Sample Category Title

USD/CHF's fall from 0.9459 extended to 0.9193 last week but quickly recovered again. Initial bias remains neutral this week first. Still, further decline is expected as long as 0.9380 resistance holds. On the downside, below 0.9193 will resume the decline from 0.9459 to 0.9149 support. Firm break there will turn near term outlook bearish for 0.9090 support and below. On the upside, above 0.9380 resistance will flip bias back to the upside for 0.9459 resistance instead.

In the bigger picture, medium term outlook will be neutral at best as long as 0.9471 resistance holds. Larger down trend could still extend through 0.8756 (2021 low). However, firm break of 0.9471 will argue that whole down trend form 1.0342 (2016 high), has completed with waves down to 0.8756. A medium term up trend should be set up to target 1.0237/0342 resistance zone.

In the long term picture, price actions from 0.7065 (2011 low) are currently seen as developing into a long term corrective pattern, at least until a firm break of 1.0342 resistance.

AUD/USD formed a temporary top at 0.7539 last week, ahead of 0.7555 resistance, and turned sideway. Initial bias remains neutral this week and more consolidations could be seen. But further rally is expected as long as 0.7372 minor support holds. On the upside, decisive break of 0.7555 should confirm that whole corrective decline from 0.8006 has completed at 0.6966. Further rise should then be seen back to retest 0.8005. However, break of 0.7372 will dampen this bullish view and turn bias back to the downside for 0.7164 support instead.

In the bigger picture, correction from 0.8006 could have completed at 0.6966, after drawing support from 0.6991. That is, up trend from 0.5506 (2020 low) might be ready to resume. Firm break of 0.8006 will target 61.8% projection of 0.5506 to 0.8006 from 0.6966 at 0.8511 next. This will remain the favored case as long as 0.7164 support holds.

In the longer term picture, focus remains on 0.8135 structural resistance. Decisive break there will argue that rise from 0.5506 is developing into a long term up trend that reverses whole down trend from 1.1079 (2011 high). However, rejection by 0.8135 will keep long term outlook neutral at best.

USD/CAD dropped to 1.2428 last week but recovered since then. Initial bias remains neutral this week for some more consolidations. But outlook stays bearish as long as 1.2591 resistance holds. As noted before, corrective pattern from 1.2005 could have completed already. Break of 1.2428 will target 1.2886 support and then 1.2005 low. On the upside, nevertheless, break of 1.2591 resistance will turn bias back to the upside for 1.2899 resistance instead.

In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend from 1.4667 and that carries larger bearish implications too.

In the longer term picture, we're viewing price actions from 1.4689 as a consolidation pattern. Thus, 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. However, firm break of 1.2061 support will argue that USD/CAD has already started a long term down trend. Next target is 61.8% retracement of 0.9406 to 1.4689 at 1.1424.

GBP/JPY rose further to 164.61 last week but retreated notably since then Initial bias remains neutral this week some consolidations. But outlook stays bullish with 158.04 resistance turned support intact, and further rally is expected. On the upside, break of 164.61 will resume larger up trend to long term fibonacci level at 167.93. However, firm break of 158.19 will turn bias to the downside and bring deeper pull back.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress, and notable support from 55 week EMA affirms medium term bullishness. Next target is 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93. Sustained break there will be a long term bullish signal. This will now remain the favored case as long as 150.95 support holds.

In the longer term picture, as long as 55 month EMA (now at 147.73) holds, we'd still favor more rally to 61.8% retracement of 195.86 to 122.75 at 167.93. Sustained break there will pave the way to 195.86 (2015 high).

EUR/JPY formed a temporary top at 137.50 last week, after hitting 137.49 long term resistance, and turned sideway. Initial bias remains neutral first. As long as 133.70 support holds, further rally is still expected. On the upside, sustained break of 137.49 resistance will resume larger up trend for 144.06 projection level next. However, firm break of 133.70 will indicate short term topping, and turn bias back to the downside for deeper pull back.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Sustained break of 137.49 (2018 high) will resume larger pattern from 109.30 (2016 low). Next target will be 100% projection of 114.42 to 134.11 from 124.37 at 144.06. In any case, outlook will now remain bullish as long as 124.37 support holds, in case of deep pull back.

