Sample Category Title

Daily Pivots: (S1) 140.95; (P) 141.38; (R1) 141.85; More....

Intraday bias in EUR/JPY stays neutral at this point. On the downside, break of 140.77 minor support will turn bias back to the downside, to extend the corrective pattern from 145.62 with another falling leg towards 137.32 support. On the upside, above 144.06 will bring retest of 145.62 high.

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.

Daily Pivots: (S1) 0.8744; (P) 0.8778; (R1) 0.8811; More...

Intraday bias in EUR/GBP stays neutral and outlook is unchanged. On the downside, sustained trading below 55 day EMA (now at 0.8656) will extend the fall from 0.9267 (as another falling leg of a long term consolidation pattern), to 0.8201/8338 support zone. On the upside, above 0.8848 minor resistance will turn bias back to the upside for recovery instead.

In the bigger picture, as long as 0.8720 resistance turned support holds, rise from 0.8201 is seen as resuming larger up trend from 0.6935 (2015 low). Break of 0.9499 (2020 high) should be seen at a later stage. However, firm break of 0.8720 will argue that sideway pattern from 0.9499 is extending with another falling leg instead.

Daily Pivots: (S1) 1.5298; (P) 1.5371; (R1) 1.5481; More...

EUR/AUD's rally resumed and break of 1.5396 resistance carries some larger bullish implication. Intraday bias is back on the upside for 161.8% projection of 1.4281 to 1.4965 from 1.4716 at 1.5823. For now, outlook will remain bullish as long as 1.5165 support holds, in case of retreat.

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.

Daily Pivots: (S1) 0.9667; (P) 0.9697; (R1) 0.9734; More....

Range trading continues in EUR/CHF and intraday bias remains neutral for the moment. On the upside, above 0.9798 will resume the rebound to 0.9864 resistance. Firm break there will solidify the case of medium term bottoming at 0.9407, and target 38.2% retracement of 1.1149 to 0.9407 at 1.0072. On the downside, below 0.9641 minor support will turn bias back to the downside for retesting 0.9407 low instead.

In the bigger picture, as long as 0.9864 resistance holds, long term down trend from 1.2004 (2008 high) is expected to continue. Next target is 138.2% projection of 1.2004 to 1.0505 to 1.1149 at 0.9033. However, firm break of 0.9864 will confirm medium term bottoming, on bullish convergence condition in daily MACD. Stronger rally would then be seen back to 55 week EMA (now at 1.0152), even as a corrective rebound.

Daily Pivots: (S1) 0.9670; (P) 0.9715; (R1) 0.9748; More...

Intraday bias in EUR/USD remains on the downside for retesting 0.9534 low. Firm break there will resume larger down trend for 100% projection of 1.0368 to 0.9534 from 0.9998 at 0.9163. For now, risk will stay on the downside as long as 0.9998 resistance holds, in case of recovery.

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) 1.1003; (P) 1.1073; (R1) 1.1127; More...

Break of 1.1023 minor support argues that GBP/USD's rebound from 1.0351 has completed at 1.1494. Intraday bias is back on the downside for retesting 1.0351 low. For now, risk will stay on the downside as long as 1.1494 resistance holds, in case of recovery.

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) 0.9951; (P) 0.9981; (R1) 0.0030; More...

USD/JPY's rally resumed with break of 0.9964 resistance. Intraday bias is back on the upside for 1.0063 high first. Decisive break there will resume larger up trend. On the downside, break of 0.9779 support is needed to indicate short term topping. Otherwise, outlook will stay cautiously bullish in case of retreat.

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) 145.30; (P) 145.55; (R1) 145.97; More...

USD/JPY is still limited by 145.89 resistance and intraday bias stays neutral. Overall, further rally is expected as long as 139.37 resistance turned support holds. Break of 145.89 will target 147.68 long term resistance. On the downside, however, decisive break of 139.37 will bring deeper decline towards 130.38 support.

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). 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.

Daily Pivots: (S1) 0.5928; (P) 0.6648; (R1) 0.7020; More...

Intraday bias in AUD/USD remains on the downside for the moment. Current down trend should target 100% projection of 0.7660 to 0.6680 from 0.7135 at 0.6155 next. On the upside, above 0.6362 minor resistance will turn intraday bias neutral and bring consolidations. But outlook will remain bearish as long as 0.6539 resistance holds.

