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Daily Pivots: (S1) 0.9472; (P) 0.9533; (R1) 0.9569; More...

USD/CHF's rebound from 0.9437 resumed after deep but brief retreat. But still, it's staying in range of 0.9437/9699. Intraday bias remains neutral first. At this point, we remain cautious on strong support from 0.9443 key support to bring reversal. Decisive break of 0.9699 will confirm and turn outlook bullish. Meanwhile, sustained trading below 0.9443 will extend the down trend from 1.0342 to 161.8% projection of 1.0342 to 0.9860 from 1.0099 at 0.9319.

In the bigger picture, focus is now back 0.9443 key support level. Sustained break there indicate underlying bearish momentum and would target 0.9 handle and possibly below. Meanwhile, strong rebound from current level and break 0.9699 resistance will extend long term range trading between 0.9443/1.0342.

Daily Pivots: (S1) 1.1649; (P) 1.1695 (R1) 1.1777; More...

EUR/USD retreats mildly after hitting as high as 1.1776. But still, with 1.1612 minor support intact, intraday bias remains on the upside for further rise. Current medium term rally is expected to target 1.2 handle next. Nonetheless, considering bearish divergence condition in 4 hour MACD, break of 1.1612 will indicate short term topping and bring lengthier consolidation first.

In the bigger picture, an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Sustained break of 55 month EMA (now at 1.1760) will pave the way to key fibonacci level at 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. While rise from 1.0339 is strong, there is no confirmation that it's developing into a long term up trend yet. Hence, we'll be cautious on strong resistance from 1.2516 to limit upside. But for now, medium term outlook will remain bullish as long as 1.1295 support holds, in case of pull back.

Daily Pivots: (S1) 1.3037; (P) 1.3080; (R1) 1.3161; More...

Intraday bias in GBP/USD remains on the upside for 61.8% projection of 1.2108 to 1.3047 from 1.2588 at 1.3168. Considering bearish divergence condition in 4 hour MACD, we'd stay cautious on strong resistance from 1.3168 to limit upside. However, sustained break there could extend recent rebound towards 1.3444 key resistance. But still, price actions from 1.1946 is seen as a corrective pattern and GBP/USD should feel heavy approaching 1.3444. On the downside, break of 1.2932 support will be the first sign of reversal and will turn bias to the downside to target 1.2588 key support next.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is expected, overall outlook remains bearish as long as 1.3444 key resistance holds. Larger down trend from 1.7190 is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

Daily Pivots: (S1) 110.76; (P) 111.47; (R1) 111.89; More...

USD/JPY recovered ahead of 110.61 temporary low and stays in range below 112.41. Intraday bias remains neutral first. With 112.41 intact, further decline is expected. Below 110.61 will target 108.81. Break there will resume whole correction from 118.65 and target 61.8% retracement of 98.97 to 118.65 at 106.48. Nonetheless, break of 112.41 will dampen this bearish view and turn focus back to 114.49 resistance instead.

In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85. If fall from 118.65 extends lower, down side should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.

Daily Pivots: (S1) 1.1099; (P) 1.1136; (R1) 1.1194; More...

EUR/CHF's rally accelerates further today and reaches as high as 1.1247 so far. 1.1198 key resistance level is seen as taken out decisively. And there is no sign of topping yet. Intraday bias remains on the upside for 161.8% projection of 1.0652 to 1.0986 from 1.0830 at 1.1370. On the downside, below 1.1173 minor support will turn intraday bias neutral and bring consolidations. But downside should be contained well by 1.1087 resistance turned support and bring rise resumption.

In the bigger picture, sustained break of 1.1198 key resistance will confirm resumption of the long term rise from SNB spike low back in 2015. In such case, EUR/CHF could eventually head back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.0986 resistance turned support holds.

The spotlight moves back to the Swiss Franc today as EUR/CHF surges past 1.12 key resistance level. The cross is now setting up the momentum to regain 1.2 handle in medium term, which is the prior SNB imposed floor. Back in January 2015, SNB shocked the market by removing the floor and EUR/CHF dived to as low as 0.86, depending that what chart you read. With all the improvements in Eurozone, fundamentally, politically and system-wise, it now looks like there is no longer the need of safe haven parking in the Franc, with negative interest rates. The surge in commodity and energy prices would also help lift Eurozone inflation which keep ECB on course for stimulus exits.

Also regarding Swiss, the SNB's Libor will be discontinued in 2021, after being adopted as monetary policy target since 2000. An SNB spokesman said that the central bank will announce an alternative to franc Libor "in good time" And he emphasized that "The expected end of the franc Libor won't have an effect on the monetary policy orientation and monetary conditions." Some analysts pointed out that the Libor was mainly for the interbank market. SNB would need to rethink their approach. The secured Swiss Average Rate Overnight, SARON, could be an alternative.

