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Daily Pivots: (S1) 155.58; (P) 156.26; (R1) 156.72; More...

Intraday bias in USD/JPY is turned neutral with breach of 155.73 minor support. Fall from 157.88 should develope into a corrective pattern. Break of 154.33 will bring deeper fall, but downside should be contained by 55 D EMA (now at 153.51). On the upside, above 156.94 will bring retest of 157.88. Firm break there will resume whole rally from 139.87 to 158.85 key structural resistance.

In the bigger picture, corrective pattern from 161.94 (2024 high) could have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. Decisive break of 158.85 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 150.90 resistance turned support will dampen this bullish view and extend the corrective range pattern with another falling leg.

Daily Pivots: (S1) 0.7970; (P) 0.8022; (R1) 0.8053; More…

Overall outlook is unchanged in USD/CHF, as correction pattern from 0.7828 could extend further. On the upside, break of 0.8123 will target 138.2% projection of 0.7828 to 0.8075 from 0.7877 at 0.7812. However, firm break of 0.7990 support will turn bias back to the downside for 0.7877 support.

In the bigger picture, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low). Long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382.

Daily Pivots: (S1) 1.3323; (P) 1.3356; (R1) 1.3416; More...

Intraday bias in GBP/USD remains neutral and further rally is expected with 1.3178 support intact. As noted before, fall from 1.3787 should have completed as a three-wave correction to 1.3008. On the upside, above 1.3384 will target 1.3470 resistance. Decisive break there will bring retest of 1.3787 high.

In the bigger picture, current development suggests that fall from 1.3787 is merely a corrective move, and larger rise from 1.0351 (2022 low) is still in progress. Firm break of 1.3787 will target 1.4248 (2021 high) key structural resistance. This will remain the favored case as long as target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 holds, in case of another fall.

Yesterday was one of those days the kneejerk reaction to a Federal Reserve (Fed) decision didn’t make perfect sense. As widely anticipated, the Fed lowered interest rates by 25bp and the dot plot printed that the median expectation for next year was just one rate cut – unchanged from the latest dot plot.

But the median forecast is losing its relevance with the growing opinion – and political – divergence at the heart of the FOMC. Yesterday’s vote already was subject to 3 dissents: 2 voting members preferred keeping rates steady, while Stephan Miran – who was appointed by Trump himself with the mission of ‘cut, cut, cut’ – opted for a 50bp cut. Beyond the official vote, more regional Fed members showed reluctance to cut rates when inflation is just below the 3% level, with looming upside risks. Overall, 6 out of 19 Fed members didn’t agree with the Fed’s decision to cut by 25bp. And most of them preferred keeping rates unchanged – and wait until at least an updated CPI print to guide them. Miran was the only person pushing for a jumbo rate cut (Surprise!)

And oh, Donald Trump said that yesterday’s cut could’ve been higher, and will probably announce his next Fed Chair pick soon enough to inject more dovish members into the mix – to make sure that the Fed cuts, cuts, cuts.

So, the market reaction to such a crowded and undecided Fed was unusually positive. Treasuries and equities rallied. The US 2-year yield fell close to 3.50%, the 10-year yield retreated to 4.12%, the S&P500 gained, but the small-cap index outperformed with a 1.32% rally to a fresh ATH. The US dollar fell below a critical Fibonacci level – the 38.2% retracement on the fall–rebound – and is now back in the medium-term bearish consolidation zone, while gold gained and silver rallied to a fresh record high on softer US dollar and softer yields that reduce the opportunity cost of holding the non-interest-bearing metals.

For next year, the Fed will probably sit and wait for at least 6 months whoever takes the helm from Powell. The next cut from the Fed is not expected before June next year, and money markets continue to price in two rate cuts in 2026. But the divergence of opinion at the heart of the FOMC will probably get worse as politics influence some members’ decisions grandly. Respect and credibility regarding the Fed will be put to a tough test, and some decisions will make more political sense than economic.

This is terrible news. It probably makes sense to continue to reduce exposure to the US dollar.

Now, coming back to the market reaction, I rubbed my eyes a few times with unbelief seeing the positive reaction of equity markets to the Fed decision. I think there was little to cheer in that chaos. Consequently, it didn’t take much for the post-Fed optimism to evaporate with Oracle earnings.

