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USD/CHF's decline resumed last week and dropped to as low as 0.9369. As a temporary low was formed initial bias is neutral this week for consolidations first. Upside should be limited well below 0.9648 resistance to bring another fall. Break of 0.9369 will resume larger fall to 100% projection of 0.9884 to 0.9468 from 0.9648 at 0.9232.

In the bigger picture, break of 0.9471 support turned resistance argues that medium term up trend from 0.8756 has completed with three waves up to 1.0063. Long term sideway pattern might have started another falling leg. Deeper decline would now be in favor as long as 0.9648 resistance holds, to 0.9149 structural support. Sustained break there could pave the way back to 0.8756.

In the long term picture, current development suggest that long term sideway pattern from 1.0342 (2016 high) is extending with another falling leg. While deeper decline could be seen, downside should be contained by 0.8756 support to bring reversal. Overall, outlook will remain neutral for now.

AUD/USD's rebound from 0.6680 resumed last week. While upside momentum is diminishing slightly, further rally is still expected this week to 100% projection of 0.6680 to 0.7045 from 0.6868 at 0.7233. However, break of 0.7008 minor support will turn bias back to the downside for 0.6868 support 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 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.

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 argues that it's a corrective move. 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 fall from 1.3222 resumed by breaking through 1.2766 last week. Downside momentum is a bit unconvincing. But further decline is expected this week as long as 1.2837 minor resistance holds. Firm break of 61.8% projection of 1.3222 to 1.2766 from 1.2984 at 1.2702 will target 100% projection at 1.2528, which is close to 1.2516 key support. Nevertheless, above 1.2837 will turn bias back to the upside for 1.2984 resistance 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.

In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern only. 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.

Range trading continued in GBP/JPY last week and outlook is unchanged. Initial bias remains neutral this week first. Consolidation from pattern from 168.67 could extend further. On the upside, above 163.97 will turn bias to the upside, and resume the rebound to 166.31 resistance. Break there will be the first sign of up trend resumption. On the downside, break of 159.42 will extend the correction towards 155.57 support.

In the bigger picture, 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 be a long term bullish signal, and could pave the way back to 195.86 high. This will remain the favored case as long as 155.57 support holds, even in case of deep pull back.

In the longer term picture, rise from 122.75 could be the third leg the the pattern from 116.83 (2011 low). Further rise will remain in favor as long as 55 month EMA (now at 149.84) holds. Sustained break of 61.8% retracement of 195.86 to 122.75 at 167.93. will pave the way to 195.86 (2015 high).

EUR/JPY's rebound from 133.38 extended to 138.38 last week but retreated since then. Initial bias is neutral this week first. On the upside, break of 138.38, and sustained trading above 55 day EMA (now at 138.29) will suggest that whole correction from 144.26 has completed. Further rally would then be seen back to retest 144.26 high. However, break of 135.63 will turn bias back to the downside for 133.38 low instead.

In the bigger picture, up trend from 114.42 (2020 low) is seen as the third leg of the pattern from 109.30 (2016 low). Further rally is in favor as long as 134.11 resistance turned support holds, even in case of deep pull back. Next target is 149.76 (2015 high). However, sustained break of 134.11 will be a sign of medium term bearish reversal and turn focus to 124.37 support for confirmation.

In the long term picture, up trend from 94.11 (2012 low) is seen as in the third leg. Further rally would be seen to 149.76 resistance (2014 high) and above. This will remain the favored case as long as 55 month EMA (now at 128.86) holds.

EUR/GBP's rebound from 0.8338 extended higher last week but outlook is unchanged. Fall from 0.8720 is still expected to resume as long as 0.8585 resistance holds. Firm break of 0.8338 support will target a retest on 0.8201 low.

In the bigger picture, current development suggests rejection by 38.2% retracement of 0.9499 to 0.8201 at 0.8697. Medium term bearishness is maintained. Break of 0.8201 will resume larger down trend from 0.9499 (2020 high). Nevertheless, sustained break of 0.8697 will affirm the case that rise from 0.8201 is a medium term up trend itself.

In the long term picture, the lack of medium term downside momentum suggests that fall from 0.9499 (2020 high) is merely a correction to rise from 0.6935 (2015 high). In case of another fall, downside should be contained by 61.8% retracement of 0.6935 to 0.9499 at 0.7917 to bring rebound. Sustained trading above 55 month EMA (now at 0.8591) will indicate that the correction has completed and bring retest of 0.9499.

EUR/AUD's fall from 1.5396 resumed last week and hit as low as 1.4391. Initial bias stays on the downside this week for 1.4318 support. Firm break there will resume larger down trend to medium term projection level at 1.3623. On the upside, break of 1.4804 resistance is needed to indicate short term bottoming. Otherwise, risk will stay on the downside in case of recovery.

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 1.5656) holds.

EUR/CHF's down trend resumed last week and hit as low as 0.9654. With 4 hour MACD breaking its trend line, downside momentum might be increasing. Firm break of 0.9650 long term projection level will target 100% projection of 1.1149 to 0.9970 from 1.0513 at 0.9334. Meanwhile, rebound from current level, followed by break of 0.9799 resistance should confirm short term bottoming.

In the bigger picture, long term down trend from 1.2004 (2018 high) is still in progress. Sustained break of 100% projection of 1.2004 to 1.0505 to 1.1149 at 0.9650 will target 138.2% projection at 0.9033 next. On the upside, break of 0.9970 support turned 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 (2020 low).

