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For the 24 hours to 23:00 GMT, the USD declined 0.14% against the JPY and closed at 111.88.

In the Asian session, at GMT0300, the pair is trading at 111.98, with the USD trading 0.09% higher against the JPY from yesterday’s close.

The Japanese Yen lost ground, after the Bank of Japan (BoJ) downgraded its outlook for inflation at its latest monetary policy meeting.

The BoJ kept its interest rate unchanged at -0.1%, as widely expected. However, in a quarterly review of its long-term projections, the central bank lowered its inflation forecast for the current fiscal year ending in March 2018 to 1.1% from 1.4% it forecasted three months ago. Further, the central bank pushed back the time frame for achieving its 2.0% inflation target, stating that it would be met sometime during fiscal 2019. The central bank had previously stated the target would be achieved in fiscal 2018. Nevertheless, the BoJ raised its forecast for GDP growth for the current fiscal year to 1.8%, from 1.6% estimated earlier.

On the data front, Japan’s adjusted merchandise trade surplus surprisingly narrowed to a level of ¥81.4 billion in June, defying market expectations for it to widen to a level of ¥127.5 billion. In the preceding month, the nation had reported a revised surplus of ¥122.7 billion.

On the other hand, the nation’s all industry activity index eased more-than-anticipated by 0.9% on a monthly basis in May, compared to a revised advance of 2.3% in the previous month. Market participants had expected the index to ease 0.8%.

The pair is expected to find support at 111.62, and a fall through could take it to the next support level of 111.25. The pair is expected to find its first resistance at 112.29, and a rise through could take it to the next resistance level of 112.59.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

Daily Pivots: (S1) 128.46; (P) 128.99; (R1) 129.41; More...

EUR/JPY is staying in the consolidation pattern from 130.76 and intraday bias remains neutral. Deeper fall might be seen. But downside should be contained by 127.43 cluster support (38.2% retracement of 122.39 to 130.76 at 127.56) and bring rebound. Above 130.76 will extend the larger rally to next key fibonacci level at 134.20.

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.

For the 24 hours to 23:00 GMT, the USD marginally declined against the CHF and closed at 0.9548.

In the Asian session, at GMT0300, the pair is trading at 0.9549, with the USD trading slightly higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9532, and a fall through could take it to the next support level of 0.9514. The pair is expected to find its first resistance at 0.9564, and a rise through could take it to the next resistance level of 0.9578.

Ahead in the day, traders will look forward to Switzerland’s trade balance figures for June.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

Daily Pivots: (S1) 1.0983; (P) 1.1008; (R1) 1.1030; More...

Intraday bias in EUR/CHF remains neutral for the moment. As long as 1.0983 support holds, further rally is expected in the cross. Current rise from 1.0629 should target 1.1127/98 resistance zone. However, break of 1.0983 will indicate short term topping and turn bias back to the downside for 55 day EMA (now at 1.0908).

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Such correction could have completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.1198 will resume 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. However, rejection from 1.1198 will extend the multi-year range trading with another fall.

For the 24 hours to 23:00 GMT, the USD declined 0.25% against the CAD and closed at 1.2600.

On the data front, Canada's manufacturing shipments climbed 1.1% MoM in May, topping market consensus for a rise of 0.8%. Manufacturing shipments had advanced by a revised 0.4% in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.2614, with the USD trading 0.11% higher against the CAD from yesterday's close.

The pair is expected to find support at 1.2577, and a fall through could take it to the next support level of 1.2540. The pair is expected to find its first resistance at 1.2652, and a rise through could take it to the next resistance level of 1.2690.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

Daily Pivots: (S1) 0.8825; (P) 0.8844; (R1) 0.8859; More

Intraday bias in EUR/GBP remains neutral for the moment as it's staying in range of 0.8742/8948. On the downside, below 0.8742 will target 38.2% retracement of 0.8312 to 0.8948 at 0.8705 first. Break will target 61.8% retracement at 0.8555 next. However, break of 0.8948 will extend the rebound from 0.8312 towards 0.9304 resistance.

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.

Daily Pivots: (S1) 1.4432; (P) 1.4518; (R1) 1.4563; More...

EUR/AUD drops to as low as 1.4421 so far today and met 100% projection of 1.5226 to 1.4625 from 1.4472. The cross quickly recovered. But for the moment, with 1.4617 minor resistance intact, intraday bias remains on the downside. Firm break of 1.4472 will pave the way to larger fibonacci level at 61.8% retracement of 1.3624 to 1.5226 at 1.4236. Meanwhile, above 1.4617 will indicate short term bottoming and turn bias back to the upside for 55 day EMA (now at 1.4744).

