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AUD/USD is consolidating lower after the pair surged towards 0.8125 (08/09/2017 high). Hourly support below 0.7950 (former uptrend channel). Expected to further weaken.

In the long-term, the trend is largely negative since 2011. Key supports stands at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

USD/CAD is consolidating. Hourly support is located at 1.2062 (08/09/2017 low). Resistance is now given at a distance at 1.2778 (15/08/2017 low). Expected to show continued short-term bullish pressures.

In the longer term, the pair has broken longterm support that can be found at 1.2461 (16/03/2015 low). Strong resistance is given at 1.4690 (22/01/2016 high). The pair is likely to head further lower.

USD/CHF keeps on bouncing. Strong resistance is given at 0.9771 (15/06/2017 high). The technical structure shows that the the pair is likely to head further lower below 0.9421 (03/05/2017). Expected to show renewed bearish pressures.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/JPY is now monitoring resistance area around 111. Strong support is located at 107.32 (08/09/2017 high). Expected to show further downside pressures if the pair fails to break resistance at 111.05 (04/08/2017 high).

We favor a long-term bearish bias. Support is now given at 99.02 (10/08/2013 low). A gradual rise towards the major resistance at 125.86 (05/06/2015 high) seems unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

GBP/USD is consolidating lower. The pair has set up new hourly resistance at 1.3329 (13/09/2017 high). Strong support is given at 1.2774 (24/08/2017 low). Expected to show continued short-term bullish pressures.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support can be found at 1.1841 (07/10/2017 low). Long-term resistance is given around 1.35 and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

EUR/USD lies in a bullish trend despite consolidation. Hourly resistance can be found at 1.2092 (08/09/2017 high) while hourly support lies at 1.1823 (31/08/2017 low). Stronger support is given at a distance at 1.1662 (17/08/2017 low). Expected to show renewed bullish pressures.

In the longer term, the momentum is now turning largely positive. We favour a continued bullish bias. Key resistance is holding at 1.2252 (25/12/2014 high) while strong support lies at 1.0341 (03/01/2017 low).

The euro has steadied on Thursday, after sustaining losses in the Wednesday session. Currently, the pair is trading at 1.1901, up 0.13% on the day. On the release front, the sole eurozone indicator was French Final CPI, which posted a gain of 0.5%, matching the forecast. Later in the day, Deutsche Bundesbank President Jens Weidmann will speak about monetary policy. The US will release CPI and Core CPI, which are expected to edge up to 0.3% and 0.2%, respectively. As well, unemployment claims are expected to rise to 303 thousand. On Friday, the US publishes retail sales and consumer confidence reports.

The German economy, the largest in Europe, has been the locomotive for improved growth in the eurozone in 2017. Still, Germany has not been immune to stubbornly low inflation, which has also been a chronic problem in major economies such as the US and Japan. On Wednesday, German inflation indicators were mixed. Final CPI, the primary gauge of consumer inflation, slowed to 0.1% in September, down from 0.4% in the August release. There was better news from WPI, which rebounded to 0.3%. This beat the forecast and marked the first gain in four months. On the employment front, there was positive news as Eurozone Employment Change posted a second straight gain of 0.4%. This reflects stronger employment numbers in the eurozone, as stronger economic conditions have improved the labor market and pushed unemployment rates lower.

The German economy continues to impress. Unemployment levels remain low, growth is steady, and the country even has a budget surplus. However, analysts are divided on the extent of the momentum. The German Economy Ministry is predicting that the economy could slow in the second half of 2017, and is holding to its forecast of 1.5% growth this year. The BDI Group is projecting an expansion of just above 2.0%, while the International Monetary Fund has pegged growth at 1.8% for 2017. Strong German growth in the second half would be good news for the streaking euro.

Sterling is facing a hard cold reality
The Bank of England will have no other option but to let the inflation run higher
Don't be fooled by the current sell-off in the gold price

European markets are extending their sell-off from yesterday and picking up the momentum where Asia left off. The Chinese industrial production number was poor and it triggered alarms about the health of the second biggest economy in the world. The fixed asset investment and retail sales data both failed to provide any support. Nonetheless, today is all about the Super Thursday and the BOE will deliver its decision on their monetary policy. US Futures are also trading lower despite some optimism around the US tax overhaul.

After a strong move, the Sterling is facing a hard cold reality. The surge in inflation which the UK’s economy is experiencing is not something that can make the Bank of England change its stance towards their monetary policy. The wage growth is embarrassing and increasing the interest rate under this environment (where consumers are largely feeling the pinch due to the higher prices) is not going to resolve the issue.

The Bank will have no other option but to let the inflation run higher than its current target and this is pretty much what we are expecting from the MPC minutes on Thursday. The monetary policy committee needs to overcome its divided view on the inflation which is only creating noise. It is Mark Carney’s (the governor of the Bank of England) job to send a clear message to the market which could ease off such anxieties.

The US PPI data released on Wednesday was soft, however traders took the number with a pinch of salt as the odds for another rate hike for this year are still at 40 percent. This is thanks to Paul Ryan’s (the speaker of the House of Representatives) comment who thinks that the tax overhaul plan could be released by the end of September.

This has given hopes to the dollar bulls as this tax overhaul could provide some of the tailwind for the US economy which many have been expected since the Trump’s inauguration. It appears that Washington is working more towards getting things done now rather than letting them high and dry.

Later today, we also have the US Core CPI and CPI m/m numbers due and the forecasts are at 0.2% and 0.3% respectively.

The precious metal is suffering from profit taking and the retracement continues. The fading geopolitical tensions are also weighing on the price and investors are using a calmer approach towards the risk on trade. Don't be fooled by the current sell-off in the gold price, the open interest (the higher number confirms a new fund flow) shows that the price would bounce. We maintain a year end target at 1400.

The Euro bounces above 1.1900 handle on Thursday, consolidating after strong fall on Wednesday.

Bearish acceleration was contained by daily Kijun-sen (1.1877) which now acts as initial support.

Bulls on daily chart studies are losing traction and showing increasing risk for further extension of pullback. Sustained break below Kijun-sen pivot would open support at 1.1826 (Fibo 61.8% of 1.1662/1.2092 rally) with stronger bearish acceleration seen on violation.

Initial resistance at 1.1920 remains intact for now, with stronger recovery attempts to open 10SMA at 1.1934 and pivotal daily Tenkan-sen at 1.1979.

US inflation data are expected to be the key driver today.

Res: 1.1920, 1.1934, 1.1979, 1.2000
Sup: 1.1877, 1.1826, 1.1800, 1.1763

GBPJPY is trading nicely bullish, however now in a corrective retracement of wave four. Ideally wave four will unfold only a three-wave move, before new gains may again show up. The support for the corrective wave four can be around the Fibonacci ratio of 23.6 and 38.2.

GBPJPY, 1H

GBPUSD made a new drop overnight, away from the 1.3350 region where bigger degree wave 3 had ended. This drop now represent sub-wave a as part of a three-wave retrecement within wave 4. Ideally once the remaining two sub-waves show up, a new rally higher into bigger wave 5 will come in play. The region of support for the corrective wave 4 is near the former wave four at the 1.316 level.

GBPUSD, 1H