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'We judge that expectations for a very strong non-farm payrolls and wages is very high so that the risk of disappointment is high.' – Commonwealth Bank of Australia (based on Market Watch)

Pair's Outlook

The Cable managed to retain its position on Thursday, as the lack of potential market movers contributed to relatively flat trade. Today everything depends on the US NFP data, a positive reading of which is to spark more bearish momentum and is likely to cause a drop below the immediate support , namely the monthly S2 and the lower Bollinger band. Consequently, the channel's lower boundary around 1.20 might even be put to the test. Technical indicators also suggest the Sterling is to suffer another loss today, but in case the NFP data surprises with a weaker reading the 1.23 mark is expected to be the intraday ceiling.

Traders' Sentiment

There are 67% of all open positions being long today, compared to 65% previously. The number of order to acquire the British Pound dropped over the day, namely from 61 to 53%.

'The dollar has risen as U.S. Treasury yields went up this week, but there appears to be some resistance on the upside around the middle of the 115-yen level.' – Mizuho Securities (based on Reuters)

Pair's Outlook

For the third consecutive day on Wednesday the US Dollar outperformed the Japanese Yen. The Buck itself overperformed, which caused the ascending channel's resistance line to be pierced. Consequently, the 115.00 mark was put to the test, but managed to contain the USD/JPY pair for the time being. However, a breach today is more than possible, as the upcoming NFP data is probably the most anticipated in comparison to all the readings in the last couple of years, as it would indicate whether Fed is to raise rates next week. A positive reading is to boost the Buck and could even push it beyond 116.00, while a disappointment might lead to a drop back to 113.00.

Traders' Sentiment

There are 56% of traders holding long positions today (previously 55%), whereas the share of buy orders slid from 67 to 54%.

USD/JPY - 115.36

Original strategy  :

Buy at 114.90, Target: 115.90, Stop: 114.55

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 114.90, Target: 115.90, Stop: 114.55

Position :  -

Target :  -

Stop : -

As the greenback has surged again today and broke above indicated previous resistance at 115.38, adding credence to our bullishness for recent upmove to extend further gain to another previous resistance at 115.62, however, near term overbought condition should prevent sharp move beyond 115.90-00, risk from there has increased for a retreat to take place later.

In view of this, would not chase this rise here and we are looking to buy dollar on pullback as 114.90-00 should limit downside and bring another rise. Below previous resistance at 114.75-76 would defer and risk test of 114.50-55 but break of support at 114.26 is needed to signal top is formed instead.

'If the (nonfarm payroll) data does come in better than market expectations, it will drag gold prices further.' - Barnabas Gan, OCBC (based on Reuters)

Pair's Outlook

During the early hours of Thursday's trading session the yellow metal's price slipped even further lower, as the price reached below the 1,205 level. However, the bullion managed to find support in a speculative and before the recent moves unconfirmed long term lower trend line of a large scale ascending channel pattern. Due to that reason traders should look at whether a proper rebound occurs, as from the upside there is a strong resistance cluster, which could keep the commodity price lower in the future sessions.

Traders' Sentiment

SWFX traders are neutral at the moment, as 50% of open positions are long. Although, 65% of trader set up orders are set to buy the bullion, and such a high level has not been seen for more than two months.

EUR/JPY - 122.49

EUR/JPY: Wave v as well as larger degree wave (C) ended at 94.11 and first leg of larger degree wave C upmove has possibly ended at 149.79 and wave 2 correction has possibly ended at 109.49.

The single currency only retreated to 120.02 before finding renewed buying interest again and current rally adds credence to our bullish view that low has been formed at 118.24 and upside bias remains for further gain to 123l00 but break of indicated resistance at 123.31 is needed to signal the entire correction from 124.10 top (2016 high) has ended, bring subsequent rise to 123.73, then retest of 124.10. Looking ahead, once this level is penetrated, this would confirm medium term erratic upmove from 109.49 (2016 low) has resumed for headway to 124.50-60, then 125.25-30 (50% Fibonacci retracement of 141.06-109.49).

