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GBPJPY reached a ten-day high of 146.55 in yesterday's trading before declining to finish the day 0.4% lower.

In terms of technical indicators, the RSI is currently moving along the 50 neutral-perceived level, hinting to a lack in upside or downside momentum in the very short term. The MACD is giving a mixed picture as it is positive but below the red signal line. This perhaps suggests that the overall bias is neutral as well.

If the price falls, the area around the lower Bollinger band at 144.46 could act a support. Further declines would shift the focus to the region around the current level of the 50-day moving average (MA) at 143.94 for additional support.

On the other hand, if the price rises, resistance could be met around the middle Bollinger line, which is a 20-day MA line, at 146.05. A break above would turn the attention to the region around yesterday's high of 146.55 for additional resistance.

Concluding with the medium-term picture, it looks mostly bullish given the overall uptrend since the start of the year and price action taking place above both the 50- and 200-day MAs since late June (the pair also recorded a bullish cross at the start of the year when the 50-day MA moved above the 200-day one). A fall below the 50-day MA though would set a more neutral tone.

Has changed little today, but looks like is trying to resume the upside movement after the minor decrease, personally I would like if will come down to retest the median line (ML) before will jump much higher. We’ll have a great buying opportunity if we’ll have a retest of the ML.

EUR/CHF rallied and has extended the latest gains, climbed as much as 1.1361, much above the 1.1274 yesterday’s high. You can see that has retreated a little in the last hours after the amazing jump, we could see a minor consolidation in the upcoming days above the upper median line (uml) of the ascending pitchfork.

USD/JPY is trading in the red and should approach and reach fresh new lows in the upcoming days because is located in the seller's territory. Is moving sideways on the daily chart and, but I hope that we'll have a clear direction very soon because the Nikkei stock index looks ready to make a significant move on the Daily chart.

The Yen increased in the morning also because has received a helping had from the economic figures, the Unemployment Rate decreased from 3.1% to 2.8% in June, more versus the 3.0% estimate, while the Tokyo Core CPI increased by 0.2% in July, beating the 0.1% estimate, the Househld Spending increased by 2.3% in June, exceeding the 0.6% estimate. Moreover the National Core CPI surged by 0.4%, matching expectations.

Price is trapped between the 50% and the 23.6% retracement levels, is located below the 38.2% retracement level, signalling that could decrease further. You can see that has failed to stay above the 38.2% retracement level and now should move towards the 50% retracement level, actually could be attracted by the confluence area formed at the intersection between the 50% level and the first warning line (wl1) of the ascending pitchfork.

The current corrective phase is natural after the false breakout above the 23.6% and after the failure to reach the third warning line (WL3).

The Yen could dominate the currency market as the Nikkei stock index failed once again to close above the 20058 static resistance, we false breakout in the yesterday's session that could send the index towards the 19700 level. A valid breakdown below the 19700 major static obstacle will open the door for more declines. I've told you in the last weeks that the JP225 looks exhausted on the Daily chart, but we needed a confirmation that will drop again.

Weekly
    •    Last Candlesticks pattern: Window
    •    Time of formation: 24 April 2017
    •    Trend bias: Up

Daily
    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 18 May 2017
    •    Trend bias: Up



EUR/JPY – 130.31




As the single currency has maintained a firm undertone after recent rally to 130.77, adding credence to our bullish view that medium term rise from 109.49 low is still in progress, hence upside bias remains for this move to extend further gain to 131.50-60, then 132.00-10, however, loss of near term upward momentum should prevent sharp move beyond previous resistance at 132.33 and reckon 133.00-10 would hold from here, risk from there has increased for a correction to take place later.

On the downside, whilst initial pullback to the Tenkan-Sen (now at 129.59) cannot be ruled out, reckon downside would be limited to 128.90-00 and bring another rise later. A drop below support at 128.49 would defer and suggest a temporary top is possibly formed, bring test of 128.00, break there would add credence to this view, then retracement of recent upmove would take place for test of previous support at 127.44 and then test of the Kijun-Sen (now at 127.31) which is likely to hold of first testing, bring rebound later. 

Recommendation: Buy at 128.90 for 131.50 with stop below 127.90.

On the weekly chart, as the single currency has continued trading with a firm bias after resuming recent major upmove from 109.49 low, reinforcing our bullish view for this medium term rise to extend further gain to 131.00, then 131.50-60, however, overbought condition should limit upside to previous chart resistance at 132.33 and reckon 133.00-10 would hold from here, risk from there is seen for a retreat to take place later.

On the downside, although initial pullback to 129.50-60, then 128.90-00 cannot be ruled out, reckon 128.50-60 would limit downside and euro shall head north again from there to aforesaid upside targets. A drop below support at 127.81 would defer and risk test of the Tenkan-Sen (now at 126.59) but a weekly close below there is needed to signal a temporary top is formed, bring retracement of recent upmove to previous resistance at 125.82 (now support) but downside should be limited to 125.00 and reckon 124.00-10 would remain intact.

