Sample Category Title

USD/CHF - 1.0043

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 : -

As the greenback has maintained a firm undertone after last week’s rally above 1.0003 resistance, suggesting recent rise from last week’s low at 0.9813 is still in progress and bullishness remains for this move to 1.0080, then towards 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. 

GBP/USD - 1.2478

Original strategy :

Sold at 1.2465, Target: 1.2365, Stop: 1.2500

Position : - Short at 1.2465

Target :  - 1.2365

Stop : - 1.2500

New strategy  :

Hold short entered at 1.2465, Target: 1.2365, Stop: 1.2500

Position : - Short at 1.2465

Target :  - 1.2365

Stop : - 1.2500

Cable’s rebound after holding above support at 1.2419 suggests further consolidation above this level would be seen, however, as long as indicated resistance at 1.2500 holds, mild downside bias remains for another fall, below said support at 1.2419 would bring test of 1.2400 but break 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. Looking ahead, only a drop below 1.2377 would confirm the fall from 1.2616 is still in progress for subsequent decline towards key support at 1.2335.

In view of this, we are holding on to our short position entered at 1.2465 but one should exit on such decline. Only break of said resistance at 1.2500 would abort and suggest low has been formed instead, risk a stronger rebound to 1.2525-30, then towards resistance at 1.2559.

EUR/USD - 1.0663

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 under pressure 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. 

Notes/Observations

ECB's Darghi dampens any speculation on any imminent change in its policy stance

Market focus remains on upcoming discussions between the leaders of the US and Chin

India RBI narrow its rate corridor (not expected); left Repurchase Rate unchanged at 6.25% but raised the Reverse Repo by 25bps to 6.00%

Overnight:

Asia:

China Mar Caixin PMI Services: 52.2 v 52.6 prior (6-month low and 3rd straight sequential decline)

PBoC skips open market operations for 9th straight session

China FX regulator SAFE: China FX market relatively stable, cross-border capital flow were gradually becoming balanced

Europe:

European Finance Ministers to study bad bank loan reduction program. Germany said to support ideas but opposed any European bad banks

Americas:

White House adviser Steve Bannon removed from National Security Council principals committee role in staff reorganization

House Speaker Ryan: House, Senate and White House are not yet on the same page regarding tax reform. Tax reform could take longer than healthcare haul

FOMC Mar Minutes: Most participants saw move to reduce the balance sheet later this year and stressed that policy change should be communicated "well in advance" of any actual change

Economic Data

(NL) Netherlands Mar CPI M/M: 0.3% v 0.7% prior; Y/Y: 1.1% v 1.8% prior

(IN) India Mar PMI Services: 51.5 v 50.3 prior (2nd consecutive month of expansion)

(JP) Japan Mar Consumer Confidence: 43.9 v 43.4e

(DE) Germany Feb Factory Orders M/M: 3.4% v4.0%e; Y/Y: 4.6% v 3.9%e

(CH) Swiss Mar CPI M/M: 0.2% v 0.2%e; Y/Y: 0.6% v 0.5%e

(CH) Swiss Mar CPI EU Harmonized M/M: 0.1% v 0.2%e; Y/Y: 0.5% v 0.5%e

Fixed Income Issuance:

(ES) Spain Debt Agency (Tesoro) sold total €3.92B vs. €3.5-4.5B indicated range in 2020, 2027 and 2041 Bonds

Sold €1.86B in 1.4% 2020 bono; Avg Yield: -0.126% v +0.641% prior; Bid-to-cover: 1.64x v 1.77x prior

Sold €1.27B in 1.5% Apr 2027 bond; Avg yield: 1.610% v 1.684% prior; Bid-to-cover: 1.65x v 1.42x prior

Sold €792M in 4.70% July 2041 SPGB; Avg Yield: 2.666% v 2.569% prior; Bid-to-cover: 1.47x v 1.46x prior

(ES) Spain Debt Agency (Tesoro) sold €876M vs. €0.5-1.0B indicate range in 1.80% Nov 2024 I/L bonds; Real Yield: 0.133% v 0.159% prior; Bid-to-cover: 1.99x v 1.43x prior

(FR) France Debt Agency (AFT) sold total €7.996B vs. €7.0-8.0B in 2027 and 2031 Oats

Sold €4.908B in May 1.0% 2027 Oat; Avg Yield: 0.97% v 0.91% prior; Bid-to-cover: 2.03x v 2.75x prior

