Sample Category Title

Weekly

    •    Last Candlesticks pattern: Bullish engulfing
    •    Time of formation: 02 May 2016
    •    Trend bias: Up

Daily

    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 19 Oct 2016
    •    Trend bias: Up



USD/CAD – 1.3395




Although the greenback jumped to 1.3456 earlier this week, lack of follow through buying and the subsequent retreat suggest further consolidation would be seen and pullback to the Tenkan-Sen (now at 1.3367) is likely, however, reckon downside would be limited to 1.3300-10 and support at 1.3264-77 should remain intact and bring further choppy trading later. A daily close below support at 1.3264-77 would revive bearishness and signal another leg of decline from 1.3535 is underway for weakness to 1.3200, then 1.3160-65 but reckon downside would be limited to 1.3100 and price should stay well above support at 1.3056, bring rebound later. Only a drop below this level would retain bearishness and signal the rebound from 1.2969 has indeed ended, bring further fall to 1.3000 first, however, said support at 1.2969 should remain intact.

On the upside, above said resistance at 1.3456 would extend the rebound from 1.3264 to 1.3500, break there would suggest the pullback from 1.3535 top has ended and bring retest of said resistance at 1.3535 which is likely to hold on first testing. Looking ahead, only a break of this level would retain bullishness and extend early erratic upmove from 1.2461 low to 1.3599, then 1.3660-70 but still reckon upside would be limited to 1.3700 and risk from there is seen for a retreat later. 

Recommendation: Stand aside for this week.


On the weekly chart, as the greenback has rebounded after holding above support at 1.3264 and consolidation with mild upside bias is seen for gain to 1.3455-60, above there would suggest the pullback from 1.3535 has ended, bring retest of this level. A break above there would extend recent rise from 1.2969 to indicated resistance at 1.3599, however, a break of this resistance is needed to retain bullishness and signal upmove from 1.2461 (2016 low) has resumed for headway to 1.3700 and later towards 1.3835-40 (61.8% Fibonacci retracement of 1.4690-1.2461) which is likely to cap upside.

On the downside, expect pullback to be limited to 1.3310-15 and support at 1.3264-77 should remain intact, bring another rebound later. A weekly close below the Tenkan-Sen (now at 1.3271) would signal top has been formed at 1.3535 and test of previous resistance at 1.3210 would follow, however, break there is needed to add credence to this view, bring further fall to 1.3150-60, break there would signal the rebound from 1.2969 has ended, bring subsequent decline towards 1.3083 but indicated support at 1.3056 should hold from here, risk from there has increased for a rebound later.

EUR/USD

Current level - 10651

The prolonged consolidation pattern below 1.0700 should be considered a prelude to another sell-off, through 1.0600 support, towards 1.0490 mark. Key resistance lies at 1.0700.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 110.45

My outlook here remains bearish, for a break through 110.16 low, towards 108.50 area. Key resistance is projected at 111.45

GBP/USD

Current level - 1.2472

The intraday bias is rather neutral within the tight consolidation range, so my outlook here is neutral.

USD/CHF - 1.0050

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 1.0045

Kijun-Sen level                    : 1.0047

Ichimoku cloud top                 : 1.0045

Ichimoku cloud bottom              : 1.0042

Original strategy :

Buy at 0.9950, Target: 1.0050, Stop: 0.9915

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9950, Target: 1.0050, Stop: 0.9915

Position : -

Target :  -

Stop : -

The greenback remained confined within near term established range and further sideways trading is in store before recent rise from last week’s low at 0.9813 resumes, above resistance at 1.0079 would extend further gain to previous resistance at 1.0109, however, loss of upward momentum should prevent sharp move beyond latter level and reckon 1.0140-50 would hold, risk from there has increased for a retreat to take place later. 

In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as support at 0.9948 should limit downside. Below 0.9925-30 would abort and signal top is formed instead, bring correction to 0.9905-10 but reckon previous resistance at 0.9869 would hold from here. 

Sunrise Market Commentary

Rates: Risk off after US attack; focus on payrolls now
US Treasuries spiked higher overnight after the US conducted missile strikes against Syria, retaliating the gas attack earlier this week. The US 10-yr yield tested key 2.3% support, but a break didn't occur. Today's attention turns to the US payrolls report. With risks slightly on the upside of expectations, 2.3% should become even stronger support.
Currencies: Will payrolls be strong enough to restore a better USD bid?
The dollar stabilized yesterday after Wednesday's post-Minutes correction. Overnight, USD/JPY revisited the recent lows on headlines of the US strike against Syria, but no break occurred. Later today, the focus for USD trading will be on the US payrolls. Of late, the dollar gradually lost interest rate support. Will the payrolls be strong enough to reverse this trend?

