Sample Category Title

USD/CHF Trading mixed.

USD/CHF continues its decline despite some ongoing consolidation. Hourly resistance can be found at 0.9727 (09/06/2017 high). Strong resistance is given at 1.0107 (10/04/2017 high). Expected to show continued weakness towards hourly support at 0.9614 (06/06/2017 low).

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/CAD Bearish breakout.

USD/CAD has strongly declined. Hourly support found at 1.3324 (13/04/2017 high) has been broken. Expected to show continued weakness.

In the longer term, there is now a death cross with the 50 dma crossing below the 200 dma indicating further downside pressures. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low)

AUD/USD Wide-open for further increase.

AUD/USD is pushing higher since the pair has failed to reach hourly support given at 0.7329 (09/05/2017 low). As long as prices remain below resistance at 0.7608 (17/04/2017 high), there are nonetheless strong downside risks.

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

EUR/USD Weakening.

EUR/USD is trading lower. The pair is still trading below strong resistance given at 1.1300 (09/11/2017 high). Hourly support is given at 1.1110 (22/05/2017 low) has been broken. Stronger support lies at 1.0842 (11/05/2017 low) and key support is given at 1.0494 (22/02/2017 low). Expected to show renewed bullish pressures.

In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD Volatility increases.

GBP/USD is now pushing up and down around former hourly support given at 1.2757 (21/04/2017 low). Hourly resistance lies at 1.3046 (18/05/2017 high). Expected to show further decline.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Ready for another leg lower.

USD/JPY 's short-term bearish pressures are back. The pair is bouncing lower. Hourly support can be found at 108.89 (14/06/2017 high). Strong support is located at 108.13 (17/04/2017 low). Hourly resistance is given at 110.81 (09/06/2017 high). Other key supports lie at a distance 106.04 (11/11/2016 low). Wide-open for further decline.

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

US oil remains under strong pressure and posted marginally lower low at $44.37 9te lowest since early May) on Thursday, following sharp fall after data on Wednesday.

EIA report showed draw in crude inventories of 1.7 million barrels for the week ended June 2, which was well below forecasted draw of 2.7 million barrels.

Another hit came from unexpected build of gasoline inventories which rose by 2 million barrels, compared to forecasted draw of 0.45 million barrels.

Oil prices remain pressured by global oversupply, particularly in rising production of US shale oil and non-OPEC oil producers which offsets OPEC efforts to stabilize oil prices by extension of oil production cut.

Technical studies remain firmly bearish and see scope for final push towards key support at $43.74 (05 May low). Wednesday's long bearish candle weighs heavily, however, oversold daily studies suggest the price may take a break before final push lower, but no firmer bullish signals seen so far. Falling 10SMA ($46.16) and Tenkan-sen ($46.38) mark strong resistances.

Res: 44.79, 45.19, 45.55, 46.16
Sup: 44.37, 44.00, 43.74, 43.56

GBP/USD – 1.2755

Recent wave: Wave V of larger degree wave (III) has ended at 1.1986 and major correction has commenced from there for gain to 1.3000 and 1.3140-50

Trend: Near term down

Original strategy :

Sell at 1.2850, Target: 1.2650, Stop: 1.2910

Position: -
Target:  -
Stop: -

New strategy :

Sell at 1.2750, Target: 1.2650, Stop: 1.2810

Position: -
Target:  -
Stop:-

Sterling ran into resistance at 1.2818 and has retreated sharply on dollar’s broad-based strength, suggesting the rebound from 1.2635 has ended there, hence consolidation with downside bias is seen for weakness to 1.2670-75, however, break of said support at 1.2635 is needed to confirm recent decline from 1.3048 top has resumed for retracement of recent upmove to 1.2600 but downside should be limited to 1.2550 and reckon previous support at 1.2515 would hold from here.

Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has ended at 1.7192, the subsequent selloff is the larger degree wave (C) which is still unfolding with minor wave (III) of larger degree wave 3 ended at 1.1986, hence wave (IV) correction is in progress which could either be a triangle wave (IV) of a complex formation but upside should be limited to 1.3500 and price should falter well below 1.4000, bring another decline in wave (V) of 3 for weakness to 1.1500, then 1.1200.

On the upside, expect recovery to be limited to 1.2750-55 and 1.2790-00 should hold, bring another decline. Above said resistance at 1.2818 would defer and risk a stronger rebound to 1.2860-70 would but price should falter below 1.2900, bring another selloff later.

