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USD/CHF's decline from 1.0146 resumed last week and dipped to 0.9325. Further decline is expected as long as 0.9545 resistance holds. Next target is 61.8% projection of 1.0146 to 0.9355 from 0.9545 at 0.9056. Break of 0.9545 will indicate short term bottoming, and turn bias back to the upside for stronger rebound.

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. 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 55 day EMA (now at 0.9690) holds.

In the long term picture, long term sideway pattern from 1.0342 (2016 high) is extending and it's probably in another medium term down leg. Downside will likely be contained by 0.8756 support in case of deeper fall. Overall, range trading should continue until further development.

AUD/USD edged higher to 0.6845 last week but quickly lost momentum and retreated. Initial bias is neutral this week first, and near term outlook will stay bearish as long as 0.6641 support holds. Break of 0.6845 will target 0.6871 fibonacci level. However, firm break of 0.6641 support will confirm short term topping, and turn bias back to the downside.

In the bigger picture, a medium term bottom is in place at 0.6160 already. But it's too early to call for trend reversal. Nevertheless, even as a corrective move, rise from 0.6169 should target 38.2% retracement of 0.8006 to 0.6169 at 0.6871. Sustained trading above 55 week EMA (now at 0.6922) will raise the chance of the start of a bullish up trend. This will now remain the favored case as long as 0.6521 resistance turned support holds.

In the long term picture, the down trend from 0.8006 could still be seen as a corrective move, considering that it failed to break through 161.8% projection of 0.8006 to 0.7105 from 0.7660 at 0.6202 decisively. Strong rebound from current level will keep long term outlook neutral first. However, sustained break of 0.6202 will open up deep fall to retest 0.5506.

USD/CAD surged to 1.3644 last week but quickly retreated. Initial bias remains neutral this week first. On the upside, break of 1.3644 resistance will affirm the case that correction from 1.3976 has completed at 1.3224. However, break of 1.3315 will resume the fall from 1.3976 through 1.3222 cluster support, which carries larger bearish implications.

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).

In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern only, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as long as 1.2061 support holds, which is close to 50% retracement of 0.9406 to 1.4689 at 1.2048.

GBP/JPY gyrated lower last week but stays above 163.02. Initial bias remains mildly on the downside this week for 163.02. Decisive break there will resume the whole fall from 172.11, and target 100% projection of 172.11 to 163.02 from 168.99 at 159.90. For now, risk will stay on the downside as long as 167.40 minor resistance holds, in case of recovery.

In the bigger picture, medium term upside momentum has been diminishing as seen in bearish divergence condition in weekly MACD. Sustained break of 55 week EMA (now at 160.66) will argue that it's already correcting whole up trend from 123.94 (2020 low). Nevertheless, before that, such up trend could still extend through 172.11 high.

In the longer term picture, as long as 55 month EMA (now at 151.94) holds, rise from 122.75 could still extend higher at a later stage. Next target is 195.86 (2015 high).

EUR/JPY's decline from 148.38 resumed last week and hit as low as 140.75. Initial bias stays on the downside this week for 100% projection of 148.38 to 142.54 from 146.12 at 140.28. Firm break there could prompt downside acceleration to 161.8% projection at 136.67 next. On the upside, above 143.12 minor resistance will turn intraday bias neutral first. But further decline will remain in favor as long as 146.12 resistance holds.

In the bigger picture, considering bearish divergence condition in weekly MACD, 148.38 could be a medium term top already. Fall from there is probably correcting whole up trend from 114.42 (2020 low). Deeper decline would be seen to 55 week EMA (now at 137.37), or further to 38.2% retracement of 114.42 to 148.38 at 135.40 before completion.

In the long term picture, outlook will stay bullish as long as 134.11 resistance turned support holds (2021 high). Sustained break of 149.76 (2014 high) will open up further rally, as resumption of the rise from 94.11 (2012 low), towards 169.96 (2008 high).

EUR/GBP's break of 0.8570 support confirmed resumption of whole decline from 0.9267. Initial bias stays on the downside this week for 61.8% projection of 0.9267 to 0.8647 from 0.8827 at 0.8444 next. On the upside, above 0.8674 minor resistance will turn intraday bias neutral first. But further decline will remain in favor as long as 0.8827 resistance holds.

