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The price continues to increase on the short term and could close the above the 1.2200 psychological level. The rebound could be only temporary because is hard to believe that will have enough directional energy to make a broader rebound without another decrease. Resistance can be found at the median line (ml) of the minor descending pitchfork and at the lower median line (LML).

EURGBP - The cross continues to hold on to its downside pressure selling off on Thursday and opening the door for more weakness. Support lies at the 0.8850 level where a violation will turn focus to the 0.8800 level. A break will expose the 0.8850 level. Resistance resides at the 0.8900 level where a violation if seen will turn risk towards the 0.8950 level. Further up, resistance resides at 0.9000 level followed by the 0.9050 level. Its daily RSI is bearish and pointing lower suggesting more weakness. All in all, EURGBP remains biased to the downside on further weakness

BOE sent a hawkish message at the September meeting, noting that the majority of the members agreed that some withdrawal of stimulus should be appropriate in coming months. The key reason for the upcoming tightening is strong inflation which the central bank expects to rise above +3% in October. The market interpreted this as a signal that the historically low interest rate would be raised soon. Sterling rallied to a one-year high against the US dollar and a two-month high against the euro after the announcement. The market has now priced in over 54% chance of a rate hike in December. On the monetary policy this month, the BOE voted 7-2 to leave the Bank rate unchanged at 0.25% and unanimously to keep the asset purchase at 435B pound.

Added in the meeting statement was a hawkish reference: A majority of MPC members judge that, if the economy continues to follow a path consistent with the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure then, with the further lessening in the trade-off that this would imply, some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target. Yet, it stressed that any rate hike "would be expected to be at a gradual pace and to a limited extent".

On economic developments, BOE acknowledged UK demand is "growing a little in excess of this diminished rate of potential supply growth" and spare capacity has been "eroded". It also noted that "underlying pay growth has shown some signs of recovery, albeit remaining modest". As the unemployment rate has plunged to a 4-decade lower of 4.3% in the 3 months through July, pay growth is expected to pick up in coming months. On inflation, policymakers suggested that "remaining spare capacity in the economy is being absorbed a little more rapidly than expected at the time of the August Report, and that inflation remains likely to overshoot the 2% target over the next three years". Headline CPI surprisingly rose to +2.9% y/y in August, from +2.6% a month ago. The market had anticipated a milder increase to +2.8%. BOE expects inflation to rise to above 3% in October.

Michael Saunders and Ian McCafferty continued to dissent, suggesting that monetary policy at 0.5% (up +25 bps) would still be "very supportive". Yet, the rest of the Committee, including new member Dave Ramsden preferred to " undertake a full assessment of recent developments and the data released over the next couple of months, in the context of its November forecast round".

USD/CHF - 0.9661

Original strategy :

Sold at 0.9680, Target: 0.9580, Stop: 0.9715

Position : - Short at 0.9680

Target :  - 0.9580

Stop : - 0.9715

New strategy  :

Hold short entered at 0.9680, Target: 0.9580, Stop: 0.9705

Position : - Short at 0.9680

Target :  - 0.9580

Stop : - 0.9705

Although the greenback has jumped again in NY morning and rose briefly above 0.9700 level, loss of upward momentum should prevent sharp move beyond there and consolidation with mild downside bias remains for test of support at 0.9618 but break there is needed to signal an intra-day top is formed, bring weakness to 0.8584 support, break there would provide confirmation, bring subsequent fall towards the lower Kumo (now at 0.9552).

In view of this, we are inclined to turn short on further subsequent rise. Above said resistance at 0.9705 would extend gain to 0.9725-30 but still reckon upside would be limited and 0.9761-66 (50% Fibonacci retracement of 1.0100-0.9421 and previous resistance) should hold, risk remains for another retreat to take place soon.

GBP/USD - 1.3356

Original strategy :

Sold at 1.3285, stopped at 1.3320

Position : - Short at 1.3285

Target :  -

Stop : - 1.3320

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite intra-day brief drop to 1.3153, lack of follow through selling on break of support at 1.3161 and the subsequent rally signal recent upmove is still in progress and further gain towards 1.3400 cannot be ruled out, however, loss of upward momentum should prevent sharp move beyond 1.3430-40 and reckon 1.3470-75 would hold from here, risk from there has increased for a retreat later.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below 1.3300-05 would bring test of the Kijun-Sen (now at 1.3263) but break there is needed to signal an intra-day top is formed, bring weakness to 1.3230-35, however, downside should be limited to 1.3195-00. 