Weekly
    •    Last Candlesticks pattern: Shooting doji
    •    Time of formation: 01 May 2017
    •    Trend bias: Sideway

Daily
    •    Last Candlesticks pattern: Bearish engulfing
    •    Time of formation: 5 May 2017
    •    Trend bias: Down



USD/CAD – 1.2540




As the greenback has remained under pressure after recent selloff below indicated previous support at 1.2969, adding credence to our bearish view that early erratic rise from 1.2461 has ended at 1.3794 earlier and the breach of said support at 1.2461 confirms another leg of major fall from 1.4690 is underway, hence bearishness remains for further weakness to 1.2400, then 1.2350-60, however, oversold condition should limit downside to 1.2300 and price should stay well above 1.2240-50, risk from there has increased for a rebound to take place later. 

On the upside, whilst initial recovery to the Tenkan-Sen (now at 1.2558) cannot be ruled out, reckon upside would be limited to 1.2690-00 and bring another decline later. Above 1.2730-40 would defer and risk a stronger rebound to 1.2790-00 but reckon the Kijun-Sen (now at 1.2876) would hold from here and bring another selloff later. Only a daily close above the Kijun-Sen would abort and suggest a temporary low is formed instead, risk a stronger rebound to 1.2940-45 but price should falter below resistance at 1.3015. 

Recommendation: Sell at 1.2690 for 1.2400 with stop above 1.2790.


On the weekly chart, as recent selloff has kept price under pressure and price finally broke below indicated previous support at 1.2461 (2016 low), adding credence to our view that the major fall from 1.4690 top has resumed, hence bearishness remains for this move to extend weakness to 1.2400, then towards 1.2300-10 but near term oversold condition should prevent sharp fall below 1.2240-50 and price should stay above 1.2175 (61.8% Fibonacci retracement of 1.0621-1.4690), risk from there has increased for a rebound later. 

On the upside, although initial recovery to 1.2590-00 cannot be ruled out, reckon upside would be limited to 1.2690-00 and bring another decline later. Above 1.2790-00 would defer and bring a stronger rebound to 1.2850 but resistance at 1.2944 should hold from here. Only a weekly close above the Tenkan-Sen (now at 1.2981) would suggest a temporary low is formed, bring retracement of recent decline to 1.3015 resistance but price should falter below the Kijun-Sen (now at 1.3104) and bring another selloff in late Q3.

GBP/USD - 1.3081

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3079

Kijun-Sen level                    : 1.3106

Ichimoku cloud top              : 1.3105

Ichimoku cloud bottom        : 1.3079

Original strategy :

Exit long entered at 1.3085

Position : -  Long at 1.3085

Target :  -

Stop : -

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite yesterday’s marginal rise to 1.3159, the subsequent sharp retreat suggests top has possibly been formed there and downside risk has increased for retracement of recent upmove to 1.3035-40, however, only break of support at 1.2999 would confirm recent upmove has ended, bring further fall to 1.2980 and later towards 1.2955-60.

In view of this, would be prudent to stand aside in the meantime. Above 1.3110-20 would bring recovery to 1.3140 but only break of said resistance at 1.3159 would revive bullishness and signal recent upmove has resumed for headway to 1.3185-90 and then 1.3210-20. 

Eyes remain on the 80c level ahead of the weekend as traders try to decipher if the USD correction higher could hold or fold.

PPI data gave a nice boost to inflation's potential today despite missing expectations on a quarterly basis. Whilst the QoQ read of 0.5% missed the 0.6% forecast, it has expanded at this rate for three quarters which helped the annual rate to expand at 1.7%, its highest level since Q4 '15.

Inflation earlier this week received mixed reviews with some disappointed CPI didn't pick up and other, like ourselves, see it as part of the basing period required before inflation picks up. Yes, broad CPI disappointed yet this also includes food and energy. The preferred RBA reads hit consensus and continue to suggest a base may be forming and today's PPI data provides inflationary hope.

For the expansion to continue, we need to see the underlying index close the gap from its own long-term trend. The rate of expansion has slowed since Q1 2014 which doesn't bode well for the longer-term trend. But near-term there is potential for PPI and inflation to move higher from its current base.

The narrow candles presented don't really provide a directional clue as to which way it could move or spike at London open. If we had to take a punt, we'd prefer to use a sll-limit below 80c with a view to catch any spikes and profit from an eventual downside move. Yet note that this is counter to the preceding trend and potential sport awaits at the 50 eMA and bullish channel. If we are correct to assume a bullish extension for USD ahead of the weekend, we ay find the bullish channel tested to the downside, yet if Q2 GDP disappoints then we may find ourselves closer to 80c

To be confidence a break above 80c is genuine, we would prefer to see USD broad weakness as opposed to AUD in isolation. For bullish setups we can consider AUDCHF, as this is been the more bullish story of the week for AUD after SNB's Jordon reiterated that the Swiss Franc is “significantly overvalued” Technically the cross points higher and could be headed for 0.78 next week.