In the long term picture, focus is now on 137.49 resistance (2018 high). Sustained break there will raise the chance that whole rise from 94.11 (2012 low) is resuming through 149.76 resistance. This will be a slightly favored case for now, as long as 124.37 support holds.

EUR/GBP rose further to 0.8511 last week but retreated sharply since then. Initial bias remains neutral this week first. Prior break of 0.8476 suggests short term bottoming at 0.8201. Further rise will remain in favor as long as 0.8294 support holds. On the upside, break of 0.8511 will target 0.8697 medium term fibonacci level next. However, break of 0.8294 will dampen this bullish view and bring retest of 0.8201 low.

In the bigger picture, a medium term bottom should be in place at 0.8201, on bullish convergence condition in daily and weekly MACD. Rise from there could either be a correction to the down trend from 0.9499 (2020 high), or a medium term up trend itself. In either case, further rise should be seen to 38.2% retracement of 0.9499 to 0.8201 at 0.8697. Sustained break there will target 61.8% retracement at 0.9003. This will remain the favored case as long as 0.8294 support holds.

In the long term picture, current development argues that fall from 0.9499 is probably the third leg of the pattern from 0.9799 (2008 high). Sustained break of 61.8% retracement of 0.6935 to 0.9499 at 0.7917 will pave the way back to 0.6935 (2015 low) and probably below.

EUR/AD recovered to 1.4940 last week but retreated since then. Initial bias is neutral this week work. It's seen as extending the consolidation pattern from 1.4561 and more sideway trading could be seen. But after all, outlook remains bearish as long as 1.5327 resistance holds. Firm break of 1.4533 will resume larger down trend.

In the bigger picture, fall from 1.9799 is seen as a long term impulsive move. Next target is 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). Some support could be seen there to bring interim rebound. But overall, break of 1.5354 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of recovery.

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).

EUR/CHF stayed in range of 1.0184/0400 last week and outlook is unchanged. Initial bias remains neutral first and more sideway trading could be seen. On the upside, break of 1.0400 will resume the rebound from 0.9977 to 1.0610 key structural resistance next. On the downside, however, break of 1.0184 will turn bias back to the downside for retesting 0.9970 low.

In the bigger picture, long term down trend from 1.2004 (2018 high) is still in progress. Next target is 100% projection of 1.2004 to 1.0505 to 1.1149 at 0.9650. In any case, sustained break of 1.0505 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish.

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 some sustained trading above the 55 month EMA (now at 1.0891).

There were a couple of developments of last week to note. Firstly, US yield curve inverted for the first time since 2019. There is no reason to panic for the moment, but deeper inversion could set the tone in the risk markets ahead. Secondly, Euro ended as the strongest one, attempting to extend its near term rebound. But momentum of the common currency has been rather disappointing. Euro still have a lot to prove. Thirdly, Yen's recovery faltered somewhat and ended as one of the worst performers. There is prospect of a return to weakness in Yen. But deeper pull back in benchmark treasury yields has the prospect to give Yen a hand. Elsewhere in the forex markets, Swiss Franc and Dollar were the second and third best performer. Sterling and Kiwi are among the worst.

While the impact of Russia invasion of Ukraine seemed to be fading, the overall direction of of major forex pairs and crosses will continue to hinge on the developments on it. Risks are two sided as acknowledged by central bankers from the BoE and ECB, higher inflation and lower growth. Chance of stagflation is so far talked down, but it will depend on how long the invasion would last.

First yield curve inversion in US since 2019

Yield curve inversion became a much talked about topic last week. The mostly watched part of the curve, between yield of 2-year and 10-year notes, inverted for the first time since 2019. The spread between 2-year yield at 2.465 and 10-year yield at 2.377 wasn't too serious, and it's still inconclusive to call for a recession in the US. But risk of deeper inversion is growing.

