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GBP/USD's down trend accelerated to as low as 1.0837 last week and there is no sign of bottoming yet. Break of the near term channel support indicates downside acceleration. Next target is 1.0675 long term projection level, and then 100% projection of 1.3748 to 1.1759 from 1.2292 at 1.0303. On the upside, above 1.1095 minor resistance will turn intraday bias neutral and bring consolidations first, before staging another decline.

In the bigger picture, fall from 1.4248 (2018 high) is resuming long term down trend from 2.1161 (2007 high). Next target is 61.8% projection of 1.7190 (2014 high) to 1.1409 (2020 low) from 1.4248 (2021 high) at 1.0675. Firm break there will target parity. This will remain the favored case for now as long as 1.2292 resistance holds.

In the longer term picture, long term down trend from 2.1161 (2007) high is still in progress. Next target is 100% projection of 2.1161 to 1.3503 from 1.7190 at 0.9532.

USD/CHF's rebound from 0.9478 extended higher last week. Initial bias stays on the upside this week for 0.9868 resistance. Firm break of 0.9868 resistance will argue that larger up trend is ready to resume through 1.0063. Overall, the corrective pattern from 1.0063 high could still extend. Below 0.9619 minor support will turn bias back to the downside for 0.9478 and below.

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 is seen from 55 week EMA (now at 0.9460). 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 resumed by breaking through 0.6680 low decisively, and hit as low as 0.6510. Initial bias is on the downside this week. Next target is 0.6461 long term fibonacci level. Break there will target 100% projection of 0.7660 to 0.6680 from 0.7135 at 0.6155. On the upside, above 0.6669 minor resistance will turn intraday bias neutral and bring consolidations, before staging another decline.

In the bigger picture, down trend form 0.8006 (2021 high) is expected to continue as long as 0.7135 resistance holds. Next target is 61.8% retracement of 0.5506 (2020 low) to 0.8006 at 0.6461. Sustained break there will pave the way back to retest 0.5506.

In the long term picture, rejection by 0.8135 resistance suggests that the long term down trend from 1.1079 (2011 high) is not ready to reverse. Yet, the structure of the fall from 0.8006 still is not clearly impulsive. Hence, break of 0.5506 low is not envisaged for now. The long term outlook stays neutral first, and will be reassessed later after the fall from 0.8006 completes.

USD/CAD's up trend continued last week and hit as high as 1.3611. Initial bias stays on the upside this week for long term fibonacci level at 1.3650. Break there will target 161.8% projection of 1.2005 to 1.2947 from 1.2401 at 1.3925. On the downside, below 1.3407 minor support will turn intraday bias neutral and bring consolidations first, before staging another rally.

In the bigger picture, up trend from 1.2005 (2021 low) is still in progress. Next target is 61.8% retracement of 1.4667 to 1.2005 (2021 low) at 1.3650. Sustained break there will target 1.4667 (2020 high). This will now remain the favored case as long as 1.2947 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 still 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.

Much volatility was seen in EUR/CHF last week but there is no sign of reversal. That is, outlook remains bearish and initial bias stays neutral this week first. On the downside, break of 0.9464 will resume larger down trend. Next target is 61.8% projection of 1.0512 to 0.9550 from 0.9864 at 0.9269. On the upside, above 0.9712 will bring stronger rebound towards 0.9864 resistance.

In the bigger picture, long term down trend from 1.2004 (2018 high) is still in progress. Next target is 138.2% projection of 1.2004 to 1.0505 to 1.1149 at 0.9033. On the upside, break of 0.9864 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.

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).

EUR/GBP's rally accelerated further to as high as 0.8933 last week. Initial bias stays on the upside this week. Current up trend from 0.8201 should target long term fibonacci level at 0.9003 next. On the downside, break of 0.8690 support is needed to indicate short term topping. Otherwise, outlook will remain bullish in case of retreat.

In the bigger picture, current development suggests that the down trend from 0.9499 has (2020 high) has completed at 0.8201. Rise from there is developing into a medium term up trend. Further rally would be seen to 61.8% retracement of 0.9499 to 0.8201 at 0.9003 next. Sustained break there will bring retest of 0.9499. This will now remain the favored case as long as 55 day EMA (now at 0.8585) holds.

