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US equities surged to new record highs again while treasury yields jumped as tax plan and Fed chair position continued to be the theme that drove the markets. The developments also took Dollar generally higher. DOW closed up 167.80 pts or 0.72% at 23441.76, hitting all time high. S&P 500 and NASDAQ gained 0.16% and 0.18% too but lagged DOW in the record runs. 10 year yield jumped 0.030 to close at 2.406, above 2.396 key resistance, which is see as a bullish signal. TNX could now be heading to retest 2.621 high made back in December.

At this point, Dollar index is still limited below 94.14 key near term resistance. But that's mainly due to Euro's resilience, which is trading as the second strongest currency for the week, next to Dollar. The common currency is being supported by expectation of ECB tapering, to be announced tomorrow. Elsewhere in the currency markets, Australian Dollar tumbles sharply today after CPI miss. Aussie is even weaker than Kiwi, which is suffering from negative reactions to the policies of the new government.

For the day ahead, UK Q3 GDP will be a key to watch. While a BoE November hike is highly likely, that's not a done deal yet. Sterling could suffer if GDP growth misses expectations. German Ifo business climate is another focus in European session but that is unlikely to alter ECB's course. BoC rate decision is the main highlight in US session but that could be a non-event. US will release durable goods orders, house price index and new home sales.

Republicans united on tax plan, despite political rift with Trump

The feud between US President Donald Trump and some Republicans continued, including with Bob Corker and Jeff Flake. But recent developments suggest that while some Republicans would continue to heavily criticize Trump on political front, they are rather united regarding the tax plan. The rifts are not going to derail the push for completing the tax cuts by year end. It's reported that House Republicans are now prepared to take the Senate version of the tax plan in order to move forward swiftly, dropping some ideological demands. Reconciliation of the Senate and House version will be a big step forward.

Taylor got most "show of hands" in Fed chair race

Treasury yields are also supported by news that Stanford University economist John Taylor got the most "show of hands" in a closed-door lunch, where Trump asked the Republican senators who they prefer to be next Fed Chair. The White House noted that Trump is taking this decision seriously. While Taylor has been viewed as a hawk as the Taylor rule he created points to significant increase in the policy rate from the current level, his own monetary stance might not be so.

In his speech titled Rules Versus Discretion: Assessing the Debate Over the Conduct of Monetary Policy at the Boston Fed conference on October 13, Taylor noted that "one can easily adjust the equilibrium interest rate in the rule". He added that the most important suggested change in policy rules in recent years is probably to "adjust the intercept to accommodate the lower estimate of the equilibrium real interest rate (R*)". He appears content with the situation that the FOMC members have recently adjusted the average estimate of the neutral by "at least one percentage point lower" than the original 2%.

Aussie CPI miss suggests no RBA hike soon

Consumer inflation data from Australia surprised to the downside. Headline CPI rose 0.6% qoq in Q3, below expectation of 0.8% qoq. Annual rate slowed to 1.8% yoy, down from 1.9% yoy and missed expectation of 2.0% yoy. RBA trimmed mean CPI was unchanged at 1.8% yoy, missed expectation of 2.0% yoy. RBA weighted median CPI was unchanged at 1.9% yoy, below expectation of 2.0% yoy. The data suggested that it will be hard for RBA to considering raising interest rate any time soon.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7755; (P) 0.7790; (R1) 0.7809; More...

AUD/USD drops to as low as 0.7783 so far today. Break of 0.7732 support confirms resumption of decline from 0.8124. Intraday bias is back on the downside for medium term fibonacci level at 0.7628 first. Current development affirms the case of medium term reversal. Firm break of 0.7628 will pave the way to 0.7328 key support next. On the upside, above 0.7769 minor resistance will turn intraday bias neutral first. But outlook will remain cautiously bearish as long as 0.7896 resistance holds.

In the bigger picture, rise from 0.6826 medium term bottom is seen as corrective pattern. Current development suggests that it might be completed with three waves up to 0.8124 already. Break of 38.2% retracement of 0.6826 to 0.8124 at 0.7628 will affirm this bearish case. And, decisive break of 0.7328 key cluster support (61.8% retracement at 0.7322) will confirm and bring retest of 0.6826 low. In case rise from 0.6826 resumes and extends, strong resistance should be seen at 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside.

Economic Indicators Update

STOCKS

Dow (23441.76, +0.72%) is back into the rally and yesterday's mentioned correction has not seen follow through to extend the dip further. Bulls continue to remain strong and may continue to dominate prices for the coming sessions. Test of 23500-24000 if seen would not be a surprise.

