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Daily Pivots: (S1) 0.9671; (P) 0.9739; (R1) 0.9845; More...

Intraday bias in EUR/USD stays neutral for the moment. For now, outlook will remain bearish as long as 0.9998 resistance holds. Below 0.9630 will bring retest of 0.9534 low first. Firm break there will resume larger down trend.

In the bigger picture, down trend from 1.6039 (2008 high) is still in progress. Next target is 100% projection of 1.3993 to 1.0339 from 1.2348 at 0.8694. In any case, break of 0.9998 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish even with strong rebound.

Daily Pivots: (S1) 1.1133; (P) 1.1257; (R1) 1.1455; More...

Outlook is GBP/USD remains unchanged. Intraday bias stays mildly on the upside for 1.1494 resistance. Firm break there will confirm resumption of whole rebound from 1.0351. Next target is 61.8% projection of 1.0351 to 1.1494 from 1.0922 at 1.1628. On the downside, below 1.0922 will turn bias back to the downside for 1.0351 low instead.

In the bigger picture, fall from 1.4248 (2018 high) is resuming long term down trend from 2.1161 (2007 high). Next target is 100% projection of 2.1161 to 1.3503 from 1.7190 at 0.9532. There is no scope of a medium term rebound as long as 1.1759 support turned resistance holds.

Daily Pivots: (S1) 0.9958; (P) 1.0016; (R1) 1.0072; More...

Intraday bias in USD/CHF remains neutral for consolidation below 1.0072. 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.

Daily Pivots: (S1) 146.58; (P) 147.12; (R1) 147.78; More...

USD/JPY's rally continues and breaks 147.68 long term resistance. Intraday bias stays on the upside for 149.25 projection level, and possibly to 150 psychological level. On the downside, break of 146.43 minor support will now suggest short term topping, and turn bias back to the downside for deeper pull back.

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). Further rise should be seen to 147.68 (1998 high), and possibly to 100% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 149.26, For now, break of 130.38 support is needed to be the first indication of medium term topping. Otherwise, outlook will stay bullish even in case of deep pull back.

Dollar regains some growth today, and even rises to new 32-year high against Yen. Momentum is somewhat weak, however, as traders are guarding against intervention by Japan. Meanwhile, markets are mixed elsewhere. Sterling dips after UK Finance Minister Kwasi Kwarteng announced his resignation ahead of Prime Minister Liz Truss's press conference later in the day. For now, the Pound is still the strongest for the week, followed by Kiwi and the Dollar. Yen is worst, followed by Aussie and the Swiss Franc. But there is scope for some changes in position in the final hours.

Technically, while Dollar retreated quite notably yesterday, the recovery in gold was so far very weak. Current development suggests that rebound from 1614.60 has completed at 1729.28 already. Further decline is now in favor as long as 1683.76 minor resistance holds, to retest 1614.60 low. Firm break there will resume larger decline.

In Europe, at the time of writing, FTSE is up 1.04%. DAX is up 1.16%. CAC is up 1.64%. Germany 10-year yield is down -0.108 at 2.173. Earlier in Asia, Nikkei rose 3.25%. Hong Kong HSI rose 1.21%. China Shanghai SSE rose 1.84%. Japan 10-year JGB yield rose 0.0028 to 0.254.

US retail sales growth flat in Sep, ex-auto sales up 0.1% mom

US retail sales growth was flat at 0.0% mom in September, at USD 684.0B. Ex-auto sales rose 0.1% mom, better than expectation of -0.1% mom. Ex-gasoline sales rose 0.1% mom. Ex-auto and gasoline sales rose 0.3% mom. Total sales for July through September period were up 9.2% from the same period a year ago.

Also released, import price index dropped -1.2% mom in September, below expectation of -1.1% mom.

From Canada, manufacturing sales dropped -2.0% mom in August, versus expectation of -1.1% mom. Wholesale sales rose 1.4% mom, above expectation of 0.1% mom.

ECB Lagarde: Valuations vulnerable to a range of possible negative surprises

ECB President Christine Lagarde said the financial markets may be overly optimistic about the economic outlook. "This makes valuations vulnerable to a range of possible negative surprises, whether from growth, inflation, monetary policy or corporate profitability," she said.

Vice President Luis de Guindos said, "what we considered as our downside scenario in September, is coming closer to the baseline scenario... I think we are going to face a very difficult combination of low economic growth, including the possibility of a technical recession, and high inflation,"

Governing Council member Bostjan Vasle said, "We won't stop at the neutral rate, we need to keep powering through... I'm of the opinion that we will have to go above the neutral level in order to calm inflation pressures, which are currently in the pipeline.

Eurozone exports rose 24.0% yoy in Aug, imports rose 53.6% yoy

Eurozone exports of goods rose 24.0% yoy to EUR 231.1B in August. Imports rose 53.6% yoy to EUR 282.1B. Trade deficit came in at EUR -50.9B. Intra-Eurozone trade rose 34.8% yoy to EUR 210.5B.

In seasonally adjusted term, exports rose 3.5% mom to EUR 245.5B. Imports rose 5.5% mom to EUR 292.8B. Trade deficit widened from EUR -40.5B to EUR -47.3B, much larger than expectation of EUR -40.0B. Intra-Eurozone trade rose from EUR 230.9B to EUR 239.2B.

NZ BNZ manufacturing dropped to 52.0, positive trend with ongoing volatility

New Zealand BusinessNZ Performance of Manufacturing Index dropped back from 54.8 to 52.0 in September, comparing to July's 53.5 and June's 50.2. Looking at some details, production dropped from 54.5 to 52.0. Employment dropped from 53.6 to 51.9. New orders tumbled sharply from 59.7 to 48.4. Finished stocks rose from 52.0 to 55.0. Deliveries edged down from 55.0 to 54.5.

