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The New Zealand dollar remains firmly in red on Friday and broke below psychological 0.7000 support. Fresh extension of strong fall on Thursday hit new five-month low at 0.6970, with scope seen for further weakness. The Kiwi dollar is under pressure on political uncertainty while the greenback received fresh boost on hopes of implementation of President Trump's tax package. Technical studies are in firm bearish mode and favor further easing, as Thursday's long red daily candle (the pair was down 1.7% on Thursday) weighs heavily on near-term action. The pair is currently riding on the wave C of five-wave cycle from 0.7558, which broke below its FE 100% (0.7008) and could travel to 0.6907 (FE123.6%) and 0.6844 (FE138.2%) in extension. Initial resistance lies at 0.7055 (10 Oct former low), with falling 10SMA (0.7102) expected to cap corrective upticks.

Res: 0.7000, 0.7055, 0.7090, 0.7102
Sup: 0.6970, 0.6950, 0.6907, 0.6844

USDCAD maintains a bearish market structure as the pair continues to trade below the 200-day moving average. Looking at the short-term, prices made a corrective move higher after bouncing from 1.2061 and are currently consolidating around the 1.25 handle.

Immediate support is being provided by the 50-day MA, currently at 1.2438. Breaking below this level would target the September 8 low at 1.2061. Another leg lower would increase downside pressure and bring a resumption of the broader downtrend, with scope to reach the next major low at 1.1919.

A move to the upside would target the next high at 1.2777 ahead of the key 1.3000 level. From here, the focus turns to the 1.3215-1.3342 area. An extension higher would see a re-test of the May 5 peak at 1.3793.

In the near term USDCAD is expected to maintain a neutral bias at 7-week highs, pivoting around 1.2500. Trend strength is weak (RSI is neutral), leaving little room for a sustained push higher. The market structure on the daily chart supports a bearish view.

Daily Pivots: (S1) 1.1792; (P) 1.1825 (R1) 1.1883; More...

EUR/USD failed to break out 1.1879 resistance and retreated. Intraday bias is turned neutral again. On the upside, break of 1.1879 will revive the case that corrective fall from 1.2091 has completed at 1.1669, ahead of 1.1661 support. EUR/USD should target a test on 1.2091 high then. Meanwhile, break of 1.1729 will bring retest of 1.1669 instead.

In the bigger picture, rise from medium term bottom at 1.0339 is not finished yet. It's expected to continue after pull back from 1.2091 completes. And, next target will be 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. However, it should be noted that there is no confirmation of trend reversal yet. That is, such rebound from 1.0399 could be a correction. And the long term fall from 1.6039 (2008 high) could resume. Hence, we'd be cautious on strong resistance from 1.2516 to limit upside.

Daily Pivots: (S1) 1.3109; (P) 1.3169; (R1) 1.3217; More....

Break of 1.3120 minor support suggests that recovery from 1.3026 is completed at 1.3337. Intraday bias in GBP/USD is turned back to the downside for 1.3026 first. Break will resume whole decline from 1.3651 and target 1.2773 key support next. That will also revive the case that medium term rise from 1.1946 has completed at 1.3651. Meanwhile, above 1.3337 will bring retest of 1.3651 high instead.

In the bigger picture, while the medium term rebound from 1.1946 was strong, GBP/USD hit strong resistance from the long term falling trend line. Outlook is turned a bit mixed and we'll turn neutral first. On the downside, decisive break of 1.2773 key support will argue that rebound from 1.1946 has completed. The corrective structure of rise from 1.1946 to 1.3651 will in turn suggest that long term down trend is now completed. Break of 1.1946 low should then be seen. On the upside, break of 1.3835 support turned resistance will revive the case of trend reversal and target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

The U.S dollar has recovered bullish momentum against the Japanese Yen, hitting 113.30, after the U.S Senate passed the 2018 budget blueprint, setting the stage for the proposed tax reforms from the Trump administration. The USDJPY pair currently trades around the 113.19 level, as European traders react to the latest news from the United States.

The USDJPY pair is expected to move higher while trading above the key 112.89 technical level. Intraday upside targets are located at 113.43, 113.57 and 113.90 levels.

If buyers fail to push price above the 113.31 level, sellers will likely target the 112.89 level to test demand around this region. Further intraday support below 112.89 is located at the 112.70 and 112.58 level.