Dax (13013.19, +0.08%) is trading below immediate resistance near 13060-13100 and while that holds, the index could be trading within 13100-12900 region before deciding n further direction. For now 13100 seems to be an important resistance which could probably push the price to levels below 12900 in the medium term. Note a break above 13100, if seen would turn very bullish for Dax for the coming weeks.

Nikkei (21830.78, +0.12%) has some room on the upside on the weekly candles and could test levels near 22500 before facing some rejection from there back to levels near 22000-21500 in the coming weeks. For now, the uptrend remains intact with immediate target of 22000 and higher. Resistance on Dollar Yen (113.88) near 114.50 on the weekly would be crucial to keep an eye on. A sustained break above 114.50-115.00 if seen would invite fresh bulls and open up higher targets for the Dollar Yen.

Shanghai (3394.66, +0.19%) is open to test levels near 3410-3420 in the coming sessions. Near term looks bullish while the price trades above the 21-day MA clearly visible on the daily line charts.

Nifty (10207.70, +0.22%) has decent scope of testing 10400 on the upside in the near term. There is a possibility of the index opening with a gap up today trying to attempt higher levels of 10300-10320.

COMMODITIES

Gold (1274.06) seems to have broken below the immediate support on the daily candles and could test 1260-1250 levels while below 1280. Thereafter, a bounce back towards 1300 is likely.

Silver (16.88) could tets support near 16.60 before rising back towards 17 and higher.

Brent (58.38) has not been able to move above 58.60 in the past few sessions and could possibly come off today towards 57.50 or lower again. But on the longer term, we could see a rise towards 59.50-60.00. Near to medium term looks sideways to bullish.

WTI (52.43) would have to rise above 53 to turn bullish towards 54-55 levels in the medium term. But at the same time,there is resistance visible on the weekly candles that could possibly give some rejection near current levels or let the price rise towards 53-54 levels in the next couple of weeks.

Resistance on the 3-day candles on Copper (3.1950) is important and could keep the price range-bound for a few sessions before it starts to come off towards 3.10 and lower. Near term could be ranged sideways with longer term bearishness on the cards.

FOREX

Euro (1.1760) rose to a high of 1.1793 in the US session yesterday. The strength of the 1.1730-00 Support could be increasing a bit.

Dollar-Yen (113.90) rose again yesterday, negating the fall from 114.07 seen on Monday. This is a surprise and might signal a test of the long-term Resistance at 114.50. The Euro-Yen (133.88) has risen well alongwith the rise in Dollar-Yen and may be able to rise towards 135+ in coming days.

The Pound (1.3130) has proved our bearishness right after all, as the cited Resistance at 1.3250 has held well. Further sales from here could target 1.30 in the next few days from where a short-term bounce could be seen.

Contrary to expectation of Support at 0.7785, the Aussie (0.7727) has actually broken lower with some force, surprising us. However, some more Support may be available near 0.7700. Need to see if that holds/ breaks over today-tomorrow.

Dollar-Yuan (6.6419) trades further higher today and may well surpass the psychological 6.65%. Dollar-Rupee rose to 65.07 yesterday. Unsure of its possible movement today.

INTEREST RATES

Both the US 10Yr (2.42%) and German 10Yr (0.47%) have risen almost equally. The German-US 10yr Spread (-1.95%) has come down marginally.

Need to see if there is a good bounce from here or not. As mentioned yesterday, there is Support at 0.40% on the German 10Yr and Resistance in the 2.40-50% region on the US 10Yr.

In India, we need to see how the bond market reacts to the Bank Recapitalisation Plan announced yesterday. The 10yr GOI had come down a bit to 6.7820% yesterday.

The Aussie Dollar Plummets

The Aussie bulls are running for cover as the national CPI has missed the mark badly. The headline rose 0.6%QoQ versus 0.8% expected. The with the trim mean at 0.4%QoQ versus 0.5% both prior and consensus. Unrounded, the core came in at 0.37%, which is below the target band.

Implication along the AUD interest rate curve is significant as whatever glimmer of hope the RBA hawks had riding on the CPI print has quickly evaporated in a sea of red.

With the possible move to a more hawkish Fed policy still in play, the Aussie dollar bulls should remain sidelined. After the initial gap lower to .7745 an extension lower is in-game as the USD bulls clamour for downside AUD exposure.