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term has completed at 1.3624. But we will monitor the structure of the decline from 1.5226 to adjust our view. Above 1.5226 will target a test on 1.6587 key resistance. However, further downside acceleration will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

Dollar recovers in general today as markets turned into consolidation mode. Euro is treading water while markets await ECB rate decision and press conference. Traders would be eager to hear how ECB President Mario Draghi would clarify his comments in the past few weeks. Or Draghi will just let markets' perceived ECB hawkishness be an assumed base case. Meanwhile, Yen is steady as BoJ delivered what are expected, keeping policies unchanged, raising growth forecast and lowering inflation forecast. Aussie was lifted briefly by solid job data but quickly retreated.

BoJ left policies unchanged, raised growth forecast, cut inflation projections

BoJ left monetary policies unchanged as widely expected. Short term policy interest rate was held at -0.1%. The central bank also maintained the annual pace of asset purchase at JPY 80T to keep 10 year JGB yield at around 0%. Meanwhile, BoJ noted in the quarterly report that "recent price developments have been relatively weak, as companies remained cautious in raising wages and prices." And, "risks to the economy and price outlook are skewed to the downside." Also as widely expected, BoJ lowered inflation projections and raised growth projections. The timing for meeting 2% inflation target is pushed back for the sixth time. BoJ now expects inflation to hit target in the fiscal year ending March 2020. Here is a summary of the revisions.

For fiscal 2017:

• Core inflation is projected at 1.1%, down from prior forecast of 1.4%
• GDP growth is projected at 1.8%; up from prior forecast of 1.6%

For fiscal 2018:

• Core inflation is projected at 1.5%, down from prior forecast of 1.7%
• GDP growth is projected at 1.4%; up from prior forecast of 1.3%

For fiscal 2019:

• Core inflation is projected at 1.8%, down from prior forecast of 1.9%
• GDP growth is projected at 0.7%; unchanged from prior forecast of 0.7%

Also from Japan, trade surplus narrowed to JPY 0.08T in June. All industry activity index dropped -0.9% mom in May.

Aussie enjoyed brief lift by solid job data

Aussie is lifted earlier today by solid job data but is seen losing momentum. Headline job data showed 14k growth in June, slightly below expectation of 15k. Prior month's figure was revised down from 42k to 38k. Unemployment rate was unchanged at 5.6%. Looking at the details, full-time jobs rose 62k while partly offset by -48k fall in part-time jobs. Australia NAB business confidence was unchanged at 7 in Q2.

Aussie jumped sharply this week as RBA noted that the neutral nominal rate is now at 3.5%. But with reduction in risk aversion and/or increase in trend growth rate, the neutral real interest rate could rise back from current 1.0% to 1.5%. And that indirectly implies that the neutral nominal rate could also follow and rise. Australia Prime Minister Malcolm Turnbull tried to calm the market and said that RBA is only "sending a signal, which is probably prudent, which is to say ... rates are more likely to go up than go down."

Euro cautious ahead of ECB

Euro is trading mixed as markets are awaiting ECB rate decision and press conference. The central bank is widely expected to keep policies unchanged today. The common currency was shot up in late June after ECB President Mario Draghi's upbeat comments on the economy and receding political risks. Draghi further noted that renewed reflationary forces could now give room for "adjustment of parameters" of the current stimulus program. There are speculations that ECB could announce tapering of some sort in the September meeting, or by latest in October. But in any case, today's press conference will give Draghi a chance to clarify if the markets have misjudged him. Without any clarifications, market will take the assumption of tapering in 2018 as a assumption and that could provide additional lift to the Euro.

Elsewhere

UK retail sales will be a focus in European session today. Germany will release PPI. Swiss will release trade balance. from US, jobless claims, Philly Fed survey and leading indicators will be featured.

EUR/AUD Daily Outlook

Daily Pivots: (S1) 1.4432; (P) 1.4518; (R1) 1.4563; More...

EUR/AUD drops to as low as 1.4421 so far today and met 100% projection of 1.5226 to 1.4625 from 1.4472. The cross quickly recovered. But for the moment, with 1.4617 minor resistance intact, intraday bias remains on the downside. Firm break of 1.4472 will pave the way to larger fibonacci level at 61.8% retracement of 1.3624 to 1.5226 at 1.4236. Meanwhile, above 1.4617 will indicate short term bottoming and turn bias back to the upside for 55 day EMA (now at 1.4744).

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term has completed at 1.3624. But we will monitor the structure of the decline from 1.5226 to adjust our view. Above 1.5226 will target a test on 1.6587 key resistance. However, further downside acceleration will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

Economic Indicators Update

BoJ meeting, trade data and AU employment make the bulk of Asia data where attention will then shift to tonight's ECB meeting.