Dollar paring back some post FOMC loss

Dollar is trying to recover today after the sharp post FOMC selloff. Some additional support is provided by solid economic data release. Meanwhile, it should be noted again that for the week as a whole, the Swiss Franc and Yen are indeed the weakest ones, not the greenback. Durable goods orders jumped 6.5% in June, well above expectation of 3.5%. But ex-transport orders rose only 0.2%, below expectation of 0.4%. Whole sale inventories rose 0.6% in June, above expectation of 0.3%. Initial jobless claims rose 10k to 244k in the week ended July 22, above expectation of 240k. It's nonetheless still the 125 straight week of sub 300k reading, the best streak since early 1970s. Continuing claims dropped 13k to 1.96m and stayed below 2m for 16 straight week, best since 1973.

Yesterday, Fed left its monetary policy unchanged, maintaining the federal funds rate target at 1-1.25%. The Fed made two tweak in the statement, though. First, it noted that balance sheet reduction would begin 'relatively soon', signaling that the official announcement would come in September. Second, policymakers revised lower the outlook on core inflation. US dollar plunged, with the weighted index falling to a 13-month low as the market interpreted the inflation assessment as dovish.

More on FOMC:

• FOMC Signaled To Begin Balance Sheet Normalization 'Relatively Soon', Downgraded Core Inflation Assessment
• Dollar Resumes The Unwind As Fed Fail To Impress
• FOMC Review: Smidgen Dovish But It Does Not Alter The Overall Picture
• FOMC: Steady As She Goes
• Little-Changed FOMC Statement Maintains Dovish Uncertainty, Weighs Further On Dollar
• Fed Stands Pat as Expected, Signals Coming Balance Sheet Normalization
• Fed Acknowledges the Inflation Miss, But Sticks to Balance Sheet Plans

EU officials warned of delay in Brexit negotiations

EU chief Brexit negotiator Michel Barnier briefed the 27 EU ambassadors yesterday regarding the July talks with UK. An EU official was quoted by Reuters saying that the chance of starting "future relationship talks" with UK in October "appeared to be decreasing". Progress on financial settlement, or the so called divorce-bill, was little to none. And EU officials believed that the problem lies in the lack of position of UK on many issues. The EU officials sounded a bit worried as the more time the first phrase drags on , the less time is left for the second phase, in particular on trade agreements.

UK Immigration Minister Brandon Lewis said today that "free movement of labor ends when we leave the European Union in the spring of 2019. I'll be very clear about that." While there is a period of negotiation with EU, Lewis emphasized that "we're very clear that free movement ends – it's part of the four key principles of the European Union – when we leave." That is seen as a response to recent reports that the UK government could allow a "transitional" period of three or four years regarding the issue.

Also released today, UK CBI realized sales rose to 22 in June. Eurozone M3 money supply rose 5.0% yoy in June. German Gfk consumer sentiment rose to 10.8 in August.

RBA Lowe warned of prolonged weak wage growth

In Australia, RBA governor Philip Lowe warned that prolonged weakness in wage growth could hurt the economy. He said that "if workers are getting no real wage increase year after year after year that's insidious." And, he emphasized that high wage growth "would help get inflation back to target and I think people would feel a bit better as well, and the fact that many of us have lowered our expectations of future income growth means we're less inclined to spend."

Regarding monetary policy, Lowe noted that "the main effect of lower interest rates is that more people have jobs". And "that's why I'm very comfortable with the current setting of monetary policy, it's helped people get jobs." Regarding the exchange rate, Lowe said that "it would be better if the exchange rate were a bit lower than it currently is. It would help generate more jobs, push inflation a bit closer to our target -- so that's the solution to a competitiveness problem."

EUR/CHF Mid-Day Outlook

Daily Pivots: (S1) 1.1099; (P) 1.1136; (R1) 1.1194; More...

EUR/CHF's rally accelerates further today and reaches as high as 1.1247 so far. 1.1198 key resistance level is seen as taken out decisively. And there is no sign of topping yet. Intraday bias remains on the upside for 161.8% projection of 1.0652 to 1.0986 from 1.0830 at 1.1370. On the downside, below 1.1173 minor support will turn intraday bias neutral and bring consolidations. But downside should be contained well by 1.1087 resistance turned support and bring rise resumption.

In the bigger picture, sustained break of 1.1198 key resistance will confirm resumption of the long term rise from SNB spike low back in 2015. In such case, EUR/CHF could eventually head back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.0986 resistance turned support holds.

Economic Indicators Update

• US core durable order should come strong and support the equity market
• Dovish FOMC ignites rally for euro and sterling
• European markets swing up and down due to earning results

US futures are trading higher ahead of the US core durable good order data. By looking at the US ISM's new order index and factory output, we expect the number to be strong today. The is the last set of important economic number before we get the US advance GDP q/q reading which is due tomorrow. The bar is set higher for the US core durable number as the forecast is for 0.4% while the previous reading was at 0.3%.