BNZ Senior Economist, Doug Steel stated "the overall trend remains positive, but with ongoing volatility around it. On the positive side, the PMI's 3-month moving average has continued to edge higher this month but, not so good, the 52.0 monthly reading is now back below the PMI's longer-term norm".

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 146.58; (P) 147.12; (R1) 147.78; More...

USD/JPY's rally continues and breaks 147.68 long term resistance. Intraday bias stays on the upside for 149.25 projection level, and possibly to 150 psychological level. On the downside, break of 146.43 minor support will now suggest short term topping, and turn bias back to the downside for deeper pull back.

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). Further rise should be seen to 147.68 (1998 high), and possibly to 100% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 149.26, For now, break of 130.38 support is needed to be the first indication of medium term topping. Otherwise, outlook will stay bullish even in case of deep pull back.

Economic Indicators Update

US retail sales growth was flat at 0.0% mom in September, at USD 684.0B. Ex-auto sales rose 0.1% mom, better than expectation of -0.1% mom. Ex-gasoline sales rose 0.1% mom. Ex-auto and gasoline sales rose 0.3% mom.

Total sales for July through September period were up 9.2% from the same period a year ago.

Full release here.

ECB President Christine Lagarde said the financial markets may be overly optimistic about the economic outlook. "This makes valuations vulnerable to a range of possible negative surprises, whether from growth, inflation, monetary policy or corporate profitability," she said.

Vice President Luis de Guindos said, "what we considered as our downside scenario in September, is coming closer to the baseline scenario... I think we are going to face a very difficult combination of low economic growth, including the possibility of a technical recession, and high inflation,"

Governing Council member Bostjan Vasle said, "We won't stop at the neutral rate, we need to keep powering through... I'm of the opinion that we will have to go above the neutral level in order to calm inflation pressures, which are currently in the pipeline.

GBPUSD shifted to the sidelines after Thursday’s quick advance halted marginally near the 200-period simple moving average (SMA) at 1.1300 as it did earlier this month.

The stochastics have exited the overbought territory, while the RSI, although above 50, has a negative slope, both reflecting a weakening market sentiment as investors await more details on a potential budget U-turn by the UK prime minister.

Sellers, however, may not take charge unless the price slips below the 23.6% Fibonacci retracement of the 1.0324 – 1.1494 upleg at 1.1217. If that happens, the pair may next visit the 38.2% Fibonacci of 1.1045, which is currently intersecting the tentative ascending trendline drawn from the record low of 1.0324. Snapping that border, it will then head for the 50% Fibonacci of 1.0975.
In case downside pressures fade immediately, the price may push for a close above the 1.1300–1.1380 resistance region. If it succeeds, the door will open for October’s peak of 1.1494. Though only a decisive extension above the 1.1565 barrier would bring the long-term tentative descending trendline from March 2022 under examination at 1.1730.

Summarizing, GBPUSD seems to be struggling to sustain buying momentum despite its latest upturn. Nevertheless, a bounce off the 1.1217 level could provide another opportunity for the pair to recoup some lost ground.

The dollar index edged higher in European trading on Friday, regaining traction after Thursday’s 0.7% drop.

Unexpected drop was sparked by revived risk appetite, despite the latest report showed US inflation rose above expectations in September that adds to expectations for another aggressive action from Fed in the next policy meeting.

Markets widely expect another 0.75% hike, which will be the fourth in a row, with conditions of persisting red-hot inflation, keeping in play the bets for possible 1% rate hike, although the expectations for such action are so far only at 10%.

From the fundamental side, the overall situation remains very supportive for the dollar, as increased safe-haven flows on global political and economic uncertainty continue to inflate the currency.

In addition, revised view for the US monetary policy signals that the Fed is likely to increase the size and pace of tightening and that interest rate would top at 5% by March 2023, overshooting the latest forecasts.

The cocktail of positive factors leaves a little space for a deeper correction, although some price adjustments can not be ruled out.

The picture on daily chart is mixed as 14-d momentum is in negative territory and heading south, but moving averages are in full bullish setup.

Immediate supports lay at 112.34/19 (Fibo 38.2% of 109.95/113.83 upleg/10DMA) and so far keep the downside protected.

Break here would risk test of next pivot at 111.89 (50% retracement, reinforced by daily Tenkan-sen), loss of which would weaken near-term structure and allow for deeper pullback towards 111.43/18 (Fibo 61.8%/daily Kijun-sen).

Conversely, weekly close above 10 DMA would keep in play hopes for renewed attack at Thursday’s post-CPI data peak (113.83) and unmask key barrier at 114.72 (20-year high posted on Sep 28) on break.

Res: 112.96; 113.83; 114.42; 114.72.
Sup: 112.34; 112.19; 111.89; 111.43.

Crude oil price started a fresh increase after it formed a base above the $84.50 level against the US Dollar. The price broke the $85 resistance zone to move into a short-term positive zone.

The price gained pace for a move above the $87 level and the 50 hourly simple moving average. There was a break above a major bearish trend line with resistance near $86.50 on the hourly chart. It is now consolidating gains above the $87.50 level.

However, the price is struggling to gain pace above the $88.50 resistance. The next key resistance is near the $90.00 level, above which the price might rise steadily towards the $92 resistance level.

If not, the price might decline towards the $86.50 support. If there is a downside break below $86.50, the price might accelerate lower to $85.00 on FXOpen. Any more losses might call for a test of $82.00.