Sample Category Title

Daily Pivots: (S1) 0.8517; (P) 0.8533; (R1) 0.8542; More...

Intraday bias in EUR/GBP remains neutral at this point. Below 0.8521 will resume the fall from 0.8764 to retest 0.8491. Break there will extend larger down trend to 0.8464 projection level. On the upside, above 0.8566 minor resistance will suggest short term bottoming, on bullish convergence condition in 4H MACD. Intraday bias will be turned to the upside for stronger rebound to 55 D EMA (now at 0.8607).

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) 1.6422; (P) 1.6461; (R1) 1.6511; More...

Intraday bias in EUR/AUD is back on the upside with break of 1.6512 minor resistance. Further rise would be seen to 1.6671 resistance first. Decisive break there will revive the case that whole correction from 1.7062 has completed with three waves down to 1.6127. Further rally should then be seen to 1.6844 resistance for confirmation.

In the bigger picture, fall from 1.7062 medium term top is seen as 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) 0.9295; (P) 0.9329; (R1) 0.9351; More...

EUR/CHF's fall from 0.9471 is trying to resume and intraday bias is back on the downside. While deeper decline could be seen, strong support is still expected above 0.9252 low to bring rebound. On the upside, above 0.9363 minor resistance will turn bias back to the upside. Further break of 0.9471 will resume the rebound from 0.9252 to 38.2% retracement of 1.0095 to 0.9252 at 0.9574.

In the bigger picture, medium term outlook remains bearish as long as 0.9683 resistance holds. Current fall from 1.2004 (2018 high) is part of the multi-decade down trend. Another decline is in favor after rebound from 0.9252 completes. However, firm break of 0.9683, and sustained trading above 55 W EMA (now at 0.9638) will argue that EUR/CHF is already in a medium term rally, even as a corrective move.

Daily Pivots: (S1) 1.3381; (P) 1.3413; (R1) 1.3468; More...

USD/CAD recovered after dipping to 1.3357 and intraday bias is turned neutral. On the downside, firm break of 1.3342 support will argue that rebound from 1.3176 has completed at 1.3540, and target this low for resuming whole fall from 1.3897. On the upside, however, break of 1.3540 will resume the rebound from 1.3176 instead.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern only. In case of another fall, strong support should emerge above 1.2947 resistance turned support to bring rebound. Overall, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 at a later stage.

Daily Pivots: (S1) 0.6538; (P) 0.6581; (R1) 0.6609; More...

AUD/USD is still staying above 0.6524 support and intraday bias remains neutral. Further decline is expected with 0.6639 resistance holds. On the downside, firm break of 0.6524 support will argue that whole rebound from 0.6269 has completed, and bring deeper fall to this support. On the upside, however, firm break of 0.6639 will turn bias back to the upside for stronger rebound instead.

In the bigger picture, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern to the down trend from 0.8006 (2021 high). Sideway trading could continue in range of 0.6169/7156 for some more time. But as long as 0.7156 holds, an eventual downside breakout would be mildly in favor.

Daily Pivots: (S1) 0.8562; (P) 0.8603; (R1) 0.8655; More....

USD/CHF recovered after dipping to 0.8550 and intraday bias is turned neutral again. On the downside, below 0.8550 will resume the fall from 0.8727 for 0.8487 support. Break there will argue that rebound from 0.8332 has completed, and bring retest of this low. On the upside, firm break of 0.8727 will resume the rebound to 61.8% retracement of 0.9243 to 0.8332 at 0.8995 instead.

In the bigger picture, while rebound from 0.8332 could be strong, there is no clear sign of medium term bottoming yet. This rebound is tentatively seen as a corrective move for now. Also, outlook will stay bearish as long as 0.9243 resistance holds. Larger down trend from 1.0146 (2022 high) should resume through 0.8332 low at a later stage.

Daily Pivots: (S1) 1.2646; (P) 1.2699; (R1) 1.2739; More...

GBP/USD is still bounded in range trading and intraday bias stays neutral. Another fall cannot be ruled out, but downside should be contained above 1.2499 support to bring rebound. On the upside, firm break of 1.2784 resistance will suggest that consolidation pattern has completed. Further rise should be seen through 1.2826 to resume the rally from 1.2036. Next target will be 1.3141 high.

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 that's in progress. Upside should be limited by 1.3141 to bring the third leg of the pattern. Meanwhile, break of 1.2499 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) 147.16; (P) 147.54; (R1) 147.99; More...

While USD/JPY's pull back extended lower, it's holding above 145.97 support so far. Intraday bias remains neutral for the moment, and further rally is still in favor. As noted before, corrective fall from 151.89 should have completed at 140.25 already. Break of 148.79 will resume the rise from there for retesting 151.89/93 key resistance zone. However, firm break of 145.97 will dampen this view, and turn bias to the downside for deeper fall towards 140.25.

