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Daily Pivots: (S1) 0.8797; (P) 0.8830; (R1) 0.8868; More...

Intraday bias in EUR/GBP remains neutral for the moment. As long as 55 day EMA (now at 0.8722) holds, rise from 0.8545 is still in favor to continue. Above 0.8876 will resume the rally and target 61.8% retracement of 0.9276 to 0.8545 at 0.8997 and possibly above.

In the bigger picture, fall from 0.9267 is seen as a down leg inside long term range pattern. Deeper fall could be seen towards 0.8201/8338 support zone. But strong support should be seen there to bring reversal. Nevertheless, firm break of 0.8827 resistance will turn favor to the case that such decline is merely a correction in the up trend from 0.8201. That is, further rally would be seen at a later stage through 0.9267.

Daily Pivots: (S1) 1.5520; (P) 1.5569; (R1) 1.5632; More...

Intraday bias in EUR/AUD remains neutral for the moment. On the downside, below 1.5414 will extend the fall form 1.5976 to 38.2% retracement of 1.4281 to 1.5976 at 1.5329. Nevertheless, on the upside, above 1.5739 minor resistance will suggest that the pull back has finished, and bring retest of 1.5976 high.

In the bigger picture, strong support from 55 week EMA affirms underlying bullishness. As long as 1.5271 support holds, rise from 1.4281 medium term bottom is expected to continue to 1.6434 key resistance next. Decisive break there should confirm medium term bullish trend reversal.

Daily Pivots: (S1) 0.9831; (P) 0.9852; (R1) 0.9869; More....

Intraday bias in EUR/CHF stays neutral as consolidation from 0.9953 is extending. On the upside, firm break of 0.9953 resistance will resume larger rally from 0.9407 to 1.0072 fibonacci level. However, break of 0.9720 will extend the decline from 0.9953 to 61.8% retracement of 0.8407 to 0.9953 at 0.9616.

In the bigger picture, as long as 38.2% retracement of 1.1149 to 0.9407 at 1.0072 holds, price actions from 0.9407 medium term bottom will be treated as a corrective pattern. That is, long term down trend would resume through this low at a later stage. Nevertheless, firm break of 1.0072 will also have 55 week EMA (now at 1.0053) taken out. That would be an initial sign of long term bullish reversal.

Daily Pivots: (S1) 1.3495; (P) 1.3545; (R1) 1.3621; More....

Intraday bias in USD/CAD is turned neutral again with current recovery. Corrective structure of the price actions from 1.3699 argues that rise from 1.3224 is not finished. Break of 1.3704 will target 61.8% projection of 1.3224 to 1.3669 from 1.3468 at 1.3762, and then 100% projection at 1.3943. On the downside, break of 1.3468 will bring deeper pull back first.

In the bigger picture, as long as 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) holds, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 high at a later stage. However, firm break of 1.3222/3 will indicate that the trend might have reversed. Deeper fall would be seen to next cluster support at 1.2726 (61.8% retracement at 1.2758).

Daily Pivots: (S1) 0.6707; (P) 0.6780; (R1) 0.6825; More...

Intraday bias in AUD/USD remains neutral for the moment. On the downside, sustained break of 38.2% retracement of 0.6169 to 0.6892 at 0.6616 will indicate rejection by 0.6871 fibonacci level. Deeper fall should then be seen to 61.8% retracement at 0.6445 and possibly below. On the upside, break of 0.6892 will resume the rally from 0.6169 instead.

In the bigger picture, it's still unsure if price actions from 0.6169 medium term bottom are developing into a corrective pattern or trend reversal. Rejection by 38.2% retracement of 0.8006 to 0.6169 at 0.6871 will maintain medium term bearishness for another fall through 0.6169 at a later stage. However, firm break of 0.6871, and sustained trading above 55 week EMA (now at 0.6894) will raise the chance of the start of a bullish up trend.

Daily Pivots: (S1) 132.06; (P) 133.06; (R1) 134.42; More...

