USD/CHF's rebound from 0.9437 extended higher after interim consolidation. Initial bias stays on the upside this week for 38.2% retracement of 1.0342 to 0.9437 at 0.9783 first. As noted before, prior break of 0.9699 resistance suggests near term reversal after defending 0.9443 key support. Break of 0.9783 will target channel resistance (now at 0.9890). On the downside, break of 0.9630 is needed to indicate completion of the rebound. Otherwise, outlook will stay cautiously bullish in case of retreat.

In the bigger picture, current development argues that USD/CHF has successfully defended 0.9443 key support level. And long term range trading in 0.9443/1.0342 is extending with another rise. At this point, there is no sign of an up trend yet. Hence, while further rise is expected in USD/CHF, we'll start to be cautious on loss of momentum above 61.8% retracement of 1.0342 to 0.9437 at 0.9996.

AUD/USD's consolidation from 0.8065 continued last week and stayed above 0.7877 support. Initial bias remains neutral this week first. Further rise is in still favor with 0.7877 support intact. Break of 0.8065 will target 100% projection of 0.6826 to 0.7833 from 0.7328 at 0.8335. Nonetheless, break of 0.7877 will indicate short term topping, with bearish divergence condition in 4 hour MACD. In such case, intraday bias will be turned back to the downside for 0.7711 resistance turned support.

In the bigger picture, current development suggests that rebound from 0.6826 is developing into a medium term rise. There is no confirmation of trend reversal yet and we'll continue to treat such rebound as a corrective pattern. But in any case, break of 55 month EMA (now at 0.8100) will target 38.2% retracement of 1.1079 to 0.6826 at 0.8451. Break of 0.7328 support is needed to confirm completion of the rebound. Otherwise, further rise is now expected.

In the longer term picture, 0.6826 is seen as a long term bottom. Rise from there could either reverse the down trend from 1.1079, or just develop into a corrective pattern. At this point, we're favoring the latter. And, as long as 38.2% retracement of 1.1079 to 0.6826 at 0.8451 holds, we'd anticipate another decline through 0.6826 at a later stage.

USD/CAD's rebound last week confirmed short term bottoming at 1.2412. Initial bias stays on the upside this week. Current rebound could be corrective whole decline from 1.3793 and might target 38.2% retracement of 1.3793 to 1.2412 at 1.2940. On the downside, break of 1.2552 minor support will indicate completion of the rebound. In such case, intraday bias will be turned back to the downside for 1.2412 low.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. A short term bottom is formed at 1.2412 after hitting 61.8% projection of 1.4689 to 1.2460 from 1.3793 at 1.2415. But there is no sign of completion of the correction yet. Break of 1.2412 will target 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we'd look for strong support from there to contain downside and bring rebound. Meanwhile, sustained break of 1.2968, 38.2% retracement of 1.3793 to 1.2412 at 1.2940 will be the first sign of completion of the correction and will turn focus back to 1.3793 key resistance.

In the longer term picture, rise from 0.9056 (2007 low) is viewed as a long term up trend. It's taking a breath after hitting 1.4689. But such rise is expected to resume later to test 1.6196 down the road. But firm break of 50% retracement of 0.9406 to 1.4869 at 1.2048 will raise doubt over this view.

GBP/JPY's stayed in range of 144.01/147.76 last week but last decline argues that fall from 147.76 is resuming. Initial bias remains neutral this week first with focus on 144.01. Break will turn bias to the downside for trend line support (now at 141/54). Further break there will target 135.58/138.65 support zone. However, above 146.77 will turn bias to the upside. Further break of 147.76/148.42 key resistance zone will resume larger rebound from 122.36.

In the bigger picture, rise from medium term bottom at 122.36 is expected to continue to 38.2% retracement of 196.85 to 122.36 at 150.43. Decisive break there will carry long term bullish implications and pave the way to 61.8% retracement at 167.78. In case the sideway pattern from 148.42 extends, we'd be looking for strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside.

In the longer term picture, it remains to be confirmed is whole down trend from 195.86 has completed at 122.36 already and there is no confirmation yet. But in any case, firm break of 38.2% retracement of 195.86 to 122.36 at 150.43 would pave the way to 61.8% retracement at 167.78. And with that, the 55 month EMA will be firmly taken out which suggests that price actions from 116.83 is indeed a sideway pattern that could last more than a decade.

EUR/JPY edged higher to 131.39 last week but quickly retreated. Initial bias is neutral this week first. The development argues that a short term top is possibly in place, with bearish divergence condition in 4 hour MACD. Break of 129.83 will confirm this bearish case and turn bias to the downside for 38.2% retracement of 122.39 to 131.39 at 127.95. But we'd expect strong support from there to contain downside and bring rebound. On the upside, break of 131.39 is needed to confirm rise resumption. Otherwise, more consolidative trading is expected with risk of another fall.

