Daily Pivots: (S1) 122.16; (P) 122.94; (R1) 123.47; More...

Intraday bias in EUR/JPY remains neutral as consolidation from 124.08 continues. Overall, further rally is in favor as long as 120.90 support holds. Above 124.08 will target 126.09 key resistance next. As rise from 109.20 is still seen as a corrective pattern, we'd be cautious on topping around 126.09. Meanwhile, break of 120.90 will indicate short term topping and turn bias to the downside for 55 days EMA (now at 120.27) and below.

In the bigger picture, price actions from 109.20 medium term bottom are seen as part of a medium term corrective pattern from 149.76. There is prospect of another rise towards 126.09 key resistance level before completion. But even in that case, we'd expect strong resistance between 126.09 and 141.04 to limit upside, at least on first attempt. Sustained trading below 55 day EMA will pave the way to retest 109.20.

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Daily Pivots: (S1) 140.18; (P) 142.01; (R1) 142.99; More...

GBP/JPY's fall from 148.42 resumed by taking out 142.16 and reaches as low as 140.60 so far. The development confirms short term topping at 148.42 too. Intraday bias is back on the downside for 38.2% retracement of 122.36 to 148.42 at 138.46. As note before, rise from 122.36 is seen as a corrective move. Sustained trading below 138.46 and downside acceleration will indicate that such correction is finished too. And in that case, deeper fall should be seen to 61.8% retracement at 132.31 and below. On the upside, break of 145.38 resistance is needed to confirm completion of the fall from 148.42. Otherwise, near term outlook stays bearish in case of recovery.

In the bigger picture, the down trend from 195.86 top (2015 high) should have made a medium term bottom at 122.36 after hitting 100% projection of 195.86 to 154.70 from 163.87 at 122.71. Price actions from there are expected to develop into a medium term corrective pattern. Upside should be limited by 38.2% retracement of 195.86 to 122.36 at 150.4 for setting the medium term range.

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Sterling remains the weakest major currency this week as pressured by uncertainties over Brexit. UK prime minister Theresa May blamed the fall in the Pound's exchange rate on media's misinterpretation of what she said yesterday. She clarified that "I am tempted to say that the people who are getting it wrong are those who print things saying I'm talking about a hard Brexit, it is absolutely inevitable it is a hard Brexit. I don't accept the terms soft and hard Brexit." She emphasized that "what we are doing is going to get an ambitious, good and best possible deal for the United Kingdom, in terms of trading with and operating within the European single market." Earlier in the day, May said in a televised interview that Brexit is about "getting the right relationship" and the right relationship is about being "have control of our borders, control of our laws".

German Chancellor Angle Merkel repeated her stance that without accepting EU's "four freedoms", there would be restricted access to the single markets. The four freedoms include movement of goods, people, services and capital over borders. Merkel emphasized that "one can't carry out these negotiations as an exercise in cherry-picking. That would have fatal consequences for the other 27 member states, and we can't allow such consequences." Meanwhile, Merkel also urged European unity beyond Brexit and said urged the member states to have "have joint positions on a range of issues, including trade, climate to domestic security." And without it, "Europe won't be able to develop its strength."

In US, Atlanta Fed president Dennis Lockhart said that "the job of cyclical recovery is largely done". And, Fed is "quite close to achieving its mandated policy objectives of full employment and stable prices." And, the economy is "well positioned for moderate growth and steadily improving conditions". Meanwhile, Boston Fed president Eric Rosengren said that "appropriate monetary policy will need to normalize more quickly than over the past year." And, Rosengren also said that it "seems reasonable if we continue to see real GDP growing faster than the so-called 'potential' rate."

On the data front, UK BRC retail sales monitor rose 1.0% yoy in December. Australia retail sales rose 0.2% mom in November. China CPI rose 2.1% yoy in December, PPI rose 5.5% yoy. Swiss will release unemployment rate in European session. Canada will release housing starts and building permits later in US session.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 140.18; (P) 142.01; (R1) 142.99; More...