The Sunrise Headlines

• US equities ended a dull trading session with small gains. Risk sentiment deteriorated after the US conducted missile strikes against Syria. Most Asian equity indices lose around 0.3% with Japan and China outperforming.
• The US military launched nearly 60 Tomahawk cruise missiles against a Syrian air base this morning, responding to mounting calls for a display of force in the wake of this week's suspected chemical-weapons attack in Syria.
• Under rules passed by the US Senate, lawmakers in the minority party will no longer be able to block presidential appointments to the Supreme Court a move so extreme it had been known as “the nuclear option”.
• Overtime pay in Japan, a barometer of strength in corporate activity, edged up in February for the first time in nine months, while real wages remained flat, government data showed on Friday
• The ECB has proposed that large branches of foreign banks in the EU be subject to tighter regulation and capital requirements, a move that would increase US and Asian lenders' costs and also hit British banks after Brexit.
• ECB President Draghi yesterday looked to dull speculation that the ECB will halt its negative rate experiment later this year. In a press conference later in the day, ECB VP Constâncio said that Draghi has “a lot of support” for his stance
• Today's eco calendar contains US payrolls and UK industrial production data. Euro-area finance ministers will try to break a months-long deadlock over Greece's bailout in Malta. BoE Carney is scheduled to speak

Currencies: Will Payrolls Be Strong Enough To Restore A Better USD Bid?

USD going nowhere ahead of the payrolls

The dollar regained slightly ground against the euro and the yen yesterday after Wednesday's soft market reaction to the March Fed Minutes. EUR/USD dropped briefly on soft Draghi comments early in Europe, but the pair soon returned to wait-and-see modus ahead of today's US payrolls. The pair closed the session at 1.0644 (from 1.0663). USD/JPY reversed early losses to finish the session at 110.81 (from 110.70).

Overnight, Asian markets were hit by a (temporary?) risk-off reaction as the US executed a missile strike against Syria in response to the use of chemical weapons. Markets followed the ‘standard risk-off procedure'. Equities and US bond yields declined. The yen rebounded. The oil price jumped also higher as markets feared more instability in the region. However, the reaction was limited and an important part of the moves is already reversed at the time of writing. Several Asian equity markets including Japan returned already in positive territory. USD/JPY dropped close to the recent low in the low 110 area, but the test was again rejected (currently 110.60). The moves in EUR/USD were very limited. The pair is holding a narrow range in the mid 1.06 area.

Today, there are plenty of second tier eco data. However, except for the fall-out from the Syria strike, focus of (FX) trading will be on the US payrolls. Payrolls started 2017 on a strong footing (238K and 235K in January and February). We expect an ongoing healthy labour market in March, but somewhat less buoyant. The market expects a 180K net job gains. Other labour market indicators gave some mixed signals of late. Still, we put the risk somewhat to the upside of expectations with the 6m and 12m average of 195K as our guesstimate. The unemployment rate might have stabilized at 4.7%, while we hope to see earnings to have stabilized at 2.8% Y/Y (consensus 2.7% Y/Y).

Of late, US bond yields drifted back to key support levels and this also weighed on the dollar. Our base scenario of in-line to slightly better than expected payrolls, should be good enough to prevent a sustained break lower of US yields and of the dollar. USD/JPY remains vulnerable to a downside test in case of a weak payrolls report. However, as we don't expect a sustained decline of US yields beyond key support levels(10-j < 2.30%), a real USD sell-off is unlikely. EUR/USD didn't show clear dynamics this week. We expect the topside to be rather well protected, even in case of a soft payrolls report

Last week, the dollar decline slowed, but the subsequent rebound had no strong legs as US yields remain relatively low near key support levels. The Fed Minutes didn't help the dollar even as the Fed confirmed its intention to continue policy normalization. The (FX) market apparently anticipates that reducing the balance sheet might slow the pace of Fed rate hikes. Both measures could go hand in hand if the US economy remains on track. In any case, further down the road, US monetary policy conditions will most likely be tightened which should be USD supportive.

From a technical point of view, USD/JPY last week failed to regain the 111.36/60 previous range bottom. A decline below 110 would signal more trouble ahead. We remain cautious on USD/JPY ST and first want a clear sign that a solid bottom is in place. EUR/USD extensively tested the topside of the MT range, but the test was rejected last week. The 1.0874/1.0906 area now looks a solid resistance. EUR/USD might return lower in the previous 1.0875/1.05 trading range.

EUR/USD: perfectly calm going into the US payrolls release

EUR/GBP

Sterling stays in consolidation modus

Yesterday, sterling was driven by non-UK factors and technical considerations. EUR/GBP spiked briefly lower to the 0.8510/15 area on the Draghi headlines early in the European trading. As was the case for EUR/USD, the decline was almost immediately reversed. EUR/GBP hold a tight range in the mid 0.85 area further out (close at 0.8537 from 0.08542). Cable finished sideways at 1.2470.