The Euro weakened overnight as traders booked profits ahead of today's ECB meeting. The confusion following Draghi's seemingly hawkish speech last month the ECB may use today's meeting to tweak their message to calm the markets. Draghi sent the Euro above 113 at the end of June and ECB officials attempt to tame the run came to little avail as the Euro stopped just shy of 116 overnight. So they may use today's meeting to tweak the message again and take the fun ot of the rally.

EURAUD remains out preferred Euro short as sentiment on AUD remains strong, it is the strongest G10 performer this year whilst Euro faces further profit taking over the near-term. AU employment is expected to soften slightly but unless it throws a curve-ball then AU should remain supported. If there is any concern to the AUD rally it may come from Guy Debelle's speech tomorrow as the temptation to jawbone AUD may now be on his agenda.

The positive sentiment surrounding AUD is likely to help AUDJPY on its way to Y90 following today's BoJ meeting. No major changes are expected on the policy front but a downgraded inflation outlook is viable. With household spending, wage growth CPI all disappointing, it is hard to justify their inflation forecast let alone a 2% target. Large speculators have also piled into Yen shorts in recent weeks whilst bulls remain on the sideline, making Yen the preferred short over the coming weeks.

US data bucked the trend by beating forecasts overnight, seeing an improvement in building permits and housing starts. It helped slow the bleeding on the US Dollar index, although the weaker Euro probably provided the bulk of support. USDJPY found support at 111.55 and focus now switches to the BoJ meeting where a corrective rally is expected. The healthcare plan disappointment is largely priced in and Yen outflows are likely to persist as traders are currently net short the Yen by US$12.3bn (as of last week's CFTC report).

The monthly pivot and 50% retracement provide a broad zone up support between 111.37 – 111.68, with yesterday's bullish hammer respecting the upper part of the zone. If we are to see a break of yesterdays low, as long as we remain above the monthly pivot then we do see potential for an eventual upside move so. Bearish momentum on the lower timeframes is waning and the downside appears stretched.

Close to 80 but no cigar, yet. Markets perceived the employment set to be a net positive to promptly bid AUD higher, only to book profit just shy of the milestone

AUD extended gains as employment was seen as a net positive. As there was an expectation for employment to soften slightly, the realisation of the fact came as no surprise. Unemployment ticked higher to 5.6% as expected and employment change increased by +14k verses +15k expected (down from 38k prior). The higher participation rate took the edge off of the slightly higher unemployment rate, which we expect to soften over the coming months as capacity utilisation continues to increase.

Part-time employment weighed heavily on total jobs number yet full-time employment increased by 62k, allowing markets to see the a healthier underlying employment change other than the 14k presented.

AUDUSD stopped just shy of 80c although we'd be surprised if this key, psychological level broke upon first attempt as temptation to book a quick profit may be high. But unless we hear a verbal intervention of some sorts, we should be above 80c soon enough. Volatility is something to also note as the past two weeks are already bordering on an outlier. Last week's close was its most bullish week since Feb and if you look across the percentage changes, you'll see that volatile weeks are not exceeded and, often, the subsequent week's range is sanguine. As this occurs below the 80c level and the risk of verbal intervention is potentially rising, this may pour water on volatility for the bulls. However, a break above 80c is a milestone worthy of seeking bullish setups on lower timeframes (intraday) if you remember the volatility potential theoretically goes down the higher we trade.

RBA Assistant Governor Guy Debelle speaks tomorrow and traders are on guard for a potential jawbone. With sentiment and technicals on AUD remaining very much bullish we have moved beyond levels which have previously warranted a verbal intervention of some sort. Throughout 2016 the statement included “An appreciating exchange rate could complicate' the economic adjustment when AUD traded between 0.732-0.77. In 2017 this was switched from 'could complicate' to 'would complicate' for the same range, yet AUD now trades just shy of 0.80. The last time AUD traded at these levels was in 2015 when the language used within the statement was quite bluntly 'further depreciation is likely / necessary'.

Focus now shifts to the BoJ meeting where we think AUDJPY is headed for Y90. Yen outflows are likely to persist over the coming weeks and a lower inflation outlook from BoJ should help support carry trades.

In some ways is it not fair to directly compare the levels over time as the economic background has changed over this period. Yet it has not improved to the point where AUD will be comfortable with a higher AUD. In the backdrop of a weaker USD whilst the Fed find data hard to truly justify another hike, it may also be the RBA's perception of this extra hike as to whether they try to publicly talk AUD down between meetings. If they were banking on the Fed to hike and effectively remove the 25bps positive carry AUDUSD currently has, then there is good reason to expect verbal intervention at some point. Tomorrow may just be that day.