EUR/USD - 1.1888

Original strategy  :

Bought at 1.1855, Target:1.1955, Stop: 1.1820

Position : - Long at 1.1855

Target :  - 1.1955

Stop : - 1.1820

New strategy  :

Hold long entered at 1.1855, Target:1.1955, Stop: 1.1835

Position : - Long at 1.1855

Target :  - 1.1955

Stop : - 1.1835

As the single currency slipped again in NY morning and dropped to as low as 1.1838, as euro found support there and has rebounded, retaining our near term bullishness and as long as said support holds, mild upside bias remains for another bounce to previous support at 1.1926, however, break above there is needed to signal an intraday low is formed, brig further gain to 1.1950-55 and then 1.1975-80 but price should falter below yesterday’s high at 1.1995.

In view of this, we are holding on to our long position entered at 1.1855. Below said support at 1.1838 would signal recent decline from 1.2093 top is still in progress and may extend weakness to 1.1823 support, however, still reckon downside would be limited to 1.1800 and bring rebound later.

USD/JPY - 110.61

Original strategy  :

Buy at 109.65, Target: 110.65, Stop: 109.30

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 109.65, Target: 110.65, Stop: 109.30

Position :  -

Target :  -

Stop : -

As the greenback has maintained a firm undertone after this week’s rally, suggesting bullishness remains for the rise from 107.32 low to extend further gain towards 111.10-15, however, break there is needed to retain upside bias and encourage for headway to 111.40, having said that, near term overbought condition should prevent sharp move beyond another previous resistance at 111.71, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as 109.50-60 should limit upside. Below previous resistance at 109.40 would risk test of the lower Kumo (now at 109.33) but only break there would abort and signal top is formed instead, bring weakness to 109.00 first.

The Canadian dollar continues to show limited movement in the Thursday session. Early in the North American session, USD/CAD is trading at 1.2204, up 0.25% on the day. On the release front, inflation indicators are the focus on both sides of the border. In Canada, the New Housing Price Index gained 0.4%, above the forecast of 0.3%. Over in the US, CPI and Core CPI both improved in August. CPI gained 0.4%, edging above the forecast of 0.3%. Core CPI gained 0.2%, matching the forecast. There was more good news from the labor market, as unemployment claims fell to 284 thousand, well below the forecast of 303 thousand.

Early in the year, the Federal Reserve was full of optimism that a strong US economy would warrant three rate hikes during in 2017. The economy has generally performed well, but the US continues to grapple with weak inflation levels. A strong labor market has not helped push inflation higher, as wage growth remains soft. Fed policymakers have retreated from their earlier optimistic forecasts, and have been counseling caution and patience regarding rate increases. As for a December hike, the odds have been below 50% for months. Currently, the odds are pegged at 46%, which is an improvement from last week. However, the positive August CPI data could be a sign that at long last, inflation is moving in the right direction. If the markets feel this is the case, the odds of a December hike should increase.

The Canadian dollar has enjoyed an impressive run, as the currency has jumped 2.7% against the greenback in September. Oil prices have remained close to $50, and stronger economic growth led the BoC to raise the benchmark rate by 25 basis points last week, from 0.75% to 1.00%. The rate hike caught the markets by surprise, and sent USD/CAD down to a 2-year low. However, Canada is heavily reliant on its export sector, and the downside of a strong Canadian dollar is that it makes the country's exports more expensive. Still, Canadian finance minister Bill Morneau said on Tuesday that he had no problem with a higher Canadian dollar, as a strong currency was reflective of a strong economy.

Daily Pivots: (S1) 145.49; (P) 146.08; (R1) 146.51; More

GBP/JPY's rise from 139.29 extends to as high as 148.11 so far and it's testing 147/76/42 resistance zone. Intraday bias remains on the upside for the moment. Firm break of 148.42 will confirm resumption of medium term rebound from 122.36. GBP/JPY should then target 150.43 fibonacci level next. On the downside, break of 145.15 support is needed to indicate short term topping. Otherwise, further rise is expected even in case of retreat.

In the bigger picture, the sideway pattern from 148.42 is still unfolding. In case of deeper fall, we'd expect strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside. Medium term rise from 122.36 is expected to resume later. And break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. However, firm break of 135.58/39 will dampen the bullish view and turn focus back to 122.36 low.

Daily Pivots: (S1) 0.8973; (P) 0.9006; (R1) 0.9029; More

EUR/GBP's decline from 0.9305 extends to as low as 0.8877 and breaks 38.2% retracement of 0.8312 to 0.9305 at 0.8926. Intraday bias remains on the downside. Fall from 0.9305 is seen as the third leg of the consolidation from 0.9304. Further fall should be seen to 61.8% retracement at 0.8691 and below. On the upside, above 0.8981 minor resistance will turn intraday bias neutral first.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. It's uncertain whether it is finished yet. But in case of another fall, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside and bring rebound. Whole up trend from 0.6935 is expected to resume after consolidation from 0.9304 completes. Firm break of 0.9799 high will target 61.8% projection of 0.5680 to 0.9799 from 0.6935 at 1.1054.