GBP/JPY - 139.25

Recent wave: Medium term low formed at 120.50 and (A)-(B)-(C) major correction has commenced with (A) leg ended at 148.45, hence wave (B) is unfolding for retreat to 131.00-10.

Trend: Near term down

Original strategy:

Sell at 141.50, Target: 139.50, Stop: 142.10

Position: -
Target: -
Stop: -

New strategy :

Sell at 140.40, Target: 138.50, Stop: 141.00

Position: -
Target:  -
Stop:-

As sterling has retreated after meeting resistance at 140.90 yesterday, suggesting the rebound from 138.70 has possibly ended there and consolidation with downside bias remains, break of said support at 138.70 would confirm recent decline from 148.10 top has resumed for further subsequent weakness to 138.45-50, then towards 138.00, however, near term oversold condition should limit downside to 137.50 today.

In view of this, would not chase this fall here and we are looking to sell sterling again on recovery as 140.40-50 should limit upside. Above said resistance at 140.90 would defer and risk a stronger recovery to 141.15-20, then 141.50, however, still reckon upside would be limited to 142.00 and price should falter below resistance at 142.75, bring another decline later. 

Our preferred count is that larger degree wave V with circle is unfolding from 251.12 with wave (I) 219.34, (II): 241.38 and wave (III) is subdivided into 1: 192.60, 2: 215.89 (23 Jul 2008) and wave 3 ended at 118.87 earlier in 2009. The correction from there to 162.60 is wave 4 which itself is a double three and is labeled as first a-b-c ended at 151.53, followed by wave x at 139.03, 2nd a ended at 162.60, 2nd b at 146.75 and 2nd c leg of wave 4 ended at 163.00. Therefore, the decline from 163.00 to 116.85 is now treated as wave 5 which also marked the end of larger degree wave (III), hence wave (IV) major correction has commenced for retracement of the wave (III) from 241.38 and upside target at 183.95-00 (50% Fibonacci retracement of the wave (II) from 241.38) had been met, a drop below 160.00 would suggest wave (IV) has ended at 195.85, bring decline in wave (V) for initial weakness to 130 (already met) and 120.


EUR/GBP         –  0.8679

EUR/GBP – The major (A)(B)(C)-(X)-(A)(B)(C) correction from 0.9805 is unfolding and 2nd (A) has possibly ended at 0.6936.

As the single currency has risen again and broke above previous resistance at 0.8857, adding credence to our bullishness for the erratic rise from 0.8304 to extend further gain to 0.8900, then towards 0.8940-50 (50% Fibonacci retracement of 0.9576-0.8304), however, loss of upward momentum should prevent sharp move beyond 0.9000 psychological level and price should falter below 0.9090-00 (61.8% Fibonacci retracement) and bring retreat later.

Our latest preferred count is that the wave V of a 5-wave series from 0.5682 ended at 0.9805 earlier and major from there has possibly ended at 0.8067 as A-B-C-X-A-B-C. We are keeping our view that the entire correction from 0.9805 has possibly ended at 0.7756 and as labeled as the attached daily chart and impulsive move from 0.9084 has ended at 0.7756 as a 5-waver which marked either the (C) wave or the A leg of (C), a daily close above resistance at 0.8831 would suggest (C) leg has ended and headway towards 0.9084.

On the downside, whilst initial pullback to 0.8740-45 cannot be rule out, reckon 0.8680-90 would limit downside and bring another rise later. A daily close below support at 0.8652 would suggest top is possibly formed and risk weakness towards 0.8600-05 but reckon downside would be limited to 0.8550 and previous support at 0.8524 should hold from here, bring rebound later. 
 
Recommendation: Buy at 0.8680 for 0.8880 with stop below 0.8580

Euro's long term uptrend started in Feb 1981 at 0.5039 and is unfolding as a (A)-(B)-(C) move with (A): 0.8433 (Feb 1993), (B): 0.5682 (May 2000) and impulsive wave (C) should have ended at 0.9805 with wave III ended at 0.7254 (May 2003), triangle wave IV at 0.6536 (23 Jan 2007) and wave V as well as wave (C) has ended at 0.9805.

We are keeping an alternate count that only wave III ended at 0.9805 and the correction from there is the wave IV and may extend weakness to 0.7700, however, it is necessary to see a daily close above resistance at 0.9143 would change this to be the preferred count.

