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Daily Pivots: (S1) 142.32; (P) 142.92; (R1) 143.28; More....

Intraday bias in EUR/JPY remains neutral first. Another rise is in favor. Break of 144.15 will extend the rebound from 137.37 to 146.71 resistance next. However, sustained trading below 55 day EMA (now at 142.00) will argue that the correction from 148.38 is still in progress and target 137.37 low again.

In the bigger picture, as long as 55 week EMA (now at 139.03) holds, larger up trend from 114.42 (2020 low) is still in progress for 149.76 long term resistance. However, firm break of 55 week EMA will bring deeper fall to 38.2% retracement of 114.42 to 148.38 at 135.40. Sustained break there will raise the chance of trend reversal, and target 61.8% retracement at 127.39.

Daily Pivots: (S1) 0.8799; (P) 0.8812; (R1) 0.8829; More...

Risks stays on the downside in EUR/GBP with 0.8927 resistance intact. Fall from 0.8977 would target 0.8720 support first. Decisive break there will argue that whole rebound from 0.8545 has completed, and bring retest to this low.

In the bigger picture, focus is back on 55 day EMA (now at 0.8804). Sustained trading below there will argue that fall from 0.9267 is in progress. Such decline is seen as a leg inside long term range pattern from 0.9499 (2020 high). Break of 0.8545 will pave the way back to 0.8201 (2022 low).

Daily Pivots: (S1) 1.5519; (P) 1.5560; (R1) 1.5606; More...

Range trading continues in EUR/AUD and intraday bias stays neutral. On the upside, break of 1.5650 resistance will revive that case that correction from 1.5976 has completed at 1.5254. Intraday bias will be back on the upside for 1.5749 resistance first. On the downside, firm break of 1.5254/71 will carry larger bearish implication and resume the fall from 1.5976.

In the bigger picture, it's still early to confirm if rise from 1.4281 represents bullish trend reversal. But as long as 1.5271 support holds, such rally is in favor to continue. Break of 1.5976 will target 1.6434 key resistance next. On the other hand, firm break of 1.5271 will retain medium term bearishness instead.

Daily Pivots: (S1) 0.9874; (P) 0.9890; (R1) 0.9911; More....

Intraday bias in EUR/CHF remains neutral as range trading continues. In case of another fall, downside should be contained by 38.2% retracement of 0.9407 to 1.0095 at 0.9832, to complete the corrective pattern from 1.0095. Break of 0.9923 will turn bias back to the upside for stronger rebound towards 1.0067/0095 resistance zone.

In the bigger picture, the rejection by 55 week EMA (now at 1.0025) mixed up the outlook. On the upside, sustained trading above 55 week EMA will raise the chance of bullish trend reversal. Rise from 0.9407 should then target 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484). However, firm break of 0.9832 support will revive medium term bearishness and bring retest of 0.9407 low instead.

Markets

The German and US 10-yr yield failed to clear key resistance this week, triggering some return action lower yesterday. We’re talking about 2.55% for GE (2022 top & 38% retracement on 2008/2020 decline) and 3.9% for US (neckline double bottom & previous support as neckline of double top; see graphs). A well-received 7-yr Note auction helped US Treasuries in the end as well. Changes on the US yield curve ranged between +0.4 bps (2-yr) and -3.8 bps (10-yr). German yields lost 1.1 bp (2-yr) to 4.3 bps (10-yr) with the 30-yr’s outperformance related to a syndicated tap (€4bn 1.8% 2053). US stock markets closed the session around 0.5% firmer while EUR/USD failed to profit from a better risk climate. EUR/USD closed at 1.0596. Today’s eco calendar contains PCE deflators, but they are unlikely to show big surprises following CPI’s earlier this month. This context suggests that core bonds might find a bid going into the weekend. Next week’s EMU CPI numbers and US ISM surveys are the following references.

All eyes turned to Japan this morning, where BoJ governor-nominee Ueda appeared for a parliamentary hearing in his first public remarks since his appointment to replace current governor Kuroda at the helm of the Bank of Japan when his term ends in April. Ueda managed to keep a very balanced approach, saying the central bank’s current easing is appropriate, while simultaneously stating the obvious that the BoJ will inevitably have to think about a review of yield curve control or a move in the direction of policy normalization if another clear step up in improvement in the outlook for price trends comes into sight. Markets have been pondering about the timing of this watershed moment ever since the BoJ unexpectedly doubled the tolerance band around the 0% target for the 10-yr yield from 25 bps to 50 bps in December of last year. It becomes harder and harder for the central bank to turn a blind eye to inflation dynamics. This morning’s January national inflation figures showed the headline reading rising from 4% Y/Y to 4.3% Y/Y while underlying core inflation (ex fresh food) accelerated from 4% Y/Y to 4.2% Y/Y. Both are the highest levels since the early ‘80s and are more than double the BoJ’s inflation target. The central bank (under Kuroda) kept the view that inflation remains cost-driven and that it probably peaked last month as government support measures kick in (utility subsidies). This morning’s market reaction is extremely muted. The Japanese yen showed some volatility, but holds near yesterday’s closing levels (134.6-area). Short term, we expect the pair to have more upward potential. The greenback on the one hand gets interest rate support with markets discounting higher rates for longer. On the other hand it remains too soon to frontrun the U-turn by the BoJ. First resistance kicks in around 136.67 (38% retracement on October to January decline). Japanese bond yield fall 0.4 bps (2-yr) to 3.9 bps (20-yr) with the curve bull flattening.

