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'The (Japanese) central bank's actions are negative for JGBs and negative for the yen and will be a factor that helps keep dollar/yen supported.' – BK Asset Management (based on Reuters)

Pair's Outlook

A strong US NFP reading on Friday was insufficient for the USD/JPY pair to remain elevated, as weak secondary data weighed on the Buck and caused the support area circa 112.60/50 to be retested. Consequently, this area is expected to provide sufficient support today, causing the US Dollar to close trade in the green zone. The weekly pivot point at 113.19 is the closest resistance, but there is no impetus present today, which has the potential to push the pair that high, excluding external factors of course. Meanwhile, technical indicators are unable to confirm the possibility of the positive outcome.

Traders' Sentiment

There are 58% of traders with a positive outlook towards the US Dollar today, compared to 61% on Friday. At the same time, the share of buy orders inched up from 62 to 61%.

'Gold will climb about 6 percent through the end of the year as investors seek a shelter from rising political risk, according to Independent Strategy Ltd.'s David Roche.' – Ranjeetha Pakiam (Based on Bloomberg)

Pair's Outlook

Gold showed solid demand with a surge above the 1,219.20 level, which is strengthened by the 100-hour SMA and the upper Bollinger Band, and taking into account the significance of the area, a consolidative movement should follow on shorter time-frames. The next target on the upside lies at 1,233.81 and could be tested today, in case XAU/USD delays the correction for the next few sessions. In case the breakout is false, 1,211.01 will serve as a floor when the rate returns below the broken area, but we stand in favour of a firmly rising scenario.

Traders' Sentiment

Traders remain almost neutral on the metal, as 51% of open positions are short on Monday. Meanwhile, 61% of trader set up orders are to buy the bullion.

"The stronger than expected growth since the Brexit vote has been entirely due to much stronger than expected household consumption growth. It won't last". - Daniel Vernazza, UniCredit

The services sector activity in Britain slowed unexpectedly during the first month of 2017, a private survey revealed on Friday. Markit/CIPS reported its Purchasing Managers' Index for the UK services sector fell to 54.5 points in January after hitting 56.2 in December, the highest level since July 2015, when it climbed to 57.4. Market analysts anticipated a slighter decrease to 55.8 in the reported month. Last month's reading recorded the first slowdown in the UK services industry in four months. However, it remained comfortably above the 50-point level separating expansion from contraction. Britain's service industry is closely monitored, as it accounts for almost 80% of the economy. According to the Markit Services PMI survey, companies expressed greater optimism about the future of the services sector. Nevertheless, businesses once again pointed to rising inflationary pressures due to the sharp fall in the value of the Sterling. The weak domestic currency is likely to push inflation to 2.7% in 2018, above the Central bank's target of 2%, the BoE Governor Mark Carney said on Thursday. Although the Bank said its tolerance for above-target inflation would be limited. After the release, the Pound dropped markedly against other major currencies, trading at 1.1630 against the Euro and 1.2494 against the US Dollar.

'The lack of wage growth suggests further room for tightening in the labor market. So long as that remains true, and with inflation still below target, the Fed will be content to hold off on further interest rate hikes'. - Anthony Nieves, ISM

US companies created more jobs than expected last month, following the disappointing December figure. The Bureau of Labor Statistics revealed on Friday that nonfarm payrolls rose 227,000 in January, compared with the preceding month's upwardly revised 157,000, while market analysts anticipated an increase to 170,000 in the reported month. Meanwhile, the unemployment rate came in at 4.8% last month, up from December's reading of 4.7%. Friday's data also showed that average hourly earnings grew 0.1% in January, following the prior month's downwardly revised 0.2% and falling behind the 0.3% rise market forecast. Earlier this week, the Federal Reserve declined to raise interest rates. However, policymakers maintained their projection of three hikes in 2017. Separately, the Institute of Supply Management reported its Non-Manufacturing Purchasing Managers' Index fell to 56.5 in January from the preceding month's 57.2, whereas analysts penciled in a slight decrease to 57.0 points. Overall, the slight decrease in the headline Index was mainly driven by the weaker New Orders Index, which dropped to 58.6 from 60.7 in the previous month; however, order backlogs held on the same level. Moreover, the ISM said the Employment Index advanced to 54.7, while the Price Index surged to 59.0 from 56.0, representing an increase in inflationary pressures.