And given the build-up of Long Aud versus its commonwealth peers AUDNZD and AUDCAD we should expect more AUD bloodletting as these positions head for the exits

The London open will be closely monitored as a test of .7700 looks more likely than not

There is a lot to digest

Investors are nearing a dizzying state of maximum overload given the sheer volumes of headlines, rumours and market whispers, they need to digest.

US politics dominated investor focus.President Trump visited Senate Republicans for lunch on Tuesday, and predictably traders took note of the market whispers surrounding Tax Reform and The Fed Chair.

The big news is that House of Republicans is now scheduled to release a full tax reform bill to the public next Wednesday, but Senate mutter tempered the mood as Republican Sens. Bob Corker, John McCain, Rand Paul may not support tax overhaul.

Trump canvassed Senators for their Fed Chair preference from the shortlisted Taylor Yellen and Powell. According to Senator Scott, Taylor “appeared to win.”.

The markets were unvoiced on the tax reform muckrake, but US 10 year yields popped higher on the Taylor straw poll victory which precipitated a break of the hugely significant 2.4% level. Breaching the 2.4 % level is tremendously convincing from both a psychological and technical perspective, as this barrier has acted as the principal benchmark for gauging both Fed and dollar sentiment.

USDJPY moved on both storylines: down 30pips on tax reform news approaching 113.50 then but then recovered to 113.958 on Taylor headline. There is no escaping these storylines and investors will have a lot on their plate absorbing these evolving narratives as uncertainty continues to reign.

There was a lot of jostling on the market overnight, but the sum of all parts points towards US equities, yields and USD higher. And while the USD in mainly bid in early APAC reversing Monday dollar swoon, positioning remains light in a very cautious market . Predictably so as currency moves have been lightning quick and unmediated at times.

Looking ahead

AUD CPI, where consensus is for +2.0% YoY. We have virtually nothing priced in for November, and the first full hike is only by November 2018.

And it should be a massive day for CNY as we’ll find out who the new Politburo Standing Committee consists of in a media rollout at 11:45 local time

The Euro

Trade continues to be somewhat lacklustre ahead of what is widely perceived as the ECB’s non-event of the year. None the less, the ECB will have to reduce its assets purchases to avoid breaching legal limits, but the consensus is the reduction will be relatively currency neutral. For the most part, traders are tuning in for the slim chance Draghi and Co will provide some definitive forward guidance.

The Euro continues to take its cue from USD sentiment.

The Japanese Yen

Buying any dips in USDJPY seems to be a no-brainer given recent political developments should mean Abe/Kuroda Redux in their never-ending quest to ensure a slightly weaker JPY. With Tokyo buying the 113.25 dip yesterday more than a few traders were burned chasing the dollar lower as the 113.20-30 held firm like a rock

USDJPY is back testing the rarified air around the 114.00 level waiting for some concrete news on tax reform and or Fed Chair. But with the market increasingly pricing in tax reform, it’s likely coming down the Fed Chair nomination to ignite the rocket engine and shoot USDJPY higher.

The Australian Dollar

The Aussie is suffering at the hands of US yields and as a result, we are back testing 2-week lows despite resounding commodity prices.

However, do not ignore today’s CPI print as higher than expected impression could lead to a notable shift in short-term interest rates sentiment and underpin the Aussie. But this too may only provide some temporary relief as the market looks to fade Aussie dollar strength.

The New Zealand Dollar

The Kiwi continues to wobble on political uncertainty. But when you throw in a dose of monetary policy uncertainty with the incoming Government poised to “review and reform ” the RBNZ, things get messy.
Asia EM FX

There is no escaping or avoiding the headline risk jitters. US bond yields are dictating the pace of play as local traders nervously bide their time. USDAsia will continue to track USDJPY as fast money rules with longer-term traders showing little appetite for risk.

Yuan

It will be interesting to gauge just how much of a “decisive role” the market will play in the economy into year end. So far these comments are following on deaf ear as its likely state-owned entities were keeping the market in check over the China summit to avoid any extreme awkwardness.

MYR

Its a big week for the Ringgit but with the Budget likely to target lower income groups the net effect should be stimulatory for the economy and support the local unit to a degree.

However, the market focus remains on the next Fed Chair and US tax reform. Recent tax reform headlines have proven positive for both US equity and the US dollar markets. Also, the prospect of a hawkish surprise on the Fed Chair has also underpinned USD sentiment. Asian FX is showing a robust correlation to the USD trend so we could be on the verge of a near-term crossroad that could see the broader USD push higher short-term and weaken the MYR towards 4.25 USDMYR support levels, more so on a hawkish Fed chair surprise.