Oracle announced a higher-than-expected EPS growth – but that was due to a one-time income from the sale of a subsidiary. Cloud sales increased 34% – but were lower than expected. Revenue from its infrastructure business grew 68% – also lower than expected by analysts. And more dramatically, the company continued to burn cash last quarter: its free cash flow reached a negative $10 billion. To make matters worse, the company said that it expects capex to reach about $50 billion in the fiscal year ending May 2026 – $15 billion more than its September forecast – and investments at Oracle are financed by debt: overall, the company has about $106 billion in debt. Frankly, the report was not dramatically bad, but it came to confirm concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation, sending Oracle shares down by more than 11% in after-hours trading.

As such, Asia woke up to a bleak day. SoftBank lost more than 7% – the kind of moves that we’re now used to seeing in its stock price – while the tech-heavy Korean Kospi is under pressure, as national chip champion SK Hynix gives back more than 2.50% after the country’s main exchange issued a warning that the stock price had gone too high – following a nearly 300% jump between April and November – suggesting that we could be entering a bubble zone. Perhaps.

US futures are down this morning with Nasdaq leading losses. The Fed outlook looks dodgy. Worries regarding leveraged AI investments are taking centre stage. The FOMO of the AI rally is now turning into a fear of a bubble. Stock valuations are high and market breadth is quite narrow, with most of the gains and appetite relying on AI. It’s reasonable to expect a correction as fundamentals are moving away from the reality on the ground. Capital markets are turning into a big betting ground, and valuations make little sense. But go tell that to investors. The market rally is so sweet that there seems to be a collective understanding that if no one sells, the rally could simply go on. So let’s see whether anything could shake the omertà!

Good news is, the next big news of the week – Broadcom earnings – looks safer from a risk perspective. The company is expected to deliver another strong quarter, with consensus calling for roughly +30–32% year-over-year EPS growth, and ~24% annual revenue growth – driven by robust demand in custom AI silicon and networking products. Guidance on AI-related revenue and future demand trends will probably be solid as well, given that they are involved in the production of Google’s TPUs – which are expected to become a new hot commodity for those looking for cheaper alternatives to Nvidia’s GPUs for running AI applications, especially inference – expected to make up a big chunk of future AI computation.

And given how markets are willing to pull Santa into year-end – despite political, geopolitical and economic worries – good news from Broadcom could easily turn sentiment positive.

Daily Pivots: (S1) 1.1646; (P) 1.1673; (R1) 1.1724; More….

EUR/USD's rise from 1.1467 resumed by breaking through 1.1681 temporary top and intraday bias is back on the upside. As noted before, corrective fall form 1.1917 should have completed at 1.1467. Firm break of 1.1727 resistance will solidify this case and bring retest of 1.1917 high. However, break of 1.1614 support will revive near term bearishness, and bring retest of 1.1467 low.

In the bigger picture, as long as 55 W EMA (now at 1.1346) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

US stocks advanced solidly overnight after the Fed’s expected 25bps rate cut was greeted warmly by markets. Even though some economists labeled the decision a “hawkish cut,” the risk-on response in equities and the sell in Dollar suggested investors heard nothing hawkish enough to derail near-term sentiment.

The three-way vote split offered little surprise. Trump-backed Governor Stephen Miran once again pushed for a deeper 50bps reduction, while known hawks Austan Goolsbee and Jeffrey Schmid preferred to hold policy steady. The distribution fit comfortably with prior expectations and did little to shift the market narrative.

The Fed’s economic projections retained their key feature: one rate cut each in 2026 and 2027, reinforcing a shallow and deliberate easing path. Meanwhile, neither Chair Jerome Powell nor the statement signaled that the Committee is ready to commit to a pause. That ambiguity reflects both internal differences and the timing: November CPI and NFP—critical data points—are due next week, making it premature for Powell to any declare direction.

Market pricing barely budged. Fed fund futures now imply about a 48% chance of a 25bps cut in March, versus 52% for a hold—almost identical to pre-FOMC levels. With the market’s base case broadly intact and no hawkish surprise from Powell, the stock-market rally remains on track, keeping hopes for a Santa rally alive for now.

