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Daily Pivots: (S1) 1.5174; (P) 1.5263; (R1) 1.5420; More....

Sharp fall from 1.5392 indicates temporary topping. Intraday bias in EUR/AUD is turned neutral first. Outlook will remain bullish as long as 1.1494 support holds. Break of 1.5392 will resume medium term rise from 1.3624 and target 61.8% projection of 1.3624 to 1.5226 from 1.4949 at 1.5939 first.

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.

GBP/USD - 1.3192

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite rising to 1.3279, as cable has retreated after faltering below indicated resistance at 1.3287, suggesting further choppy trading would take place and weakness to 1.3155-60 cannot be ruled out, however, reckon yesterday’s low at 1.3110 would hold and bring another bounce later. Only a break of this level would revive bearishness and signal decline has resumed for retest of 1.3088 first.

On the upside, whilst recovery to 1.3235-40 cannot be ruled out, reckon upside would be limited and said resistance at 1.3279-87 would hold, bring further choppy consolidation. Only a break of said resistance area would signal the fall from 1.3338 has ended at 1.3088, bring further gain to 1.3300-05 but said resistance at 1.3338 should remain intact. As near term outlook is still mixed, would be prudent to stand aside for now.

Daily Pivots: (S1) 133.90; (P) 134.20; (R1) 134.64; More...

EUR/JPY's sharp fall suggests rejection from 134.39 key resistance. That is, rise from 131.65 could have completed. Intraday bias is turned back to the downside for 131.65. Overall outlook will remain bullish as long as 131.65 holds and another rise is still in favor. But firm break of 131.65 will suggest reversal and turn focus to 127.55 key support. On the upside, sustained trading above 134.39 will confirm up trend resumption and and target 141.04 long term resistance.

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 reversed and will turn outlook bearish for deeper fall.

EUR/USD - 1.1719

Original strategy  :

Bought at 1.1785, stopped at 1.1750

Position : - Long at 1.1785

Target :  -

Stop : - 1.1750

New strategy  :

Sell at 1.1755, Target: 1.1655, Stop: 1.1790

Position : -

Target :  -

Stop : -

Current selloff on dollar’s broad-based strength together with the breach of previous support at 1.1725 signals the fall from 1.1880 has resumed and may extend further weakness to 1.1700, break there would extend weakness to previous support at 1.1669, however, break there is needed to retain bearishness and extend recent fall from 1.2093 top to 1.1650, then towards 1.1615-20.

In view of this, we are looking to turn short on recovery as 1.1750-55 should limit upside.Above 1.1790 would abort and signal an intra-day low is formed instead, then further choppy trading would take place and recovery towards resistance at 1.1837 cannot be ruled out.

Daily Pivots: (S1) 0.9864; (P) 0.9901; (R1) 0.9934; More....

USD/CHF's rise resumes after brief consolidation and hits as high as 0.9955 so far. Intraday bias is back on the upside. Current rise from 0.9420 should target 61.8% retracement of 1.0342 to 0.9420 at 0.9990. Sustained break there will pave the way to retest 1.0342 high. In any case, near term outlook will remain bullish as long as 0.9736 support holds.

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.

Daily Pivots: (S1) 1.3157; (P) 1.3214; (R1) 1.3319; More....

GBP/USD is still bounded in range of 1.3026/3337 and intraday bias stays neutral at this point. On the downside, break of 1.3026 will resume the decline from 1.3651 and target 1.2773 key support level. This will also revive the case of medium term reversal. Meanwhile, on the upside, break of 1.3337 will resume the rebound from 1.3026 to 61.8% retracement of 1.3651 to 1.3026 at 1.3412 and above.

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 stay 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.

Daily Pivots: (S1) 113.39; (P) 113.81; (R1) 114.16; More...

Intraday bias in USD/JPY remains neutral for consolidation below 114.23 temporary top. Consolidation might extend for a while. Still, outlook stays bullish as long as 111.64 support holds. Decisive break of 114.49 resistance will confirm that correction pattern from 118.65 has completed at 107.31 already. And USD/JPY should then target a test on 118.65. However, break of 111.64 will dampen this bullish view and suggests that rebound from 107.31 has completed.

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 completed. 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.