In the long term picture, the fall form 0.9499 (2020 high), as a correction to rise from 0.6935 (2015 low), could have completed 0.8201. It's still early to judge that up trend is ready to resume. But in that case, further rise would be seen to 0.9499 first, and then 0.9799 (2009 high).

EUR/AUD turned into consolidation below 1.4965 last week. Initial bias remains neutral this week first. Further rally is in favor a long as 1.4663 minor support holds. On the upside, break of 1.4965 will resume the rise from 1.4281 towards 1.5396 resistance. On the downside, however, break of 1.4663 minor support will turn bias back to the downside for retesting 1.4281 low.

In the bigger picture, down trend from 1.9799 is still in progress. Break of 1.4318 low will target 61.8% projection of 1.9799 to 1.5250 from 1.6434 at 1.3623, which is close to 1.3624 long term support (2017 low). This will remain the favored case now as long as 1.5396 resistance holds.

In the longer term picture, fall from 1.9799 (2020 high) is seen as the third leg of the pattern from 2.1127 (2008 high). Deeper fall should be seen to 1.3624 support. Decisive break there would pave the way back to 1.1602 (2012 low). This will remain the favored case as long as 55 month EMA (now at 1.5588) holds.

EUR/JPY's decline from 145.62 accelerated lower last week. Initial bias is mildly on the downside this week with focus on 138.38 support turned resistance. Firm break there will raise the chance of larger reversal and target 133.38 support next. On the upside, break of 142.28 will revive near term bullishness and bring retest of 145.62 high instead.

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 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 129.30) holds, up trend 109.03 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.

GBP/JPY's sharp decline and break of 155.57 support suggests medium term topping at 169.10. That came after multiple rejection by long term fibonacci level at 167.93. Initial bias remains on the downside this week for 150.95 support next. On the upside, above 159.10 minor resistance will turn intraday bias neutral and bring consolidations, before staging another fall.

In the bigger picture, rejection by 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 suggests that rise from 123.94 (2020 low) has completed. Deeper fall would be seen to 38.2% retracement of 123.94 to 169.10 at 151.84. Some support could be seen there to bring rebound. But risk will now stay on the downside as long as 169.10 resistance holds. Sustained trading below 151.84 will target 61.8% retracement at 141.19.

In the longer term picture, as long as 55 month EMA (now at 150.40) holds, rise from 122.75 could still extend higher at a later stage. However, sustained break of 55 month EMA will ague that whole rise has completed, and open up deeper fall back to 116.83/122.75 support zone.

It's such a week of surprises. The biggest one was probably the free fall in Sterling, as markets reaction to the "mini-budget" of the new UK government was overwhelmingly negative. Commodity currencies and Euro were also pressured on risk aversion.

Dollar emerged as the strongest one after hawkish Fed hike, selloff in risk assets, and surging treasury yields. Yen just eked out a second place, with Japan's first intervention of the same kind since 1998 being unable to over turn the tide with the greenback. Swiss Franc was the third strongest, additionally supported by its rally against Euro and Sterling.

With a relatively light calendar ahead, and quarter end approaching, the markets might have a breather this week. But... never say never.

GBP/USD free falling to parity after radial mini-budget

Sterling was already under some pressure after Fed's hawkish rate hike. BoE's decision to raise Bank Rate by 50bps was not unanimous, with three MPC members voted for a 75bps and one voted for just 25bps. But the free fall only took off after Finance Minister Kwasi Kwateng's mini-budget, which was perceived by some as the most radical since 1972.

Market reactions were overwhelmingly negative to the plan. FTSE lost -1.97% on Friday and could barely defend 7000 handle. 10-year Gilt yield surged 0.3292 to 3.827, the biggest one-day jump on record since 1989, and hit the highest level since 2010. GBP/USD fell below 1.09 for the first time since 1985.

Investors believed the plan would push inflation even higher and BoE would be forced to raise interest rate further to 5.50% in the currency cycle, which adds additional weight to the economy. The combined reaction suggests the lack of confidence in the government's ability managing the ballooning debt.

