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Short Term Elliott Wave View in EURUSD suggests that cycle from 4.16.2024 low is in progress as a 5 waves impulsive Elliott Wave structure. Rally to 1.12 ended wave (3) of the impulse. Pullback in wave (4) is now in progress with internal subdivision as an expanded Flat structure. Down from 8.26.2024 high, wave A ended at 1.10. Rally in wave B unfolded as a double three Elliott Wave structure. Up from wave A, wave ((w)) ended at 1.1189 and pullback in wave ((x)) ended at 1.1065. Wave ((y)) higher ended at 1.1213 which completed wave B.

The pair turned lower in wave C with subdivision as a 5 waves impulse. Down from wave B, wave ((i)) ended at 1.1119 and rally in wave ((ii)) ended at 1.1209. Internal subdivision of wave ((ii)) unfolded as a double three where wave (w) ended at 1.1189 and wave (x) ended at 1.1122. Wave (y) higher ended at 1.1209 which completed wave ((ii)). Pair resumed lower in wave ((iii)) towards 1.1043 and wave ((iv)) ended at 1.1082. Expect wave ((v)) of C of (4) to complete soon and pair to turn higher in 3 waves at least.

EURUSD 60 Minutes Elliott Wave Chart

EURUSD Elliott Wave Video

Daily Pivots: (S1) 1.3480; (P) 1.3495; (R1) 1.3517; More...

Intraday bias in USD/CAD remains neutral first. On the upside, above 1.3538 will resume the rebound from 1.3418 to 1.3646 resistance. ON the downside, firm break of 1.3418 will resume whole decline from 1.3946 towards 1.3176 key support.

In the bigger picture, corrective pattern from 1.3976 (2022 high) is extending with another falling leg. While deeper decline could be seen, strong support should emerge above 1.2947 resistance turned support to bring rebound. Rise from 1.2005 (2021 low) is still in favor to resume at a later stage.

Daily Pivots: (S1) 0.6869; (P) 0.6892; (R1) 0.6909; More...

Intraday bias in AUD/USD remains neutral for consolidation below 0.6941. Further rally is expected as long as 0.6823 resistance turned support holds. Above 0.6941 will resume the rise from 0.6348 to 100% projection of 0.6348 to 0.6823 from 0.6621 at 0.7096. However, firm break of 0.6823 will turn bias to the downside for deeper pullback to 55 D EMA (now at 0.6742).

In the bigger picture, overall, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern, with rise from 0.6269 as the third leg. Firm break of 0.6870 resistance will target 100% projection of 0.6269 to 0.6870 from 0.6340 at 0.6941, and then 138.2% projection at 0.7179. This will now remain the favored case as long as 0.6621 support holds.

Daily Pivots: (S1) 1.1024; (P) 1.1054; (R1) 1.1074; More....

Intraday bias in EUR/USD remains neutral and further rally is still expected 1.1001 cluster support holds (38.2% retracement of 1.0665 to 1.1213 at 1.1004). Break of 1.1213 will target 1.1274 high. However, decisive break of 1.1001/4 will confirm near term bearish reversal. Intraday bias will be turned back to 61.8% retracement at 1.0874.

In the bigger picture, corrective pattern from 1.1274 should have completed at 1.0665 already. Decisive break of 1.1274 (2023 high) will confirm resumption of whole up trend from 0.9534 (2022 low). Next target will be 61.8% projection of 0.9534 to 1.1274 from 1.0665 at 1.1740. This will now be the favored case as long as 1.1001 support holds.

Daily Pivots: (S1) 1.3239; (P) 1.3273; (R1) 1.3300; More...

GBP/USD's break of 1.3265 resistance turned support suggests short term topping at 1.3433, on bearish divergence condition in 4H MACD. Intraday bias is back on the downside for 55 D EMA (now at 1.3090), and possibly below. But strong support is expected from 1.3000 cluster (38.2% retracement of 1.2298 to 1.3433 at 1.2999 to bring rebound.

In the bigger picture, up trend from 1.0351 (2022 low) is in progress. Next target is 61.8% projection of 1.0351 to 1.3141 from 1.2298 at 1.4022. For now, outlook will stay bullish as long as 1.3000 support holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8459; (P) 0.8483; (R1) 0.8523; More…

No change in USD/CHF's outlook as sideway trading continues. On the downside, break of 0.8374 will resume the fall from 0.9223 to retest 0.8332 low. Decisive break there will indicate larger down trend resumption. Nevertheless, firm break of 0.8548 will argue that it's correcting whole fall from 0.9223. Intraday bias will be back on the upside for 38.2% retracement of 0.9223 to 0.8374 at 0.8698 at least.

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern, with fall from 0.9223 as the second leg. Strong support could be seen from 0.8332 to bring rebound. Yet, overall outlook will continue to stay bearish as long as 0.9243 resistance holds. Firm break of 0.8332, however, will resume larger down trend from 1.0146 (2022 high).