USD/JPY - 113.77

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Despite yesterday’s rise to 114.24, the subsequent stronger-than-expected retreat suggests a temporary top has possibly been formed there and consolidation with mild downside bias is seen for test of 113.24-25 (previous support and 38.2% Fibonacci retracement of 111.65-114.24), break there would add credence to this view, bring further fall to 112.95-00 (50% Fibonacci retracement) but reckon downside would be limited to 112.60-65 (61.8% Fibonacci retracement) and support at 112.30 should remain intact.

On the upside, whilst recovery to 113.90-95 cannot be ruled out, said yesterday’s high at 114.24 should hold and bring another retreat later. Above this level would revive bullishness and extend recent rise from 107.32 low to 114.45-50 (50% projection of 111.65-114.10 measuring from 113.24), then towards 114.75-80 (61.8% projection). As near term outlook is mixed, would be prudent to stand aside in the meantime.  

ECB announced the plan to reduce asset purchase next year. In line with the majority of market participants had anticipated, the central bank would trim the size of buying by half, to 30B euro per month, in the first nine months of 2018, "or beyond, if necessary". It added that stimulus measures would be implemented "in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim". The single currency dropped after the announcement, on profit-taking. The policy rates stayed unchanged, with the main refinancing rate, the marginal lending rate and the deposit rate at 0%, 0.25% and -0.40% respectively.

Satisfactory Economic Recovery

At the press conference, President Mario Draghi appeared confident over the Eurozone's economic recovery, suggesting growth has continued "unabated". He supported his judgment citing the upswing in business investment, improvement in construction investment has also improved, as well as robust exports. While attributing these developments to the accommodative monetary policy and QE, Draghi again called for "more growth-friendly" fiscal policies in "all Eurozone countries"..

Dovish Tapering

Despite tapering, ECB intentionally maintain a dovish tone. Draghi used "recalibration" of the asset purchase program, instead of the word "tapering". He admitted that the decision was not an unanimous one. Yet, the members were generally positive towards reducing the size of purchase, thanks to the increase in employment across the Eurozone and rising wages. The composition in the assets to be bought would be largely unchanged. Meanwhile, ECB would reinvest the principal payments from maturing securities "for an extended period of time after the end of its net asset purchases, and in any case for as long as necessary". The central bank remained flexible and noted that "if the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the APP in terms of size and/or duration". At the press conference, Draghi maintained a flexible tone and reiterated that the stimulus measures after September 2018 is "open-ended.

ECB is not Fed

When asked about why ECB continues to buy assets while the Fed has begun balance sheet reduction, Draghi suggested that the US recovery is "way more advanced" than in the Eurozone, and the region's inflation outlook is "way behind". He dismissed comparison between ECB and the Fed, refusing to promise that ECB would follow the suit of the Fed in raising interest rates 15 months after ending the bond-purchase program.

USD/JPY has inched higher in Thursday trade. In the North American session, USD/JPY is trading at 113.64, down 0.09% on the day. On the release front, Japanese Services Producer Price Index gained 0.9%, above the forecast of 0.8%. In the US, unemployment claims climbed to 233 thousand, just below the forecast of 235 thousand. Later in the day, Japan releases Tokyo Core CPI, which is expected to remain unchanged at 0.5 percent. On Friday, the US releases two key indicators – Advance GDP and the UoM Consumer Sentiment.

The Bank of Japan is expected to hold course with its ultra-accommodative monetary policy, following Prime Minister Shinzo Abe's convincing election victory this week. The BoJ holds a policy meeting next week, and policymakers are expected to maintain its inflation forecasts. At the September meeting, the BoJ stated that it did not expect inflation to reach the Bank's 2 percent target until fiscal year 2020. BoJ Governor Haruhiko Kuroda has long insisted that the bank will not taper its stimulus program until inflation moves higher. Despite weak inflation and wage growth, there has not been much pressure on the Bank to change policy, as the Japanese economy has performed well in 2017. GDP expanded at an annualized 2.5 percent in the second quarter, buoyed by solid numbers from the manufacturing and export sectors.

The US releases Advance GDP on Friday, and this key indicator should be treated as a market mover. The markets are forecasting a gain of 2.5%, after Preliminary GDP posted a sharp gain of 3.0%. US economic numbers remain strong, and the labor market is close to capacity. At the same time, inflation has not moved higher, and wage growth has been weaker than expected. Despite the lack of inflation, the odds of a December rate hike have soared in recent weeks, with the odds of a rate raise at 96%, according to CME FedWatch.