GBP/JPY's fall from 148.42 resumed by taking out 142.16 and reaches as low as 140.60 so far. The development confirms short term topping at 148.42 too. Intraday bias is back on the downside for 38.2% retracement of 122.36 to 148.42 at 138.46. As note before, rise from 122.36 is seen as a corrective move. Sustained trading below 138.46 and downside acceleration will indicate that such correction is finished too. And in that case, deeper fall should be seen to 61.8% retracement at 132.31 and below. On the upside, break of 145.38 resistance is needed to confirm completion of the fall from 148.42. Otherwise, near term outlook stays bearish in case of recovery.

In the bigger picture, the down trend from 195.86 top (2015 high) should have made a medium term bottom at 122.36 after hitting 100% projection of 195.86 to 154.70 from 163.87 at 122.71. Price actions from there are expected to develop into a medium term corrective pattern. Upside should be limited by 38.2% retracement of 195.86 to 122.36 at 150.4 for setting the medium term range.

Economic Indicators Update

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It was not a very good start of us in the first week of 2017, we bought euro against yen initially at 122.60 but the retreat from 123.86 turned out deeper than expected, the position was stopped at 122.25 but euro found support just above 122 level and has rebounded in latter part of the week.

We sold aussie at 0.7350 but in view of the strength of the rebound from 0.7158, we exited the position around break-even and the pair continued edging higher since.

Another short position was entered in EUR/GBP at 0.8615 but euro found renewed buying interest at 0.8450 and rallied, the position was stopped at 0.8655 and the pair broke above previous resistance at 0.8669.

In short, 3 positions were entered last week with total loss of 70 points and the positions are listed below.

4 Jan : EUR/JPY - Long at 122.60, exited at 122.25 (- 35 points)
6 Jan : AUD/USD - Short at 0.7350, exited at 0.7345 (+ 5 points)
9 Jan : EUR/GBP - Short at 0.8615, exited at 0.8655 (- 40 points)

| AUD EUR/JPY EUR/GBP CAD
Jan + 5 -35 - 40
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Y-T-D

We had a fairly good start in the first week of 2017, we sold cable at 1.2305 and our downside target at 1.2205 was met quite soon, we then entered three positions in USD/JPY, two long and one short, the two long position only made small profit whilst the short position entered at 116.65 met our downside target at 115.65 with another 100 points profit.

On the other hand, the two positions entered in EUR/USD and USD/CHF (short and long respectively) didn't work very well, both went in the wrong direction and stops were tripped.

In short, 6 positions were entered among all 4 currency pairs with total profit of 152 points and the positions are listed below:

3 Jan : GBP/USD - Short at 1.2305, exited at 1.2205 (+100 points)
4 Jan : USD/JPY - Long at 117.35, exited at 117.50 (+15 points)
4 Jan : EUR/USD - Short at 1.0470, exited at 1.0505 (- 35 points)
5 Jan : USD/CHF - Long at 1.0170, exited at 1.0140 (- 30 points)
5 Jan : USD/JPY - Short at 116.65, exited at 115.65 (+100 points)
9 Jan : USD/JPY - Long at 116.50, exited at 116.52 (+ 2 points)

| JPY EUR CHF GBP

Jan + 117 - 35 - 30 +100
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Y-T-D

Daily Pivots: (S1) 1.0497; (P) 1.0558 (R1) 1.0591; More.....

Intraday bias in EUR/USD remains neutral as consolidation from 1.0339 continues. As long as 1.0652 holds, outlook stays bearish and another decline is expected. Break of 1.0339 will extend the larger down trend to parity next. However, break of 1.0652 will now confirm short term bottoming and turn near term outlook bullish for stronger rebound to 1.0872 resistance first.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

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Daily Pivots: (S1) 1.0117; (P) 1.0149; (R1) 1.0208; More.....

Intraday bias in USD/CHF remains neutral for the moment as consolidation from 1.0342 continues. In case of another fall, we'd expect strong support from 1.0019 to contain downside and bring rally resumption. Firm break of 1.0342 will confirm up trend resumption. However, sustained break of 1.0019 will indicate near term reversal and could bring deeper fall bring to 0.9443/9548 support zone.

In the bigger picture, the corrective fall from 1.0327 should have completed at 0.9443 already. Rise from 0.9443 could be resuming the long term rally from 2011 low at 0.7065. But decisive break of 1.0327 is needed to confirm. In that case, next medium term upside target will be 38.2% retracement of 1.8305 to 0.7065 at 1.1359. Rejection from 1.0327 will extend the sideway pattern with another fall back to 0.9443/9548 support zone.