The British pound has fallen sharply lower against the U.S dollar, hitting 1.3091, as the U.S dollar index soars. The GBPUSD pair moved lower in the Asian session, as the U.S Senate passed through the 2018 budget plan, while intraday technical selling accelerated losses when price broke below the 1.3130 level. The pair currently sits around the 1.3095 level, as traders await the release of UK government finance data.

The GBPUSD pair is strongly bearish while trading below the 1.3130 level, a further decline towards the 1.3070 and 1.3030 technical support levels remain likely.

If GBPUSD sellers fail to push price below the 1.3090 level in the Europea session, buyers may try to push price-action back towards the 1.3116 and 1.3130 resistance levels.

Weekly
    •    Last Candlesticks pattern: Window
    •    Time of formation: 24 April 2017
    •    Trend bias: Up

Daily
    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 18 May 2017
    •    Trend bias: Up



EUR/JPY – 133.66




As the single currency found renewed buying interest at 131.66 earlier this week and has staged a strong rebound above previous resistance at 133.50, signaling the pullback from 134.41 (last month’s high) has ended and bring further gain to 134.00, then retest of said resistance. Only a break of this level would confirm recent upmove has resumed for further gain to 135.00, however, near term overbought condition should limit upside to 136.00-10 and reckon 136.90-00 would hold from here, price should falter well below 138.45-50 (1.618 times extension of 109.49-124.10 measuring from 114.85), risk from there has increased for a much-needed correction to take place later.

On the downside, whilst pullback to 132.65-70 cannot be ruled out, reckon the Kijun-Sen (now at 132.52) would hold and bring another rise later. Below 132.00 would risk test of said support at 131.66 but only break there would signal a temporary top has been formed at 134.41 bring retracement of recent upmove to 131.00, then previous support at 130.62, having said that, reckon psychological level at 130.00 would limit downside and price should stay well above another previous support at 129.37, bring rebound later.

Recommendation: Buy at 132.70 for 134.70 with stop below 131.70.

On the weekly chart, as euro found renewed buying interest at 131.66 this week and has staged a rebound, a white candlestick looks set to be formed, hence consolidation with upside bias is seen for gain to 134.00 but break of recent high at 134.41 is needed to confirm recent upmove from 109.49 (2016 low) has resumed and extend gain to 135.00, then 136.00-10, however, reckon upside would be limited and 136.95-00 should hold, price should fatter below 138.45-50 (1.618 times extension of 109.49-124.10 measuring from 114.85), bring retreat later.

On the downside, expect pullback to be limited to 132.60-70 and bring another rise. Only below said support at 131.66 would bring test of the Tenkan-Sen (now at 131.13) but a drop below this level is needed to suggest a temporary top has possibly been formed at 134.41, bring weakness to 129.95-00, however, only a break below 129.37 support would add credence to this view and signal retracement of recent upmove has commenced, hence further weakness to 128.90-00, then towards 128.00-10 would follow but previous support at 127.56 should remain intact.

Daily Pivots: (S1) 0.9725; (P) 0.9770; (R1) 0.9803; More....

Break of 0.9835 argues that rebound from 0.9420 is resuming. Intraday bias is cautiously on the upside for further rally to 61.8% retracement of 1.0342 to 0.9420 at 0.9990 next. As medium term fall form 1.0342 is possibly finished, sustained break of 0.9990 will pave the way to retest 1.0342 high. However, break of 0.9736 support will mixed up the near term outlook and turn bias back to the downside for 0.9587 support instead.

In the bigger picture, current development suggests that USD/CHF has defended 0.9443 (2016 low) key support level again. Rise from 0.9420 could develop into a medium term move and target a test on 1.0342 high. This represents the upper end of a long term range that started back in 2015. On the downside, break of 0.9587 support is now needed to indicate completion of the rise from 0.9420. Otherwise, further rally will remain in favor in medium term.

The global financial markets can expect a steady stream of market-moving data on Friday, culminating in several batches of high-profile North American figures.

Action begins in Europe at 06:00 GMT with the release of German producer inflation data. The German producer price index (PPI) is forecast to rise 2.9% annually in September, following a 2.6% increase the previous month.

Attention shifts to policy a half hour later as Bank of Japan (BOJ) Governor Haruhiko Kuroda delivers a speech. Currency traders will be on high alert for any mention of quantitative easing.

Returning to the data, the UK National Statistics office will report on public sector net borrowing at 08;30 GMT.

The Canadian government headlines the North American calendar with multiple releases Friday, including retail sales and consumer inflation. Retail spending is forecast to rise 0.5% in August, after climbing 0.4% the previous month.

