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Daily Pivots: (S1) 1.2947; (P) 1.2978; (R1) 1.3036; More...

Intraday bias in GBP/USD remains on the upside for 1.3047 as rise from 1.2588 continues. Break of 1.3047 will target 61.8% projection of 1.2108 to 1.3047 from 1.2588 at 1.3168. On the downside, below 1.2913 minor support will turn bias neutral and bring retreat, before staging rally resumption.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern. Pull back from 1.3047 has completed after failing to sustain below 1.2614 resistance turned support. It argues that the corrective pattern from 1.1946 is still in progress for another high above 1.3047. But still, 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.

Daily Pivots: (S1) 0.9542; (P) 0.9571; (R1) 0.9586; More.....

At this point, intraday bias in USD/CHF remains on the downside. Current decline should target 0.9548 support and below. We'd start to look for bottoming signal again as it approaches 0.9443 key support level. On the upside, above 0.9646 minor resistance will turn bias neutral and bring recovery. But still, break of 0.9770 resistance is ended to indicate short term bottoming. Otherwise, outlook will remain bearish.

In the bigger picture, USD/CHF is still bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level. However, sustained break of 0.9443 will carry larger bearish implication and target 0.9 handle.

The Euro is consolidating within narrow range, after hitting fresh over one-year high at 1.1445 in early Friday, just ahead of target at 1.1455 (50% retracement of 1.2567/1.0340 descend).

The pair is looking for round-figure barrier at 1.1500 and may extend higher to fully retrace 1.1614/1.0340 (05 May 2016 / 03 Jan 2017 bear-leg), as firmly bullish technicals and sentiment are supportive.

Meanwhile, corrective action may precede fresh upside as daily studies are strongly overbought, but so far did not generate firmer bearish signal.

Also, profit-taking on strong three-day rally may add pressure on pair’s near-term action.

Corrective dips will face initial supports at 1.1424/00, followed by thick hourly cloud (spanned between 1.1383/08) and former strong barriers at 1.1290 zone, reinforced by converged daily Tenkan-sen/Kijun-sen, where deeper corrective action should find strong support.

Res: 1.1455, 1.1500, 1.1511, 1.1550
Sup: 1.1424, 1.1400, 1.1383, 1.1320

Daily Pivots: (S1) 111.67; (P) 112.29; (R1) 112.79; More...

USDJPY jumped to 112.91 but failed to break through near term channel resistance and retreated. A temporary top is formed and intraday bias is turned neutral first. Near term outlook stays cautiously bullish as long as 110.94 support holds. Sustained break of the channel resistance argue that whole pull back from 118.65 has completed at 108.12 already. In such case, further rise should be seen to 114.36 resistance for confirmation. However, break of 110.94 will argue that rebound from 108.81 has completed and will turn bias back to the downside for this support instead.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

EURJPY edged higher in the previous five trading days, while it yesterday recorded a sixteen-and-a-half-month high of 128.82. The price has been consistently above the 50- and 200-day moving averages (MAs) since late April.

The positive alignment when the Tenkan-sen line (red) crossed above the Kijun-sen (blue) earlier this week is hinting to a positive near-term bias. However, it should be noted that the Kijun-sen is flat at the moment, perhaps suggesting that the bullish momentum has lost its steam. The RSI indicator is projecting a similar picture, as it is on the one hand well into bullish territory at 72, but on the other hand it is currently trending downwards from overbought levels.

Yesterday's high of 128.82, combined with the 129.00 handle, are likely to form a resistance area on the upside. A successful break above this area, would divert attention to the 130.00 level, a psychological level that could potentially act as a barrier to further up movements. A more sustained rally is likely to follow should the price climb above 130.00.

On the downside, another potential psychological level, namely the 127.00 mark, might act as support. Further down, additional support could come from the Tenkan-sen, currently at 126.23.

Looking at the medium-term outlook, it looks bullish at the moment with the price comfortably above the 50- and 200-day MAs. Moreover, both MAs are currently upward sloping, albeit the 200-day is only moderately positively sloped. Also, the considerable divergence between the price and the 200-day MA could be a sign of an overextended rally

Daily Pivots: (S1) 0.7594; (P) 0.7619; (R1) 0.7662; More...