Intraday bias in USD/JPY stays neutral first with focus on 134.49 resistance. Considering bullish convergence condition in 4 hour MACD, firm break of 134.49 should confirm short term bottoming. Bias will be turned back to the upside for 138.16 cluster resistance (38.2% retracement of 151.93 to 129.49 at 138.06. On the downside, break of 129.49 will resume the whole decline from 151.93 instead.

In the bigger picture, a medium term top was in place at 151.93. Sustained trading below 55 week EMA (now at 131.65) would raise the chance of bearish trend reversal. Deeper fall would be seen to 61.8% retracement of 102.58 to 151.93 at 121.43. This will now remain the favored case as long as 55 day EMA (now at 137.26) holds.

Daily Pivots: (S1) 0.9289; (P) 0.9334; (R1) 0.9406; More...

Intraday bias in USD/CHF remains neutral and risk stays mildly on the upside with 0.9199 short term bottom intact. Break of 0.9397 will resume the rebound from 0.9199 to 55 day EMA (now at 0.9460) and above. On the downside, however, firm break of 0.9199 will resume whole decline from 1.0146 instead.

In the bigger picture, rise from 0.8756 (2021 low) has completed at 1.0146, well ahead of 1.0342 long term resistance (2016 high). Based on current downside momentum, fall from 1.0146 might be a medium term down trend itself. Sustained break of 61.8% retracement of 0.8756 to 1.0146 at 0.9287 will pave the way to 0.8756. In any case, risk will stay on the downside as long as 0.9545 resistance holds.

Daily Pivots: (S1) 1.0482; (P) 1.0557; (R1) 1.0599; More...

No change in EUR/USD's as it's still bounded in range of 1.0481/0733. Intraday bias stays neutral for the moment. On the downside, break of 1.0481 will confirm short term topping, on bearish divergence condition in 4 hour MACD. Deeper fall would be seen back to 1.0289 support and below. On the upside, however, firm break of 1.0733 will resume whole rally from 0.9534.

In the bigger picture, focus stays on 38.2% retracement of 1.2348 (2021 high) to 0.9534 at 1.0609. Rejection by 1.0609 will suggest that price actions from 0.9534 medium term bottom are developing into a corrective pattern. Thus, medium bearishness is retained for another fall through 0.9534 at a later stage. However, sustained break of 1.0609 will raise the chance of trend reversal and target 61.8% retracement at 1.1273.

Daily Pivots: (S1) 1.1832; (P) 1.1955; (R1) 1.2036; More...

Intraday bias in GBP/USD is back on the downside with break of 1.1899 temporary low. Sustained trading below 55 day EMA (now at 1.19383) will extend the fall from 1.2445 to 38.2% retracement of 1.0351 to 1.2445 at 1.1645 next. However, strong rebound from 55 day EMA, followed by break of 1.2086 resistance, will argue that the pull back from 1.2445 has completed, and turn bias back to the upside for retesting this high.

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. This will remain the favored case as long as 55 day EMA (now at 1.1916) holds.

The forex markets are largely in tight range in Asian session today. Dollar is currently the strongest one for the week, after the rally attempt overnight. But traders are still holding their bets ahead of today's non-farm payroll data. For now, Canadian Dollar is the second best, followed by Aussie. Yen is the worst performer, followed by Kiwi and Euro. In addition to NFP, much attention would be on Eurozone CPI flash and Canada employment. Reactions on today's data release could set the tone for the rest of the month.

Technically, the conditions for a near term rebound in USD/JPY are there, with break of channel resistance and bullish convergence in 4 hour MACD. Firm break of 134.49 resistance should bring rise to 138.16 cluster resistance (38.2% retracement of 151.93 to 129.49 at 138.06), with prospect of further rally to 61.8% retracement at 143.35. Let's see how it goes with NFP.