The daily chart is labeled as attached, early selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), hence, wave (C) has possibly ended at 94.12 with a diagonal triangle as labeled in the daily chart, hence upside bias is seen for further gain. Recent rally above indicated retracement level at 116.69 (50% Fibonacci retracement of the intermediate fall from 139.26-94.12) adds credence to this view and signal major reversal has commenced but first leg of this wave C has possibly ended at 149.79, hence wave 2 has commenced with wave A ended at 126.09, followed by wave B at 141.06, wave C commenced and could have ended at 109.49, above 125.00 would add credence to this view.

On the downside, whilst initial pullback to 122.00 cannot be ruled out, reckon downside would be limited to 121.60-70 and bring another rise later. Below previous resistance at 121.19 would defer and risk weakness to 120.50 but only break of said support at 120.02 would abort and signal the rebound from 118.24 has ended instead, then further fall to 119.60-70 and 119.30-35 would follow but said support at 118.24 should remain intact.

Recommendation: Buy at 121.70 for 123.70 with stop below 120.70.

To re-cap the corrective upmove from the record low of 88.93 (18 Oct 2000), the wave A from there is subdivided as: 1:88.93-113.72, 2:99.88 (1 Jun 2001), 3:140.91 (30 May 2003), 4:124.17 (10 Nov 2003) and 5 ended at record high of 169.97 (21 Jul 2008). The brief but sharp selloff to 112.08 is viewed as a-b-c x a-b-c wave (A) of B. The subsequent rebound to 139.26 is (B) of B and (C) of (B) has possibly ended at 94.12 and in any case price should stay well above previous chart support at 88.93, bring rally in larger degree wave C towards 150.00.

The fairly upbeat assessment of the US economy by Fed Chair Janet Yellen last week made the difference. As she hinted strongly that the Fed would raise its benchmark rate unless today's job report disappoints strongly, we have moved our rate hike call for the Fed forward from June to March. We now expect three hikes in 2017 in line with the Fed's median dot plot from December. Wednesday's strong ADP number bodes well for today's payroll; therefore, a Fed rate hike should be a done deal, in our view.

That said, we were a bit surprised by the sudden hawkishness of the Fed, as there were not many signs in the minutes from the latest meeting or Yellen's hearing in Congress that the Fed was going to hike already in March. It seems that the Fed considers the meeting to be a window of opportunity due to strong economic data, a tight labour market, easy financial conditions and record-high stocks.

However, the Fed's fairly positive assessment of the strength of the US economy seems to be shared by US equity markets. Over the past weeks, equity markets have taken another leap higher as we had called for, supported partly by strong economic releases both in the US and elsewhere.

Fixed income and oil markets seem less convinced about the upbeat assessment. Longterm yields have not climbed much since the initial rise after Trump's election victory in November. As a result, we have seen a flattening of the yield curve in the US. Furthermore, inflation expectations are starting to head south and over the past two days, oil markets have seen a sharp sell-off, reminiscent of past occasions over the 2014-16 period, when the Fed turned more hawkish than had been priced into the market.

USD/CHF –  1.0125

 
USD/CHF – Wave IV ended at 1.1730 and wave V has possibly ended at 0.7068

 
As the greenback has continued trading with a firm undertone after rising from 1.0009 (last week’s low), adding credence to our bullish view that the erratic rise from 0.9861 is still in progress and may extend further gain to 1.0200 and possibly test of resistance at 1.0248, however, a daily close above there is needed to signal the retreat from 1.0344 has ended at 0.9861, bring eventual retest of 1.0344. Looking ahead, only break of said resistance at 1.0344 would retain bullishness and extend the major rise from 0.7401 (2015 low) to 1.0400 and later towards 1.0470-75 but upside should be limited to 1.0500 and price should falter below 1.0600.

Our preferred count on the daily chart is that early selloff to 0.9630 is an end of the larger degree wave III and major correction is unfolding from there with a leg ended at 1.2298 (Nov 2008 with (a): 1.0625, (b):1.0011 and (c):1.2298), wave b ended at 0.9910 with (a): 1.0370, (b): 1.1967, (c): 0.9910. The rise from there to 1.1730 is the wave c which also marked the end of wave IV and wave V has possibly ended at 0.7068.