Daily Pivots: (S1) 144.41; (P) 145.47; (R1) 147.51; More...

USD/JPY's rebound from 139.57 short term bottom resumed by breaking through 146.47 resistance. Intraday bias is back on the upside for 38.2% retracement of 161.94 to 139.57 at 148.11. Decisive break there will argue that whole fall from 161.95 has completed ahead of 139.26 fibonacci level, and bring further rally to 61.8% retracement at 153.39. For now, risk will stay on the upside as long as 141.63 support holds, in case of retreat.

In the bigger picture, fall from 161.94 medium term top is seen as the first leg of the correction to whole up trend from 102.58 (2021 low). Strong support could be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to contain downside, at least on first attempt. Firm break of 149.35 resistance will indicate that the second leg has started. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Dollar is gaining some traction, emerging as the strongest currency of the week so far. Several factors are underpinning this momentum. First, Fed Chair Jerome Powell has reaffirmed the expectation of two additional rate cuts this year, adhering to the script established in the latest dot plot. This stance has tempered market speculation about another aggressive 50bps cut at the upcoming November meeting.

Second, a chorus of ECB officials is aligning with market expectations for a 25bps rate cut this month. Notably, even a top hawkish member have shifted her tone to express increased concern over economic growth. This collective dovishness adds downward pressure on Euro. Third, Japan's new Prime Minister has softened his previously hawkish stance on monetary policy. In a significant turnaround, he has indicated support for BoJ be cautious regarding any additional rate hikes. This shift has weighed heavily on Yen, making it the weakest performer among major currencies this week.

For now, fed fund futures are still seeing 36% chance of a 50bps Fed cut on November 7, and 64% chance of 25bps. The most critical data would be tomorrow's non-farm payrolls, but a slight miss in headline job growth might not be able to alter Fed officials' minds. Today's ISM services will carry some weight too, and Fed would hope that services activities are not deteriorating too much.

Elsewhere, Swiss CPI data due today will also be important. New SNB Chair Martin Schlegel has warned earlier in the week that downside risks to inflation is "definitely" higher than upside risks. He even emphasized that SNB won't rule out negative interest rate should deflation risk materializes. Swiss CPI is expected to be unchanged at 1.1% in September and any downside surprise would add to the case of another 25bps rate cut in December.

Overall in the currency markets, Loonie is the second strongest for the week at this point, following Dollar, as underpinned by rebound in oil prices. Aussie is currently the third best, but started to lose momentum as the boost from China's stimulus measures is fading. On the other hand, Yen is the worst performer for the week, followed by Kiwi, and then Swiss Franc. Euro and Sterling are positioned in the middle.

Technically, AUD/JPY's near term rally resumed by breaking through 100.70 temporary top. Further rise is now expected as long as 98.33 support holds, towards 100% projection of 90.10 to 99.82 from 93.58 at 103.30. However, as the rebound from 90.10 is seen as the second leg of the medium term consolidation pattern from 109.36, AUD/JPY should start to lose momentum above 103.30. Strong resistance should emerge below 109.36 high to bring near term reversal.

In Asia, at the time of writing, Nikkei is up 2.24%. Hong Kong HSI is down -4.14%. China is still on holiday. Singapore Strait Times is down -0.10%. Japan 10-year JGB yield is up 0.014 at 0.834. Overnight, DOW rose 0.09%. S&P 500 rose 0.01%. NASDAQ rose 0.08%. 10-year yield rose 0.042 to 3.785.

BoJ's Noguchi urges patience before Japan's inflation mindset shifts

BoJ Board Member Asahi Noguchi, a known dovish, emphasized in a speech today that Japanese society still needs "considerable time" to go before fully adopting a mindset aligned with the central bank's 2% inflation target. Noguchi highlighted the importance of BoJ maintaining its accommodative monetary policy until this shift in mindset occurs.

With inflation surpassing the 2% target for over two years and nominal wages rising, Japanese firms are increasingly willing to pass on higher costs through price hikes. However, Noguchi highlighted that real consumption remains weak, as households continue to expect low price growth—a mindset shaped by Japan's prolonged deflationary period.

Japan's PMI services finalized at 53.1, composite at 52.0

Japan’s services sector continued its expansion in September, although growth eased slightly. The final Services PMI was recorded at 53.1, down from 53.7 in August, marking a sustained rise in business activity for all but one of the past 25 months. Composite PMI, which includes both services and manufacturing, stood at 52.0, down from 52.9 in August, remaining above the 50-neutral threshold for the third consecutive month.

Usamah Bhatti, economist at S&P Global Market Intelligence, highlighted that the service sector’s strong performance carried into the end of Q3. The average reading for Q3 (53.5) was largely in line with Q1’s average of 53.4, signaling "sustained growth" in the service economy.

However, the manufacturing sector continued to struggle, weighing on overall private sector performance. While service sector remains a pillar of growth, aggregate new business growth slowed in September, and backlogs of work fell for the fifth consecutive month. The outlook for the wider private sector will depend on how the service economy responds to downside risks, including a stagnating economy.