Sold €3.088B in May 1.50% 2031 Oat; Avg Yield 1.31% v 1.48% prior; Bid-to-cover: 1.91x v 1.82x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 -0.3% at 3,460, FTSE -0.6% at 7,288, DAX -0.5% at 12,162, CAC-40 -0.2% at 5,082, IBEX-35 -0.1% at 10,396, FTSE MIB -0.5% at 20,144, SMI -0.5% at 8,600, S&P 500 Futures -0.1%]

Market Focal Points/Key Themes: European equity indices are trading lower as markets are jittery ahead of the ECB minutes of the latest policy meeting; Market uncertainty also heightened with US President Trump's meeting with China President Xi Jinping today; FOMC minutes were released overnight and Speaker Ryan said the road ahead for tax reform may be longer than healthcare; Banking stocks trading lower across the board with the peripheral lender weighted FTSE MIB underperforming as a result; shares of Pearson the notable laggard in the FTSE 100 after receiving an analyst downgrade; Commodity and mining stocks providing some support in the index as copper prices consolidate near yesterday's rally highs.

Upcoming scheduled US earnings (pre-market) include Fred's, Hooker Furniture, Carmax, Lamb Weston, MSC Industrial Direct, RPM International, Schnitzer Steel Industries, and Constellation Brands.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Hella KGaA HLE.DE -0.1% (9M results), Homeserve HSV.UK +8.8% (trading update), Mothercare MTC.UK +2.2% (Q4 results), Pearson PSON.UK -8.9% (analyst downgrade), Unilever UNA.NL -0.1% (to buyback €5B shares)]

Consumer Staples: [CHR Hansen CHR.DK -3.3% (Q2 results)]

Financials: [Saint-Gobain SGO.FR -0.5% (extension of pact with Burkard Family in relation to sale of Schenker -Winkler)]

Healthcare: [BTG BTG.UK +3.8% (revised FY outlook), Hikma Pharmaceuticals HIK.UK -0.6% (settlement agreement with Jazz), PureTech Health PRTC.UK +2.3% (Project EVO pilot study results)]

Industrials: [Gerresheimer GXI.DE -5.3% (Q1 results)]

Technology: [Kontron KBC.DE +3.0% (FY16 results), S&T SANT.AT +5.8% (FY16 results), Wirecard WDI.DE -0.2% (final FY16 results)]

Utilities: [Findel FDL.UK -1.5% (trading statement)]

Speakers

ECB chief Draghi reiterated that monetary policy stance remains appropriate; needed to see more inflation confidence before changing stance

ECB's Praet (Belgium, chief economist) reiterated ECB stance on forward guidance that interest rates to stay low or lower during the forecast horizon. Cyclical recovery gaining momentum with expansion broadening; risks remained to the downside and inflation dynamics were conditional on substantial degree of policy accommodation

EU Commission imposes 5 year tariffs on Chinese hot-rolled coil steel of up to 35.9% in bid to ease competition for EU producers

RBI Policy statement noted that it was unanimous in its decision to narrow rate corridor (6-0). Narrow corridor to help manage weighted average call rate. Forecasted FY17/18 GDP at 7.4% v 6.7% in prior year. Saw H1 inflation at 4.5% and rising to 5.0% in H2

Currencies

Relatively subdued European session with overall market focus remaining on upcoming discussions between the leaders of the US and China on Friday.

EUR currency was softer in the session after ECB's Draghi dampened any speculation of any imminent change in its policy stance. Pair hit a 3-week low at 1.0630 following the Draghi commentary on forward guidance

Fixed Income:

Bund futures trade at 162.38 down 2 ticks coming off earlier highs following the Spanish and French auctions. Continued momentum lower targets 162.02 followed by 161.52 then 161.02. A move back higher targets 162.67 day high followed by 162.98 then Feb contract high at 163.12. .

Gilt futures trade at 127.95 down 7 ticks also reversing from earlier highs as European indices rebound off lows. Support remains at 127.75 then 127.34 followed by 127.05. Resistance moves to 128.50 then 128.96 followed by 129.24. Short Sterling futures trade flat with Jun17Jun18 remaining steady at 14/14.5bp

Thursday's liquidity report showed Wednesday's excess liquidity fell to €1.465T a fall of f €110B from €1.575T prior. Use of the marginal lending facility rose to €256M from €114M prior.

