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The common European currency declined by 116 pips or 0.89% against the Japanese Yen on Thursday. The currency pair breached the 200– hour SMA support level at 129.31 during yesterday's trading session.

All things being equal, bearish traders are likely to continue to drive the exchange rate lower during the following trading session. The potential target for sellers will be near the 128.60 level.

However, the EUR/JPY currency exchange rate may encounter support at 128.50 within this session.

Daily Pivots: (S1) 0.9300; (P) 0.9327; (R1) 0.9375; More....

A temporary top is formed at 0.9367 in USD/CHF with current retreat. Intraday bias is turned neutral for consolidations first. But further rally will remain in favor as long as 0.9214 support holds. On the upside, break of 0.9367 will resume the rise from 0.8925 to 0.9471 key resistance next.

In the bigger picture, the strong rally above 55 week EMA (now at 0.9190) now tilts favor to the case of bullish trend reversal. That is, decline from 1.3042 (2016 high) is probably completed at 0.8756 already. Sustained break of 0.9471 resistance should confirm this case and pave the way to retest 1.0342 ahead. However, rejection by 0.9471 will mix up the outlook again and retain some medium term bearishness.

General trend

• Equity indices have extended declines.
• Shanghai markets will be closed for holiday from Oct 1-7 (Fri-Thurs); HK will be closed on Oct 1st..

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened -0.3%.
• (AU) AUSTRALIA AUG HOME LOANS VALUE M/M: -4.3% V -0.5%E; INVESTMENT LENDING M/M: +1.5% V 3.5% PRIOR.
• (AU) Australia Sept Final PMI Manufacturing: 56.8 v 57.3 prior (confirms 16th month of expansion).
• (AU) Australia Sept AIG Manufacturing Index: 51.2 v 51.6 prior.
• (AU) Australia Sept CoreLogic House Prices M/M: 1.5% v 1.5% prior.
• (AU) Australia PM Morrison: Australia ready to take next steps to safely reopen to the world; Will roll out 7 day quarantine for vaccinated individuals.
• (AU) Australia said to remove international travel curbs on Australians once states move to home quarantine – Press.
• (AU) New South Wales Premier Berekjiklian resigns [amid probe].
• (AU) Australia sells A$1.0B v A$1.0B indicated in 2.75% Nov 2028 bonds, avg yield 1.1425%, bid to cover 5.30x.
• (NZ) New Zealand Sept ANZ Consumer Confidence: 104.5 v 109.6 prior; M/M: -4.7% v -3.1% prior.

China/Hong Kong

• Hang Seng closed, Shanghai closed.
• (HK) Macau Sept Casino Rev (MOP) 5.88B v 4.44B prior; Y/Y +165.9% v 200.4%e.
• (CN) China said to publish draft rules to regulate accounting treatment of asset management products, cites the Finance Ministry (MOF); The rules are said to be aimed at improving the quality of accounting information related to domestic asset management products; China is also seeking to avoid financial risks..
• (CN) China Premier Li: To ensure energy and power supply and will maintain economic operations within a reasonable range; China will maintain the continuity and stability of its macro policies, increase policy effectiveness, and will make preemptive policy fine-tuning.
• (CN) China Commerce Ministry (MOFCOM) spokesperson: China-US economic and trade teams are maintaining regular communication.
• (US) Trade Chief Tai: To outline Biden China strategy on Monday (Oct 4th).
• (CN) US House Panel to hold hearing on China listings on US Exchanges on Oct 26th.
• (CN) China Industry Ministry (MIIT): sees pressure to stabilize industrial economic growth.
• (CN) China FX Regulator SAFE: Reiterates to continue maintaining flexibility in exchange rate.

Japan

• Nikkei opened -0.7%.
• (JP) Bank of Japan (BOJ) announces Bond purchases for Oct-Dec period; To keep current pace of JGB buying from Oct to Dec 2021.
• (JP) Japan Fin Min Aso to be replaced by former Olympics Minister Suzuki - Japanese press.
• (JP) Expected that Japan new PM Kishida will appoint Yamagiwa as Economy Min - Press.
• (JP) JAPAN Q3 TANKAN LARGE MANUFACTURING INDEX: 18 V 13E; OUTLOOK SURVEY: 14 V 14E.
• (JP) JAPAN AUG JOBLESS RATE: 2.8% V 2.9%E.
• (JP) Japan Sept Final PMI Manufacturing: 51.5 v 51.2 prelim (confirm the 8th straight month of expansion).
• (JP) Japan Sept Consumer Confidence: 37.8 v 37.5e.
• (JP) Bank of Japan (BOJ) Summary of Opinions from Sept 21-22 meeting: Seeing signs of slowdown in China growth.
• (JP) Said that Newly Elected LDP Leader (incoming PM) Kishida will dissolve parliament on Oct 14th - Press.

Korea

• Kospi opened -0.4%.
• (KR) South Korea Sept Trade Balance: $4.2B v $5.1Be.
• (KR) South Korea Sept PMI Manufacturing: 52.4 v 51.2 prior (11th month of expansion).
• (KR) South Korea extends social distancing measures by additional 2 weeks.

Other Asia

• (ID) Indonesia Sept PMI Manufacturing: 52.2 v 43.7 prior (1st expansion in 3 months).
• (MY) Malaysia Sept PMI Manufacturing: 48.1 v 43.4 prior (4th consecutive contraction).
• (PH) Philippines Sept PMI Manufacturing: 50.9 v 46.4 prior (1st expansion in 2 months).
• (TW) Taiwan Sept PMI Manufacturing: 54.7 v 58.5 prior (15th month of expansion).