The RBA will be in focus against next week to see if wording of their statement becomes more aggressive in light of the stronger currency. The trouble the RBA now face is there's really little they can do if the US Dollar continues to unravel the way it has recently. Thankfully for them, we think USD is due a correction as multiple FX crosses have hesitated at key levels, which may tempt bears to close out ahead of the weekend.

EUR/USD - 1.1702

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1698

Kijun-Sen level                  : 1.1700

Ichimoku cloud top             : 1.1663

Ichimoku cloud bottom      : 1.1649

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As the single currency found support at 1.1650 and has recovered, suggesting further recovery to 1.1725-30 cannot be ruled out, however, break of this week’s high at 1.1777 is needed to signal recent upmove has once again resumed and extend gain to 1.1784-85 (50% projection of 1.1370-1.1712 measuring from 1.1613). then 1.1800 but loss of near term upward momentum should prevent sharp move beyond 1.1820-25 (61.8% projection), risk from there has increased for a retreat later.

As near term outlook is mixed, would be prudent to stand aside in the meantime. Below 1.1670-75 would bring test of said support at 1.1650 but break there is needed to signal a temporary top is possibly formed, bring further weakness towards support at 1.1613, having said that, price should stay well above previous resistance at 1.1583 (now support), bring another rise later.

USD: The US Dollar continues dive in freefall fashion as soft data, negative Whitehouse sentiment and technicals point lower. Next week provides a broad look at the US economy as it includes inflation, employment and business sentiment. NFP will continue to be a day traders favourite although with the employment data remaining firm overall and strongly hinting maximum employment has been achieved, it is debatable as to whether a strong NFP will support the Greenback. Yet as sentiment is very negative, traders may see more opportunity with a bad NFP print. Monday may be the bigger event as it includes personal consumption data. Core PCE is the Fed's preferred CPI gauge although it also gives a peak into consumer sentiment and spending. If ISM and Markit PMIs are to move higher it suggests support for growth in late H2, yet we doubt this would turn the Dollar's trend and is likely more of a stock market play.

CAD: The Canadian Dollar has been on a tear these past few weeks as the USD unravels to lift commodities whilst hawks continue to bid CAD. This makes CAD biased to good data over bad, particularly if it is inflation related. CPI data showed signs of stability according to their three preferred inflationary measures. In fact, by taking an average of the three we see inflation ticked higher to 1.4%. Raw prices have softened recently and an extension of this trend may take some of the fun out of the bullish CAD story. If we are treated to a recovery though we expect it to support.

PMI data remains supportive of growth overall, with the composite (manufacturing and services) sitting at a very healthy 61.6 to suggest support for growth in the months ahead. Within the indices there has been a softening of employment in recent months, and if we are to see prices move lower than this suggest less of an inflationary pressure. Overall the figures remain healthy though.

Employment remains a mixed picture. Whilst it has picked up in recent months, the unemployment has moved lower as the participation rate has dropped with it. Ideally we should see participation move higher.

EUR: Whilst unemployment continues to make headway and currently sits at 15mn, its lowest level since May 2009, the employment rate is also on the decline. Annually employment growth is -1.5%, its lowest since 2008 whilst the quarterly read is also historically low at 0.4%. Whilst economic data is good overall, the employment sector is one which may undermine some inflationary pressures which are building up elsewhere.

The rate of broad inflation has softened to 1.3% YoY, its slowest rate since January and is moving in line with the UK and US to suggest this may be more of a global trend than one solely related to Europe. The monthly read has scraped by at 0% and -0.1% prior, so be on guard for further softening which may make another dent in the Euro.

GBP: The softness of CPI in June has helped to reduce calls for an immediate hike and we'll get to see if this is reflected in the MPC votes. Last meeting, we saw 3 votes to hike which had moved up from the original one. If we are to see one of those votes change their mind then we'd expect a bearish follow-through on GBP, although we'd be more surprised if we were to see 4 members vote for a hike which could send Sterling higher.

CNY: China's manufacturing PMI gave economists a scare in May when it dipped below 50 to denote industry contraction. Yet after recovering to 50.4 we await to see if the contraction was an outlier.

The NBS reads remain the more optimistic data sets, although employment has contracted faster and input prices (inflation) appears ready to cross below 50. Input prices are a slight concern as they have now moved to 50.4, denoting only a slight expansion. If we contract from here it brings down inflationary pressures further down the supply chain.