Today, the UK calendar is well filled with The Halifax House prices, the production and the trade balance data. The production is expected to rebound after a poor reading in January. The trade deficit is expected more or less stable after a tentative better performance of the previous months. A further narrowing of the trade deficit might be slightly sterling supportive. BoE governor Carney will speak in London. If he says anything on the economy or on monetary policy we expect him to stress the uncertainty of the Brexit process and avoid any signal about policy tightening. Mid-March, sterling found a better bid after higher than expected UK inflation and a more hawkish tone from the BoE. We changed our short-term bias on EUR/GBP from positive to neutral. The EUR/GBP 0.88/0.84 range should guide trading for now. Since late last week, the sterling rally/shortsqueeze shows tentative signs of running into resistance, but we see no trigger for a real change in sentiment yet. Longer term, Brexit-complications remain a potential negative for sterling. We are not convinced that the BoE will raise rates anytime soon, even not after recent higher inflation data.

EUR/GBP sterling short-squeeze is easing, but no sustained sterling correction yet

Download entire Sunrise Market Commentary

GBP/USD - 1.2465

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.2466

Kijun-Sen level                    : 1.2478

Ichimoku cloud top              : 1.2475

Ichimoku cloud bottom        : 1.2460

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the British pound rebounded yesterday after finding support at 1.2450 and further consolidation above this level would be seen and upside risk remains for recovery to 1.2500-05 and possibly towards 1.2520-25, however, as broad outlook remains consolidative, reckon upside would be limited and price should falter below resistance at 1.2559, bring retreat later.

As near term outlook is still mixed, would be prudent to stand aside in the meantime. Below said support at 1.2450 would revive bearishness and bring weakness to indicated support at 1.2419, break there would bring test of 1.2400 but below there is needed to add credence to our view that the rebound from 1.2377 has ended at 1.2559, bring further fall towards support at 1.2377.

EUR/USD - 1.0650

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 1.0649

Kijun-Sen level                  : 1.0655

Ichimoku cloud top             : 1.0667

Ichimoku cloud bottom      : 1.0662

Original strategy  :

Sell at 1.0725, Target: 1.0610, Stop: 1.0760

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0725, Target: 1.0610, Stop: 1.0760

Position : -

Target :  -

Stop : -

As the single currency has remained weak after recent selloff, bearishness remains for the decline from 1.0906 to extend further weakness to 1.0620, then test of previous chart support at 1.0600, however, a sustained breach below the latter level is needed to retain downside bias for subsequent selloff to 1.0570-75 first.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0720-30 should limit upside. Only a firm break above resistance at 1.0773 would suggest low is formed instead, bring a stronger rebound to 1.0800 but resistance at 1.0827 should remain intact. 

Currency pair EUR/USD

The US Dollar (USD) is building a consolidation zone before the important Non-Farm Payroll (NFP) and unemployment rate data from the United States. The NFP news event could lead to increased volatility during and after event which could potentially break the price range.

The EUR/USD specifically is challenging the support level of the sideways consolidation zone (blue/red). The breakout direction could be critical for the direction of the EUR/USD but be aware of new support (green line) and resistance (Fibonacci levels).

The EUR/USD sideways zone is offering multiple support and resistance trend lines that could play a key role in any breakout or continuation of the consolidation.

Currency pair GBP/USD

The GBP/USD continues to move within a contracting triangle chart pattern (red/blue lines). A break below support (blue) could see price challenge the 61.8% Fibonacci level of wave X vs W (blue), whereas a break above resistance (red) could see price complete wave E (green) most likely near 1.27.

The GBP/USD is also building a shallow angled bullish channel (orange/blue lines). The break of the channel could indicate the new direction the GBP/USD.

Currency pair USD/JPY

The USD/JPY is building a descending wedge chart pattern (orange/green lines). A break below support (green) could see price challenge the 50% Fibonacci support level of wave 4 vs 3 (purple). A break above resistance (orange) could expand wave B (brown).

The USD/JPY trend lines could play a critical role in any breakout. The wave count favours a wave 5 (orange) within wave C (purple) at the moment.

USD/JPY - 110.56

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 110.57

Kijun-Sen level                  : 110.64

Ichimoku cloud top             : 110.87

Ichimoku cloud bottom      : 110.70

Original strategy  :

Sell at 111.30, Target: 110.30, Stop: 111.65

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 111.30, Target: 110.30, Stop: 111.65

Position :  -

Target :  -

Stop : -

Although the the greenback fell briefly to 110.13, as dollar has rebounded after holding above support at 110.11, suggesting further consolidation above this level would be seen and corrective bounce to 111.00 cannot be ruled out, however, reckon upside would be limited and resistance at 111.46 should remain intact, bring another decline later, below said support at 110.11-13 would confirm medium term decline has resumed for further subsequent fall to 109.80-85 (1.618 times projection of 112.20-111.12 measuring from 111.59) but price should hold above 109.50-55 (100% projection of 112.20-110.27 measuring from 111.46).