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Daily Pivots: (S1) 115.61; (P) 116.39; (R1) 117.72; More...

Intraday bias in USD/JPY remains neutral as consolidation from 118.65 continues. Outlook stays bullish with 114.76 intact and further rise is expected. Above 118.65 will extend the whole rise from 98.97 to 125.85 key resistance next. However, sustained break of 114.76 will confirm short term topping and bring deeper pull back to 55 day EMA (now at 112.96) and possibly below.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.05 and below will extend the consolidation with another falling leg before up trend resumption.

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Daily Pivots: (S1) 1.2217; (P) 1.2324; (R1) 1.2387; More...

Intraday bias in GBP/USD remains on the downside for the moment. Prior break of 1.2200 confirms resumption of fall from 1.2774 for 1.1946 low. As noted before, corrective rise from 1.1946 has completed at 1.2774 and larger down trend is possibly resuming. This is supported by the rejection from 55 day EMA. Decisive break of 1.1946 will confirm this bearish case. Meanwhile, break of 1.2432 resistance will indicate that fall from 1.2774 is completed and correction from 1.1946 is extending with another rise.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

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Sterling is sold off across the board today and remains weak in early US session. The pound falls on fear that UK will opt for hard Brexit and lose access to the single market in EU. On the other hand, FTSE surges to new record high at 7239. UK prime minister Theresa May. May emphasized in a televised interview that Brexit is about "getting the right relationship, not about keeping bits of membership." And she noted that the right relationship is about being "have control of our borders, control of our laws" while having the "best possible deal" for trading with EU. The comments indicated that control of immigration and law prevail access to the single markets. Meanwhile, May also pledged to set out "some more details in the coming weeks" about Brexit ahead of the March 31 deadline for triggering Article 50 for Brexit negotiations.

Technically, GBP/USD dives through 1.2200 support to resume recent fall from 1.2774. GBP/JPY also drops through 142.16 support which confirms short term reversal, topping at 148.42. EUR/GBP also breaches 0.8666 resistance to resume recent rebound from 0.8303. Among the Sterling crosses, GBP/AUD is the biggest mover today. The sharp decline and strong break of 55 day EMA confirmed short term topping at 1.7204 and completion of the rebound from 1.5665. Note that GBP/AUD was held below 38.2% retracement of 2.0535 to 1.5665 and inside medium term channel. The developments argues that larger down trend 2.2397 is intact and is possibly resuming. Near term outlook is now bearish for a test on 1.5665 low.

A report by S&P chief European economist noted that inflation in Eurozone will turn around in 2017. However, ECB would look through the rise in inflation, pushed by energy prices. In steady, he expected ECB to maintain monetary policy accommodations until core inflation returns to sustainable rising path, "not before 2018". On the other hand, Germany's BbB banking association urged ECB to start "a very careful change in policy direction" because of pick-up in inflation. The BbB noted that "the low interest rates are a huge problem for banks, but the ECB's interest rate turnaround should be implemented carefully."

On the data front, Eurozone Sentix investor confidence rose sharply to 18.2 in January, versus expectation of 12.8. Sentix noted "the Eurozone's economic indices finally align with the already positive development of the indices of other world regions." And, "the region benefits from repeated announcements by president-elect Trump to establish a mutually beneficial relationship between the two countries." Also from Eurozone, unemployment rate was unchanged at 9.8% in November. German trade surplus widened to EUR 21.7b in November, industrial production rose 0.4% mom. Elsewhere, Australia building approvals rose 7.0% mom in November.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2217; (P) 1.2324; (R1) 1.2387; More...

Intraday bias in GBP/USD remains on the downside for the moment. Prior break of 1.2200 confirms resumption of fall from 1.2774 for 1.1946 low. As noted before, corrective rise from 1.1946 has completed at 1.2774 and larger down trend is possibly resuming. This is supported by the rejection from 55 day EMA. Decisive break of 1.1946 will confirm this bearish case. Meanwhile, break of 1.2432 resistance will indicate that fall from 1.2774 is completed and correction from 1.1946 is extending with another rise.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Economic Indicators Update

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