Corporate issuance saw $7.2B come to market via 4 issuers headlined by Airbus $1.5B 2 part offering, Sinopec $3.4B 4 part offering and Unicredit $2B 2 part offering. Issuance for the week now stands over $18B compared to analyst estimates at $25B.

Looking Ahead

(UK) EU President Tusk meets PM May in London to discuss Brexit

(MX) Mexico Mar Vehicle Production: No est v 301.5K prior; Vehicle Exports: No est v 240.9K prior

05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills

05:30 (HU) Hungary Debt Agency (AKK) to sell Floating Bonds

05:30 (PL) Poland to sell to sell PLN3.0-5.0B in Bonds

05:40 (DE) ECB's Weidmann (Germany) in Berlin

06:00 (IE) Ireland Mar Live Registry Monthly Change: No est v -2.8Ke; Live Registry Level: No est v 276.0K prior

06:15 (DE) German Chancellor Merkel with State leaders

07:00 (BR) Brazil May FGV Inflation IGP-DI M/M: 0.0%e v 0.1% prior; Y/Y: 4.8%e v 5.3% prior

07:30 (US) Mar Challenger Job Cuts: No est v 37.0K prior; Y/Y: No est v -40.0% prior

07:30 (EU) ECB account of the monetary policy meeting (Feb Minutes)

07:45 (PT) ECB's Constancio (Portugal) in Malta

08:00 (CL) Chile Feb Nominal Wage M/M: 0.8%e v 1.1 % prior; Y/Y: 4.3%e v 4.4% prior

08:15 (UK) Baltic Dry Bulk Index

08:30 (US) Initial Jobless Claims: 250Ke v 258K prior; Continuing Claims: 2.03Me v 2.052M prior

08:30 (CA) Canada Feb Building Permits M/M: 1.3%e v 5.4% prior

08:30 (US) Weekly USDA Net Export Sales

09:00 (RU) Russia Gold and Forex Reserve w/e Mar 31st: No est v $399.0B prior

09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10%

09:00 (NO) Norway Central Bank (Noregs) Gov Olsen

09:30 (US) Fed's William (non-voter)

09:30 IMF Financial Stability Report

10:20 (BR) Brazil Mar Vehicle Production: No est v 200.4K prior; Vehicle Sales: No est v 135.7K prior; Vehicle exports: No est v 66.3K prior

10:30 (US) Weekly EIA Natural Gas Inventories

11:00 (US) Treasury announces for upcoming 3-year, 10-year and 30-year autions during week of Apr 10th

11:00 (BR) Brazil to sell 2023 LFT

11:00 (BR) Brazil to sell 2018, 2019 and 2020 LTN Bills

12:40 (BE) ECB's Praet (Belgium, chief economist)

13:15 (PT) ECB's Constancio (Portugal)

19:00 (PE) Peru Central Bank (BRCP) Interest Rate Decision: Expected to leave Reference Rate unchanged at 4.25%

USD/JPY - 110.80

Original strategy  :

Sell at 111.00, Target: 110.00, Stop: 111.35

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 111.10, Target: 110.10, Stop: 111.45

Position :  -

Target :  -

Stop : -

As the greenback ran into renewed selling interest at 111.46 and has dropped sharply, retaining our bearishness for the decline from 112.20 top to resume after consolidation, below 110.27 (this week’s low) would confirm and extend the fall from 112.20 to last week’s low at 110.11. Looking ahead, break there is needed to retain downside bias and 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) which is likely to hold on first testing.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 111.00-10 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. 

EURUSD made a sharp drop in the past couple of hours, which could potentially be blue wave v, as part of an impulse. That said, wave v may find some support in the next few sessions and ideally make a three wave reversal into a-b-c. Regarding the fact, that we are looking at a wave 2 correction on higher degree time frames, the following three wave correction can potentially make a rally towards the 1.0767/1.0739 region, before again looking down.

EURUSD, 1H

News and Events:

Fed surprises markets, further USD weakness cannot be ruled out in medium/long term

Given the lacklustre pace of recovery of the US economy, most participants expected the Fed to stick to its initial plan: gradual rate tightening. Instead, the minutes of the March FOMC meeting revealed that the members discussed extensively the strategy to start unloading the $4.5 trillion of bonds and mortgage-backed securities that currently sit on its balance. Technically, the Fed did not actually discuss selling those assets but rather changing the committee’s reinvestment policy later this year. Indeed, the central bank is currently reinvesting all principal payments from its Treasury, agency debt and agency MBS portfolios, which has the effect to maintain unchanged the size of its portfolio.

