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Although Spanish authorities decided to suspend Catalonia’s autonomy, the common European currency did not show negative reaction to this news. In fact, it bounced off from a combination of the 100-, 200-hour SMAs and the weekly PP and managed to break through the upper boundary of one of the descending channels. After failing to bypass the 1.1858 level three times in a row it slipped back to the above weekly PP. On the one hand, the 64% average bearish market sentiment and anticipation of Janet Yellen speech later this day play in favour of appreciation of the buck. On the other hand, the southern side remains protected by a bunch of moving averages, which have already stopped the pair from falling below the 1.1800 mark.

The British Pound fell sharply against the Greenback on the report showing stronger-than-expected drop in the country's retail sales. GBP/USD marked a 0.21% decrease to the 1.3151 level to finish the session at the same level. The pair's Friday trading started with sharp decline overshadowed by news supportive for Dollar.

The Office for National Statistics reported that the volume of the UK retail sales dropped unexpectedly 0.8% in September, putting the quarterly growth to the weakest yearly rate since 2013. Consumer demand was uncertain, though pre-Christmas sales are likely to change the situation. Moreover, questions arose about wheteher the Bank of England would hike rates for the first time in a decade.

Cable remains in red on Friday and probed below thin daily cloud after fresh weakness eventually broke below strong supports at 1.3145/43 (Fibo 61.8% of 1.3026/1.3337/55SMA) which limited downside attempts in past two days. Fresh weakness hit new 10-day low at 1.3087, with bearish studies favoring further downside and close below 55SMA needed to confirm. Pound is under pressure from stronger dollar, as well as concerns about Brexit and doubts whether BoE will hike interest rates on Nov 2. Recent comments from BoE officials also weigh on pound as BoE's Deputy Governor Cunliffe in his speech on Thursday, gave no clear signals about rate hike soon, adding to dovish steer seen on the speech of new deputy governor Ramsden earlier this week. Bears may extend towards key supports at 1.3045 (100SMA) and 1.3026 (05 Oct low), as near-term action remains pressured by thick 4-hr cloud (spanned between 1.3182 and 1.3260). Broken 55SMA marks initial resistance at 1.3143.

Res: 1.3143, 1.3161, 1.3182, 1.3204
Sup: 1.3087, 1.3045, 1.3026, 1.3000

GBPJPY has been trading in a range during the past two weeks and is pivoting around the 20 and 50-period moving averages which are converging around the 148.50 level. This also happens to be the 38.2% Fibonacci retracement of the recent rally from 141.34 to 152.85.

Support is expected at the 50% Fibonacci at 147.11. This level has been tested a few weeks ago and was rejected, resulting in the market consolidating just above it. To the upside, the key 150 level and 23.6% Fibonacci will provide resistance, which if broken would see another push higher to re-test the 152.85 peak before the resumption of the August to September uptrend.

A drop below the 50% Fibonacci at 147.11 would turn the focus to the downside to target 145.74. Another leg lower would open the way towards key levels at 144 and 140.

The lack of direction in trend and momentum indicators highlight the neutral feel in the near term. Aside from the horizontal moving averages, the RSI and MACD on the 4-hour chart are flat. Clearer signals are needed to determine where the market will go from here.

Daily Pivots: (S1) 132.69; (P) 133.15; (R1) 133.84; More...

At this point, EUR/JPY is still staying in range of 131.69/134.39. Intraday bias remains neutral first. With 131.69 support intact, there is no confirmation of reversal yet. Decisive break of 134.39 high will indicate up trend resumption. Next target will be 141.04 long term resistance. Nonetheless, firm break of 131.69 will be an early sign of medium term reversal and will target 127.55 key support level.

In the bigger picture, medium term rise from 109.03 (2016 low) is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). 61.8% retracement of 149.76 to 109.03 at 134.20 is already met. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. However, break of 127.55 support will argue that the medium term trend has reversal and will turn outlook bearish for deeper fall.

Daily Pivots: (S1) 0.8948; (P) 0.8980; (R1) 0.9037; More...

EUR/GBP's rebound from 0.8857 extends higher today but it's still limited below 0.9032 resistance. Intraday bias remains neutral first. Break of 0.9032 will resume the rebound from 0.8745 and target 100% projection of 0.8745 to 0.9032 from 0.8857 at 0.9144. On the downside, below 0.8857 will likely resume whole fall from 0.9305 through 0.8745 low.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of another fall. And in that case, EUR/GBP could have a retest on 0.8303. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 1.4997; (P) 1.5027; (R1) 1.5068; More....

EUR/AUD is staying in range of 1.4945/5101 and intraday bias remains neutral. Deeper decline is still mildly in favor. Break of 1.4945 will affirm the case that fall from 1.5241 is the third leg of consolidation pattern from 1.5226. And, Further break of 1.4791 will target 1.4421 support cluster support (50% retracement of 1.3624 to 1.5226 at 1.4425). We'd expect strong support from there to bring rebound. On the upside, though, above 1.5101 will turn focus back to 1.5241 instead.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term top has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. The corrective structure of the price actions from 1.5226 is affirming this view. Sustained trading above 1.5226 will target a test on 1.6587 key resistance. However, break of 1.4421 support will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

Daily Pivots: (S1) 1.1532; (P) 1.1558; (R1) 1.1593; More....