In the bigger picture, current development suggests that fall from 0.9267 is 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.

In the long term picture, long term range pattern is extending. But rise from 0.6935 (2015 low) is expected to extend at a later stage, to 0.9799 (2009 high).

EUR/AUD stayed in consolidation from 1.5704 last week and outlook is unchanged. Initial bias remains neutral this week first. In case of another fall, downside should be contained by 55 day EMA (now at 1.5327) to bring rebound. On the upside, decisive break of 1.5704 will resume larger rise from 1.4281. However, sustained trading below 55 day EMA will bring deeper correction towards 1.4965 resistance turned support.

In the bigger picture, a medium term bottom should be in place at 1.4281, on bullish convergence condition in daily MACD. Further rise would be seen back to 1.6434 key resistance next. Break of 1.4965 resistance turned support is needed to indicate reversal. Otherwise, further rally will remain in favor.

In the longer term picture, breach of 55 month EMA (now at 1.5592) raises the chance of medium term bullish reversal. Focus is back on 1.6434 cluster resistance, 38.2% retracement of 1.9799 (2020 high) to 1.4281 at 1.6389). Sustained break there will confirm and target 61.8% retracement at 1.7691.

Sideway consolidation continued in EUR/CHF last week and outlook is unchanged. Initial bias stays neutral this week first. 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, prior rejection by 0.9970 support turned resistance retains medium term bearishness. That is, while 0.9407 is a medium term bottom, price actions from there would develope into a corrective pattern rather than a reversal. Down trend resumption through 0.9407 is mildly favored at a later stage. This will remain the favored case now, as long 38.2% retracement of 1.1149 to 0.9407 at 1.0072 holds.

In the long term picture, capped well below 55 month EMA, EUR/CHF is seen as extending the multi-decade down trend. There is no prospect of a bullish reversal until firm break of 1.0505 support turned resistance (2020 low). In case of resumption, next target is 138.2% projection of 1.2004 to 1.0505 to 1.1149 at 0.9033.

The tone of the markets was well set by Fed Chair Jerome Powell's indication of smaller rate hike in the upcoming FOMC meeting. The biggest reactions were found in treasury yields, which decline was surprisingly steep. US stocks ended higher but upside momentum appeared to be diminishing.

Dollar was sold off broadly and closed as the second worst performer, next to Canadian. Australian Dollar was actually the third weakest, arguing that risk-on sentiment wasn't that solid. Yen was the strongest, as supported by falling yields, followed by Kiwi and then Sterling. Euro and Swiss Franc ended mixed.

Investors cheered Powell, but turning cautious

Fed Chair Jerome Powell's speech at the Brookings Institution was the biggest market mover last week, and pretty much set the tone. In short, Powell said that, "it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down", adding that, the time for moderating the pace of rate increases may come as soon as the December meeting." Stocks rose while treasury yield and Dollar tumbled as reactions to the speech. Solid non-farm payroll growth with stronger wage increases provided some jitters, but didn't alter the path.

The decline in treasury yields at the long end was rather decisive and significant. But momentum in stocks and Dollar was not. As pointed out by many Fed officials, at this stage of the tightening cycle, it's not the size of a move that matters. Rather, the terminal rate and the timing to get there carry much more significance. Thus, traders might start to turn cautious and wait for new economic projections at the FOMC meeting on December 15 to get some hints on the answers to the two questions, before taking another committed move.

DOW's close above 34281.36 resistance was a bullish development. But upside momentum is clearly diminishing as seen in daily MACD. There is still prospect of a pull back in the near term, and bring of 33583.77 support will indicate the start of a correction. But as long as 33583.77 holds, DOW could still edge higher before making a near term top.

S&P 500's rebound from 3491.58 is much less convincing that DOW's corresponding move. SPX is still kept well below 4325.28 resistance. Indeed, break of 3906.54 support should have 55 day EMA taken out too, and would open up the case for retesting 3491.58 low.

