Daily Pivots: (S1) 1.3993; (P) 1.4034; (R1) 1.4072; More...

Intraday bias in EUR/AUD remains on the downside for the moment. Current decline is part of the whole fall from 1.6250 and should target 1.3671 key support level next. As the larger decline from 1.6587 is seen as a corrective move, we'd expect downside to be contained by 1.3671 to bring reversal. On the upside, break of 1.4289 resistance will confirm short term bottoming and turn bias back to the upside for 1.4721 resistance.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a consolidative pattern. 50% retracement of 1.1602 to 1.6587 at 1.4095 was already met. While further fall cannot be ruled out, we'd expect strong support above 1.3671 to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4721 resistance will indicate completion of such correction and outlook bullish for retesting 1.6587 high.

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Daily Pivots: (S1) 1.0678; (P) 1.0691; (R1) 1.0712; More...

Intraday bias in EUR/CHF remains neutral as consolidation from 1.0635 continues. Near term outlook will remain bearish as long as 1.0749 resistance holds and deeper decline is expected. Decisive break of 1.0620 key support level will confirm resumption of whole fall from 1.1198. In that case, next downside target will be 1.0485 fibonacci level. Break of 1.0749 will raise the chance of medium term reversal and turn focus back to 1.0897 key resistance.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Such correction is still in progress. Sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485. On the upside, break of 1.0897 resistance is needed to confirm completion of such fall. Otherwise, outlook will stay bearish.

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After a very busy week of central banks meetings, economic data outcomes, and earnings across the globe, investors' attention will shift again to politics – A move that is likely to remain the major market moving factor for months to come.

While the dollar has been struggling for the past six weeks, Friday's Non-Farm Payrolls reported a rise of 227,000 jobs. Even though the rise has been the largest in the last four months, this has done did very little to buck the trend because the average hourly earnings rose by only 0.1% and unemployment ticked up slightly suggesting that slack in the labor market still exists. As a result traders lowered their bets for a March rate hike to 13%.

For the new U.S. administration solely analyzing economic data won't be enoughin what seems to be declaring a currency war. In a non-traditional fashion, the officials in the U.S. including the president himself have been repeatedly saying the dollar is over-valued and accusing countries like China, Germany, and Japan for manipulating their currencies,

This will become more interesting as Japan's Prime Minister visits Washington on Friday. Shinzo Abe told parliament that suggestions of Japan devaluing the yen were off the mark, emphasizing that his country is abiding by G20 agreements to refrain from competitive currency devaluation, and that monetary policy easing is a tool to accelerate growth, not manipulate the currency. Well, he can also remind Mr. Trump of who started QE1, QE2, and QE3 programs.

On the U.S. data front, there's only Tier 2 economic data to be released next week including trade balance, and University of Michigan consumer sentiment. However, the trade deficit in the U.S. will become an important figure to monitor as Trump's trade policies are taking center stage.

Similarly, in the Eurozone, the calendar is light with only German trade balance and couple of industrial production numbers from the rest of area, which makes again politics, especially in France of more importance to the Euro. Marine Le Pen kicked off her presidential campaign on Saturday with a promise to shield voters from globalization and make France free again. The chances of the far-right leader to win the elections is very slim according to opinion polls, but I think markets have learnt the lessons from the UK and the US.

China also returns from a long holiday with lot of data to digest. Foreign exchange reserves, services PMI, Foreign Direct Investments and Trade Balance figures are all due to release.

Daily Pivots: (S1) 1.0729; (P) 1.0763 (R1) 1.0818; More.....

Intraday bias in EUR/USD remains neutral for the moment as it's bounded in tight range below 1.0828. As noted before, choppy rise from 1.0339 is seen as a correction. Hence, in case of another rise, upside should be limited by 1.0872 resistance and bring fall resumption eventually. Break of 1.0619 will turn bias to the downside for retesting 1.0339 low.

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) 1.2445; (P) 1.2491; (R1) 1.2526; More...

GBP/USD is staying in range below 1.2705 and intraday bias remains neutral for the moment. As noted before, rise from 1.1986 is seen as the third leg of the consolidation pattern from 1.1946. Hence, in case of another rise, we'd expect upside to be limited by 1.2774 resistance and bring down trend resumption. On the downside, below 1.2411 minor support will argue that rise from 1.1986 is completed and turn bias to the downside for 1.1946 low.

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) 0.9889; (P) 0.9935; (R1) 0.9966; More.....

USD/CHF is still staying in consolidation from 0.9860 and intraday bias remains neutral at this point. Upside of recovery is expected to be limited by 1.0043 resistance and bring another decline. Current fall from 1.0342 is seen as the third leg of the pattern from 1.0327. Below 0.9860 will target 61.8% retracement of 0.9443 to 1.0342 at 0.9786 and below. On the upside, break of 1.0043 will indicate short term bottoming and turn bias back to the upside.

In the bigger picture, rejection from 1.0327 resistance suggests that consolidation pattern from there is still in progress. Fall from 1.0342 is seen as the third leg and retest of 0.9443/9548 support zone could be seen. But we'd expect strong support from there to contain downside. At this point, we're still expecting the larger rally to resume later to 38.2% retracement of 1.8305 to 0.7065 at 1.1359, after the consolidation completes.

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Daily Pivots: (S1) 112.09; (P) 112.77; (R1) 113.22; More...

