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Daily Pivots: (S1) 1.2809; (P) 1.2852; (R1) 1.2902; More...

Intraday bias in GBP/USD is turned neutral first with current retreat. Some consolidations would be seen below 1.2892 temporary top first. But further rally will remain in favor as long as 55 4H EMA (now at 1.2735) holds. On the upside, above 1.2892 will resume larger rise from 1.2063 and target 61.8% projection of 1.2036 to 1.2826 from 1.2517 at 1.3005.

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) 0.8743; (P) 0.8764; (R1) 0.8797; More....

Range trading continues in USD/CHF and intraday bias stays neutral at this point. On the downside, sustained break of 0.8741 will argue that the whole rebound from 0.8332 might have completed, and bring deeper fall to 0.8550 support. Nevertheless, strong bounce from current level will retain near term bullishness. Further break of 0.8891 will resume the rise from 0.8332.

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) 146.33; (P) 147.23; (R1) 147.96; More...

Intraday bias in USD/JPY remains on the downside and outlook is unchanged. Sustained 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. Nevertheless, strong support from 146.81, followed by break of 148.29 minor resistance resistance, will argue that fall from 150.87 is merely a correction, which has completed already.

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.

Yen continues to stand out as the strongest currency in today's relatively subdued markets, supported by anticipations of an imminent rate hike by BoJ next week. Swiss Franc and US Dollar are trailing behind in strength, indicating a preference for safer assets. Conversely, Australian Dollar, New Zealand Dollar, and Sterling find themselves at the lower end of the performance spectrum, with Canadian Dollar also showing signs of weakness. This currency alignment hints at a cautious risk-off sentiment prevailing in the market, awaiting confirmation from developments in the US.

With no significant economic announcements scheduled for North America today and Fed ongoing blackout period, the forex market's direction seems to be at the mercy of overarching risk sentiments. However, the overall picture is set to become more dynamic tomorrow with a lineup of economic data releases. The agenda begins with Japan's PPI and Australia's NAB business confidence index during Asian session, followed by the spotlight shifting to UK's employment data and wages growth, and culminating with US CPI. Investors and traders are advised to maintain calm and secure their seatbelts in anticipation of market-moving data on Tuesday.

Technically, Nikkei's break of 38876.80 support today should confirm short term topping at 40472.10. Investors could be taking profits now in anticipation of next week's BoJ meeting. Deeper pull back is in favor to 38.2% retracement of 32205.38 to 40472.10 at 37314.21. But strong support should be seen around 55 D EMA (now at 36922.87) to bring rebound.

In Europe, at the time of writing, FTSE is down -0.37%. DAX is down -0.55%. CAC is down -0.19%. UK 10-year yield is down -0.0149 at 4.045. Germany 10-year yield is up 0.019 at 2.285. Earlier in Asia, Nikkei fell -2.19%. Hong Kong HSI rose 1.43%. China Shanghai SSE rose 0.74%. Singapore Strait Times fell -0.28%. Japan 10-year JGB yield rose 0.0325 to 0.767.

Bitcoin breaks 72k, regulatory nod and ETF inflows propel

Bitcoin's bullish momentum has once again captured the market's attention as it makes new record high above 72k mark today. This surge follows the UK Financial Conduct Authority decision to greenlight the creation of cryptocurrency debt instruments on financial exchanges, albeit limited to professional investors.

In addition to regulatory developments, investment flows into ETFs continue to demonstrate strong market interest. Despite slight deceleration, the 10 largest US spot Bitcoin ETFs attracted almost USD 2B in capital for the week ending March 8, according to LSEG data. This continued influx of institutional money into Bitcoin products highlights the growing confidence and interest from investors seeking exposure to digital assets.

Technically, current rally in Bitcoin is expected to target 161.8% projection of 24896 to 49020 from 38496 at 77572 first. Firm break there will target 200% projection at 86798 next. Meanwhile, break of 67095 support will indicate short term topping and bring consolidations first, before staging another rise.

ECB's Kazimir advocates for June rate cut, citing alive and kicking inflation risks

ECB Governing Council member Peter Kazimir said today he favors June for the first rate cut because upside inflation risks are still "alive and kicking".

"Rushing isn't smart and beneficial,"  warning that a premature move would risk undermining the ECB's credibility.

"Only in June, with new forecast at hand, will the level of confidence reach the threshold," he said, adding that he favors "a smooth and steady cycle of policy easing."

"Upside inflation risks are alive and kicking," Kazimir said, listing factors including workers' pay, energy prices, fiscal policy and the green transition.

"The current picture clearly favors staying calm for the coming weeks and delivering the first-rate cut in summer," he said. "The slowdown in inflation remains fragile — we can't take it for granted."