Investors in European markets are not that thrilled about today's earnings outcome and swinging between gains and losses. Both; Deutsche Bank and Royal Dutch Shell, surprised the markets with their numbers. It was refining and chemical business for Shell which really helped their top line number as the oil price itself is still not strong enough. Deutsche bank reported strong profits and the second quarter profit came well ahead of the Street estimate. However the CEO of the Bank brought attention to the fact that the revenue across the group still needs more work. Facebook also made a lot of noise last after the bell yesterday by beating the revenue and with a strong forecast.

Sterling and Euro are the most flashing currencies. The euro has smashed its two year resistance and Sterling is trading near the highest level since September. Before we dive into the common denominator which has produced this move, it is vital to mention that the fresh hawkish comments by Ewald Nowotny, the ECB committee member, who said it is time to slowly go off on gas, have also helped the currency. But the main catalyst behind these strong moves is the dovish statement by the Fed.

The statement was relatively dovish despite the fact that the Fed did mention that scaling down of the balance sheet would happen soon. The statement failed to produce any life in the volatility index and it touched another low. It is central banks around the world which pushed the volatility this low. The Fed fund rate is now pricing only a 45% chance for another rate hike for this year. The main reason is that the inflation is so low and markets do not believe that the Fed will increase the interest again this year. However, this could change rapidly because all it takes is just a couple of strong economic readings and these Fed fund rates will show a completely different percentage.

The USD/CAD has been dropping significantly without any substantial retrace, finally hitting the 1.2400 zone support. On H4 chart the pair is showing the bullish divergence so there could be a push to the upside. Above 1.2450 we might see a bullish price action towards 1.2536. Sellers should be waiting at the POC and if the price gets there we might see a rejection. POC 1.2600-15 (W H3, 38.2, historical sellers). The POC zone is very close to W H4/M L4 so it adds additionally to its strength. Rejections might aim for sub 1.2400 levels, specifically 1.2360.

At this point it's important to notice the bullish divergence and possible upward move on the pair.

The FOMC statement didn't offer much on Wednesday but it was enough to send the US dollar over the technical cliff. Several major levels broke as the dollar plunged in the aftermath. We look at what's ahead. The USDX charts below are an update from our May 19th analog USDX chart.

The US dollar moves in the aftermath of the FOMC statement look like the kind of thing you would see after a major dovish disappointment but they were more about positioning and technicals than anything from the Fed.

Tweaks to the statement included saying inflation was 'below' target rather than 'somewhat below'; and that the balance sheet runoff will start 'relatively soon' which could mean later than September. With regards to the inflation tweek, it remains to be seen whether the change was simply a mark-to-market reflection or a possible sign of the Fed's plan.

What's more important is what it didn't say. There were none of the hawkish or optimistic notes that many market participants were hoping for, and evidently positioning for. In a binary sense, this decision was either going to be neutral or more hawkish and traders piled into dollar longs in the hopes of a bounce.

It didn't come and the dollar fell by more than a cent. The move got a second wind on technicals as key levels broke. EUR/USD took out its August 2015 high of 1.1714, opening up a foray into the 2014/2015 the 1.20-1.27 zone.

The 1.2461 low in USD/CAD gave way and the pair touched a two-year low. AUD/USD also hit a fresh cycle high and cable is just a few pips away from doing the same.

The CFTC positioning data has repeatedly shown a bias to dollar longs but we're finally seeing cracks in the resolve.

Looking ahead, data comes back into focus. On Thursday, the volatile US durable goods orders are due, followed by Friday's first look at US Q2 GDP. The Fed may have been given an early look at GDP and that could explain the tepid statement. Beyond that the major numbers will be inflation, but July CPI isn't due until Aug 11, so there's plenty of time (scope) for the dollar to continue lower and the 200-week MA on USDX wilbe be the talk of the town.

WTI Oil is holding high levels and pressuring $49.00 barrier on fresh extension of strong rally from $45.39 (24 July trough). Oil price maintains firm bullish sentiment which was strongly boosted on Tuesday, when oil price rallied strongly on announcement of Saudi Arabia about reducing exports in August and was reinforced by Wednesday's stronger than expected draw in US crude inventories.

Yesterday's close above daily cloud was a bullish signal, as the price is attempting to firmly break above weekly cloud (cloud top lies at $48.61).

Near-term focus turns towards targets at: $49.43 (200SMA), psychological $50.00 barrier and $50.27 (29 May high).

Bulls so far ignore strongly overbought conditions of slow stochastic, however corrective easing could be expected before the price clears 200SMA barrier.

Res: 49.00, 49.43, 49.63, 50.00
Sup: 48.51, 48.18, 47.89, 47.50