In the bigger picture, stronger than expected rebound from 140.25 dampened the original bearish review. Strong support from 55 W EMA (now at 142.49) is also a medium term bullish sign. Fall from 151.89 could be a correction to rise from 127.20 only. Decisive break of 151.89/93 will confirm resumption of long term up trend. This will now be the favored case as long as 140.25 support holds.

Daily Pivots: (S1) 1.0820; (P) 1.0838; (R1) 1.0865; More...

Intraday bias in EUR/USD remains neutral for the moment and outlook is unchanged. Further decline is expected as long as 1.0931 minor resistance holds. Below 1.0795 will resume the fall from 1.1138 to 1.0722 structural support next. Decisive break there will argue that whole rise from 1.0447 has completed, and target this low. On the upside, however, break of 1.0931 will turn bias back to the upside for stronger rebound instead.

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 1.0722 support will argue that the third leg has already started for 1.0447 and below.

In a week crowded with high-profile events like FOMC rate decision overnight and the upcoming BoE meeting today, Japanese Yen is surprisingly stealing the show as the star performer in the currency markets. This rally in Yen's can be attributed to the significant drop in global benchmark treasury yields, driven by renewed flight to safety amidst fresh concerns over banking stability. The apprehension in the banking sector has prompted investors to flock to bonds. Meanwhile, it's also bolstering Yen, especially against Australian Dollar, which is currently under pressure due to more lackluster Chinese economic data.

Dollar, meanwhile, regained some ground overnight and stayed firm in Asian session. Fed Chair Jerome Powell's unequivocal stance against a March rate cut has led to significant pullback in US stocks. However, the impact on Asian equities has been relatively muted, with the markets showing mixed response. Focuses will now shift to Eurozone CPI flash, BoE rate decision, and US ISM manufacturing today, and then non-farm payrolls tomorrow.

As the week progresses, Yen stands out as the strongest currency, buoyed by its safe-haven appeal amid the current market uncertainties. New Zealand Dollar and Canadian Dollar follow as the next strongest. On the flip side, Australian Dollar finds itself at the bottom of the performance chart, reflecting regional economic challenges, while Euro and Sterling also lag. Dollar and Swiss Franc find themselves in mixed positions.

Technically, let's follow up on AUD/JPY's development as it accelerates down to as low as 95.98 so far. Fall from 97.86 is seen as the third leg of the pattern from 98.56 high. Further decline is expected as long as 96.73 minor resistance holds. Decisive break of 95.82 will target 93.70, and possibly further to 93.00 key support level.

In Asia, at the time of writing, Nikkei is down -0.78%. Hong Kong HSI is up 0.71%. China Shanghai SSE is down -0.29%. Singapore Strait Times is down -0.33%. Japan 10-year JGB yield is down -0.0303 at 0.706. Overnight, DOW fell -0.82%. S&P 500 fell -1.61%. NASDAQ fell -2.23%. 10-year yield fell -0.092 to 3.967.

DOW tumbles as Fed Powell rules out March rate cut

US stocks plunged sharply overnight, following Fed's decision to maintain the interest rate at 5.25-5.50%. While Fed finally dropped tightening bias, indicating the peak of the tightening cycle, it firmly dismissed the possibility of an imminent rate cut in March.

Chair Jerome Powell's statement during the post-meeting press conference was clear: "I don't think it's likely that the committee will reach a level of confidence by the time of the March meeting to identify March is the time to do that".This comment has effectively quashed hopes for an early rate cut.

Policy loosening is still underway, echoing December's dot plot. Powell said, "We believe that our policy rate is likely at its peak for this tightening cycle and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint, at some point this year."

Some Fed reviews:

• Fed Review: In a Risk Management Mode
• FOMC Removes "Bias" To Tighten, but Don't Expect Imminent Easing
• Fed Holds Rates, Signals No Rush to Start Cutting 

In response to these developments, DOW closed down -317.01 pts or -0.81% at 38150.30. Near term focus is now on 37795.71 support. Decisive break there will confirm initial rejection by 100% projection of 28660.94 to 34712.28 from 32327.20, possibly on bearish divergence condition in D MACD too. That would kick start a correction phase back to 55 D EMA (now at 36856.81).

Similarly, for S&P 500, break of 4802.40 support will confirm short term bottoming, after rejection by 100% projection of 3808.86 to 4607.07 from 4103.78, on bearish divergence condition in D MACD. Deeper correction should then be seen to 55 D EMA (now at 4697.73).

US 10-year yield dives below 4% as fresh bank fears prompt flight-to-safety

US 10-year yield declined significant overnight, closing below 4% psychological at 3.967, as investors flocked to the safety of bonds amidst growing concerns over the banking sector. This shift in sentiment was triggered by New York Community Bancorp's unexpected quarterly loss and subsequent dividend cut, which led to a steep 34% drop in its stock. The unease quickly spread to other smaller lending institutions, reigniting memories of last year's brief banking crisis and spurring a rush towards Treasury bonds.