Until now, Fed members were only vaguely discussing about unwinding its bonds portfolio. In addition, the balance sheet discussions only recently started to gain traction. The market did not expect the Fed to move that fast as most analyst were expecting the Fed would start fine-tuning its reinvestment policy in the middle of 2018. This surprise move caught investors off guard and forced them to reassess the US economic outlook as well as the effect on the USD. Indeed, choosing to unload the balance sheet instead of tightening short-term rate has the advantage to limit, to some extent, USD appreciation.

On Wednesday, the Dollar erased completely its pre-FOMC minutes’ gains and ended the day flat against most of its peers. For now, the market is still digesting the minutes and its potential impact on the greenback. Investors are definitely cutting risk, pushing equities lower and the Japanese Yen higher. Overall, the backdrop of political uncertainty in the European Union favours the USD in the short-term. However, the reflation trade in the US is, more than ever, being questioned by market participants as President Trump’s administration has been unable to carry out any of its planned reforms. Therefore, further USD weakness cannot be ruled out in the medium and long-term.

ECB minutes and Alexis Tsipras meets European Council President

Today’s investors will carefully watch the ECB minutes. Indeed, at their last meeting in March, it turned out that the European Central Bank was more hawkish than expected.

However, recent declarations from policymakers are cooling down this view and the minutes should bring the confirmation that the European institution should not move far away from the purchase of €60 billion of bonds until year-end.

We do not expect a strong market movement after the release. Markets are not pricing in a too strong narrowing of the divergence between the Fed and the EU.

Staying in Europe, Alexis Tsipras is going to meet European Council President Donald Tusk ahead of the Eurogroup, composed of Eurozone Finance Ministers, which will be held tomorrow (Friday). Tsipras hopes to renegotiate the bailout terms. We recall Greece is seeing its debt-to-GDP ratio exploding since the first bailouts and that massive growth is required to only reimburse the charge of the debt.

Today's Key Issues (time in GMT):

• ECB President Draghi speaks in Frankfurt EUR / 07:00
• Mar CPI MoM, exp 0,20%, last 0,50% CHF / 07:15
• Mar CPI YoY, exp 0,50%, last 0,60% CHF / 07:15
• Mar CPI EU Harmonized MoM, exp 0,20%, last 0,60% CHF / 07:15
• Mar CPI EU Harmonized YoY, exp 0,50%, last 0,70% CHF / 07:15
• Mar Markit Germany Construction PMI, last 54,1 EUR / 07:30
• Mar Average House Prices, last 2.938m, rev 2.950m SEK / 07:30
• ECB Executive Board member Praet speaks in Frankfurt EUR / 07:30
• Mar Markit Germany Retail PMI, last 51,2 EUR / 08:10
• Mar Markit Eurozone Retail PMI, last 49,9 EUR / 08:10
• Mar Markit France Retail PMI, last 51,7 EUR / 08:10
• Mar Markit Italy Retail PMI, last 45,5 EUR / 08:10
• Apr 6 RBI Repurchase Rate, exp 6,25%, last 6,25% INR / 09:00
• Apr 6 RBI Reverse Repo Rate, exp 5,75%, last 5,75% INR / 09:00
• Apr 6 RBI Cash Reserve Ratio, exp 4,00%, last 4,00% INR / 09:00
• ECB's Weidmann Speaks in Berlin EUR / 09:40
• May FGV Inflation IGP-DI MoM, exp 0,00%, last 0,06% BRL / 11:00
• May FGV Inflation IGP-DI YoY, exp 4,78%, last 5,26% BRL / 11:00
• Mar Challenger Job Cuts YoY, last -40,00% USD / 11:30
• ECB account of the monetary policy meeting EUR / 11:30
• mars.31 Foreigners Net Bond Invest, last $399m TRY / 11:30
• mars.31 Foreigners Net Stock Invest, last -$59m TRY / 11:30
• ECB Vice President Constancio speaks in Malta EUR / 11:45
• Feb Building Permits MoM, exp 1,30%, last 5,40% CAD / 12:30
• Apr 1 Initial Jobless Claims, exp 250k, last 258k USD / 12:30
• mars.25 Continuing Claims, exp 2030k, last 2052k USD / 12:30
• mars.31 Gold and Forex Reserve, last 399.0b RUB / 13:00
• Fed's Williams Speaks on a Panel in Frankfurt USD / 13:30
• Apr 2 Bloomberg Consumer Comfort, last 49,7 USD / 13:45
• Mar Vehicle Production Anfavea, last 200385 BRL / 14:20
• Mar Vehicle Sales Anfavea, last 135665 BRL / 14:20
• Mar Vehicle Exports Anfavea, last 66268 BRL / 14:20
• ECB Executive Board member Praet speaks in Malta EUR / 16:40
• ECB Vice President Constancio speaks in Valletta, Malta EUR / 17:15