Expectations on the size of next Fed rate hike shifted again last week, with stocks cheering lower than expected consumer inflation reading in the US. Dollar ended as the worst performer but it did have a late come back following rebound in benchmark treasury yields. Indeed, it was the late selloff in Sterling and Euro, the second and third last, that worth more attention.

Meanwhile, return of risk-on sentiment lifted commodity currencies with New Zealand and Australian Dollars being the best performer. Swiss Franc was the third with help from buying against other European majors.

Looking ahead, countering forces could keep Dollar going nowhere in general. The downside breakout in Sterling and Euro in crosses could take a front seat for the near term at least.

Stocks firm, yield resilient, Dollar going nowhere

Investors pared back bet on a 75bps rate hike by Fed in September, after lower than expected CPI reading last week, which indicated that inflation might have finally peaked. Fed fund futures are pricing in only 45% chance of 75bps hike, down from 68% a week ago. Instead, there is 55% chance of just a 50bps hike, up from 32% a week ago.

Nevertheless, it should be noted that before September FOMC meeting, there will be one more set of non-farm payroll and CPI data. Thus, it's still too early to conclude anything for that meeting. Sentiment could still flip-flop once more.

The development gave risk sentiment a lift as major US stock indexes ended the week notably higher. S&P 500's close above 55 week EMA was a bullish sign. That added to the case that correction from 4818.62 has completed completed with three waves down to 3636.87 already. Further rally is now expected as long as 4112.09 support holds. Next target is 61.8% retracement of 4818.62 to 3636.87 at 4367.19. Sustained break there should pave the way to 4637.30/4818.62 resistance zone later in the year. Such development would cap Dollar's rally attempt, in particular against commodity currencies.

While US 10-year yield dipped initially last week, it managed to rebound quickly to close the week slightly higher at 2.849. There is no change in the view that the first leg of the consolidation pattern from 3.483 has completed at 2.525. TNX is now in the second leg of the consolidation. Sustained trading above 55 day EMA (now at 2.860), will pave the way back to 3.000 handle and above. Such development will give Dollar some support in case, and keep Yen's rebound capped.

Dollar index extended the correction from 109.29 to 104.63, but quickly recovered. DXY is still holding on to 55 day EMA (now at 105.28) and medium term channel support. Outlook isn't bearish for now, as DXY is still seen as engaging in a near term correction pattern. This is inline with the above views that risk-on sentiment will cap Dollar's rally while resilience in yield will limit downside. That is, Dollar is going nowhere overall.

However, sustained trading below 55 day EMA would mean that DXY is in a medium term corrective pattern that would extend to 101.29 cluster support (38.2% retracement of 89.20 to 109.29 at 101.61).

Downside breakout in some Euro and Sterling crosses

The selloffs in Euro and Sterling were more apparent, in particular against Swiss Franc and Aussie. EUR/CHF's down trend resumed last week and hit as low as 0.9654. It doesn't look like long term projection level 0.9650 will provide enough support for a rebound. And, in any case, outlook will stay bearish as long as 0.9799 resistance holds. Sustained break of 0.9650 will target 100% projection of 1.1149 to 0.9970 from 1.0513 at 0.9334.

GBP/CHF has also resumed the long term down trend and hit as low as 1.1399. Outlook will stay bearish as long as 1.1774 resistance holds. Next target is 161.8% projection of 1.3070 to 1.2134 from 1.2598 at 1.1084, which is close to 1.1107 (2020 low).

GBP/AUD broke out of near term consolidation pattern last week and hit as low as 1.7024. It's resuming the down trend from 1.9218 (2022 high), as well as that from 2.0840 (2020 high). Near term outlook will stay bearish as long as 1.7649 resistance holds. Next target is 61.8% projection of 1.9218 to 1.7171 from 1.7649 at 1.6384.

EUR/AUD also resumed the near term decline from 1.5396 and hit as low as 1.4391. It's on track to retest 1.4318 low. Firm break there will resume the down trend from 1.6434 (2021 high), and that from 1.9799 (2020 high). Next target will be 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).

USD/JPY Weekly Outlook

USD/JPY edged higher to 135.57 last week but dropped sharply from there. Yet, downside was contained above 130.38 support. Initial bias stays neutral this week first. Outlook is unchanged that corrective pattern from 139.37 is still unfolding. Range trading between 126.35/139.37 will continue for a while. On the downside, break of 130.38 will target 100% projection of 139.37 to 130.38 from 135.57 at 126.58. On the upside, above 135.57 will resume the rebound form 130.38 to retest 139.37.

In the bigger picture, fall from 139.37 medium term top is seen as correcting whole up trend from 101.18 (2020 low). While deeper decline cannot be ruled out, outlook will stays bullish as long as 55 week EMA (now at 122.70) holds. Long term up trend is expected to resume through 139.37 at a later stage, after the correction finishes.

In the long term picture, rise from 101.18 is seen as part of the up trend from 75.56 (2011 low). Further rally is expected to 100% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 149.26, which is close to 147.68 (1998 high). This will remain the favored case as long as 55 week EMA (now at 122.70) holds.

Monday, Aug 15, 2022

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Tuesday, Aug 16, 2022

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Wednesday, Aug 17, 2022

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Thursday, Aug 18, 2022

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Friday, Aug 19, 2022

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