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Daily Pivots: (S1) 1.3058; (P) 1.3109; (R1) 1.3140; More...

Intraday bias in USD/CAD remains neutral first, and further rally is in favor with 1.2971 minor support intact. On the upside, decisive break of 1.3222 will resume larger up trend from 1.2005. Next target is 100% projection of 1.2005 to 1.2947 from 1.2401 at 1.3343. On the downside, however, break of 1.2971 will extend the corrective pattern from 1.3222 with another falling leg, back towards 1.2726 support instead.

In the bigger picture, down trend from 1.4667 (2020 high) should have completed at 1.2005, after defending 1.2061 long term cluster support. Rise from there should target 61.8% retracement of 1.4667 to 1.2005 (2021 low) at 1.3650. This will remain the favored case now as long as 1.2516 support holds.

Daily Pivots: (S1) 0.6718; (P) 0.6746; (R1) 0.6779; More...

Intraday bias in AUD/USD is turned neutral with current recovery. On the upside, decisive break of 0.6680 low will resume larger down trend. Next target is long term fibonacci level at 0.6461. On the upside, break of 0.6855 support turned resistance will turn bias back to the upside for 0.7008 resistance instead.

In the bigger picture, price actions from 0.8006 (2021 high) is seen more as a corrective pattern to rise from 0.5506 (2020 low). Or it could also be a bearish impulsive move. In either case, outlook will remain bearish as long as 0.7282 resistance holds. Next target is 61.8% retracement of 0.5506 to 0.8006 at 0.6461.

Daily Pivots: (S1) 143.43; (P) 144.00; (R1) 144.67; More...

Intraday bias in USD/JPY remains neutral for consolidation below 144.98 temporary top. Downside of retreat should be contained by 139.37 resistance turned support to bring another rally. Break of 144.98 will resume larger up trend to 147.68 long term resistance. Break there will target 161.8% projection of 126.35 to 139.37 from 130.38 at 151.44 next.

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) 0.9677; (P) 0.9730; (R1) 0.9758; More...

USD/CHF's break of 0.9691 support suggests that rebound from 0.9369 has completed at 0.9869, ahead of 0.9884 resistance. The development also indicates that corrective pattern from 1.0063 is extending with another falling leg. Intraday bias is back on the downside for 0.9369 support. On the upside, above 0.9757 minor resistance will turn intraday bias neutral again.

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) 1.1456; (P) 1.1508; (R1) 1.1556; More...

Intraday bias in GBP/USD stays neutral at this point. Considering bullish convergence condition in 4 hour MACD, break of 1.1608 resistance will confirm short term bottoming at 1.1404, after defending 1.1409 low. Intraday bias will back on the upside for 55 day EMA (now at 1.1942). ON the downside, decisive break of 1.1409 will resume larger down trend to 61.8% projection of 1.3748 to 1.1759 from 1.2292 at 1.1063 next.

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

Daily Pivots: (S1) 0.9944; (P) 0.9986; (R1) 1.0042; More...

EUR/USD's break of 1.0078 resistance suggests short term bottoming at 0.9863, on bullish convergence condition in 4 hour MACD. Intraday bias is back on the upside 55 day EMA (now at 1.0170). Sustained break there will raise the chance of larger reversal, and target 1.0368 resistance. On the downside, firm break of 0.9863 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, outlook will stay bearish as long as 1.0368 resistance holds, even in case of strong rebound.

Dollar is starting to reverse recent gains, probably in a more persistent way. Australian Dollar is leading the way higher today, as supported by extended improvement in risk sentiment. But for the week, Swiss Franc and Euro are the strongest ones, followed by Canadian. Yen is still the worst performer, even though it's in recovery against the greenback.

Technically, much focus is now on 1.0078 minor resistance in EUR/USD, and 1.1608 minor resistance in GBP/USD. Firm break of these levels will indicate short term bottoming at 0.9863 and 1.1404 respectively. In this case, EUR/USD should be considered regaining parity for now while GBP/USD should have defended 2020 low. Both would have more upside potential for the near term then.

In Asia, at the time of writing, Nikkei is up 0.46%. Hong Kong HSI is up 2.59%. China Shanghai SSE is up 0.70%. Singapore Strait Times is up 0.84%. Japan 10-year JGB yield is down -0.0128 at 0.239. Overnight, DOW rose 0.61%. S&P 500 rose 0.66%. NASDAQ rose 0.60%. 10-year yield rose 0.027 to 3.292.

Fed Evans: We need to be increasing interest rates up to a substantially higher level

Chicago Fed President Charles Evans said yesterday, "I think that we've got a good plan in place. We could very well do 75 in September. My mind is not made up. I do know that we need to be increasing interest rates up to a substantially higher level than where they are now."

