Daily Pivots: (S1) 1.0519; (P) 1.0567 (R1) 1.0654; More.....

EUR/USD recovers further but stays below 1.0652 resistance. Intraday bias remains neutral first. 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, break of 1.0461 key support indicates that consolidation from there has completed as a triangle at 1.1298. And, the down trend from 1.6039 (2008 high) is resuming. Current downtrend is now expected to target 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) 1.2313; (P) 1.2373; (R1) 1.2475; More...

GBP/USD rebounds further as consolidation from 1.2200 extends. With 1.2509 minor resistance intact, intraday bias stays neutral and outlook remains bearish. We'd still expect upside to be limited by 1.2509 resistance and bring fall resumption. Corrective rise from 1.1946 has completed at 1.2774. Below 1.2200 will target a test on 1.1946 low. Decisive break there will confirm larger down trend resumption.

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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Daily Pivots: (S1) 1.0048; (P) 1.0134; (R1) 1.0182; More.....

USD/CHF is still staying in the consolidation pattern from 1.0342 and intraday bias remains neutral. Deeper fall cannot be ruled out. But 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, firm 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) 114.56; (P) 115.99; (R1) 116.77; More...

USD/JPY weakened against but stays above 114.76 support. Intraday bias remains neutral for the moment. 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 112.76) 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 corrective 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.

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US treasury yields tumbled sharply as markets corrected the post election rally. Surge in yields since November was driven by anticipation of Donald Trump's policies of higher spending, lower taxes and higher debt. Markets seemed to turn cautious as Trump prepares to take office later in the month. 10 year yield dropped to 2.368 comparing to December's high at 2.621. 30 year yield also dropped to close below 3.000 handle at 2.962, comparing to December's high at 3.196. The development dragged Dollar broadly lower with the dollar index hitting as low as 101.30. The developments confirmed that yields and Dollar turned into a correction phase which could last for the the rest of the month. It's doubtful whether a strong non-farm payroll report could trigger sustainable comeback in the Dollar in near term. In other markets, gold rode on Dollar weakness and reached as high as 1185.9. DJIA continued to stay in tight range below 20000 handle.

TNX's sharp fall and break of 2.424 support confirmed short term topping at 2.621, on bearish divergence condition in daily MACD. Deeper decline is now in favor in near term to 55 day EMA (now at 2.257). But we'd expect strong support from 38.2% retracement of 1.336 to 2.621 at 2.130 to contain downside. Nonetheless, consolidation from 2.621 should extend for a while in near term. And break of 2.621 is needed to confirm up trend resumption. Otherwise, near term outlook will stay neutral at best. And such development would limit strength in the greenback.

Non-farm payroll report from US is the main focus today. The US economy is expected to add 178k jobs in December. Unemployment rate is expected to rise back to 4.7%. Average hourly earnings are expected to grow 0.3% mom. Looking at other job data, ADP report was a disappointment, showing 153k growth in private sector jobs missing expectation of 175k. Employment component of ISM services also dropped sharply to 53.8, down from 58.2. However, employment component of ISM manufacturing improved to 53.1, up from 52.3. Conference board consumer confidence improved to 113.7, up from 109.4. There are more risks of downside surprises in today's NFP report. US will also release trade balance and factory orders.

Elsewhere, Australia trade balance turned into surplus of AUD 1.24b in November, first surplus since 2014. Japan labor cash earnings rose 0.2% yoy in November. German factory orders, retail sales, Eurozone confidence indicates and retail sales will be featured in European session. Swiss will release foreign currency reserves. Canada will release employment data and trade balance.

USD/JPY Daily Outlook

Daily Pivots: (S1) 114.56; (P) 115.99; (R1) 116.77; More...

USD/JPY weakened against but stays above 114.76 support. Intraday bias remains neutral for the moment. 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 112.76) 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 corrective 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.

Economic Indicators Update

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Daily Pivots: (S1) 1.0418; (P) 1.0459 (R1) 1.0528; More.....

Intraday bias in EUR/USD remains neutral for the moment with focus on 1.0652 resistance. 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, break of 1.0461 key support indicates that consolidation from there has completed as a triangle at 1.1298. And, the down trend from 1.6039 (2008 high) is resuming. Current downtrend is now expected to target 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) 1.2243; (P) 1.2297; (R1) 1.2375; More...

GBP/USD's consolidation from 1.2200 is still in progress and extending. Intraday bias remains neutral first. In case of stronger rise, upside should be limited by 1.2509 resistance and bring fall resumption. Corrective rise from 1.1946 has completed at 1.2774. Below 1.2200 will target a test on 1.1946 low. Decisive break there will confirm larger down trend resumption.

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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Daily Pivots: (S1) 1.0176; (P) 1.0233; (R1) 1.0266; More.....

USD/CHF's consolidation from 1.0342 is still in progress and intraday bias stays neutral first. Deeper fall cannot be ruled out. But 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, firm 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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Dollar stays soft in early US session after mixed job data as the post FOMC minutes selloff might extend. Initial jobless claims dropped 28k to 235k in the week ended December 31, much lower than expectation of 260k. That's also just 2k above the 43 year low of 233k made back in November. In addition, initial claims stayed below 300k for 96 straight weeks, the longest since 1970. Continuing claims rose 16k to 2.11m in the week ended December 24. ADP report showed 153k growth in private sector jobs in December, missing expectation of 175k. Challenger report showed 42.4% yoy rise in planned layoffs in December. Also release in US session, Canada IPPI rose 0.3% mom in November. RMPI dropped -2.0% mom.

UK data continues to beat market expectations. PMI services rose to 56.2 in December, up from 55.2, above consensus of 54.7. That;s also the highest level in 17 months. Markit noted that "the UK economy continues to defy widely held expectations of a Brexit-driven slowdown." Meanwhile, the all-sector PMI, including services, manufacturing and construction survey findings, also rose to 17-month high at 56.4, up from 55.1. Markit noted this points to GDP growth of 0.5% in Q4, just slightly lower than Q3 reading of 0.6%. However, it's also cautioned that inflationary pressures are building through the supply chain and could drag down growth in 2017.

From Eurozone, PPI rose 0.3% mom, 0.1% yoy in November, better than expectation of 0.2% mom, -0.1% yoy. Retail PMI rose to 50.4 in December, up from 48.6. Elsewhere, Swiss CPI dropped -0.1% mom, 0.0% Yoy in December. China Caixin PMI services rose to 53.4 in December. Japan monetary base rose 23.1% yoy in December.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 116.79; (P) 117.48; (R1) 117.92; More...

USD/JPY is still bounded in the consolidation from 118.65 and intraday bias remains neutral. At this point, we'd continue to expect downside to be contained by 114.76 support and bring rally resumption finally. 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 112.67) 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 corrective 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.

Economic Indicators Update

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Daily Pivots: (S1) 116.79; (P) 117.48; (R1) 117.92; More...

USD/JPY is still bounded in the consolidation from 118.65 and intraday bias remains neutral. At this point, we'd continue to expect downside to be contained by 114.76 support and bring rally resumption finally. 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 112.67) 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 corrective 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.

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