AUD/USD retreats after hitting as high as 0.7711. Intraday bias remains on the upside for 0.7748 resistance and above. At this point, there is no clear sign of medium term range breakout yet. Hence, we'd be cautious on topping again as it approaches medium term fibonacci level at 0.7849. On the downside, below 0.7653 minor support will turn bias neutral and bring consolidations first. But near term outlook will remain bullish as long as 0.7534 support holds.

In the bigger picture, we're still treating price actions from 0.6826 low as a corrective pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8116) and above.

On Thursday, the US Commerce Department released GDP (Annualized QoQ) showing a 1.4% annual rate compared to the 1.2% posted in the previous month. This slight increase shows that the US economy slowed less sharply in Q1 than expected, due to higher consumer spending and an increase in exports, which suggests a better growth outlook for the year. US Consumer spending rose to 1.1%, the weakest reading since Q2 of 2013 but almost double the 0.6% reported in May.

The underlying trend of a tightening labour market was reinforced by the latest US Labor Department report of the number of Americans filing for unemployment benefits last week rising slightly to 244K.

EUR surged to its highest in over a year on Thursday, whilst GBP, bond yields and global equities also climbed, as a plethora of hawkish comments from central bankers signaled the era of easy money might be coming to an end. EURUSD surged to as high as $1.1444 overnight, its strongest since May 2016. Currently EURUSD is trading around 1.1420.

USD weakness against JPY continued with data showing Japanese core consumer prices rose 0.4% in May from a year earlier in its fifth straight month of gains, although inflation remains well below the central bank’s 2% target. USDJPY fell to 111.727 overnight, after losing 0.2 percent on Thursday. It was heading for a 1.2 percent gain for the month, but is down 4.2% this year. Currently USDJPY is trading just above 112.00.

Bank of England Chief Economist Haldane mirrored the comments made on Wednesday by BoE Governor Carney by stating “the BoE needs to look seriously at hiking rates”. These comments added to recent GBP strength pushing GBPUSD to 1.30292 in early trading today. This is the first time in 5 weeks that cable has been above 1.30 and close to its highest levels in 9 months. GBPUSD is currently trading around 1.3010.

Having slipped to a 10-month low last week Oil has rebounded more than 7% as a weekly decline in US production eased concerns of a deepening global over supply. WTI and Brent were both up over 0.5% on the day, touching highs of $45.42pb and $48.04pb respectively. In early trading WTI is currently trading around $45.34pb and Brent is currently trading around $47.92pb.

Benefitting from USD weakness has seen Gold rise, hitting an early Friday high of $1,248.10 before retracing back to trade currently near $1,243.

U.S. inflation remains in focus today with the favorite Fed measure: the core PCE deflator. The markets are expecting the month-over-month number to ease to 0.1% for May and the annual rate slowing to 1.4%. Personal income and spending are also forecast to have grown more slowly than the 0.4% rise seen in April.

The US dollar continued to post losses yesterday as EURUSD and GBPUSD breached 1.1400 and 1.3000 levels respectively. The bearish sentiment in the market for the U.S. dollar was clearly evident by the rally that has maintained a strong momentum so far.

Yesterday, the final Q1 GDP report showed that the US economy advanced 1.4%. This was the third upward revision since the preliminary report. Despite the upbeat data, corporate profits declined. For the markets, the focus was all about central bank officials and the intention to tighten monetary policy.

Looking ahead, the economic data today will include UK's final revised quarterly GDP while Canada's monthly GDP numbers are coming out. The US PCE data is also due with core PCE expected to rise 0.1% on the month, slower than 0.2% previously. Weaker PCE alongside consumer spending and income could continue to add to the bearish sentiment for the US dollar.