The euro has posted slight losses in the Thursday session, as EUR/USD is trading at 1.1170. In economic news, the eurozone surplus dropped sharply, coming in at EUR 19.6 billion. This was well short of the forecast of EUR 22.4 billion. In the US, today's major release is unemployment claims, which is expected to dip to 241 thousand. On the manufacturing front, the markets are braced for a soft reading from Philly Fed Manufacturing Index, with an estimate of 25.5 points. On Friday, the eurozone releases Final CPI and the US will publish Building Permits and Housing Starts.

US consumer numbers were soft on Thursday, as CPI and retail sales reports missed estimates. CPI declined 0.1%, short of the estimate of 0.2%. This was the second decline in three months, as inflation is currently at 15%, well below the Federal Reserve's target of 2.0%. Retail Sales, the primary gauge of consumer spending was dismal, coming in at -0.3%, compared to a forecast of +0.1%. This marked the indicator's weakest reading since August 2016. Weak retail sales is clearly an area of concern – the soft reading could drag down GDP for the second quarter, as as consumer spending accounts for more than two-thirds of economic growth. Although surveys continue to show that US consumers remain optimistic about the economy, this hasn't translated into stronger consumer spending. The euro initially posted gains following the release of this data, but the dollar was able to recover.

As expected, the Federal Reserve raised rates on Thursday by 25 basis points, to a target range of 1.00 percent to 1.25 percent. The rate statement portrayed an optimistic picture, noting that the economy was growing, and the labor market remained strong. As for inflation, which remains stubbornly low, the statement acknowledged that inflation remained below the Fed's target of 2.0%, but expected that goal to be reached in the “medium term”. The Fed projected one more rate hike in 2017, and the markets are circling the December meeting as the most likely date. The odds for a September increase are at 18%, compared to 23% a week ago, according to the CME Group. As for a December increase, the odds are currently at 38%. One surprising development was that Fed Chair Janet Yellen outlined a plan to reduce its $4.2 trillion balance sheet (comprised of Treasury bonds and mortgage-backed securities). Yellen was short on specifics, saying that the goal was to begin the normalization “relatively soon”. The balance sheet ballooned after the financial crisis in 2008, as the Fed implemented a massive quantitative easing program as part of its accommodative monetary policy, together with interest rates of zero. The gradual reduction in the purchase of these assets signifies an important vote of confidence in the strength of the US economy.

USD/CAD – 1.3280

USD/CAD – Wave v ended at 0.9407 and a-b-c correction may extend gain to 1.4700

The greenback finally dropped in line with our bearish expectation, our short position entered at 1.3530 finally met our downside target at 1.3330 with 200 points profit, this anticipated selloff adds credence to our view that top has been formed at 1.3794 and the breach of previous support has reinforced our view that the rebound from 1.2969 ha ended at 1.3794, then further weakness to 1.3150 and then 1.3100 would be seen, however, oversold condition should limit downside and reckon previous support at 1.3056 would hold, price should stay above psychological support at 1.3000.

We are keeping our view that the wave b from 1.0657 (a leg top) has possibly ended at 0.9633 with (a): 0.9800, wave (b): 1.0447 and wave c at 0.9633, the subsequent rise from there is now treated as wave c exceeded indicated upside target at 1.3770-80 and 1.4000 and wave (3) has possibly ended at 1.4690 and wave (4) correction has commenced for retracement back to 1.2832 support, then 1.2410-20.

On the daily chart, our latest preferred count remains that the A of (B) rally from 0.9059 low (7 Nov 2007) unfolded into an impulsive wave with i: 0.9059-1.0380, ii ended at 0.9819, iii at 1.3019 followed by triangle wave iv at 1.2026 , then wave v formed a top at 1.3066 and also ended the wave A. The wave B is unfolding as an double three a-b-c-x-a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c at 1.0784, followed by wave x at 1.1725, another set of a-b-c unfolded with 2nd a at 0.9931, 2nd b at 1.0674. the 2nd c has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3900 had been met and gain to 1.4700 would follow.

On the upside, whilst initial recovery to 1.3310-15 cannot be ruled out, reckon upside would be limited to 1.3350 and previous support at 1.3387 (now resistance) should hold, bring another decline. A daily close above 1.3387 would suggest low is possibly formed, bring a stronger rebound to 1.3425-30, break there would add credence to this view, then further gain to 1.3490-00 would follow but resistance at 1.3547 should remain intact.