10-year yield to defend key support level

US 10-year yield's steep decline was a surprise. The move away from 55 day EMA is starting the argue that it's already in a medium term correction. Still, rebound from current level will have 3.483 resistance turned support defended. Break of 3.798 resistance will bring stronger rise back towards 4.333 high, and keep the correction short term.

However, sustained break of 3.483 will extend the fall from 4.333 to 55 week EMA (now at 2.897), or even further to 38.2% retracement of 0.398 to 4.333 at 2.829. Such development would be an heavy drag on all Yen pairs, in particular USD/JPY.

Dollar index sitting on important support zone

Dollar index's close below 38.2% retracement of 89.20 to 114.77 at 105.00 is a bearish sign. Yet, it's still sitting close to an important support zone between 104.63 and 55 week EMA (now at 104.00). There is still prospect of forming a bottoming at current level. Break of 107.19 resistance should at least bring rebound back to 55 day EMA (now at 108.62).

However, sustained trading below the 55 day EMA will open up deeper correction to 61.8% retracement at 98.96, which is below 100 handle. If that happens, we might at extended rally in stocks and correction in yields at the same time.

Yen surged broadly, boosted by falling yields

Yen was the biggest winner for the week as lifted by the steep decline in US and European benchmark yields. There was also some support from new board member Naoki Tamura's push for policy framework review, which could eventually lead to an end of the ultra-loose monetary policy (well, perhaps next year).

After some hesitation, AUD/JPY's near term decline finally took off and further fall should be seen to retest 90.81 support soon. Firm break there will resume the decline fall from 99.32, as a correction to larger up trend. Next target will be 100% projection of 99.32 to 90.81 from 95.73 at 87.22.

Also, if that happens, 55 week EMA would likely be taken out decisively, which would indicate that AUD/JPY is already correcting the rise form 59.85 (2020 low). That would open up further decline to 38.2% retracement of 59.85 to 99.32 at 84.24.

CAD/JPY's development was even more bearish, with a close below 55 week EMA (now at 100.45). It's likely already in correction to whole up trend from 73.80 (2020 low). Deeper decline is expected as long as 103.45 resistance holds. Next target is 38.2% retracement of 73.80 to 110.87 at 96.70.

Loonie selloff accelerates as BoC tightening close to a pause

Taking about Canadian Dollar, it ended as the worst performer last week on talks that BoC could pause earlier than Fed which leave its terminal rate lower. Opinions are divided on whether BoC would raise interest rate by 25bps or 50bps this week. Yet, there is consensus that this hike, or another one in January, would be the end of the cycle.

EUR/CAD's rally accelerated to as high as 1.4196 last week and there is not sign of topping yet. Further rally is expected as long as 1.3943 support holds. Next target is 161.8% projection of 1.2867 to 1.3694 from 1.3270 at 1.4608.

Also, note that sustained break of 1.4263 support turned resistance should confirm the completion of whole down trend from 1.6151 (2018 high), with three waves down to 1.2867 (2022 low). Further rally should be seen to 61.8% retracement of 1.6151 to 1.2867 at 1.4897 and above in the medium term.

USD/JPY Weekly Outlook

USD/JPY's fall from 151.93 resumed last week and hit as low as 133.61. Initial bias stays on the downside this week for 133.07 medium term fibonacci level or further to 55 week EMA. On the upside, break of 137.66 support turned resistance will turn intraday bias neutral first. However, near term risk will stay on the downside as long as 142.24 resistance holds, even in case of recovery.

In the bigger picture, a medium term top should be formed at 151.93. Fall from there is correcting larger up trend from 102.58. It's too early to call for bearish trend reversal. But even as a corrective move, such decline should target 38.2% retracement of 102.58 to 151.93 at 133.07, or further to 55 week EMA (now at 131.33). Some support should be seen around this zone to bring rebound. However, sustained break of 55 week EMA will pave the way to 61.8% retracement at 121.43.

In the long term picture, rise from 102.58, as part of the up trend from 75.56 (2011 low) was put to a halt at 151.93, just ahead of 100% projection of 75.56 to 125.85 from 102.58 at 152.87. There is no clear sign of long term reversal yet. Such up trend is expected to resume at a later stage, as long as 125.85 resistance turned support holds.

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