While the MYR long-term outlook remains favourable, the possible short-term USD scramble on a more hawkish Fed Chair nod could present some headwinds to regional currency markets. I expect Traders will tread lightly this week given the level of market uncertainty.

Bank of Canada expected to stand pat on Wednesday

The US dollar is trading higher against most major pairs. The EUR is the outlier as the USD is down against the single currency ahead of the European Central Bank (ECB) monetary policy announcement on Thursday. The Bank of Canada (BoC) is up first with the Canadian central bank set to releases its benchmark rate statement on Wednesday, October 25 at 10:00 am EDT. The central bank is anticipated to keep rates unchanged after an earlier unexpected rate hike in September that put the benchmark rate at 1.00 percent. A press conference by Governor Stephen Poloz will take place at 11:15 am EDT. Canadian data has underperformed and the loonie is on the back foot against the dollar following the optimism surrounding the Fed Chair announcement and US tax reforms.

US President Donald Trump is set to announce his pick to Chair the U.S. Federal Reserve before November 3. In an informal straw poll during a lunch with Republican Senate leadership Stanford economist John Taylor was the preferred choice. Markets still have Fed Governor Jerome Powell in the lead. Taylor’s approach to monetary policy is said to be more rule based versus Yellen’s data driven approach.

The USD/CAD gained 0.27 percent on Tuesday. The currency pair is trading at 1.2677 ahead of the monetary policy statement from the Bank of Canada (BoC). Investors are not expecting a change in the benchmark interest rate and will focus instead on the monetary policy report and the press conference by BoC governor Stephen Poloz. The Canadian economy surprised with impressive growth in the first half of the year. The pace of recovery prompted the central bank to remove the stimulus it had added in 2015. Restoring the benchmark interest rate to 1.00 percent with two rate hikes in 2017. The market is not pricing in another rate hike this year as the economy is showing signs of slowing down and there are uncertainties about NAFTA negotiations.

Canadian real estate prices have been cooled by the two rate lifts as well as newly announced mortgage rules will come into effect. Household debt has worried the government and the BoC which could leave rates at current level beyond the end of 2017. The U.S. Federal Reserve is not forecasted to keep rising rates beyond 2017 with the December meeting almost at 100 percent probability of a rate hike. Until a new Fed Chair is announced there will be uncertainty on what to expect from the central bank.

The EUR/USD gained 0.24 percent in the last 24 hours. The single currency pair is trading at 1.1779 after positive flash purchasing managers indices in manufacturing and services. The manufacturing PMI came in at 54.5 beating expectations as well as the services PMI that recorded a 55.9 reading. As the monetary policy decision announcement by the European Central Bank (ECB) approaches the EUR is beginning to rise as the market anticipates the reduction of the monthly bond purchases. The ECB is expected to taper its QE program from 60 billion euros, but at the same time extend the duration of the program to avoid putting the recovery of the eurozone in jeopardy.

West Texas Intermediate is trading at $52.15 after Saudi Arabia once again is pleading to rebalance the energy market. An extension of the crude output deal involving the Organization of the Petroleum Exporting Countries (OPEC) and other major producers continues to makes the rounds. The current deal expires at the end of the first quarter of 2018, but talk of an extension could push it back until the end of the year.

The Energy Information Administration (EIA) will release the weekly US inventory data on Wednesday, October 25 at 10:30 am EDT. A 2.6 million drawdown is forecasted for US crude stocks.

Disruptions to the supply chain in Iraq are also keeping prices above the $52 price level. The fallout of the independence movement in Northern Iraq has resulted in the army moving into oil rich areas and supply has been restricted by about 200,000 daily barrels. The impact to global energy inventories is not massive as Southern Iraq houses the majority of production, but oil prices are sensitive to news about reduced supply.

Market events to watch this week:

Wednesday, October 25
4:30 am GBP Prelim GDP q/q
8:30 am USD Core Durable Goods Orders m/m
10:00 am CAD BOC Monetary Policy Report
10:00 am CAD BOC Rate Statement
10:00 am CAD Overnight Rate
10:30 am USD Crude Oil Inventories
11:15 am CAD BOC Press Conference
Thursday, October 26
7:45 am EUR Minimum Bid Rate
8:30 am EUR ECB Press Conference
8:30 am USD Unemployment Claims
Friday, October 27
8:30 am USD Advance GDP q/q

Gold has lost ground in the Tuesday session. In the North American session, the spot price for an ounce of gold is $1275.72, down 0.48% on the day. On the release front, Richmond Manufacturing Index slowed to 12 points, well off the forecast of 19 points. This marked its weakest gain since June. In the US, there are two key events – Core Durable Goods Orders and New Home Sales.