In the bigger picture, the down trend from 149.76 (2014 high) is completed at 109.03 (2016 low). Current rally from 109.03 should be at the same degree as the fall from 149.76 to 109.03. Further rise is expected to 61.8% retracement of 149.76 to 109.03 at 134.20. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. Medium term outlook will remain bullish as long as 124.08 resistance turned support holds.

In the long term picture, at this point, there is no clear indication that rise from 109.03 is resuming that from 94.11. Hence, we'd be cautious on topping below 149.76 to extend range trading. Nonetheless, firm break of 149.76 will indicates strong underlying buying. In such case, EUR/JPY will target 100% projection of 94.11 to 149.76 from 109.03 at 164.68.

EUR/GBP's rally resumed last week and reached as high as 0.9503. Initial bias remains on the upside this week first. Current rise from 0.8312 should extend towards 0.9304 key high. At this point, there is no clear sign of up trend resumption yet. Hence, we'll be cautious on strong resistance from 0.9304 to limit upside and bring another fall. Meanwhile break of 0.8922 support will indicate short term topping and turn bias to the downside for 0.8742 support.

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.

In the long term picture, firstly, price action from 0.9799 (2008 high) is seen as a long term corrective pattern and should have completed at 0.6935 (2015 low). Secondly, rise from 0.6935 is likely resuming up trend from 0.5680 (2000 low). Thirdly, this is supported by the impulsive structure of the rise from 0.6935 to 0.9304. Hence, after the correction from 0.9304 completes, we'd expect another medium term up trend to target 0.9799 high and above.

EUR/AUD rose further to as high as 1.4964 last week but retreated since then. A temporary top is in place and initial bias is neutral this week for consolidation first. Outlook remains bullish as long as 1.4777 resistance turned support holds. As noted before, correction from 1.5226 should have completed with three waves down to 1.4421 already. Above 1.4964 will target 1.5073 resistance first. Break of 1.5073 will likely resume the rise from 1.3624 and target 61.8% projection of 1.3624 to 1.5226 from 1.4421 at 1.5411 next. However, firm break of 1.4777 will dampen this bullish view and turn bias to the downside for 1.4564 support. Break will extend the correction from 1.5226 through 1.4421.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term has completed at 1.3624. Rise from 1.3624 is expected to resume to retest 1.6587. The corrective structure of the fall from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, another decline will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

In the longer term picture, the rise from 1.1602 long term bottom isn't over yet. We'll keep monitoring the development but there is prospect of extending the rise to 61.8% retracement of 2.1127 to 1.1602 at 1.7488 and above. However, sustained trading below 1.3671 should confirm trend reversal and target 1.1602 long term bottom again.

EUR/CHF rose to as high as 1.1537 last week and met 200% projection of 1.0652 to 1.0986 from 1.0830 at 1.1498. A short term top should be formed there on bearish divergence condition in 4 hour MACD. Initial bias is mildly on the downside for 4 hour 55 EMA (now at 1.1349) and below. But downside should be contained by 38.2% retracement of 1.0830 to 1.1537 at 1.1267 and bring rebound. On the upside, break of 1.1537 is needed to confirm rally resumption. Otherwise, we'd expect more consolidation first, with risk of another fall.

In the bigger picture, sustained break of 1.1198 key resistance confirms resumption of the long term rise from SNB spike low back in 2015. In this case, EUR/CHF would eventually head back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1087 resistance turned support holds.

Dollar staged a strong rebound towards the end of the week as boosted by an overall set of solid job data. While the greenback still ended lower against Euro for the week, it's now looking likely that the greenback has found a short term bottom already. It's still early to confirm a trend reversal for Dollar yet. And we believe the key lies in the yet to be confirmed fiscal policy of US President Donald Trump. But for now, Dollar will probably gyrate higher in the early part of this week until CPI release on Friday. On the other hand, while Euro ended the week as the strongest currency, its rallies against Dollar, Yen and even Swiss Franc are starting to look tired. Sterling ended the week generally lower after markets perceived the BoE Super Thursday as a dovish one. But commodity currencies were even weaker with Canadian Dollar starting to pare back the strong gains in the past two months.

Dollar index starting to feel the support from 91.91/3 key cluster

Recapping the outlook of Dollar index, the fall from 103.82 is seen as a move corrective long term up trend from 72.69 (2011 low) to 103.82 (2017 high). It's now close to key cluster support level at 91.91/93 (38.2% retracement of 72.69 to 103.82 at 91.93), which is reasonably close to 55 month EMA (now at 90.92). While Friday's post NFP rebound doesn't confirm trend reversal yet, we'll start to look for more signals of bottoming. 94.28 resistance will be the first hurdle for the index. Break there will bring stronger rise back to 55 day EMA (now at 95.74). In case of another fall, we'll still expect strong support from 91.91/93 to contain downside and bring sustainable rebound.