Breach of 1.1622 argues that medium term up trend has resumed. Intraday bias stays on the upside for the moment. Sustained trading above 1.1622 will pave the way to 1.2 key level. On the downside, below 1.1523 will dampen this bullish case and turn bias to the downside for 1.1387 instead. In that case, consolidation from 1.1622 will extend for a while.

In the bigger picture, long term rise from SNB spike low back in 2015 is still in progress. EUR/CHF should now be heading back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1198 resistance turned support holds.

The approval of a budget blueprint for the 2018 fiscal year, drove the dollar higher against its major counterparts on Friday in Asia, while the kiwi extended its losses in the face of economic uncertainties which might emerge under the new coalition government.

Trump's tax plan, which promises substantial tax cuts to businesses and individuals, is ready to move to the House of Representatives after the Republican-controlled Senate voted in favor of the 2018 fiscal budget yesterday which would add $1.5 trillion to the federal deficit over the next decade in order to fund the tax cuts. The good news for the Republicans now is that the Senate approval unlocked a key legislative tool needed for them to pass the tax package through Congress without support from the Democrats. With hopes to pass the bill by December, Trump's team will work harder to submit a House-version tax draft by early November.

In other news, Trump has completed his interviews with the five candidates considered for the role of Fed chair on Thursday, with sources familiar with the matter saying that a decision could be announced as soon as next week.

During the session, the dollar gained 0.26% on the day against its major peers, with the index last trading at 93.52. Looking at dollar pairs, dollar/yen hit a two-week high at 113.31 ahead of the Japanese elections on Sunday, while dollar/swissie touched a five-month high of 0.9847.

In New Zealand, the formation of the new coalition government consisted of the Labour party and the small New Zealand First, raised fears that stricter policies on immigration and foreign investments would be imposed, hurting the outlook for the kiwi. The kiwi, which recorded the worst performance among G10 currencies this month, made a fresh five-month low of $0.6970 on Friday.

On late Thursday, the German Chancellor, Angela Merkel expressed their support to the British Prime Minister, Theresa May, during the EU summit in Brussels that concludes today, raising hopes that Brexit talks could progress to the second stage, reaching an EU-UK trade deal. Particularly, Merkel said “that there are no indications at all” that Brexit negotiations won't succeed, suggesting that trade talks could start at the next EU summit in December.

Despite those comments, the pound failed to gain ground as doubts on monetary policy and specifically on whether the BOE would proceed with a rate hike in November weighed on the currency after the release of disappointing economic data out of the UK early this week. The pound retreated by 0.22% against the greenback, last seen at $1.3131.

The euro declined by 0.30% to $1.1817 as the Spanish Prime Minister, Mariano Rajoy, prepares to hold a cabinet meeting on Saturday that could activate Article 155 and therefore suspend Catalonia's autonomy. This arose after the Catalan leader, Charles Puigdemont, refused for the second time on Thursday to renounce “symbolic” independence and said instead he would proceed with a formal declaration if the Spanish government continues to refuse to engage in dialogue.

The loonie climbed by 0.20% ahead of Canadian inflation data due later today.

Turning to commodities, gold tumbled by 0.56% to $1,281.90 per ounce on the back of a stronger dollar, while oil prices moved higher as well amid signs of tightening supply. WTI crude jumped by 0.55% to $51.57 per barrel and Brent rose by 0.42% to $57.47.

The pair is holding near session high at 113.32 in early European trading, following strong rally in Asia. The greenback was boosted by increased optimism about US tax reforms after the US Senate approved a budget blueprint for the 2018 fiscal year that opens way for Republicans to continue with Trump’s tax-cut plans without support from Democrats.

The dollar also received support from speculations of successor of Janet Yellen as Fed chair person, as President Trump favors more hawkish person at that position.

Japan’s general election is on Sunday and market observers expect no surprises for the market as Japanese PM Abe’s ruling coalition is on track keep the majority in the lower house.

Bullish technical studies point at the upside as fresh rally cracked key resistance zone between 113.25 and 113.43. Sustained break here would spark fresh extension of broader uptrend from 107.31 (08 Sep low) towards targets at 114.00/50.

Hesitation at key barriers could be anticipated as slow stochastic is entering overbought territory which may result in consolidation before bulls resume.

Initial supports at 113.00/112.70 are expected to ideally contain dips, while extended downticks should find ground at 112.50 (session low / converged 10/20SMA’s / 4-hr cloud top).

Conversely, firm break here would sideline near-term bulls for prolonged consolidation.

Res: 113.86, 114.00, 114.50, 114.80
Sup: 113.00, 112.70, 112.50, 112.03