Recommendation: Short entered at 1.3530 met target at 1.3330 with 200 points profit an d would stand aside for this week.

Longer term - The selloff from 1.6194 (21 Jan 2002) to 0.9059 (07 Nov 2007) is viewed as (A) wave which is a 5-waver as labeled on the monthly chart as below, the subsequently rally is labeled as (B) with impulsive A leg of (B) ended at 1.3066, wave B of (B) is unfolding which has either ended at 0.9407 or would extend one more fall but downside should be limited to 0.9200 and 0.9000 should hold.

Fed remains on track despite faltering inflationary pressures

As broadly expected the Federal Reserve lifted borrowing costs by 25bps following a two-day meeting. The decision was already priced in by market participants. However, the Committee created a stir with a surprisingly hawkish statement and press conference from Janet Yellen despite the recent publication of lacklustre economic data.

Indeed, the last CPI and retail sales reports came on the soft side and triggered a USD sell-off, just a couple of hours before the announcement of FOMC's decision. The consumer price index extended only 1.9%y/y in May versus 2.0% expected and down from 2.2% in the previous month amid sustainable downside pressure on crude oil prices. In addition, the core measure, which excludes the most volatiles components such as food and energy prices, slid to 1.7%y/y, down from a previous reading and median forecast of 1.9%. Finally, retail sales printed in negative territory and contracted 0.3%m/m in May, well below market's expectations of a flat reading, signalling that US consumers preferred to remain cautious against the backdrop of political jitters in the US and an uncertain economic outlook.

Committee's members seemed committed to hold the line and keep steady the tightening pace as announced at the preceding meetings. Moreover the Fed remains highly confident the recent set-back in inflation developments is only temporary and expects to increase by another notch the federal funds target before the end of the year.

In our opinion, the fact that the Fed is not really concerned about the disappointing inflation readings suggests that the institution may have started to reconsider the ground for reaching at all cost the 2% inflation target. Indeed, overall the US economy is not in such a bad state as it is not in recession anymore and the economic growth is the envy of many countries.

Finally, the Committee discussed further about balance sheet unwinding as it drafted carefully a plan for policy normalisation; and it is expected to be implement before the end of the year. However, the Fed remained extremely cautious by stating that “the Committee would be prepared to resume reinvestment of principal payments received on securities held by the Federal Reserve if a material deterioration in the economic outlook were to warrant a sizable reduction in the Committee's target for the federal funds rate”.

The USD was broadly higher this morning and erased partially the losses triggered by the release of the CPI and retail sales report. EUR/USD is back below 1.12 and currently trading with a negative bias.

Switzerland: SNB holds rates unchanged

Loose monetary policy is to continue for some more time. The EURCHF pair is back above 1.0900. This morning Swiss policymakers have decide to hold rates unchanged at -0.75% repeating that the Swiss franc is largely overvalued and that this is a threat for the Swiss economy. The Swiss franc is trading at a level around 30 times higher than levels before the financial crisis. Such high levels are definitely boosting deflationary pressures.

The plan is definitely staying the same for the central bank. Defending the Swiss Franc at all costs. The FX reserves keep on growing towards very massive levels. It now represents CHF 700 billion. As long as the Swiss central bank considers the currency is overvalued, the FX reserves are going to keep climbing.

In Swiss political news, Didier Burkhalter, head of the Federal Department of Home Affairs, will leave the Federal Council on October 31st. He was mostly criticised for his pro-Europe views. Monitoring relations with the EU is very important, as one key driver for the CHF depends on its giant neighbour.

For the time being, we can see that political uncertainties have reduced since the French elections. Nonetheless, other political uncertainties seem to arise with Hungary, Czech Republic or Poland seeming to refuse to welcome any more migrants and they will likely be sanctioned by the European Commission.

EUR/JPY - 122.50

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

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Although the single currency has fallen again and near term downside risk remains for recent decline from 125.82 top to extend weakness to 122.00, near term oversold condition should prevent sharp fall below 121.50-60 and reckon 121.25-30 would hold from here, risk from there has increased for a rebound to take place later.

In view of this, would not chase this move here and would be prudent to stand aside in the meantime. Above 123.15-20 would suggest low is possibly formed but break of resistance at 123.65-75 is needed to add credence to this view, bring a stronger rebound towards 124.10-20 which is likely to cap upside.

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).