Attention now turns to the Swiss National Bank. SNB is expected to hold at 0.00%. Chair Schlegel has made clear that returning to negative rates would require a very high bar. Officials are expected to repeat their standard line: vigilant, but in no rush to move.

A positive development for Switzerland came with the confirmation on Wednesday that the US–Swiss tariff agreement will apply retroactively to November 14. The deal cuts Trump’s previously imposed 39% tariff down to a ceiling of 15%. The Swiss government noted this would reduce trade-weighted US tariff levels by roughly 10%, materially improving access for Swiss exporters.

In currency markets, Yen remains entrenched at the bottom of the weekly performance table. Aussie slipped to second-worst after today’s poor labor data reminded markets that RBA hike speculation for 2026 is still premature. Dollar sits as the third weakest following its post-FOMC slide.

At the top of the leaderboard, Swiss Franc has rebounded and is now the strongest performer—though recent weak Swiss CPI data raises the risk of a slight dovish tilt today, leaving CHF exposed. Euro follows as the second strongest, benefiting from Dollar weakness. Kiwi ranks third-best, supported by relative strength against the soft Aussie. Sterling and Loonie sit in the middle of the pack.

In Asia, Nikkei fell -0.90%. Hong Kong HSI is down -0.15%. China Shanghai SSE is down -0.92%. Singapore Strait Times is up 0.26%. Japan 10-year JGB yield fell -0.034 to 1.930. Overnight, DOW rose 1.05%. S&P 500 rose 0.67%. NASDAQ rose 0.33%. 10-year yield fell -0.022 to 4.164.

Australia jobs shock as employment drops -21.3k in November

Australia’s November labor data delivered a downside surprise, with employment falling by -21.3k against expectations for a 20k increase. The weakness was driven by a sharp -56.5k drop in full-time positions, partly offset by a 35.2k rise in part-time roles.

Despite the weaker headline, unemployment rate held at 4.3%, better than the expected uptick to 4.4%. The jobless rate has now been steady at 4.3% in five of the past six months, reflecting a labor market that is loosening but not deteriorating sharply. Participation rate dipped -0.2pts to 66.7%, suggesting some softening in labor-force engagement.

Monthly hours worked were unchanged on the month but still up 1.2% yoy, indicating modest resilience in total labor input despite weaker job creation.

AUD/NZD to extend correction through 1.14 after data blow to RBA hike hopes

Australian Dollar weakened broadly after today’s significantly softer labor-market report, though it continues to show relative resilience against the U.S. Dollar and most majors—with the notable exception of Kiwi. The sharp downside surprise in employment has tilted sentiment in favor of further downside in AUD/NZD as markets reassess the likelihood of near-term RBA tightening.

Speculation of a 2026 RBA rate hike had intensified in recently, particularly after Governor Michele Bullock signaled that cuts were not on the horizon and that the Board had actively discussed scenarios in which rates might need to rise.

However, today’s -21.3k contraction in employment has sharply undercut that momentum. The data suggest that any discussion of a rate hike in the near term is premature. A long pause now appears the more plausible baseline—at least through Q1—while the RBA waits for a fuller run of data to determine whether underlying developments justify movement in either direction.

Technically, AUD/NZD is extending the corrective pattern from 1.1634. Today's dip suggests the recovery from, as the second leg of the correction form 1.1634, might have completed at 1.1514 already. Deeper fall would be seen to 1.1396 first.

Break there will extend the fall to 61.8% projection of 1.1634 to 1.1396 from 1.1514 at 1.1367, and possibly further to 100% projection at 1.1267. But even in this case, downside should be contained by 1.1275 cluster support, which is slightly below 38.2% retracement of 1.0649 to 1.1634 at 1.1258.

The up trend from 1.0649 is expected to resume through 1.1634 at a later stage. But that will require renewed conviction that the RBA is genuinely preparing for a rate hike in 2026.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1646; (P) 1.1673; (R1) 1.1724; More….

EUR/USD's rise from 1.1467 resumed by breaking through 1.1681 temporary top and intraday bias is back on the upside. As noted before, corrective fall form 1.1917 should have completed at 1.1467. Firm break of 1.1727 resistance will solidify this case and bring retest of 1.1917 high. However, break of 1.1614 support will revive near term bearishness, and bring retest of 1.1467 low.