"I think the precise path is less important than just constantly telling people, we're on this path, this is what we're going to do, inflation is job one, we're going to handle this," Evans said.

"Unemployment is 3.7% right now. I'm optimistic that we're going to be able to navigate this and keep unemployment to about 4.5% by the time we're done," he said. "That would still be a pretty good outcome, although it will be costly for some."

"I would prefer to find an appropriate spot to pause and monitor how things are going, rather than go much higher -- potentially overshoot," he said. "I wouldn't say that I'm advocating sort of pausing at 3.5%, because I think 4 is more likely."

SNB Jordan: At the moment, franc appreciation tends to help rather than hurt

SNB Chairman Thomas Jordan said yesterday, "you cannot say we have passed the zenith and now it is certainly heading lower. If it comes to a power shortage situation, to a complete gas shortage in Europe, then it cannot be excluded that inflation pressure rises again. You have to be very cautious."

Jordan declined to comment on currency interventions. But he added, "at the moment it is rather so that given the inflationary pressure an appreciation of the franc tends to help rather than hurt."

BoC Rogers: We need a period of lower growth to balance things out

BoC Senior Deputy Governor Carolyn Rogers said yesterday, "our primary focus will be to judge how monetary policy is working to slow demand, how fast supply challenges are resolved, and most importantly, how both inflation and inflation expectations respond."

"Because we are in a period of excess demand, we need a period of lower growth to balance things out and bring demand back in line with supply," Rogers said.

"By front-loading interest rates now, we're trying to avoid the need for even higher rates down the road and a more pronounced slowing of the economy," she said.

BoJ Kuroda: We will watch exchange rate moves carefully

BoJ Governor Haruhiko Kuroda said, "When the yen is moving 2 to 3 yen per day, that's a rapid move. We will watch exchange rate moves carefully." The comment came after Kuroda met Prime Minister Fumio Kishida, where currency matters were discussed.

Separately, Finance Minister Shunichi Suzuki said the the government would not rule out any options on foreign exchange moves.

On the data front

Japan M2 rose 3.4% yoy in August, matched expectations. China CPI slowed from 2.7% yoy to 2.5% yoy, below expectation of 2.8% yoy. PPI slowed from 4.2% yoy to 2.3% yoy, below expectation of 3.1% yoy.

Looking ahead, France industrial output will be released in European session. Later in the day, Canada employment data will take center stage.

EUR/USD Daily Outlook

Daily Pivots: (S1) 0.9944; (P) 0.9986; (R1) 1.0042; More...

EUR/USD's break of 1.0078 resistance suggests short term bottoming at 0.9863, on bullish convergence condition in 4 hour MACD. Intraday bias is back on the upside 55 day EMA (now at 1.0170). Sustained break there will raise the chance of larger reversal, and target 1.0368 resistance. On the downside, firm break of 0.9863 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, outlook will stay bearish as long as 1.0368 resistance holds, even in case of strong rebound.

Economic Indicators Update

BoJ Governor Haruhiko Kuroda said, "When the yen is moving 2 to 3 yen per day, that's a rapid move. We will watch exchange rate moves carefully." The comment came after Kuroda met Prime Minister Fumio Kishida, where currency matters were discussed.

Separately, Finance Minister Shunichi Suzuki said the the government would not rule out any options on foreign exchange moves.

Chicago Fed President Charles Evans said yesterday, "I think that we've got a good plan in place. We could very well do 75 in September. My mind is not made up. I do know that we need to be increasing interest rates up to a substantially higher level than where they are now."

"I think the precise path is less important than just constantly telling people, we're on this path, this is what we're going to do, inflation is job one, we're going to handle this," Evans said.

"Unemployment is 3.7% right now. I'm optimistic that we're going to be able to navigate this and keep unemployment to about 4.5% by the time we're done," he said. "That would still be a pretty good outcome, although it will be costly for some."

"I would prefer to find an appropriate spot to pause and monitor how things are going, rather than go much higher -- potentially overshoot," he said. "I wouldn't say that I'm advocating sort of pausing at 3.5%, because I think 4 is more likely."

BoC Senior Deputy Governor Carolyn Rogers said yesterday, "our primary focus will be to judge how monetary policy is working to slow demand, how fast supply challenges are resolved, and most importantly, how both inflation and inflation expectations respond."

"Because we are in a period of excess demand, we need a period of lower growth to balance things out and bring demand back in line with supply," Rogers said.

"By front-loading interest rates now, we're trying to avoid the need for even higher rates down the road and a more pronounced slowing of the economy," she said.