Japan's Q4 GDP finalized at 0.1% qoq, a narrow escape from recession

Japan's economy has narrowly avoided a recession, as shown in the final GDP figures for Q4. The revised data indicates a modest growth of 0.1% qoq, a positive swing from the preliminary estimate of -0.1% qoq contraction. On annualized basis, GDP expanded by 0.4%, contrasting sharply with initial reports of -0.4% decline.

The main driver behind this upward revision was significant increase in capital expenditure, which surged by 2% qoq, deviating markedly from the initially estimated -0.1% qoq drop. However, private consumption, accounting for approximately 60% of Japan's economy, presented a less optimistic picture, declining by -0.3% qoq, a slight deterioration from the provisional figure of -0.2% qoq.

This latest economic data comes at a crucial time, but it does not seem to deter BoJ from considering an interest rate hike for the first time since 2007, scheduled for March 19. The anticipation builds around the annual Spring wage negotiations, which have so far shown strong momentum. Positive outcomes are also expected from the forthcoming results from Rengo, Japan's largest union group, on March 15.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 146.33; (P) 147.23; (R1) 147.96; More...

Intraday bias in USD/JPY remains on the downside and outlook is unchanged. Sustained 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. Nevertheless, strong support from 146.81, followed by break of 148.29 minor resistance resistance, will argue that fall from 150.87 is merely a correction, which has completed already.

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.

Economic Indicators Update

The Japanese yen strengthened against the US dollar on Monday, reaching a month-long peak following the release of statistics indicating Japan's return to economic growth in Q4 2023. This development effectively ends the previously declared technical recession.

Japan's GDP experienced a quarterly increase of 0.1% and an annual growth of 0.4%. These figures revise earlier estimates, suggesting 0.1% and 0.4% declines, respectively. In comparison, the Japanese economy contracted by 0.8% quarterly and 3.3% annually in Q3 2023.

The positive economic data have fuelled market speculation about a potential interest rate hike by the Bank of Japan, with some economists and traders anticipating such a move as soon as March.

Bank of Japan board member Junko Nakagawa recently commented on the visible prospects for achieving inflation targets and a positive wage cycle, further supporting the yen.

The Japanese currency is currently benefitting from the weakening US dollar and a drop in US government bond yields amid the Federal Reserve's dovish rhetoric.

Technical Analysis of USD/JPY

On the H4 USD/JPY chart, a correction wave to the 146.48 level has been completed (tested from above). The market is now forming a consolidation range above this level, expecting to break upwards and initiate the fifth growth wave towards 152.72. The MACD oscillator supports this scenario, with its signal line trading below zero at minimums and poised for growth.

On the H1 USD/JPY chart, a correction wave to 146.48 has finished. A growth impulse to 147.26 and its correction to 146.55 have been executed, essentially setting the consolidation range boundaries. With an upward breakout, growth towards the 148.00 level is anticipated. This target is the first in the growth wave. The Stochastic oscillator confirms this scenario, with its signal line above the 50 mark and strictly heading towards 80.

Bitcoin's bullish momentum has once again captured the market's attention as it makes new record high above 72k mark today. This surge follows the UK Financial Conduct Authority decision to greenlight the creation of cryptocurrency debt instruments on financial exchanges, albeit limited to professional investors.

In addition to regulatory developments, investment flows into ETFs continue to demonstrate strong market interest. Despite slight deceleration, the 10 largest US spot Bitcoin ETFs attracted almost USD 2B in capital for the week ending March 8, according to LSEG data. This continued influx of institutional money into Bitcoin products highlights the growing confidence and interest from investors seeking exposure to digital assets.

Technically, current rally in Bitcoin is expected to target 161.8% projection of 24896 to 49020 from 38496 at 77572 first. Firm break there will target 200% projection at 86798 next. Meanwhile, break of 67095 support will indicate short term topping and bring consolidations first, before staging another rise.

In a statement today, ECB Governing Council member Peter Kazimir highlighted his preference delivering the first rate cut in June. Emphasizing the persistent nature of upside inflation risks, Kazimir pointed to factors such as workers' pay, energy prices, fiscal policy, and the green transition as ongoing concerns that necessitate caution.

Kazimir's stance is clear: "Rushing isn't smart and beneficial," he remarked, underlining the jeopardy to ECB's credibility from a hasty policy adjustment.

According to him, "Only in June, with new forecast at hand, will the level of confidence reach the threshold."

Also, he advocates for a "smooth and steady cycle of policy easing," suggesting that the decision-making process should be grounded in comprehensive and up-to-date economic forecasts.