EURUSD intraday analysis

EURUSD (1.1440): EUR/USD continued to surge higher with the current rally posting three consecutive days of gains. Price action has clearly breached the 1.1400 price level with support on the daily chart seen at 1.1200. On the 4-hour chart, the momentum remains strongly biased to the upside with 1.1450 likely to be the next target. Any reversals will need to show a strong confirmation alongside fundamentals that could validate the reversal in price. In the near term, buying dips in EURUSD remains the major theme. Immediate support at 1.1357 is seen followed by a dip to 1.1300. As long as EURUSD remains within this support zone, we could expect to see short-term gains continuing in the currency pair.

GBPUSD intraday analysis

GBPUSD (1.3021): GBPUSD has breached the 1.3000 level and is also strongly positioned to the upside. Support on the daily chart is seen at 1.2975 which could offer a near-term decline for prices. A daily close below 1.2975 could, however, signal a decline towards the next lower support level seen at 1.2800 - 1.2780. On the 4-hour chart, the GBPUSD price action shows a strong risk of correction with no support being tested between 1.2800 and the current levels of 1.3000. Therefore, long positions above 1.2976 should be cautious as this exposes the risk of a correction in prices.

USDJPY intraday analysis

USDJPY (111.88): USDJPY has managed to trade above 112.00 level, but price action closed with a doji yesterday. A bearish close today could potentially signal a correction to the downside. On the 4-hour chart, price action is seen testing the 111.72 level which marks the top of the bull flag pattern. Bounce off this level is required and a close above 112.44 for further continuation towards 113.36. Failure to break above the previous high could result in USDJPY staying range bound. In this case, the support at 111.72 remains critical as it could potentially break and confirm the downside in USDJPY.

EUR/JPY - 128.00

Recent wave: wave v of (C) ended at 94.12 and major correction in wave A has ended at 149.79

Trend: Near term up

Original strategy:

Buy at 127.45, Target: 129.45, Stop: 126.85

Position: -
Target: -
Stop: -

New strategy :

Buy at 127.00, Target: 129.00, Stop: 126.40

Position: -
Target:  -
Stop:-

As the single currency has eased after rising to 128.83 yesterday, suggesting consolidation below this level would be seen and pullback to 127.50 is likely, however, reckon 127.00 would limit downside and bring another rise later, above said resistance at 128.83 would extend recent upmove to 129.00-10, however, near term overbought condition should prevent sharp move beyond 129.50-60 and reckon psychological level 130.00 would hold from here, risk from there has increased for a retreat later. 

In view of this, we are looking to reinstate long on pullback as 127.00 should limit downside. Below support at 126.49 would defer and suggest top is possibly formed, risk correction to 126.00 and later towards 125.40-50.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

AUD/USD – 0.7675

Recent wave: Wave 5 ended at 1.1081 and major correction has commenced for fall to 0.7000 and then towards 0.6500-10

Trend: Near term up

Original strategy :

Bought at 0.7595, Target: 0.7745, Stop: 0.7555

Position: - Long at 0.7595
Target:  - 0.7745
Stop: - 0.7555

New strategy :

Exit long entered at 0.7595

Position: - Long at 0.7595
Target:  -
Stop:-

Although aussie extended recent upmove to 0.7712, current retreat suggests consolidation below this level would be seen and pullback to 0.7645-50 is likely, however, reckon previous resistance at 0.7625 would limit downside and price should stay above 0.7575-80, bring another upmove probably next week.

In view of this, would be prudent to exit long entered at 0.7595 and look to reinstate long on pullback. Above said resistance at 0.7712 would extend recent upmove to chart resistance at 0.7750 but overbought condition should limit upside and price should falter below 0.7785-90.

On the 4-hour chart, the move from 0.8066 is the wave 5 with i: 0.8860, ii: 0.8315, wave iii is an extended move ended at 1.0183, iv: 0.9706 and wave v has ended at 1.1081 (also the top of entire wave 5). The subsequent selloff is the major correction which is unfolding as ABC-X-ABC and 2nd A leg has ended at 0.8848, followed by a-b-c wave B which ended at 0.9758, hence, 2nd C wave is now in progress and indicated downside target at 0.7000 and 0.6950 had been met, so further fall to 0.6710-20 cannot be ruled out.