The Risk Today:

EUR/USD is now consolidating. The pair is heading lower since the pair failed to hold above former resistance given at 1.0874 (08/12/2017 high). Hourly support can be found at 1.0630 (intraday low). Stronger support can be found at 1.0494 (22/02/2017 low). Expected to see further short-term weakness. 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's bullish pressures have faded abruptly. Hourly resistance is located at 1.2615 (27/03/2017 high) while hourly support can be found at 1.2324 (03/17/2017 low). Expected to show continued strengthening towards stronger resistance at 1.2775 (06/12/2016 high) if support area around 1.24 stands. 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's momentum is slowing down. Hourly resistance is given at 112.20 (31/03/2017 high). Stronger resistance can be located at 113.57 (16/03/2017 high) while support is given at 110.11 (27/03/2017 low). 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).

USD/CHF is strengthening. Hourly support is given at 0.9814 (27/03/2017 low). Key resistance can be found at a distance at 1.0344 (15/12/2016 high). Expected to show another leg higher. 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.

EUR/JPY - 118.13

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

Trend: Near term down

Original strategy:

Sell at 118.85, Target: 116.60, Stop: 119.45

Position: -
Target: -
Stop: -

New strategy :

Sell at 119.00, Target: 117.00, Stop: 119.60

Position: -
Target:  -
Stop:-

As the single currency has remained under pressure, suggesting recent erratic decline from 124.10 top (2016 high) is still in progress and bearishness remains for this move to extend weakness to 117.00 but oversold condition should prevent sharp fall below 116.50-60 and reckon 116.15-20 would hold from here, bring rebound later.

In view of this, would not chase this fall here and would be prudent to sell euro on subsequent rebound as 118.90-00 should limit upside. Above 119.06 resistance would defer and suggest a temporary low is possibly formed, risk rebound to 119.40-50 but price should falter below resistance at 119.85, bring another selloff. 

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 – 0.7552

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 :

Sell at 0.7605, Target: 0.7410, Stop: 0.7665

Position: -
Target:  -
Stop: -

New strategy :

Buy at 0.7525, Target: 0.7680, Stop: 0.7465

Position: -
Target:  -
Stop:-

Although aussie has fallen again after brief recovery to 0.7588 and near term downside risk remains for the fall from 0.7750 to extend weakness to 0.7520-25 (38.2% Fibonacci retracement of 0.7158-0.7750), loss of near term downward momentum should prevent sharp fall below there and reckon indicated support at 0.7491 would hold, bring rebound later, above said resistance at 0.7588 would suggest a temporary low is possibly formed, bring rebound to 0.7625-30 and later towards resistance at 0.7680-85.

In view of this, we are inclined to buy aussie on next decline. Below said support at 0.7491 would signal the fall from 0.7750 is still in progress for further weakness to 0.7450-55 (50% Fibonacci retracement of 0.7158-0.7750), however, oversold condition should limit downside to 0.7380-85 (61.8% Fibonacci retracement), risk from there is seen for a rebound later.

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.

Daily Pivots: (S1) 117.77; (P) 118.27; (R1) 118.54; More...

With 119.31 support turned resistance intact, deeper fall is expected in EUR/JPY. Current development suggests that medium term rise from 109.20 has completed at 124.08 already. Below 117.42 will target 61.8% retracement of 109.20 to 124.08 at 114.88 next. Nonetheless, sustained break of 119.31 will turn focus back to 120.43 resistance instead.

In the bigger picture, the firm break of 38.2% retracement of 109.20 to 124.08 at 118.39 indicates that medium term rise from 109.20 is completed at 124.08. That's well below 126.09 key support turned resistance. Also, EUR/JPY failed to sustain above 55 week EMA. Deeper decline would now be seen back to 109.20 low. Overall, the down trend from 149.76 (2014 high) is not completed yet. Break of 109.20 will resume such down trend towards 94.11 low. In any case, break of 126.09 is needed needed to confirm medium term reversal.