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Daily Pivots: (S1) 188.65; (P) 189.09; (R1) 189.57; More.....

Intraday bias in GBP/JPY remains neutral for the moment. On the downside, below 187.94 will resume the decline from 191.29 to 38.2% retracement of 178.32 to 191.29 at 186.33. Sustained break there will raise the chance of larger scale correction and target 61.8% retracement at 183.27. On the upside, though, firm break 189.69 minor resistance will retain near term bullishness and bring retest of 191.29 high.

In the bigger picture, up trend from 123.94 (2020 low) is in progress. Medium term outlook will stay bullish as long as 178.32 support holds. Next target is 195.86 long term resistance (2015 high).

Daily Pivots: (S1) 161.04; (P) 161.48; (R1) 161.84; More...

Intraday bias in EUR/JPY stays neutral at this point. On the downside, below 160.20 will resume the fall from 163.70 to 38.2% retracement of 153.15 to 163.70 at 159.66. Sustained break there will indicate that fall from 163.70 is reversing whole rise from 153.13, and target 61.8% retracement at 157.18. On the upside, though, above 162.16 minor resistance will retain near term bullishness, and bring retest of 163.70.

In the bigger picture, price actions from 164.29 medium term top are seen as a correction to rise from 139.05 which could still be extending. As long as 148.38 resistance turned support holds (2022 high), larger up trend from 114.42 (2020 low) is expected to resume through 164.29 at a later stage. Next target would be 169.96 (2008 high).

Daily Pivots: (S1) 0.8526; (P) 0.8542; (R1) 0.8549; More...

Intraday bias in EUR/GBP remains neutral for the moment. On the downside decisive break of 0.8491/7 support zone will confirm larger down trend resumption and target 0.8464 projection level first. Nevertheless, firm break of 0.8577 will turn bias back to the upside for stronger rebound.

In the bigger picture, fall from 0.8764 is seen as another leg in the whole down trend from 0.9267 (2022 high). Outlook will stay bearish as long as 0.8713 resistance holds. Break of 0.8491 will target 61.8% projection of 0.8977 to 0.8491 from 0.8764 at 0.8464.

Daily Pivots: (S1) 1.6507; (P) 1.6538; (R1) 1.6569; More...

Intraday bias in EUR/AUD remains neutral for the moment. On the downside, decisive break of 1.6450 support will argue that whole rebound from 1.6127 has completed with three waves up to 1.6742 already. Near term outlook will be turned bearish for 1.6127 again, to extend the whole corrective pattern from 1.7062. Nevertheless, strong rebound from current level, followed by break of 1.6606 minor resistance, will retain near term bullishness and bring retest of 1.6742.

In the bigger picture, fall from 1.7062 medium term top is seen as a correction to the up trend from 1.4281 (2022 low). Break of 1.6844 resistance will argue that this up trend is ready to resume through 1.7062 high. In case of another fall, strong support should be seen around 1.5846 and 38.2% retracement of 1.4281 to 1.7062 at 1.6000 to bring rebound.

Daily Pivots: (S1) 0.9609; (P) 0.9619; (R1) 0.9629; More...

Intraday bias in EUR/CHF remains neutral and further rally is expected with 0.9510 support intact. On the upside, break of 0.9630 will resume the rise from 0.9252 and target 161.8% projection of 0.9252 to 0.9471 from 0.9304 at 0.9658 next. However, considering bearish divergence condition in 4H MACD, firm break of 0.9510 will turn bias back to the downside for deeper fall.

In the bigger picture, as long as 0.9683 resistance holds, rebound from 0.9252 are seen as a corrective move only. Larger down trend is expected to resume through 0.9252 after the correction completes. However, firm break of 0.9683 and sustained trading above 55 W EMA (now at 0.9620) will argue that 0.9252 is already a medium term bottom. Stronger rise would then be seen 61.8% retracement of 1.0095 to 0.9252 at 0.9773 and above.

Yesterday’s mix of economic data – which pointed at higher-than-expected inflation and lower-than-expected spending in the US – finally broke the Federal Reserve (Fed) doves’ and the equity bulls’ back for at least a day. US producer price inflation jumped to 0.6% on a monthly basis in February, and to 1.6% on a yearly basis. Higher fuel and food prices were to blame. But even taking the volatile energy and food prices out, the core metric showed higher-than-expected price pressures last month, core PPI remained steady at the 2% y-o-y. Retail sales, on the other hand, improved less than expected. The data forced the market to reconsider the Fed expectations. The probability of a June rate cut fell to 60%. The 2-year yield jumped to 4.70%, the 10-year yield spiked to 4.30%, the dollar index sharply rose and equities fell – though losses reversed toward the end of the session. The S&P500 closed the session 0.29% down and Nasdaq fell 0.30%.

All eyes are on next week’s FOMC meeting. The Fed will update its dot plot having seen a two-month jump in inflation, robust jobs data, a relatively strong GDP print and healthy earnings. There is a chance that we see the median forecast show no more than two rate cuts penciled in by the Fed members for the year – instead of three plotted at December’s dot plot. We will walk into next week’s FOMC meeting with a hawkish tilt knowing that it’s always better for the Fed not to act too early than to be forced to make a U-turn on the way.

Crude extends gains

US crude advanced to $81pb level after Ukraine damaged 12% of Russia’s refining capacity with drone attacks. The IEA also gave support to the bulls yesterday by saying that they anticipate a supply deficit throughout this year if OPEC+ continues to cut output in the Q2. This is a significant change in their forecast as they were pointing at a surplus at their earlier prediction. Trend and momentum indicators support a further rise in oil prices. But oil bulls could hit a wall if we see a hawkish shift from the Fed at next week’s meeting.