Fed's Barkin flags risk of inflation getting stuck

In the remarks overnight, Richmond Fed President Thomas Barkin expressed that he's still "more concern about inflation" than the labor market. He added due to solid demand and renewed labor market tightness, there are challenges in completing the "last mile" of of the inflation fight.

While Barkin dismissed the notion of a "big resurgence" in inflation, he acknowledged the "very real risk" of inflation "getting stuck".

He stated that he would be optimistic if, by Q1, inflation continued to show signs of stabilization, which would allow Fed to consider moving back to a "neutral" policy stance.

However, Barkin made it clear that "normalization comes when you're convinced that inflation hits 2%." He remains "open-minded" on how quickly rates could fall, leaving room for flexibility depending on future inflation data.

ECB’s hawk Schnabel turns attention from inflation to rising growth risks

ECB Executive Board member Isabel Schnabel, widely known for her hawkish stance, has shifted her tone, adding to growing signals from other officials that the central bank is preparing for a 25bps rate cut this month.

Schnabel acknowledged in a speech overnight the "headwinds to growth," pointing to weakening labor demand and progress in disinflation. She noted that a "sustainable fall of inflation back to our 2% target in a timely manner is becoming more likely," despite persistent inflation in services and strong wage growth.

Schnabel also highlighted that while the peak impact of monetary tightening is likely behind us and real incomes are rising, the recovery remains fragile. “Growth remains shallow,” she said, with the recovery repeatedly falling short of expectations over the past 18 months.

In separate remarks, Governing Council member Mario Centeno, a known dove, warned of the "new risk" of inflation undershooting the ECB’s target.

Centeno cautioned that this could "stifle economic growth," leading to fewer jobs and reduced investment. A sluggish economy, he said, could create a "vicious cycle," further driving inflation below the target and compounding economic challenges.

Looking ahead

Swiss CPI is a main focus in European session. Eurozone will release PPI and PMI services final. UK will also publish PMI services final. Later in the day, US ISM services will take center stage, while jobless claims and factory orders will also be featured.

USD/JPY Daily Outlook

Daily Pivots: (S1) 144.41; (P) 145.47; (R1) 147.51; More...

USD/JPY's rebound from 139.57 short term bottom resumed by breaking through 146.47 resistance. Intraday bias is back on the upside for 38.2% retracement of 161.94 to 139.57 at 148.11. Decisive break there will argue that whole fall from 161.95 has completed ahead of 139.26 fibonacci level, and bring further rally to 61.8% retracement at 153.39. For now, risk will stay on the upside as long as 141.63 support holds, in case of retreat.

In the bigger picture, fall from 161.94 medium term top is seen as the first leg of the correction to whole up trend from 102.58 (2021 low). Strong support could be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to contain downside, at least on first attempt. Firm break of 149.35 resistance will indicate that the second leg has started. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Key Highlights

• Ethereum failed to surpass the $2,800 resistance and trimmed most gains.
• ETH price is following a major bearish trend line with resistance near $2,820 on the daily chart.
• Bitcoin price remains at risk of more losses below $60,000.
• Gold prices might gain pace for a move toward the $2,700 level.

Ethereum Technical Analysis

Ethereum struggled to surpass the $2,750 level and corrected gains. There was a rejection pattern on the chart, suggesting that ETH could face more downsides.

Looking at the daily chart, the price was rejected again below the 50% Fib retracement level of the downward move from the $2,560 swing high to the $2,078 low. It also stayed below the $2,800 resistance zone, the 100-day simple moving average (red), and the 200-day simple moving average (green).

The price is now trading below the $2,620 level and signaling a downturn. The next major support is near $2,250, below which the price could slide toward $2,165. Any more losses might call for a move toward the $2,050 level.

On the upside, ETH is facing resistance near the $2,640 level. The next major resistance is near the $2,800 level. There is also a connecting bearish trend line with resistance at $2,850 on the same chart.

A daily close above the $2,820 resistance zone could start another steady increase. In the stated case, the price may perhaps rise toward the $3,000 level. The next stop for the bulls may perhaps be near the $3,250 level.

Looking at Bitcoin, the bears were able to push the price below $62,000 and might aim for more losses below $60,000.

Economic Releases

• US ISM Services Index for Sep 2024 – Forecast 51.7, versus 51.5 previous.
• US Initial Jobless Claims - Forecast 220K, versus 218K previous.

BoJ Board Member Asahi Noguchi, a known dovish, emphasized in a speech today that Japanese society still needs "considerable time" to go before fully adopting a mindset aligned with the central bank's 2% inflation target. Noguchi highlighted the importance of BoJ maintaining its accommodative monetary policy until this shift in mindset occurs.

With inflation surpassing the 2% target for over two years and nominal wages rising, Japanese firms are increasingly willing to pass on higher costs through price hikes. However, Noguchi highlighted that real consumption remains weak, as households continue to expect low price growth—a mindset shaped by Japan's prolonged deflationary period.