On the downside, whilst initial pullback to 1.0065-70 cannot be ruled out, reckon said support at 1.0009 would remain intact and bring another rise later to aforesaid upside targets. A daily close below support at 1.0009 would abort and suggest the rebound from 0.9861 has possibly ended, bring test of 0.9967, break there would add credence to this view and bring further fall to 0.9900. A drop below there would confirm and signal the fall from 1.0344 has resumed for a retest of said support at 0.9861, once this level is penetrated, this would extend this decline to 0.9850-53 (61.8% Fibonacci retracement of 0.9550-1.0344), then 0.9800, having said that, reckon downside would be limited to 0.9735-40 and 0.9675-80 should hold from here, bring rebound later..
 
Recommendation: Buy at 1.0065 for 1.0265 with stop below 0.9965.

Dollar's long-term downtrend started from 2.9343 (Feb 1995) and it was unfolding as a (A)-(B)-(C) with (A): 1.1100, (B): 1.8310 (26 Oct 2000), then followed by another impulsive wave (C) with wave III ended at 0.9630 (Mar 2008). Under this count, correction in wave IV has possibly ended at 1.1730 and wave V already broke below support at 0.9630 and met indicated downside target at 0.7500 and 0.7400. The reversal from 0.7068 suggests the wave V has possibly ended and the breach of resistance at 0.9595 add credence to this view and indicated upside target at 1.0000 had been met, however, the sharp retreat from 1.0296 to 0.7401 suggests choppy trading would be seen but price should stay above said record low at 0.7068.

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

Original strategy:

Bought at 120.95, Target: 122.55, Stop: 120.35

Position: - Long at 120.95
Target: 122.55
Stop: -

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

The single currency eased to 120.86 yesterday and renewed buying interest did emerge there (we recommended to buy at 120.95 and a long position was entered), retaining our bullishness and the subsequent anticipated rally just reached our indicated upside target at 122.55 as price rose to 122.56 in European morning. Although current firmness suggests bullishness remains for the rise from 118.24 low to extend further gain to 122.90-00, reckon upside would be limited to 123.30-35 and bring retreat later.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below 122.00 would bring pullback to 121.75-80 but reckon support at 121.48 would limit downside, only break of support at 121.30 would suggest top is formed instead, bring correction to 120.90-00 later.

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 – 0.7525

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 :

Sold at 0.7605, Target: 0.7450, Stop: 0.7585

Position: - Short at 0.7605
Target:  - 0.7450
Stop: - 0.7585

New strategy :

Hold short entered at 0.7605, Target: 0.7450, Stop: 0.7585

Position: - Short at 0.7605
Target:  - 0.7450
Stop:- 0.7585

Although aussie has recovered after falling yo 0.7491 yesterday and minor consolidation above this level would be seen, reckon upside would be limited to previous support at 0.7543 and bring another decline, below said support would extend recent decline from 0.7741 top for retracement of early upmove to 0.7449 support but reckon downside would be limited and reckon 0.7400-10 would hold from here.

In view of this, we are holding on to our short position entered at 0.7605. Only above indicated resistance at 0.7633 would abort and risk a stronger rebound to 0.7665-70, above there would signal low is formed instead and suggest the retreat from 0.7741 has ended, bring a stronger rebound to 0.7700 but price should falter well below said resistance at 0.7741, bring another decline.

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.

EUR/USD

Current level - 10589

Yesterday's reversal at 1.0523 has put and end to the whole slide from 1.0638 high and the intraday bias is positive above 1.0565, with a risk of another upswing towards 1.0640 area. On the senior frames I favor a downtrend to emerge, towards 1.0450 zone.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 115.41

The pair is approaching 115.65 resistance area and my outlook is already counter-trend, for a reversal and slide towards 114.10 support.

GBP/USD

Current level - 1.2156

The bias remains negative below 1.2220 crucial area, for a slide towards 1.2080 zone.