Gold prices have steadied this week, after the metal slipped 1.9 percent last week. Investor risk appetite increased as the US posted strong numbers last week, as employment, manufacturing and housing data beat their estimates. As well, the growing possibility that John Taylor could become the next head of the Federal Chair has hurt gold, as Taylor is considered a strong proponent of higher interest rate levels.

Who will take over at the Federal Reserve? The markets are keeping close tabs on the central bank, as Janet Yellen’s 3-year term expires in February. President Trump has said he will nominate a new Fed head in the coming days, and the front runners are economist John Taylor and Federal Reserve Governor Jerome Powell. Taylor advocates a rule in which rates which be as high as 3 percent, given current economic conditions. Powell is more closely aligned to Fed Chair Janet Yellen’s monetary stance which advocates an incremental increase in rates. With the two candidates representing sharply differing views on interest rate levels, Trump’s choice for the new Fed chair could have an effect on monetary policy and the strength of the US dollar. Still, most economists are of the view that monetary policy will be largely driven by the performance of the US economy. Inflation levels remain weak and may not reach Fed’s target of 2 percent before 2020, but that has not dampened expectations of a December rate hike. According to CME FedWatch, the odds of a raise in December stand at 96 percent.

The 2nd half of the week is underway, featuring non-stop news including Wednesday's Bank of Canada decision. On Tuesday, the euro was the top performer while the New Zealand dollar lagged as the swoon continued. Bad news on the tax reform plan and chatter of a Taylor nomination (see standing in image below) confounded USD traders. Australian CPI, UK GDP and the BOC decision are up next.

USD/CAD touched the highest since mid-August on Tuesday in a sign that the market is less-worried about a hawkish Bank of Canada. USD/CAD broke the 100-day moving average and neared 1.27 as the +200 pip gain since Friday's soft retail sales reported extended.

That data point is a big reason why few expect another hike from Poloz. However the market is pricing in a 18% chance of higher rates because of the central bank's unpredictable recent history. If the BOC decides to remain on the sidelines, signals about the December meeting and beyond will be closely watched. The market is pricing in a 46% chance of a hike on Dec 6 and that rises to 72% for the January meeting. If the BOC moves to a clear neutral stance, expect a sharp rally in USD/CAD.

The other side of that trade is also dangerous. US 10-year yields broke above 2.40% Tuesday in a move that Bill Gross said could signal the end of the generational bond bull market. That helped to push USD/JPY briefly above 114.00.

At the same time, politics remains a dominant theme. USD fell on talk that Trump's tax cut plan doesn't have enough votes in the Senate. Competing with that was a report that John Taylor won an informal Senate Republican poll to be the next Fed Chair.

Aside from the BOC and Fed, look for big moves in the Australian and UK currencies. At 0030 GMT, the Q3 Australian CPI report is due and expected to show a 0.8% q/q rise. The trimmed mean is forecast at +0.5% q/q and a miss there will be a market driver.

At 0830 GMT, pound traders will be locked into the first look at UK Q3 GDP. The consensus is for a +0.3% reading and a miss in either direction will have major implications for GBP.

The British pound has posted losses in the Tuesday session. In North American trade, GBP/USD is trading at 1.3123, down 0.55% on the day. On the release front, there are no British releases on the schedule. In the US, the Richmond Manufacturing Index softened to 12 points, well off the forecast of 19 points. This marked its weakest gain since June. Wednesday will be busy. The UK releases Preliminary GDP, with an estimate of 0.3%. In the US, there are two key events – Core Durable Goods Orders and New Home Sales.

Britain's manufacturing sector continues to expand, but the data is pointing to slower growth in the third quarter. CBI Industrial Order Expectations, which surveys sentiment among manufacturers, showed a decline for the first time in over a year. Earlier in October, two key manufacturing indicators softened. Manufacturing Production dipped to 0.4% in August, down from 0.5% a month earlier. Still, this beat the estimate of 0.2%. As well, Manufacturing PMI slowed to 55.9 in September, compared to 56.9 in August. Brexit is a constant concern for investors, and any signs of weakness in the economy could trigger the sell-off of British pounds in favor of safe-haven assets, such as gold and the Japanese yen.