"Upside inflation risks are alive and kicking," he asserted, emphasizing the need for vigilance. "The current picture clearly favors staying calm for the coming weeks and delivering the first-rate cut in summer," he said. "The slowdown in inflation remains fragile — we can't take it for granted."

USDJPY continues to trend lower as dollar was deflated by growing bets for Fed’s rate cut in coming months, while yen rallies on strong signals that the Bank of Japan could start raising interest rates this month, with scenario being boosted by solid Q4 GDP data, which show that economy remains resilient and likely avoided recession.

Technical picture on daily chart is improving as negative momentum is strengthening and converged daily Tenkan / Kijun-sen are about to create bear-cross.

Bears probe again through cracked Fibo support at 146.82 (38.2% of 140.25/150.88) and pressure next supports at 146.18/12 (200DMA / top of daily Ichimoku cloud and 145.89 (Feb 1 higher low), with break of these supports to further weaken near-term structure and expose next pivots at 145.56 (50% retracement) and 145.00 (daily cloud base).

Daily close below 146.82 Fibo level to verify bearish signal and keep bears fully in play.

Caution on oversold conditions on daily chart which may produce headwinds and slow bears.

Res: 147.12; 147.48; 147.75; 148.37.
Sup: 146.18; 146.12; 145.56; 145.00.

The Japanese yen continues to make inroads against the US dollar. In Monday’s European session, USD/JPY is trading at 146.54, down 0.35%. The yen notched its fourth straight winning day on Friday and surged 2% last week.

Japan’s GDP revised upwards to 0.1%

Japan’s GDP for the fourth quarter was revised upwards to 0.1%, compared to -0.1% in the preliminary estimate and following a 0.8% decline in the third quarter. This was significant as the small gain in Q4 means that the economy narrowly avoided a recession, which is defined as two consecutive quarters of negative growth.

No recession is good news, but Japan’s economy is sputtering. The economy barely grew in Q4 and missed the market estimate of 0.3%. Domestic demand remains weak as nervous consumers are holding tight to the purse strings. Private consumption declined 0.3% in the fourth quarter, slightly weaker than the market estimate of 0.2%.

Will BoJ pivot at the March meeting?

All eyes are on the Bank of Japan meeting on March 18-19, with investors on the alert for signs that the central bank plans to phase out its ultra-loose monetary policy. Senior BoJ officials have made hints that changes are coming to the Bank’s ultra-loose monetary policy. The BoJ is unlikely to lift interest rates out of negative territory, but could show a shift in policy by ending its yield curve control policy. A rate hike, which would likely send the yen sharply higher, isn’t expected before June.

In the US, the February employment report was mixed. Nonfarm payrolls rose 275,000, easily beating the market estimate of 200,000 and the downwardly revised 229,000 in January. However, the unemployment rate surprised by climbing to 3.9% after holding at 3.7% for three straight months, which was also the market estimate. This was the highest unemployment rate in two years and points to softer labor market conditions. The rise in the unemployment rate has raised the odds of a rate cut in June by the Federal Reserve. Currently, the likelihood of a cut is 73%, compared to 64% just one week ago, according to the CME’s FedWatch tool.

USD/JPY Technical

• There is resistance at 147.23 and 147.96
• 146.33 and 1.4560 are providing support

The euro is trading above USD 1.09, hitting its strongest point since mid-January on Friday, helped by news from both the US and Europe.

Friday's news showed that the US labor market is weakening:

→ The change in employment in the non-farm sector showed an increase in jobs = 275k for the month, although last month it was = +353k.

→ The unemployment rate rose to 3.9%, although it was 3.7% for 3 months.
News of a weakening labour market could put pressure on the Fed to ease monetary policy.

Meanwhile in Europe, the ECB kept borrowing costs at a record high, citing significant progress in containing inflation, and revised its inflation expectations downward, forecasting price growth of 2.3% in 2024, and 1.9% in 2025. And during a press conference last Thursday, ECB President Lagarde told reporters that policymakers had not discussed rate cuts at that meeting.

Thus, there is reason to believe that the Fed will start lowering rates earlier (it started raising them earlier than the ECB). And this assumption is shared by many market participants, judging by the bullish dynamics in the EUR/USD market.

Today's chart shows:

→ the price of EUR/USD has been moving within an ascending channel (shown in blue) since mid-February. Moreover, it seems that the median line acts as resistance — Friday’s peak indicates this;

→ the price rose to the important psychological level of 1.1000 – it served as resistance in January;

→ the RSI indicator is in the overbought zone, forming a bearish divergence.

If there is some correction this week after an increase of more than 0.9% last week, then the price of EUR/USD may fall to its lower limit. Failure of the bulls to resume the uptrend from this line could mark the prospect of a decline in price towards the important support of 1.0870.

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