'The rise in real sales in the fourth quarter was in line with expectations, but the outright fall in nominal sales in December reveals a worrying lack of momentum heading in to 2017'. - Kate Hickie, Capital Economics

Australian retail sales posted a surprise fall in the last month of 2016, official figures revealed this morning. The Australian Bureau of Statistics reported retail sales dropped 0.1% to $A25.61 billion on a seasonally adjusted basis in December, following the preceding month's downwardly revised gain of 0.1% and missing analysts' expectations for a rise of 0.3% in the reported month. The December figure marked the first contraction since July 2016. In volume terms, sales jumped 0.9% in the Q4, up from the prior quarter's 0.0% and in line with analysts' forecasts. Thus, analysts suggest that consumer spending provided a big positive contribution to economic growth in the Q4 of 2016. In regional terms, retail sales declined 0.4% in Victoria, 0.3% in New South Wales and 0.7% in the Australian Capital Territory. These falls offset gains of 1.2% in South Australia, 0.6% in Western Australia, 1.1% in the Northern Territory and 0.5% in Tasmania. Sales were unchanged in Queensland. The largest drop of 2.3% was recorder in household goods retailing. The ABS said that the fall was mainly driven by a sharp 6.6% decrease in sales of hardware, building and garden supplies. It was the biggest monthly decrease in this category since July 2000. Economists suggested that the following plunge was largely due to the closure of the Masters hardware chain.

The EUR/JPY has formed a bullish Wolfe Wave structure on intraday time frame, making a 1-3 line confluence with ATR Pivot Point (green line). At this time, traders should watch for a possible breakout of 121.05 towards 121.25 and 121.40. If the breakout happens and EPA is hit (121.40) traders should also watch for a possible continuation towards next ATR pivots with 121.90 as a final projection. If the price proceeds lower without breaking the 1-3 line then watch for 121.70 and 120.47 - projected low.

The Aussie is consolidating under fresh highs at 0.7694, posted on strong bullish acceleration last week that eventually broke above former congestion top at 0.7607.

Bullish daily studies favor further advance, however, correction is expected to precede fresh upside.

Daily RSI and slow stochastic are emerging from overbought territory and expected to generate bearish signals.

Session low at 0.7650 marks initial support ahead of near-term consolidation floor at 0.7618 and strong 0.7607/02 supports (former consolidation top / daily Tenkan-sen), which should contain extended upticks.

Only break here would risk deeper pullback and expose key near-term supports at 0.7510 / 0.7488 (former consolidation range floor / 200SMA).

Renewed attempts above 0.7700 barrier would signal fresh bullish action for final attack at key short-term barrier at 0.7776 (08 Nov high).]\

Res: 0.7694, 0.7730, 0.7776, 0.7800
Sup: 0.7650, 0.7618, 0.7602, 0.7547

Near-term focus is turning lower after recovery attempts from strong 112.00 support stayed capped under sideways-moving daily Tenkan-sen line (currently at 113.70).

The pair looking for fresh attack at the lower boundary of near-term congestion between 112.00 (Fibo 38.2% of 101.17/118.65) and 113.70 (daily Tenkan-sen line), break of which would trigger stronger acceleration lower and open psychological 110.00 support (reinforced by ascending 100SMA).

Bearishly aligned daily technicals support scenario.

Alternative scenario requires firm break above Tenkan-sen barrier to sideline near-term bears and signal stronger correction of the downleg from 115.36 to 112.00.

Res: 112.26, 113.45, 113.70, 114.09
Sup: 112.21, 111.97, 111.34, 110.83

Cable remains under pressure in early Monday's trading and attempts to extend strong pullback from 1.2704 peak, after the price broke below short-term bull-channel.

Near-term bears eyes strong support zone between 1.2430 and 1.2390 (thin daily cloud / Fibo 38.2% of 1.1986/1.2704 / 100SMA), break of which is needed to confirm reversal and open way for further easing.

Sustained break lower is expected to open way towards 1.2345 (daily Kijun-sen) and 1.2260 (Fibo 61.8%) in extension

Daily Tenkan-sen (currently at 1.2557) offers solid resistance that should cap corrective upticks.

Res: 1.2496, 1.2536, 1.2557, 1.2600
Sup: 1.2430, 1.2411, 1.2390, 1.2345

The Euro eased in Asia, following repeated rejection near 1.0800 barrier (Friday/today), as falling 100SMA continues to cap (past four days trading repeatedly closed below 100SMA). Near-term action is holding within 1.0720/1.0800 congestion, trading between daily Tenkan-sen and 100SMA, without clear near-term direction. Last week's strong upside rejection at daily cloud top generated negative signal, with loss of daily Tenkan-sen pivot (currently at 1.0723), needed for stronger bearish signal. Slow stochastic is turning lower from overbought zone and supports scenario along with daily studies that are losing traction. Firm break below 1.0700 zone is needed to complete asymmetric H&S on hourly chart and trigger fresh acceleration lower. Meantime, expect extended congestion while daily Tenkan-sen holds. Break above layers of strong barriers (falling 100SMA / daily cloud top/upper 20d Bollinger band is needed to activate bullish scenario for extension of the upleg from 1.0339 (03 Jan low).

Res: 1.0796, 1.0810, 1.0824, 1.0872
Sup: 1.0746, 1.0723, 1.0710, 1.0656