Statistics Canada is also expected to show a 1.6% annual increase in the consumer price index (CPI) at 12:30 GMT.

South of the border, the National Association of Realtors (NAR) will report on existing home sales for the month of September. The sale of previously-owned homes is forecast to dip 1% to a seasonally adjusted annual rate of 5.3 million units.

Energy traders will also keep an eye on weekly rig-count data at 17:00 GMT.

In terms of monetary policy, Federal Open Market Committee (FOMC) member Loretta Mester will deliver a speech at 18:00 GMT.

USD/CAD

The USD/CAD will be data-driven on Friday, as investors try to piece together Canada’s inflation outlook relative to the central bank’s rate-hiking schedule. The USD/CAD exchange rate is up 0.2% overnight to trade at 1.2511. The gains reflect a broader rally for the greenback this week. A solid inflation report from Statistics Canada could trigger a broad reversal for the pair. In fact, anything that supports the case for a trigger-happy BOC will send the Canadian dollar higher.

EUR/USD

The euro advanced against the dollar on Thursday, but has since softened to resume trading in the low 1.1800 region. The EUR/USD remains firmly capped below the 1.19 handle for nearly a month. That means the upper 1.1800s continue to offer strong resistance. On the opposite side of the ledger, immediate support is located in the upper half of the 1.1700 area.

USD/JPY

The USD/JPY caught a tailwind Friday, gaining 0.5% to trade at 113.17. The pair touched a session high of 113.31, which would have marked the highest settlement in two weeks. All eyes are on the BOJ’s Kuroda, as his comments could signal the direction of the market in the coming hours. Analysts at Danske Bank see the USD/JPY returning to 115.00 and beyond over the next six months.

Weekly
    •    Last Candlesticks pattern: Shooting doji
    •    Time of formation: 01 May 2017
    •    Trend bias: Sideways

Daily
    •    Last Candlesticks pattern: Bearish engulfing
    •    Time of formation: 5 May 2017
    •    Trend bias: Down



USD/CAD – 1.2470




Although the greenback rebounded earlier this week to as high as 1.2591, as the pair has retreated after faltering below recent high at 1.2599, retaining our view that further consolidation below this level would be seen and test of 1.2433 support cannot be ruled out, below there would bring retracement of recent rise towards the Kijun-Sen (now at 1.2360) but reckon 1.2310-15 would contain downside and bring another rise later. Only a break of said resistance at 1.2599 would confirm the rise from 1.2061 low has resumed and bring retracement of early decline to 1.2620-25, then towards resistance at 1.2663, having said that, reckon upside would be limited to 1.2700-10 and price should falter below resistance at 1.2778.

On the downside, whilst initial pullback to 1.2433 and then 1.2390-00 cannot be ruled out, reckon the Kijun-Sen (now at 1.2360) would limit downside and 1.2315-25 would hold, bring another rise later. Only a daily close below support at 1.2254 would abort and signal the rebound from 1.2061 has ended instead, bring weakness to 1.2198, break there would add credence to this view and extend weakness to 1.2121. Having said that, break there is needed to retain bearishness and bring further fall towards said recent low at 1.2061. Looking ahead, below 1.2061would extend downtrend to psychological level at 1.2000, having said that, loss of momentum should prevent sharp fall below 1.1920-25 (61.8% projection) and 1.1900 should hold. 

Recommendation: Buy at 1.2325 for 1.2525 with stop below 1.2225


On the weekly chart, as the greenback has retreated after failing to penetrate resistance at 1.2599, suggesting further consolidation below this level would be seen and pullback to 1.2433, then 1.2390-00 cannot be ruled out, however, if our view that a temporary low formed at 1.2061 is correct, downside should be limited to 1.2315-25 and bring another rebound later. Above 1.2599 would extend the corrective rise from 1.2061 low for retracement of recent decline to previous resistance at 1.2663, then 1.2700-10, having said that, price should falter below previous resistance at 1.2778, bring another decline later in Q4.

On the downside, expect pullback to be limited to 1.2390-00 and 1.2300-10 should hold, bring another rise later to aforesaid retracement targets. Below 1.2121 support would abort and signal the rebound from last month’s low at 1.2061 has ended, bring retest o this level later. A drop below 1.2061 would confirm decline from 1.3794 top has resumed and extend weakness towards psychological support at 1.2000, however, reckon downside would be limited to 1.1920-25 (61.8% projection of 1.3794-1.2414 measuring from 1.2778) and reckon 1.1840-50 would hold from here, price should stay above 1.1750-60, bring rebound later.