While the decline in FTSE was deep, it's not the end of the world for the UK yet. The key medium term level to defend is 38.2% retracement of 4898.79 to 7687.27 at 6622.07. As long as this level holds, any ups-and-downs, while large, are seen as part of a medium term sideway pattern only.

As for GBP/USD, it would hope to get some support between parity and 61.8% projection of 1.7190 (2014 high) to 1.1409 (2020 low) from 1.4248 (2021 high) at 1.0675. to stabilize, as least for the first attempt. It's way too early to judge how deep the current down trend would extend to. But if parity is taken out firmly, the next target could be 100% projection of 2.116 to 1.3503 from 1.7190 at 0.9532.

Japan intervened finally, but USD/JPY just range bound

Another significant development last week was Japan's intervention in the currency markets, the first act to support Yen since 1997-98 Asian Financial crisis. Japan did intervene in the markets in between but those actions were for slowing the currency's advances. The move came after USD/JPY hit 24 year high and threatened to approach 1998 high at 147.68.

While Yen did rebound after intervention, there was no follow through buying against Dollar so far. The up trend in USD/JPY remains intact with 139.37 resistance turned support intact. That is, USD/JPY could still have another attempt on 147.68 to test Japan's determination.

Firm break of 139.37 will be an indication of medium term topping. But based on current market sentiment, and policy divergence between Fed and BoJ, there is little chance of breaking next support level at 130.38 in the foreseeable future.

Dollar and yields up, stocks down after FOMC

Moving on to the US, Fed raised interest rate by 75bps to 3.00-3.25% as widely expected. The bigger surprise was found in the new economic projections, which expect interest rate to hit 4.4% by the end of this year, and peak at 4.6% in 2023. But then, there is still room for further upward revision in the policy path in December's projection if high inflation persists.

DOW break through prior low at 29653.29 to resume the medium term correction from 36952.65 high. For now, near term outlook will stay bearish as long as 31026.89 resistance holds, even in case of strong recovery. The correction could target 100% projection of 36952.65 to 26953.29 from 34281.36 at 26982.00, or even further to 61.8% retracement of 18213.65 to 36952.65 at 25371.94, before completion.

10-year yield surged through 3.483 to resume the long term up trend last week, and hit as high as 3.773. TNX is now in proximity to 61.8% projection of 1.343 to 3.483 from 2.525 at 3.847. There might be some consolidations below this projection level first. But in any case, further rally is in favor as long as 3.353 support holds. Firm break of 3.847 could prompt further up side acceleration to 100% projection at 4.665.

At same time, it should also be noted that 2-year yield rose 0.345 over the week to close at 4.212, hitting the highest level since 2007. Inversion of 2-yr and 10-yr yield, at -0.51, is now the deepest since 1981, surpassing -0.43 in 1989.

As for Dollar index, it accelerated to to close strongly at 113.19 as up trend resumed. DXY is now pressing a medium-term channel resistance, and the two-decade channel resistance. It's also in proximity to 61.8% projection of 94.62 to 109.29 from 104.63 at 113.69. Thus, there is prospect of further loss of upside momentum, and some consolidations.

But still, break of 109.29 resistance turned support is needed to confirm topping. Otherwise, further rally will remain in favor. Sustained break of 113.69 will pave the way to 100% projection of 119.30, which is close to 120 psychological level, and 2001 high.

GBP/JPY Weekly Outlook

GBP/JPY's sharp decline and break of 155.57 support suggests medium term topping at 169.10. That came after multiple rejection by long term fibonacci level at 167.93. Initial bias remains on the downside this week for 150.95 support next. On the upside, above 159.10 minor resistance will turn intraday bias neutral and bring consolidations, before staging another fall.

In the bigger picture, rejection by 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 suggests that rise from 123.94 (2020 low) has completed. Deeper fall would be seen to 38.2% retracement of 123.94 to 169.10 at 151.84. Some support could be seen there to bring rebound. But risk will now stay on the downside as long as 169.10 resistance holds. Sustained trading below 151.84 will target 61.8% retracement at 141.19.

In the longer term picture, as long as 55 month EMA (now at 150.40) holds, rise from 122.75 could still extend higher at a later stage. However, sustained break of 55 month EMA will ague that whole rise has completed, and open up deeper fall back to 116.83/122.75 support zone.