In the FX

The EURUSD tumbled to 1.0873 on the back of a broadly stronger dollar and rising speculation that the European Central Bank (ECB) will cut the rates even if it’s not fully sure that inflation is headed to 2% target according to the Belgian central bank head Pierre Wunsch. The Governor of the Bank of Greece goes a step further and says that the ECB should cut rates twice before its August break.

However, let's return to reality. The ECB would find it challenging to act independently and implement numerous rate cuts if the Fed adopts a hawkish stance, leading to appreciation of the US dollar. The ECB could take the risk of cutting before the Fed (in June) and announce one additional cut compared to the Fed at best before seeing inflation risks return to the bloc.

Price-wise, the EURUSD outlook remains bearish. The pair will step into a medium term bearish consolidation zone if it slips below the 1.0867 level – the major 38.2% Fibonacci retracement on February – March rebound, and could extend gains all the way down to 1.06 in the continuation of an ABCD pattern.

Elsewhere, the USDJPY is trending higher despite news that the wages negotiations in Japan show that big corporations meet the wages demand. Today, Rengo – the country’s biggest union group – will announce its numbers. Strong wages growth is inflationary and should convince the Bank of Japan (BoJ) to act sooner rather than later. However, the BoJ is expected to hold off until it obtains a clearer understanding of the wage landscape following the second and third rounds of negotiations, scheduled between the end of March and the beginning of April. These negotiations will not only encompass major corporations but also extend to medium and small-sized companies. This being said, given the positive news from the early negotiations, it’s interesting to see that the Japanese yen bulls don’t hold a dominant position in the market this week. The USDJPY is back above the 148 level. A broadly stronger US dollar certainly explains why the USDJPY couldn’t gain a further downside momentum this week, but given how cheap the yen has become, I would expect the yen bulls to resist to the dollar’s upside pressure. They have not. Still, I think that going short the yen at the current levels doesn’t offer a potential worth taking the risk of a sizeable bullish run in the yen into next week’s BoJ decision.

And speaking of decisions, the PBoC left its MLF rate unchanged today, while home prices fell for a 13th month in China warning that all the efforts deployed so far couldn’t slow bleeding in the country’s problematic property sector.

Daily Pivots: (S1) 1.0858; (P) 1.0907; (R1) 1.0932; More...

EUR/USD's break of 55 4H EMA (now at 1.0900) indicates short term topping at 1.0980. Intraday bias is back on the downside for 1.0797 support. Firm break there will argue that rebound from 1.0694 has completed and bring retest of this low. For now, risk will stay on the downside as long as 1.0980 resistance holds, in case of recovery.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern to rise from 0.9534 (2022 low). Rise from 1.0447 is seen as the second leg. While further rally could cannot be ruled out, upside should be limited by 1.1274 to bring the third leg of the pattern. Meanwhile, sustained break of 1.0694 support will argue that the third leg has already started for 1.0447 and possibly below.

Daily Pivots: (S1) 1.2715; (P) 1.2769; (R1) 1.2807; More...

GBP/USD's break of 55 4H EMA (now at 1.2760) indicates short term topping at 1.2829. Intraday bias is back on the downside for 55 D EMA (now at 1.2673). Sustained break there will target 1.2517 structural support next. For now, risk will stay mildly on the downside as long as 1.2822 minor resistance holds, in case of recovery.

In the bigger picture, price actions from 1.3141 medium term top are seen as a corrective pattern to up trend from 1.0351 (2022 low). Rise from 1.2036 is seen as the second leg, which is still in progress. But upside should be limited by 1.3141 to bring the third leg of the pattern. Meanwhile, break of 1.2517 support will argue that the third leg has already started for 38.2% retracement of 1.0351 (2022 low) to 1.3141 at 1.2075 again.

Daily Pivots: (S1) 0.8795; (P) 0.8819; (R1) 0.8862; More....

Current strong rebound in USD/CHF argues that consolidation pattern from 0.8884 has completed with three waves to 0.8728. Intraday bias is mildly on the upside for 0.8891 resistance first. Firm break there will resume whole rise from 0.8332. Next target is 61.8% projection of 0.8550 to 0.8884 from 0.8728 at 0.8934. For now, this will remain the favored case as long as 0.8728 support holds, in case of retreat.

In the bigger picture, price actions from 0.8332 medium term bottom as seen as developing into a corrective pattern to the down trend from 1.0146 (2022 high). Further rise would be seen as long as 0.8555 support holds. But upside should be limited by 0.9243 resistance, at least on first attempt.

Daily Pivots: (S1) 147.71; (P) 148.04; (R1) 148.63; More...

USD/JPY's break of 148.29 minor resistance argues that fall from 150.87 is merely a correction, and has completed at 146.47. Intraday bias is back on the upside for retesting 150.87. Nevertheless, on the downside, break of 38.2% retracement of 140.25 to 150.87 at 146.81 will argue that fall from 150.87 is reversing the whole rally from 140.25. In this case, deeper decline would be seen to 61.8% retracement at 144.30 and below.

In the bigger picture, no change in the view that price action from 151.89 (2023 high) are correction to up trend from 127.20 (2023 low). The question is whether this correction has completed at 140.25, or extending with fall from 150.87 as the third leg. Sustained break of above mentioned 146.81 fibonacci level will favor the latter case. But even so, downside should be contained by 50% retracement of 127.20 to 151.89 at 139.54.