Who will take over at the Federal Reserve? The markets are keeping close tabs on the central bank, as Janet Yellen's 3-year term expires in February. President Trump has said he will nominate a new Fed head in the coming days, and the front runners are economist John Taylor and Federal Reserve Governor Jerome Powell. Taylor advocates a rule in which rates which be as high as 3 percent, given current economic conditions. Powell is more closely aligned to Fed Chair Janet Yellen's monetary stance which advocates an incremental increase in rates. With the two candidates representing sharply differing views on interest rate levels, Trump's choice for the new Fed chair could have an effect on monetary policy and the strength of the US dollar. Still, most economists are of the view that monetary policy will be largely driven by the performance of the US economy. Inflation levels remain weak and may not reach Fed's target of 2 percent before 2020, but that has not dampened expectations of a December rate hike. According to CME FedWatch, the odds of a raise in December stand at 96 percent.

The EUR/USD is consolidating within a narrow range as it waits for new drivers to encourage volatility. Mixed data from the Eurozone has not helped investors to pick a market direction. The preliminary report on flash manufacturing PMI showed growth of the indicator to 58.6 in October, which is 0.5 more than expected. On the other hand, preliminary data on flash services PMI showed a decline to 54.9 compared to 55.8 in September. Investors are waiting on ECB President Mario Draghi's speech on Thursday in search of a direction. Tomorrow the focus will be on the housing market report and durable goods orders in the US that may trigger sharp moves.

The sterling declined amid uncertainty around the possibility of an interest rate hike by the Bank of England. Investors are also skeptical about the outcome of negotiations between the UK and European Union, despite the progress that has been seen recently. Tomorrow the preliminary statistics on the country's GDP growth for the third quarter will be published. The GBP/USD was also under pressure from positive news on the growth of flash services PMI in the US for October, which grew to 55.9 against 55.3 in September.

Traders attention will turn to the consumer price index report in Australia early tomorrow morning at 00:30 GMT. If we see a growth in inflation, the Reserve Bank of Australia may look to tighten monetary policy despite earlier statements that the current interest rate level is reasonable.

EUR/USD

The single currency quotes are moving in a narrow range and after the end of the current consolidation we are likely to see a sharp movement in either direction. Breaking through the support at 1.1730 may become a trigger for the bears to pull the pair down to 1.1620 or even 1.1550. At the same time, we do not exclude growth resuming and in case of opening long positions with potential targets at 1.1825 and 1.1925, the stop should be set under 1.1730.

GBP/USD

The British pound is testing an important support level at 1.3150, breaking through it may be a stimulus for further drops with the next objectives at 1.3050 and 1.2950. We should note that currently the RSI on the 15-minute chart is close to the oversold zone, which indicates a potential rebound. An increase is likely to be limited by the inclined resistance line at the 1.3250 mark.

AUD/USD

The fall of aussie quotes has slowed and the price is consolidating at the moment. Previously the price broke the important 0.7800 level, which was the basis for further price declines to the target levels at 0.7740 and 0.7700. The MACD signal line is approaching zero and its crossing may point to a potential upward movement with correction to the SMA100 on the 15-minute chart and 0.7800 resistance line.

USD/CHF - 0.9892

Most recent candlesticks pattern : N/A

Trend                                    : Up

Tenkan-Sen level                  : 0.9877

Kijun-Sen level                    : 0.9870

Ichimoku cloud top                 : 0.9854

Ichimoku cloud bottom              : 0.9810

Original strategy :

Buy at 0.9795, Target: 0.9895, Stop: 0.9760

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9795, Target: 0.9895, Stop: 0.9760

Position : -

Target :  -

Stop : -

As the greenback has surged again after finding renewed buying interest at 0.9838, suggesting recent rise from 0.9421 low is still in progress and bullishness remains for this move to extend further gain to 0.9910-15, then towards 0.9940-50, having said that, near term overbought condition should limit upside and price should falter well below psychological resistance at 1.0000, bring retreat later.

In view of this, we are looking to buy dollar again on pullback as said support at 0.9838 should limit downside and bring another rise. Below the lower Kumo (now at 0.9810) would defer and risk test of support at 0.9796 but only break of latter level would add credence to this view, bring retracement of recent rise to 0.9775-80, however, support at 0.973037 should remain intact.