In Asia, at the time of writing, Nikkei is up 0.54%. Hong Kong HSI is down -0.27%. China Shanghai SSE is up 0.12%. Singapore Strait Times is down -0.61%. Japan 10-year JGB yield is up 0.0804 at 0.501, pressing BoJ's cap. Overnight, DOW dropped -1.02%. S&P 500 dropped -1.16%. NASDAQ dropped -1.47%. 10-year yield rose 0.011 to 3.720.

ECB Villeroy: Desirable to reach terminal rate by summer, and stay there

ECB Governing Council member  Francois Villeroy de Galhau said yesterday, "it would be desirable to reach the right 'terminal rate' by next summer, but it is too early to say at what level."

"We'll then be ready to remain at this terminal rate as long as necessary," Villeroy said. "The sprint of rate increases in 2022 becomes more of a long-distance race, and the duration will count at least as much as the level."

"We need to be pragmatic and guided by observed data, including underlying inflation, without fetishism for increases that are too mechanical," he added.

"Our forecast, and our commitment, is to bring inflation toward 2% between now and the end of 2024 to the end of 2025," Villeroy said.

Fed Bullard: Policy rate getting closer to sufficiently restrictive zone

St. Louis Fed President James Bullard said yesterday that FOMC aggressive actions in 2022 and planned rate hike in 2023 has "returned inflation expectations to a level consistent with the Fed's 2% inflation target."

"During 2023, actual inflation will likely follow inflation expectations to a lower level as the real economy normalizes," he said.

"The policy rate is not yet in a zone that may be considered sufficiently restrictive, but it is getting closer," he added.

Regarding the economy, Bullard noted, "The probability of a soft landing has increased compared to where it was in the fall of 2022, where it was looking more questionable... And the reason I think that the prospects for a soft landing have increased is that the labor market has not weakened the way many had predicted" and growth levels rebounded from weakness".

US NFP to guide stocks and Dollar

Focuses will once again turn to US non-farm payrolls data today. Markets are expecting 200k job growth in December. Unemployment rate is expected to be unchanged at 3.7%. Average hourly earnings are expected to continue to grow solidly by 0.4% mom.

Looking at some related data, ADP private employment posted strong upside surprise of 235k growth. ISM manufacturing employment rose from 48.4 to 51.4, back in expansion. Four-week moving average of initial jobless claims was down slightly to 214k. Consumer confidence improved notably from 101.4 to 108.3.

Overall, the US job markets should continue to show much resilience despite high inflation and continuous tightening. The point of attention is more likely on wages growth and the implications on inflation ahead, and thus Fed's policy path.

US stocks have been trading in tight range in the past two weeks, rightly so. S&P 500 is capped below flat 55 day EMA, which keeps near term bearish bias. Break of near term support at 3764.49 will resume the decline from 4100.96. More importantly, such development will affirm the case that whole correction from 4818.62 is still in progress for at least another low below 3491.58. Nevertheless, a strong close above 55 day EMA and 3918.39 resistance will instead indicate that rebound from 3491.58 is ready to resume through 4100.96. SPX's reaction to today's NFP data will be a clear indication of underlying risk sentiment, which should then guide the path of Dollar.

Looking ahead

Eurozone CPI flash will be the main focus in European session. Eurozone economic sentiment and retail sales, Germany retail sales and factory orders, France consumer spending, Swiss retail sales and foreign currency reserves, UK PMI construction will also be released.

Later in the day, US non-farm payrolls, ISM services and factory orders will be released. Canada employment will also be featured.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.1832; (P) 1.1955; (R1) 1.2036; More...

Intraday bias in GBP/USD is back on the downside with break of 1.1899 temporary low. Sustained trading below 55 day EMA (now at 1.19383) will extend the fall from 1.2445 to 38.2% retracement of 1.0351 to 1.2445 at 1.1645 next. However, strong rebound from 55 day EMA, followed by break of 1.2086 resistance, will argue that the pull back from 1.2445 has completed, and turn bias back to the upside for retesting this high.

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. This will remain the favored case as long as 55 day EMA (now at 1.1916) holds.

Economic Indicators Update