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USD/CHF's rally continued to 1.0072 last week, but failed to sustain above 1.0063 high and retreated. Initial bias remains neutral this week first. On the upside, break of 1.0072, and sustained trading above 1.0063, will confirm larger up trend resumption. Next target is 1.0283 projection level. However, break of 0.9914 support will indicate rejection by 1.0063, and turn bias back to the downside for 0.9779 support first.

In the bigger picture, current development suggests that up trend from 0.8756 (2021 low) is still in progress. Sustained break of 1.0063 will target 100% projection of 0.9149 to 1.0063 from 0.9369 at 1.0283, and then 1.0342 (2016 high). For now, this will remain the favored case as long as 0.9369 support holds, even in case of deep pull back.

In the long term picture, outlook is mixed with deeper than expected fall from 1.0063, but some support was seen from 55 week EMA (now at 0.9528). Overall, though, USD/CHF is seen as in sideway pattern from 1.0342 (2016 high). Range trading should continue until further development.

AUD/USD's down trend continued to 0.6169 last week but recovered. Initial bias remains neutral this week first, and outlook stays bearish as long as 0.6539 resistance holds. Firm break of 100% projection of 0.7660 to 0.6680 from 0.7135 at 0.6155 will target 138.2% projection at 0.5781.

In the bigger picture, down trend form 0.8006 (2021 high) is expected to continue as long as 0.6680 support turned resistance holds. Next target is 0.5506 low. Medium term momentum will now be closely monitored to gauge the chance of break of 0.5506.

In the long term picture, current medium term downside momentum raises the chance of resumption of long term down trend from 1.1079 (2011 high). It's still a bit early to judge the chance. But break of 0.5506 will target 0.4773 (2001 low).

USD/CAD's up trend continued last week and hit as high as 1.3976. As a temporary top was formed, initial bias is neutral this week for some consolidations. Outlook will stay bullish as long as 1.3501 support holds. Firm break of 1.3976 will target 200% projection of 1.2005 to 1.2947 from 1.2401 at 1.4285.

In the bigger picture, up trend from 1.2005 (2021 low) is still in progress. Based on current impulsive momentum, it could be resuming long term up trend from 0.9056 (2007 low). Whether it is or it isn't, retest of 1.4689 (2016 high) should be seen next. This will now remain the favored case as long as 1.3222 resistance turned support holds.

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's rise from 148.93 resumed last week and initial bias stays on the upside this week for 169.10 resistance. Firm break there will confirm larger up trend resumption. Next near term target is 61.8% projection of 148.93 to 165.69 from 159.71 at 170.06, and then 100% projection at 176.47. On the downside, break of 159.71 support will extend the corrective pattern from 169.10 with another falling leg.

In the bigger picture, current development suggests that up trend from 123.94 (2020 low) is still in progress. Sustained break of 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 will pave the way to retest 195.86 high. This will now remain the favored case as long as 148.93 support holds.

In the longer term picture, as long as 55 month EMA (now at 151.18) holds, rise from 122.75 could still extend higher at a later stage. Next target is 195.86 (2015 high).

EUR/JPY's rise from 137.32 resumed and extended higher last week. Initial bias stays on the downside this week for retesting 145.62 high first. Decisive break there will confirm up trend resumption. Next target is 100% projection of 133.38 to 145.62 from 137.32 at 149.56, which is close to 149.76 long term resistance. On the downside, break of 140.88 will extend the corrective pattern from 145.62 with another falling leg.

In the bigger picture, as long as 133.38 support holds, the up trend from 114.42 (2020 low) could still extend through 145.62 high. In that case, next target is 149.76 (2015 high). However, sustained break of 133.38 will be a sign of medium term bearish reversal and bring deeper fall to 124.37 support first.

In the long term picture, as long as 55 month EMA (now at 129.41) holds, up trend 109.03 (2016 low) should still extend higher to 149.76 resistance (2014 high). However, sustained break of 55 month EMA will argue that the three wave pattern has completed, and bring deeper fall back to 109.03/114.42 support zone.

EUR/GBP dropped to 0.8607 last week but recovered since then. Initial bias is turned neutral this week first, but further decline is expected with 0.8869 resistance intact. Break of 0.8607 will target 61.8% projection of 0.9267 to 0.8647 from 0.8869 at 0.8486.

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.

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's rise from 1.4281 extended higher last week despite some loss of upside momentum. Initial bias is on the upside this week for 161.8% projection of 1.4281 to 1.4965 from 1.4716 at 1.5823. On the downside, break of 1.5429 minor support will turn intraday bias neutral and bring consolidation first, before staging another rally.

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, break of 55 month EMA (now at 1.5613) 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.

EUR/CHF rebounded after retreating to 0.9641 last week, but upside stays below 0.9798 resistance. Initial bias remains neutral this week first. On the upside, break of 0.9798 will target 61.8% projection of 0.9407 to 0.9798 from 0.9641 at 0.9883. Decisive break there will solidify the case of medium term bottoming and target 100% projection at 1.0032. This will remain the favored case as long as 0.9641 support holds.

In the bigger picture, considering bullish condition in daily MACD, firm break of 0.9864 resistance will confirm medium term bottoming at 0.9407. Stronger rally should then be seen to 55 week EMA (now at 1.0138), even as a corrective rebound. Nevertheless, rejection by 0.9864 will bring down trend resumption through 0.9407 next.

In the long term picture, capped 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.