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 111.20-30 should limit upside. Only above 111.46 resistance would abort and prolong choppy trading, risk rebound to 111.59, then towards 111.90-00 later but price should falter well below said resistance at 112.20. 

Key Points:

• Double top formation could see a large decline over the coming weeks.
• Parabolic SAR remains highly bearish.
• The neckline of the pattern is now very much in sight.

The Aussie Dollar seems to have finally shed its bullishness and is now making a beeline for a crucial level of indication which might result in a substantial slide over the coming weeks. Specifically, if it breaks through the 0.7490 level, a developing chart pattern will likely be confirmed which should result in a decline back to the December lows.

More specifically, over the past 3 months we have seen what is now clearly a double top pattern form up. This structure has largely respected the overarching bearish trend line and, now that the AUD has closed below the 100 day EMA, this bearish sentiment should come back with a vengeance. As a result, the neckline of the double top is now firmly in sight which could mean further loses are now on the way.

Such a return of long-term bearishness would mirror the consensus being reached by a number of technical instruments. Namely, the parabolic SAR is steeply bearish and in practically no danger of having its bias inverted within the next few weeks. Similarly, the EMA bias is indicating that losses should extend moving ahead, especially now that the pair is below the 100 day average. Finally, we can also look to the MACD oscillator for some guidance as the recent signal line crossover would typically indicate that a downtrend is still firmly in place.

All things considered, we expect to see the neckline around the 0.7490 handle to not only be challenged but also be broken within a week or so. When this happens, selling pressure could mount significantly which may not truly abate until the AUDUSD moves all the way back to the 0.7158 mark. Downside risk should be capped around this level given that it has been a very robust support for the pair over the past year or so. However, we could also have some difficulty with the 0.7325 level which has also proven to be a solid zone of support as well.

Ultimately, this forecast may run into a bit of interference if the Australian and US fundamentals continue to post mixed results. However, given the widely held expectations of successive US rate hikes and the broadly bearish technical bias, is not too much of a stretch to envision a return to the lows seen only a few month ago. As a result, keep an eye on the neckline as over the coming sessions as it could be the first key support to yield in a rather impressive trance of losses.

Market movers today

The key market focus today is on the US military strike in Syria and the US non-farm payroll report from March due to be released in the US.

The US labour market has been in good shape over the past two months and we expect this trend to cont inue. We estimate a total of 160,000 new jobs were created in March but highlight that risks are skewed to the upside as the ADP labour report from Wednesday suggested weather condit ions had less of a negat ive effect on job growth than we have pencilled in. We est imate the average hourly earnings increased 0.2% m/m, which would mean an increase of 2.7% y/y. We furthermore est imate the unemployment rate remained at 4.7% aft er last mont h's decrease.

In the UK, the NIESR GDP est imate for March is due – the indicator is usually a good predictor of actual GDP growth.

German industrial production is due to be released on Friday. Following the weak factory orders in January, we estimate indust rial product ion for February will show a drop of 2.5%.

In the Scandis, focus will be on indust rial product ion in Norway and Denmark.

Selected market news

The US has launched a military strike in Syria after accusing Assad's regime of the gas at tack earlier this week that killed many civilians. Donald Trump confirmed the at tacks from his Florida Club – current ly the locat ion of the Chinese President Jinping's visit – stat ing that it is in t he ‘vital national security interest of the United States to prevent and deter the spread and use of deadly chemical weapons'. The attack targeted the air base from which the gas at tack presumably originated. Prior to the at tack, Russian officials stated that at tacks would have ‘negat ive consequences'.

Safe havens such as US Treasuries, JPY and CHF have rallied on the first military act ion of the young Trump presidency. Also, gold and oil are moving higher this morning on the back of the rise in geopolit ical risk, as the at tacks suggest a different approach from the Trump administ rat ion than that under Obama.

Yesterday, the Czech National Bank (CNB) abandoned the EUR/CZK floor in an ext raordinary monetary policy meet ing, as the condit ions for a sustainable fulfilment of the inflation target were met and there is no need to keep monetary condit ions as relaxed as before anymore, according to the CNB . The exchange rate is now free to move according to supply and demand in the market (‘managed float '). The CNB also confirmed it stands ready to mit igate any excessive exchange rate fluctuations, without ment ioning any specific levels. Governor Jiří Rusnok indicated at the later press conference that t he CNB's tolerance for volatility will be quite large.