Treasury not confirming Dollar strength yet

In our view, the rebound in dollar has to be accompanied by rally in treasury yields to confirm the underlying inflationary force in the economy and growth momentum, and thus, a continuous tightening path of the Fed. While DOW made record high at 22092.81, strength in stocks could either be interpreted as optimism on the economy or expectation for Fed to slow down tightening. Indeed, Fed fund futures are still pricing in less than 50% chance of a rate hike by Fed by the end of the year. That suggests investors are not yet convinced that Fed policy makers are overjoyed by the NFP report.

For now 10 year yield is being supported by 2.225 level and it would extend range trading between 2.225/2.396 this year. But break of 2.396 is needed to confirm resumption of rebound from 2.103 and completion of correction from 2.621. Otherwise the choppy fall from 2.621 could still extend through 2.103 after breaking 2.225. And as long as 2.396 holds, we'll look at dollar index's rebound cautiously and see that as a correction. And in the longer term picture, TNX is still far off the key structure resistance at 3.036, which defines and long term down trend.

Euro rally looks tired

But after all, as the rally Euro is starting to look tired, favor is mildly on the Dollar's side in near term. For example, EUR/JPY retreated sharply after initial breakout to 131.39. There is bearish divergence see in 4 hour MACD. The brief spike after triangle breakout is a typical wave five, with the triangle as wave four. EUR/JPY will likely head back to 129.83 and break will confirm short term topping. In that case, deeper decline would be seen back to 55 day EMA (now at 127.35).

EUR/CHF also lost much momentum after extending recent high to 1.1537. Bearish divergence condition is seen in 4 hour MACD after the cross hit 200% projection of 1.0652 to 1.0986 from 1.0830 at 1.1498. Considering that it it's also high in overbought position in daily RSI, the cross should be turning into a corrective phase. Break of 1.1385 this week will bring pull back to 38.2% retracement of 1.0830 to 1.1537 at 1.1267. Short to medium term Euro position traders could consider to lighten up their Euro long for now, and prepare to buy again later.

Trading strategy: Sell GBP/USD for a near term trade

Regarding trading strategy, we'll look at opportunities to buy Dollar for a near term trade. Considering the above analysis, even though there is no confirmation of trend reversal yet, the greenback is in favor to move higher in near term, with help of pull back in Euro too. Sterling is considered to be the better candidate to sell against Dollar. BoE announcement last week firstly indicates that Kristin Forbes' replacement Silvana Tenreyro is not a hawk. Growth projections for 2017 and 2018 were both revised down. And more importantly, inflation forecast for 2018 and 2019 were kept unchanged suggesting that policy makers have calmed down from the inflation surge earlier in the year. That is, the chance of an earlier hike is gone and the base case is back. BoE will hand their hands until the picture of Brexit becomes clear.

Technically, bearish divergence condition in both daily and 4 hour MACD suggests short term topping at 1.3267. And deeper fall would likely be seen back to 55 days EMA (now at 1.2938) or further to channel support (now at 1.2803). As we're viewing price actions from 1.1946 as a correction, there is prospect of a retest of this low down the road (but it's too early to confirm completion of the correction yet). So we'll sell GBP/USD at market at the start of the week, with a stop at 1.3165. We'll see how it goes when GBP/USD approaches channel support.

USD/CAD Weekly Outlook

USD/CAD's rebound last week confirmed short term bottoming at 1.2412. Initial bias stays on the upside this week. Current rebound could be corrective whole decline from 1.3793 and might target 38.2% retracement of 1.3793 to 1.2412 at 1.2940. On the downside, break of 1.2552 minor support will indicate completion of the rebound. In such case, intraday bias will be turned back to the downside for 1.2412 low.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. A short term bottom is formed at 1.2412 after hitting 61.8% projection of 1.4689 to 1.2460 from 1.3793 at 1.2415. But there is no sign of completion of the correction yet. Break of 1.2412 will target 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we'd look for strong support from there to contain downside and bring rebound. Meanwhile, sustained break of 1.2968, 38.2% retracement of 1.3793 to 1.2412 at 1.2940 will be the first sign of completion of the correction and will turn focus back to 1.3793 key resistance.

In the longer term picture, rise from 0.9056 (2007 low) is viewed as a long term up trend. It's taking a breath after hitting 1.4689. But such rise is expected to resume later to test 1.6196 down the road. But firm break of 50% retracement of 0.9406 to 1.4869 at 1.2048 will raise doubt over this view.

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