News and views

GfK’s UK consumer confidence indicator for February came in at -38. While still close to historic lows, the February recovery was the biggest since March 2021 (+7 points). The improvement was across the board with personal finances and the economic situation for the year ahead climbing further out of the troughs set in September last year. Saving intentions moved closer to the highs seen in recent years. Falling energy bills and inflation in general, though still high, showing signs of having peaked is boosting consumer morale and may lead towards continued spending at a time the Bank of England is actually trying to dampen it. The data follow a stronger-than-expected PMI rebound on Tuesday. The pound strengthens marginally ahead of the European open (EUR/GBP 0.8815).

The kiwi dollar is one of the better performers in the G10 landscape this morning, eking out a small gain vs the likes of the US dollar (NZD/USD at around 1.60). The Reserve Bank of New Zealand’s assistant governor Silk struck a hawkish tone in a Bloomberg interview. The central bank lifted policy rates by 50 bps to 4.75% earlier this week while sticking to an expected 5.5% terminal rate. Silk said that there is still excess demand, a tight labor market and inflation remains well above target. Referring to the fiscal side of the economy (eg. government support for rebuilding after the passing through of cyclone Gabrielle), risks to the inflation outlook and the policy rate are to the upside. She kept all rate hike options (25, 50, 75 bps) on the table for the next meeting, adding that it will depend on the information then at hand.

Daily Pivots: (S1) 1.0572; (P) 1.0600; (R1) 1.0623; More...

EUR/USD's corrective decline from 1.1032 is still in progress. Intraday bias remains on the downside for 38.2% retracement of 0.9534 to 1.1032 at 1.0463. Strong support should be seen around there to bring rebound, at least on first attempt. On the upside, above 1.0703 minor resistance will turn intraday bias neutral first. But risk will continue to stay on the downside as long as 1.0803 resistance holds.

In the bigger picture, the rally from 0.9534 low (2022 low) is a medium term up trend rather than a correction. Further rise is in favor to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 next. This will remain the favored case as long as 1.0482 support holds.

Daily Pivots: (S1) 1.1980; (P) 1.2028; (R1) 1.2063; More...

Range trading continues in GBP/USD and intraday bias stays neutral. Another decline is in favor with 1.2269 resistance intact. On the downside, break of 1.1914 will resume the fall from 1.2446, as the third leg of the corrective pattern from 1.2445, to 1.1840 support and possibly below. Nevertheless, firm break of 1.2269 will bring retest of 1.2445/6 resistance.

In the bigger picture, rise from 1.0351 medium term bottom is at least correcting whole down trend from 1.4248 (2021 high). Further rise is expected as long as 1.1644 resistance turned support holds. Next target is 61.8% retracement of 1.4248 to 1.0351 at 1.2759. Sustained break there will pave the way back to 1.4248.

Daily Pivots: (S1) 0.9304; (P) 0.9326; (R1) 0.9363; More...

USD/CHF's rise from 0.9058 is still in progress. Intraday bias stays on the upside for 38.2% retracement of 1.0146 to 0.9058 at 0.9474. For now, break of 0.9219 support is needed to indicate completion of the rebound. Otherwise, further rally will remain in favor in case of retreat.

In the bigger picture, decline from 1.0146 is seen as part of a long term sideway pattern. As long as 38.2% retracement of 1.0146 to 0.9058 at 0.9474 holds, another fall is in favor through 0.9058. However, sustained trading above 0.9474 will indicate that the medium term trend has reversed, and open up further rally to 1.0146 again.

Daily Pivots: (S1) 134.32; (P) 134.85; (R1) 135.20; More...

While further rise cannot be ruled out in USD/JPY, strong resistance could be seen from 38.2% retracement of 151.93 to 127.20 at 136.64 to complete the corrective rebound from 127.20. On the downside, break of 133.91 minor support will turn bias back to the downside for 129.79/132.89 support zone.

In the bigger picture, prior break of 55 week EMA (now at 131.54) raises the chance of medium term bearish reversal, but that's not confirmed yet. Strong rebound from current level, followed by sustained break of 38.2% retracement of 151.93 to 127.20 at 136.64 will argue that price actions from 151.93 is merely a corrective pattern. However, rejection by 136.64 will solidify medium term bearishness for 61.8% retracement of 102.58 to 151.93 at 121.43 and 38.2% retracement of 75.56 to 151.93 at 122.75.

Daily Pivots: (S1) 0.6779; (P) 0.6810; (R1) 0.6839; More...

Intraday bias in AUD/USD stays on the downside as corrective fall from 0.7156 is in progress for 100% projection of 0.6854 to 0.7028 from 0.6854 at 0.6736, which is close to 0.6721 key structural support. Strong support is expected there to bring rebound. On the upside, above 0.6919 minor resistance will turn bias back to the upside for 0.7028 resistance.

In the bigger picture, corrective decline from 0.8006 (2021 high) should have completed with three waves down to 0.6169 (2022 low). Further rally should be seen to 61.8% retracement of 0.8006 to 0.6169 at 0.7304. Sustained break there will pave the way to retest 0.8006. This will now remain the favored case as long as 0.6721 support holds.