPI flash, US will release PCE, Japan will also release CPI. ECB will be happy if Eurozone CPI climb to 1.6% yoy as expected. Fed officials will also need to seem some strengthening in core PCE to ease their concerns on slow inflation. Other than those, Fed will release Beige Book economic report. Fed chair Janet Yellen's testimony will also be watched no matter what. PMI data from UK, ISM from US and Canada employment could also shape the trend in December.

Here are some highlights for the week ahead:

• Monday: US New home sales
• Tuesday: German import prices Gfk consumer sentiment; Eurozone M3; Canada IPPI and RMPI; US trade balance, wholesale inventories, house price indices, consumer confidence
• Wednesday: Japan retail sales; UK BRC shop price, M4, mortgage approvals; Swiss UBS consumption indicator; German CPI, French GDP; US GDP revisions, pending home sales, Fed's Beige book
• Thursday: New Zealand building permits, ANZ business confidence; Australia private capital expenditure, building approvals; China PMIs; Japan industrial production, housing starts; UK Gfk consumer confidence; Swiss GDP, KOF, retail sales; German retail sales, unemployment; Eurozone CPI, unemployment rate; Canada current account; US unemployment claims, personal income and spending, Chicago PMI
• Friday: New Zealand terms of trade; Japan CPI, household spending, unemployment rate, capital spending; China Caixin PMI manufacturing; Eurozone PMI revision. UK PMI manufacturing; Canada employment; US ISM manufacturing

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7601; (P) 0.7617; (R1) 0.7627; More...

AUD/USD weakens mildly today as recovery from 0.7531 lost momentum after hitting 0.7638. Intraday bias remains neutral at this point. Near term outlook remains bearish with 0.7729 resistance intact and deeper decline is expected. Break of 0.7531 will resume whole decline from 0.8124 and target next key cluster level at 0.7322/8. However, considering bullish divergence condition in 4 hour MACD, break of 0.7729 will indicate near term reversal and bring stronger rebound back to 0.7896 resistance and above.

In the bigger picture, corrective rise from 0.6826 medium term bottom is likely completed at 0.8124, after hitting 55 month EMA (now at 0.8049). Decisive break of 0.7328 key cluster support (61.8% retracement 0.6826 to 0.8124 at 0.7322) will confirm. And in that case, long term down trend from 1.1079 (2011 high) will likely be resuming. Break of 0.6826 will target 61.8% projection of 1.1079 to 0.6826 from 0.8124 at 0.5496. This will now be the favored case as long as 0.7729 near term resistance holds.

Economic Indicators Update