There were so many important headlines last week. USD/JPY surged to new 32-year high with support from stronger than expected CPI, and as 10-year yield broke 4% handle. Japan maintained their stance that they will act resolutely on market volatility, without actual intervention. DOW staged a historic 1500pts U-turn on Thursday but gave up much gains just the following day. Sterling rebounded further as the UK delivered episodes of political chaos.

In the end, the Pound was the biggest winner, but Dollar was not too far way. As noted below, markets are already pricing in two more 75bps Fed hikes in November and December. Euro was resiliently the third strongest. When Yen clearly struggled, it's only the second worst next the Aussie, then followed by Swiss Franc.

Markets pricing 97% chance of Nov 75bps hike, 70% of Dec 75bps hike

After stronger than expected CPI reading in the US, investors added their bets continuation of aggressive tightening by Fed ahead. Such expectations were affirmed by FOMC minutes which highlighted policymakers' concern on persistent inflation, and the cost of doing too little. Fed fund futures are now pricing in 97.2% chance of 75bps hike to 3.75-4.00%.

Indeed, there's also nearly 70% chance of 75bps hike to 4.50-4.75% at December 14 meeting.

DOW and NASDAQ staying bearish despite rebound attempts

US stocks staged a strong rebound on Thursday after CPI release, but reversed much gains on Friday. DOW was rejected by 30454.46 resistance, and the development keeps near term outlook bearish. That is, another decline should be seen sooner rather than later to 100% projection of 36965.83 to 29653.29 from 34281.36 at 26982.00

NASDAQ's recovery was even weaker, and kept below corresponding resistance at 11230.44. Next target is 61.8% projection of 16212.22 to 10565.13 from 13181.08 at 9691.17. Firm break there could prompt downside acceleration to 100% projection at 7633.99.

10-year yield extended up trend, closed above 4%

10-year yield's up trend resumed last week and closed above 4% handle. Upside momentum is not too strong as seen in 4 hour MACD. But further rally is expected anyway. Sustained trading above 4.000 could prompt some upside reacceleration towards 61.8% projection of 2.525 to 3.992 from 3.568 at 4.474 next.

Dollar index extended consolidation, staying bullish

Dollar index, however, remains bounded in range below 114.77 resistance last week. That's mainly because Dollar failed to build up momentum against Euro. Still, outlook will stay bullish as long as 55 day EMA (now at 109.98) holds. Break of 114.77 will resume the up trend towards 100% projection of 94.62 to 109.29 from 104.63 at 119.30, which is close to 120 handle.

AUD/JPY maintains bearishness as Aussie underperforms the weak Yen

While Yen was clearly a big loser last week, Aussie was even worse. One factor is that RBA has started slowing down its tightening earlier this month, which others are maintaining the same pace. Another factor is the concern over extended slowdown in China's economy due to its so-called zero-COVID policy, and intensifying tension with the West.

AUD/JPY's recovery from 90.81 was kept well below 55 day EMA and 94.52 resistance, keeping near term outlook bearish. Considering bearish divergence condition in daily MACD, 99.32 should be a medium term top. Fall from there might either be correcting the up trend from 78.77, or even that from 59.85. In either case, deeper fall is likely to 55 week EMA (now at 89.61). Sustained break there will target 38.2% retracement of 59.85 to 99.32 at 84.24.

Sterling rebounds further, riding on political chaos

Sterling ended as the best performer, helped much by the political chaos in the UK. In the latest episode, UK Prime Minister Liz Truss sacked her Finance Minister Kwasi Kwarteng, and replaced him by former Foreign and Health Minister Jeremy Hunt. Hunt is now expected to deliver a new budget plan on October 31, which he already indicated that "some taxes will not be cut as quickly as people want, and some taxes will go up."

As a side note, the development somewhat proves that BoE's was right in not to panic and rush into emergency action, other than the targeted gilt stabilization operations. After all, the Brits know their country more than the others. It's now way too soon to predict what BoE would do at the November meeting, at least not before Hunt's budget, and BoE's own revision on economic projections.

GBP/CHF extended the rebound from 1.0183 last week and the close above 55 day EMA is a positive sign. Further rally is now in favor as long as 1.0893 support holds. The key near term hurdle is 61.8% projection of 1.0183 to 1.1283 from 1.0893 at 1.1573. Sustained break there could prompt upside acceleration to 100% projection at 1.1993, which is above 55 week EMA.

USD/JPY Weekly Outlook

USD/JPY's up trend resumed last week and reached high as high 148.85, breaking 147.68 long term resistance. There is no clear sign of topping yet. Initial bias stays on the upside this week for 61.8% projection of 130.38 to 140.33 from 145.89 at 149.91. Beware that Japan might intervene again there close to 150 psychological level. Nevertheless, break of 145.89 resistance turned support is needed to confirm short term topping. Otherwise, outlook will remain bullish in case of retreat.

In the bigger picture, up trend from 101.18 is still in progress, as part of the whole up trend from 75.56 (2011 low). 147.68 (1998 high) was already met and there is not clearly sign of topping yet. In any case, break of 139.37 resistance turned support is needed to be the first sign of medium term topping. Otherwise, further rise is in favor to next target at 160.16 (1990 high).

In the long term picture, rise from 101.18 is seen as part of the up trend from 75.56 (2011 low). Sustained break of 100% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 149.26, will pave the way to 138.2% projection at 168.47. This will remain the favored case as long as 130.38 support holds.

Monday, Oct 17, 2022

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Tuesday, Oct 18, 2022

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Wednesday, Oct 19, 2022

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Thursday, Oct 20, 2022

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Friday, Oct 21, 2022

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