In the bigger picture, as long as 55 W EMA (now at 1.1346) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

In focus today

In Norway, the Regional Survey is due for release. We expect it to confirm that growth continues to rise at a moderate pace, with capacity utilization largely unchanged and indicate that the level of activity is somewhat below normal. Specifically, we expect that respondents in the survey will expect 0.3-0.4% growth next quarter, that capacity utilization will be unchanged at 35% and that the number of companies experiencing labour shortages will fall from 25% to 24%.

In Sweden, the final figures for November inflation are being published. The preliminary figures surprised to the downside, with CPI at 0.3% y/y, CPIF 2.3% y/y, and CPIF ex. energy 2.4% y/y. As preliminary estimates are generally reliable, significant revisions are unlikely. It will be interesting to analyse the details to understand the factors behind the surprise. Specifically, whether the low outcome is linked to seasonal variations or other underlying causes.

In central bank space, attention turns to the Swiss National Bank, where we forecast the rate to remain unchanged at 0.00%. The Central Bank of Turkey is also set to release its rate decision.

Economic and market news

What happened yesterday

In the US, the Federal Reserve cut its policy rate target by 25bp to 3.50-3.75% last night, as widely anticipated. Miran voted for a larger 50bp cut, while Schmid and Goolsbee dissented in favour of a hold, also in line with our expectations. We (and the markets) had expected Powell to push back against market pricing further rate cuts for 2026. However, his avoidance of strong forward guidance led to a decline in UST yields and broad USD weakening during the press conference. We maintain our Fed call and expect two final rate cuts in March and June. The Fed also announced reserve management purchases of T-bills starting 12 December at USD 40bn per month, indicating more front-loaded easing to liquidity policies than we anticipated.

Ahead of the meeting, the US Q3 Employment Cost Index signalled slightly slower-than-expected wage growth at 0.8% q/q (prior: 1.0%). This pace is close to ideal for the Fed - supporting consumption without driving inflation - and is positive for overall risk sentiment.

In Sweden, October economic activity data showed a slight decline, with lower production in the business sector as well as declining household consumption. The GDP indicator fell by 0.3% m/m, though its volatility warrants cautious interpretation. Overall, the data aligned with our expectations of slower growth for Q4, reflecting lagged effects of the summer slowdown, and does not alter the positive outlook heading into 2026.

In Norway, November core inflation declined to 3.0% y/y (cons: 3.1%, prior: 3.0%), driven by domestic and imported goods ex. food. Annual growth in household appliances and electronics dropped close to September levels, indicating that volatility was likely influenced by Black week adjustments. The print is marginally lower than Norges Bank's estimate from the September MPR at 3.1%, reinforcing the disinflationary trend. While this is unlikely to affect Norges Bank's rate path next week, it provides scope for signalling a more aggressive cutting cycle, dependent on the Regional Network survey today.

In Canada, the Bank of Canada kept the rate unchanged at 2.25% as widely expected.

In Denmark, November inflation held steady at 2.1% y/y. Food prices declined 0.9% from October, which could potentially have a positive impact on consumer sentiment.

Equities: Equity investors cheered the not-so-hawkish Fed cut yesterday. S&P 500 jumped 1% at the press conference, eventually closing 0.7% higher and small cap Russell 2000 1.3% higher. The rate decision triggered a clear cyclical preference in markets: Value cyclicals like materials, industrials, and consumer discretionary were all ~2% higher. This is interesting. Previously this year we have seen cyclical growth stocks - mag 7, basically - rallying at dovish surprises. This time, it was more of a "run it hot" reaction in markets, where expectations of stronger macro fuelled the move higher rather than lower yields. This fits our narrative very well.

One sector worth highlighting is health care, performing very strong in the risk-on session yesterday. This is a bit odd in a historical context, but health care has been behaving like a cyclical sector in recent trading. This has certainly been a tremendous rally, but we take profits today and neutralize our health care sector call. Reason for this is that the positive health care call has been a valuation call, and this argument has rapidly changed. The relative discount has gone from 20% to 10% vs global markets the last three months, which we think is a fair discount at this part of the cycle. For instance, health care now trades close to the multiple of consumer staples, after a 20% discount at the bottom.