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.

Risk sentiment is morose this week with the escalating tensions in Ukraine, rising Covid cases in China, mounting tensions between US and China, the selloff in US and other treasuries, the relentless appreciation in the US dollar and the drop in safe haven currencies.

Rare mixture of bad news

It’s rare that we have such a sour mixture of bad news on the wire.

First, the week started with images of Russian bombs falling on Ukrainian cities following the blast on the bridge that linked Russia to Crimea. That means further escalation of the war before winter. And it’s extremely bad news.

Second, Covid cases in China rose to the highest levels in two months, fueling fears that big cities like Shanghai or Shenzhen face lockdown risks, again, at a time the government steps up efforts to contain contagion before the twice-in-a-decade Communist Party gathering where Xi Jinping will certainly be given another term.

Third, tensions between US and China escalate, as well. Joe Biden’s latest decision to further restrict chip exports to China didn’t please Chinese, nor chip investors. Nvidia took another 3% hit in the teeth yesterday and slipped below the $120 per share for the first time since March 2021. AMD fell another 1%. And the US semiconductors lost a combined $240 billion in market value globally. The slump in chip stocks also spilled over the currency markets. And the currencies of countries that export chips like Korea and Taiwan fell.

But in reality, everything slipped against the US dollar

…including currencies and assets that would normally have acted as safe havens, especially in a context of rising geopolitical tensions, and war.

The Swiss franc lost ground against the greenback and the USDCHF rose above parity. The Japanese yen continued its historic fall as well, the dollar yen advanced to 145.80.

Gold fell for the fifth day to $1660 per ounce, and is set to dive deeper toward the $1600 level on the back of a relentless rise in the US yields and the dollar.

And the US yields press higher on the back of hawkish Federal Reserve (Fed) pricing, despite a couple of less hawkish comments from some Fed members at the start of the week. Chicago Fed President Charles Evans said that he wants to quickly get to a point where policy makers can feel comfortable pausing in order to reduce the risk of overshooting. The Fed Vide Chair Brainard also sounded cautious saying that the previous rate hikes are still working through the economy.

But investors ignored the latest comments. The US 2-year yield advanced to 4.35%, and activity on Fed funds futures price 77.5% chance for a 75bp hike at next FOMC meeting. That’s higher compared to yesterday.

And the positive pressure in the US yields is nowhere close to an end as big US bond buyers are deserting the marketplace. Foreign central banks are getting out of their positions to limit the impact of the US tightening on their reserves, and the Japanese pension funds and life insurers are also reportedly selling US treasuries as they no longer provide safety and stability to their holders. The Fed’s balance sheet has started shrinking, but we are still at historically high levels – by far, and it's hard to imagine that the Fed will stop downsizing its balance sheet, especially when inflation is nowhere near where the Fed officials need it to be.

At least, the avalanche of bad global news has been successful in pulling oil prices lower yesterday. The barrel of American crude eased to $90 this morning, after having flirted with $94 a barrel on Monday.

US earnings – how bad doctor?

US earnings season kicks off in a dark and depressed environment. According to data from FactSet, the EPS growth of the S&P500 companies should fall by 2.6% to below 10% in the Q3. Analysts have cut their profit forecasts by around $34 billion. And if that’s the case, the S&P500 will record the worse quarter since the Q3 of 2020, when markets were hit by the pandemic, but at least they had the Fed on their side. Today, even the Fed is no longer here to give support.

Hardly saying the day

The Bank of England (BoE) kicked off the week by announcing more measures to support the British bond market. They will buy more bonds for the next five days to compensate for the huge fiscal spending that Liz Truss threw in the face of the market, that the market refused to finance. The BoE will also launch a longer-term facility designed to ease liquidity pressures.

It’s also ‘funny’ that after having scrapped tax cuts on UK’s high earners, the Chancellor of Exchequer also announced that he will reveal his medium-term fiscal strategy and economic forecasts before the end of the month, some three weeks earlier than he previously planned. I don’t know if investors are looking forward to it.

The Truss government made a disastrous entry to office, and thigs get more disorderly by the day. And unfortunately, extra measures announced yesterday hardly convinced investors. The British 10-year gilt yield shot up by more than 4.50%, while Cable hovered around the 1.10 mark, with a growing prospect of easing further.