Fed is clearly on track to normalize interest rate to neutral at around 2.4-2.5%, and possibly slightly above. There is still room for yields to rise in the short end. However, 10-year yield is now facing a key multi-decade channel resistance at around 2.6. A light-handed rejection from there could easily push TNX through 2.299 support back to 2.00 handle, which is close to 55 day EMA (now at 2.025) and 2.065 resistance turned support. A spread of -0.4 to -0.5 between 2-year and 10-year yield would be rather serious.

S&P 500 on track to retest 4818 high

Meanwhile, it should be noted that even if a recession is going to occur in the US, it could be around 12- to 18-months away. Stocks typically lead the economy by 6 to 12 months. Due to the different time frame, there is no reason for investors to panic on yield curve inversion for now. Indeed, S&P 500 extended the rebound from 4114.65 last week. Further rise is expected as long as 4455.81 support holds, to retest 4818.62 high.

For now, strong resistance is expected around 4818.62 to bring near term reversal, to start the third leg of the corrective pattern from there. The steepness and depth of this third leg could be indicative on the next recession. But of course, it would then be a completely different picture if SPX could break through 4818.62 in decisive manner.

Euro rebound made progress, but momentum unconvincing

In the forex markets, there are two developments to monitor in the days ahead. Firstly, both EUR/USD and EUR/GBP made some progress in breaching 1.1120 and 0.8476 resistance last week. Both are signs of bullish reversal, but upside momentum has been unconvincing.

As for EUR/USD, further rise will remain mildly in favor as long as 1.0943 support holds. Rebound from 1.0805 should resume later to target 38.2% retracement of 1.2265 to 1.0805 at 1.1363.

Further rise is also in favor in EUR/GBP as long as 0.8294 support holds. Rebound from 0.8201 would target 0.8598 resistance and above.

However, EUR/CHF's rally attempt faltered below 1.0400 near term resistance. Break below 1.0184 minor support will revive near term bearishness for at least a retest on 0.9970 low. If this happens, EUR/USD and EUR/GBP could be dragged below the above mentioned support levels. That would in turn signal that Euro's overall rebound has completed earlier than expected.

Yen crosses continue to consolidate, above near term support levels

Secondly, the retreats in Yen crosses were so far rather shallow. For example, CAD/JPY is holding comfortably above 96.70 minor support.

AUD/JPY is holding above 89.91 minor support too. Rallies in both crosses are expected to resume sooner rather than later.

At the same time, USD/JPY is also holding above 121.17 minor support, which should theoretically set the base for up trend resumption. However, extended decline in US benchmark yield could drag USD/JPY through this 121.17 support for deeper correction. In this case, other Yen crosses could be dragged down too, which would sign a more sustainable near term rebound in Yen that could last for a while.

AUD/USD Weekly Outlook

AUD/USD formed a temporary top at 0.7539 last week, ahead of 0.7555 resistance, and turned sideway. Initial bias remains neutral this week and more consolidations could be seen. But further rally is expected as long as 0.7372 minor support holds. On the upside, decisive break of 0.7555 should confirm that whole corrective decline from 0.8006 has completed at 0.6966. Further rise should then be seen back to retest 0.8005. However, break of 0.7372 will dampen this bullish view and turn bias back to the downside for 0.7164 support instead.

In the bigger picture, correction from 0.8006 could have completed at 0.6966, after drawing support from 0.6991. That is, up trend from 0.5506 (2020 low) might be ready to resume. Firm break of 0.8006 will target 61.8% projection of 0.5506 to 0.8006 from 0.6966 at 0.8511 next. This will remain the favored case as long as 0.7164 support holds.

In the longer term picture, focus remains on 0.8135 structural resistance. Decisive break there will argue that rise from 0.5506 is developing into a long term up trend that reverses whole down trend from 1.1079 (2011 high). However, rejection by 0.8135 will keep long term outlook neutral at best.

Monday, Apr 4, 2022

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Tuesday, Apr 5, 2022

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Wednesday, Apr 6, 2022

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Thursday, Apr 7, 2022

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Friday, Apr 8, 2022

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