This flight to safety was further influenced by the Treasury Department's announcement. It revealed moderate increases in upcoming Treasury auctions for shorter-duration bonds, specifically two-, three-, and five-year government bonds, while signaling only minimal increases for longer durations, including 10 years and beyond. Notably, the Treasury indicated that these adjustments are likely to be the last for several quarters.

Technically, 10-year yield's rebound from 3.785 should have completed at 4.198, after rejection by 55 D EMA (now at 4.147), and ahead of 38.2% retracement of 4.997 to 3.785 at 4.247. Deeper fall is expected towards 3.785 low, but stronger support should be seen there to bring rebound, to extend sideway trading first. However, firm break of 3.785 will resume the whole decline from 4.997, with 3.253 medium term support as next target.

Japan's PMI manufacturing finalized at 48.0, depressed economy and escalating cost pressures

Japan's PMI Manufacturing was finalized at 48.0 in January, a minimal increase from December's 47.9, yet still indicative of ongoing challenges in the sector.

According to S&P Global, this figure represents a "modest deterioration" in the health of the manufacturing sector, marking a "sustained downturn" at the start of the year.

Usamah Bhatti of S&P Global Market Intelligence highlights the "depressed economic conditions" both domestically and globally as significant contributors to the sector's struggles. The data also shows notable declines in both output and new orders, with the latter experiencing a particularly sharp drop.

Manufacturers in Japan are also facing heightened pressures related to costs and supply. The cost burdens have been rising sharply, driven by increased prices of raw materials, labor, and fuel.

Additionally, supplier performance has deteriorated significantly, marked as the worst in three months. Issues such as delivery and logistical delays have been frequently mentioned, with some attributing these challenges to the ongoing disruption in the Red Sea.

China's Caixin PMI manufacturing unchanged at 50.8, economic challenges persist

China's Caixin PMI Manufacturing was unchanged at 50.8 in January, matched expectations. The sector showed modest production growth, although the overall sales expansion softened. Notably, this period marked the first rise in new export business in seven months, and business confidence reached a nine-month high. However, the employment sector continued to contract, and the market faced ongoing deflationary pressures.

Wang Zhe, Senior Economist at Caixin Insight Group, highlighted that despite the stability in manufacturing, the Chinese economy still grapples with "significant challenges", including weak demand, employment pressures, and subdued market expectations. He emphasized that these issues are yet to see a "fundamental shift reversal".

BoE watched with focus on voting dynamics and economic projections

Expectations are firmly set for BoE to keep interest rate unchanged at 5.25% today, marking the fourth consecutive session without a change. Several crucial factors could inject volatility into the financial markets, including the vote split, updated economic projections, and guidance.

A critical aspect to watch is the voting pattern among the MPC's nine members. It is unlikely that any member will advocate for an interest rate hike. The central question is whether any members, like known dove Swati Dhingra, will begin to vote for a rate cut.

Another key area of interest lies in the revised economic forecasts. Given recent economic developments, it's plausible that the growth forecasts may see a notable upgrade, while the near-term inflation outlook could be revised downwards. These changes would come with a lowered condition rate path.

The meeting is also expected to see BoE finally dropping its tightening bias, aligning with the broader global central banking trend. However, BoE would likely try to temper any enthusiasm for imminent rate cuts by emphasizing the necessity of maintaining higher interest rates "for longer." The central bank would require more evidence of wage growth deceleration before feeling confident enough to reduce rates.

There is a divergence of opinions among economists regarding the timing of the first rate cut, with general consensus fluctuates between May and August of this year. Currently, August is the more probable scenario for the initial cut. However, if today's meeting leans more dovishly than anticipated, it could tilt the scales in favor of a May cut.

With today's strong bounce, GBP/AUD's sideway consolidation from 1.9415 appears to have completed at 1.9181 already. Rise from 1.8584 is probably ready to resume. Firm break of 1.9415 will confirm this bullish case. Nevertheless, break of 1.9181 support will dampen this view and mix up the outlook.

In the bigger picture, corrective pattern from 1.9967 (2023 high) should have completed with three waves down to 1.8584 already. Rise from from there is resuming the long term up trend. Next target is 1.9967 high, with prospect of hitting 61.8% projection of 1.7218 to 1.9967 from 1.8584 at 2.0283.

Looking ahead

BoE rate decision is the major focus today, and UK PMI manufacturing will be released too. Eurozone CPI flash is another highlight, while unemployment rate and PMI manufacturing final will be featured. Swiss will also publish PMI manufacturing. Later in the day, US will release jobless claims and ISM manufacturing. Canada will also release PMI manufacturing.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.0820; (P) 1.0838; (R1) 1.0865; More...

Intraday bias in EUR/USD remains neutral for the moment and outlook is unchanged. Further decline is expected as long as 1.0931 minor resistance holds. Below 1.0795 will resume the fall from 1.1138 to 1.0722 structural support next. Decisive break there will argue that whole rise from 1.0447 has completed, and target this low. On the upside, however, break of 1.0931 will turn bias back to the upside for stronger rebound instead.

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 1.0722 support will argue that the third leg has already started for 1.0447 and below.

Economic Indicators Update