FI and FX: Yesterday's Fed rate cut was a rather balanced one, but given that markets expected a hawkish cut, market reactions were slightly to the soft side. Rates rallied somewhat and the USD weakened a tad with EUR/USD trading at 1.169. Only tiny and transitory, negative reactions in EUR/SEK and EUR/NOK following the FOMC decision. Ahead of the Fed rate decision European rates rose once again, resulting in the fifth consecutive day of higher rates. Potential rate cuts for the ECB have by now been eliminated for 2026. This morning, EUR/SEK is back at 10.84 and EUR/NOK trades at 11.83.

Australian Dollar weakened broadly after today’s significantly softer labor-market report, though it continues to show relative resilience against the U.S. Dollar and most majors—with the notable exception of Kiwi. The sharp downside surprise in employment has tilted sentiment in favor of further downside in AUD/NZD as markets reassess the likelihood of near-term RBA tightening.

Speculation of a 2026 RBA rate hike had intensified in recently, particularly after Governor Michele Bullock signaled that cuts were not on the horizon and that the Board had actively discussed scenarios in which rates might need to rise.

However, today’s -21.3k contraction in employment has sharply undercut that momentum. The data suggest that any discussion of a rate hike in the near term is premature. A long pause now appears the more plausible baseline—at least through Q1—while the RBA waits for a fuller run of data to determine whether underlying developments justify movement in either direction.

Technically, AUD/NZD is extending the corrective pattern from 1.1634. Today's dip suggests the recovery from, as the second leg of the correction form 1.1634, might have completed at 1.1514 already. Deeper fall would be seen to 1.1396 first.

Break there will extend the fall to 61.8% projection of 1.1634 to 1.1396 from 1.1514 at 1.1367, and possibly further to 100% projection at 1.1267. But even in this case, downside should be contained by 1.1275 cluster support, which is slightly below 38.2% retracement of 1.0649 to 1.1634 at 1.1258.

The up trend from 1.0649 is expected to resume through 1.1634 at a later stage. But that will require renewed conviction that the RBA is genuinely preparing for a rate hike in 2026.

Australia’s November labor data delivered a downside surprise, with employment falling by -21.3k against expectations for a 20k increase. The weakness was driven by a sharp -56.5k drop in full-time positions, partly offset by a 35.2k rise in part-time roles.

Despite the weaker headline, unemployment rate held at 4.3%, better than the expected uptick to 4.4%. The jobless rate has now been steady at 4.3% in five of the past six months, reflecting a labor market that is loosening but not deteriorating sharply. Participation rate dipped -0.2pts to 66.7%, suggesting some softening in labor-force engagement.

Monthly hours worked were unchanged on the month but still up 1.2% yoy, indicating modest resilience in total labor input despite weaker job creation.

Full Australia employment release here.

The Dollar Index (DXY) has broken decisively below the December 4 low at 98.76, establishing a clear bearish sequence from the November 21 peak. This structural decline favors continued downside momentum. The immediate target is the 100% Fibonacci extension measured from the November 21 peak, which projects toward 97.7. From that peak, wave ((i)) concluded at 99, followed by a corrective rally in wave ((ii)) that terminated at 99.56. The Index then extended lower in wave ((iii)) toward 98.82, while the subsequent rally in wave ((iv)) ended at 99.02. The final leg, wave ((v)), reached 98.76, thereby completing wave 1 of a higher degree cycle.

Following this initial decline, the Index staged a corrective advance in wave 2, unfolding as a double three Elliott Wave structure. From the termination of wave 1, wave ((w)) ended at 99.12, while the pullback in wave ((x)) concluded at 98.79. A final push higher in wave ((y)) reached 99.32, completing wave 2 in higher degree. With this correction finished, the Index has resumed its downward trajectory in wave 3. From the wave 2 high, wave ((i)) ended at 99.13, and the rally in wave ((ii)) terminated at 99.3. In the near term, as long as the pivot at 99.32 remains intact, rallies are expected to fail. The decline should continue to unfold in sequences of 3, 7, or 11 swings, reinforcing the bearish outlook and favoring further downside pressure toward the projected Fibonacci target.

Dollar Index (DXY) 60-Minute Elliott Wave Chart From 12.11.2025

DXY Elliott Wave Video:

https://www.youtube.com/watch?v=LYOYWjRAiNU