USD/JPY is staying in consolidation above 112.04 and intraday bias stays neutral for the moment. Outlook is unchanged that choppy decline from 118.65 is seen as a corrective move. Below 112.04 will bring deeper fall but we'd expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. Meanwhile, on the upside, above 115.36 resistance will argue that such correction is finished and turn bias to the upside for 118.65. Break will resume whole rise from 98.97 and target 125.85 key resistance.

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 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

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Daily Pivots: (S1) 0.7634; (P) 0.7664; (R1) 0.7711; More...

At this point, AUD/USD's rebound from 0.7158 could still extend higher. But we'd expect strong resistance from 0.7777/7833 resistance zone to limit upside and bring near term reversal. On the downside, break of 0.7510 minor support will indicate that rise from 0.7158 has completed already and turn bias back to the downside for this key near term support level.

In the bigger picture, we're still treading price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seek to 55 month EMA (now at 0.8205) and above.

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Daily Pivots: (S1) 1.2985; (P) 1.3029; (R1) 1.3065; More...

USD/CAD is staying in consolidation from 1.2968 and intraday bias stays neutral for the moment. Overall development affirmed the view that corrective rise from 1.2460 has completed at 1.3598 already, after hitting 50% retracement of 1.4689 to 1.3838. Therefore, deeper decline is expected as long as 1.3168 minor resistance holds. Break of 1.2968 should pave the way to retest 1.2460 low. However, on the upside, break of 1.3168 will mix up the near term outlook and turn focus back to 1.3387 resistance first.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg could be completed at 1.3598 and fall from there is tentatively seen as the third leg. Break of 1.2460 will target 50% retracement of 0.9460 to 1.4689 at 1.2075 before completing the correction. In case of another rise, we'd look for reversal signal above 61.8% retracement of 1.4689 to 1.2460 at 1.3838.

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The forex markets are generally staying in tight range today with Dollar, Euro and Aussie trading with a soft tone. Recent developments in the US is prompting some analysts to push back their expectations on Fed's hike this year. According to a Reuters poll of dealers, all 14 respondents expected Fed to stand pat in March meeting too. 12 our of 14 expected Fed to hike 0.25% by the end of second quarter. 10 expected interest rate to hit 1.00-1.25% by the end of the year. But only 2 expected interest rate to hit 1.25-1.50%. That is, the majority is expecting Fed to hike only twice this year.

However, San Francisco Fed president John Williams offered some hawkish comments. He noted that "from a risk management point of view, there's an argument to move sooner, rather than wait." And, he maintained that three hikes is "a reasonable guess, a reasonable perspective to have as a base case." And he noted that "there's a lot of potential that this economy is going to perhaps get more of a boost than the base case." Chicago Fed president Charles Evans said Friday that while he expected 2 hikes when he submitted his projections back in December, now, he "could see three hikes" and he "could be comfortable with that." As of Friday, fed fund futures were pricing in only 13.3% chance of a March hike and 68.3% change of a hike by June.

In Eurozone, German finance minister Wolfgang Schäuble blamed ECB for making Euro's exchange rate "too low" and monetary polices that are "too loose" for Germany. He said that "when ECB chief Mario Draghi embarked on the expansive monetary policy, I told him he would drive up Germany's export surplus.... I promised then not to publicly criticise this [policy] course. But then I don't want to be criticized for the consequences of this policy." Last week, Peter Navarro, the head of Donald Trump's new National Trade Council, criticized that Germany exploited the US and EU partners by using a "grossly undervalued" euro.

On the data front, Japan labor cash earnings rose 0.1% yoy in December, below expectation of 0.4% yoy. Australia retail sales dropped -0.1% mom in December versus expectation of 0.3% mom growth. China Caixin PMI services dropped 0.3 pt to 53.1 in January. The economic calendar is relatively light today with German factory orders, Eurozone retail PMI and Sentix investor confidence featured. Looking ahead, RBA and RBNZ rate decisions are the main focuses of the week and both central banks are expected to stand pat. Here are some highlights for the week:

• Tuesday: RBA rate decision, Japan leading indicators; Swiss foreign currency reserve; German industrial production; Canada trade balance, building permits, Ivey PMI; US trade balance
• Wednesday: Japan current account, Eco watcher sentiments; Canada housing starts
• Thursday: RBNZ rate decision; Japan machine orders; Australia NAB business confidence; UK RICS house price balance; Swiss unemployment rate; German trade balance; US jobless claims
• Friday: Japan PPI; Australia home loans; China trade balance; Japan tertiary activity index; UK industrial and manufacturing productions; Canada employment; US import price index, U of Michigan sentiment

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.2985; (P) 1.3029; (R1) 1.3065; More...

USD/CAD is staying in consolidation from 1.2968 and intraday bias stays neutral for the moment. Overall development affirmed the view that corrective rise from 1.2460 has completed at 1.3598 already, after hitting 50% retracement of 1.4689 to 1.3838. Therefore, deeper decline is expected as long as 1.3168 minor resistance holds. Break of 1.2968 should pave the way to retest 1.2460 low. However, on the upside, break of 1.3168 will mix up the near term outlook and turn focus back to 1.3387 resistance first.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg could be completed at 1.3598 and fall from there is tentatively seen as the third leg. Break of 1.2460 will target 50% retracement of 0.9460 to 1.4689 at 1.2075 before completing the correction. In case of another rise, we'd look for reversal signal above 61.8% retracement of 1.4689 to 1.2460 at 1.3838.

Economic Indicators Update

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