North America

• (US) House Leadership Aide: House will not vote on $1.0T infrastructure bill on Sept 30th, will return Friday (Oct 1st) to attempt to vote on bill.
• (US) White House: Closer to agreement than ever on infrastructure bill; Additional time needed to broker deal on Presidential Agenda.
• (US) President Biden signs bill to avoid Govt shutdown and fund Govt through Dec 3rd (as expected).
• (US) Fed's Evans (dove, voter): Recent increase in prices has been 'eye popping'; There is no way to sugarcoat the way higher prices are affecting people.
• (US) Fed Chair Powell: Fed finds itself in difficult situation in regards to tension between inflation and employment; Inflation is well above target but we are still far away from full employment - House testimony.
• (US) White House Press Sec Psaki: Oil price remains a concern; Been in touch with OPEC.

Europe

• OPEC+ reportedly considering options for releasing more oil to the market at next week's meeting beyond the plan for adding 400K bpd in Nov - press.
• (DK) Denmark Central Bank (Nationalbanken) cuts certificate of deposit rate due to sale of foreign currency; Cuts Certificate of Deposit rate 10bps to -0.60% from -0.50%, Cuts lending rate to -0.45% from -0.35%; Keeps all other rates unchanged.

Levels as of 01:20 ET

• Nikkei 225, -2.2%, ASX 200 -2% , Hang Seng closed; Shanghai Composite closed; Kospi -1.5%.
• Equity S&P500 Futures: -0.5%; Nasdaq100 -0.5%, Dax -0.9%; FTSE100 -0.6%.
• EUR 1.1583-1.1563 ; JPY 111.48-111.11 ; AUD 0.7241-0.7215 ;NZD 0.6915-0.6885.
• Gold -0.2% at $1,753/oz; Crude Oil -0.1% at $74.97/brl; Copper -1% at $4.0630/lb.

Short-term Elliott wave view in Dow Futures ( YM) suggests that the decline from the August 16 high is unfolding as Elliott wave double three structure in a bigger wave ((4)) pullback. Down from there, the decline to $33628 low ended wave (W) in a lesser degree double three structure. Up from there, the wave (X) bounce unfolded as a zigzag structure where wave A ended at $34236 high. Wave B pullback ended at $33638 low and wave C ended in 5 waves structure at $34938 high thus completed wave (X) bounce.

Below from there, the decline is unfolding as a lesser degree zigzag structure where wave ((a)) ended at $34121 low. Wave ((b)) ended in 3 swings at a $34554 high. While wave ((c)) is expected to end in between $33686- $33177 area lower. To complete the wave W lower & see a 3 wave recovery in wave X before further downside is seen. Near-term, as far as a pivot from $34938 high stays intact we expect short-term bounces to fail to look for a $32867- $31590 target area lower before the decline from peak gets mature & resume the larger trend.

Dow Futures (YM) 1 Hour Elliott Wave chart

Daily Pivots: (S1) 110.99; (P) 111.53; (R1) 111.83; More...

A temporary top was formed at 112.07 with current retreat and intraday bias is turned neutral for consolidations. Downside should be contained by 110.44 support to bring another rally. On the upside, above 112.07 will extend larger rise to 61.8% projection of 102.58 to 111.65 from 108.71 at 114.31 next. However, break of 110.44 will dampen the bullish case and turn focus back to 108.71 support.

In the bigger picture, break of 111.71 resistance suggests that the whole corrective decline from 118.65 (2016 high) has completed at 101.18 (2020 low) already. Medium term bullishness is also affirmed as USD/JPY stays well above 55 week EMA (now at 108.60). Sustained trading above 111.71 will affirm this bullish case. Rise from 101.18 could then be resuming whole rally from 98.97 (2016 low) through 118.65. This will now be the preferred case as long as 108.71 support holds.

Daily Pivots: (S1) 0.7142; (P) 0.7203; (R1) 0.7236; More...

Intraday bias in AUD/USD remains mildly on the downside as fall from 0.7477 is in progress for retesting 0.7105 low. Firm break there will resume whole decline from 0.8006 for 0.6991 support next. On the upside, break of 0.7315 resistance will turn bias back to the upside for 0.7477 resistance instead.

In the bigger picture, with 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051) intact, we're seeing price action from 0.8006 as a correction only. That is, up trend from 0.5506 low would resume after the correction completes. In that case, main focus will be 0.8135 key resistance (2018 high). Sustained break there will carry larger bullish implications. However, sustained break of 0.6991 will argue that the whole medium term trend has indeed reversed.

Daily Pivots: (S1) 1.2620; (P) 1.2692; (R1) 1.2753; More...

Intraday bias in USD/CAD is turned neutral as the sideway pattern from 1.2947 is still extending. On the downside, break of 1.2592 support will extend the fall from 1.2891, as the third leg of the pattern from 1.2947, to 1.2492 and possibly below. Overall, with 1.2421 support intact, rise from 1.2005 should still be in progress for another rally through 1.2947 at a later stage.

In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). It should have completed after hitting 1.2061 (2017 low) and 50% retracement of 0.9406 to 1.4689 at 1.2048. Sustained break of 38.2% retracement of 1.4667 to 1.2005 at 1.3022 will pave the way to 61.8% retracement at 1.3650 and above. Overall, medium term outlook remains neutral at worst with 1.2048/61 support zone intact.

Daily Pivots: (S1) 1.0765; (P) 1.0806; (R1) 1.0827; More....

EUR/CHF's fall from 1.0936 resumed by breaking 1.0811 temporary low. Intraday bias is back on the downside for retesting 1.0694 low. On the upside, above 1.0860 minor resistance will turn bias back to the upside for retesting 1.0936 resistance instead.

In the bigger picture, the stronger than expected rebound from 1.0694 and break of 55 week EMA (now at 1.0861) mixes up the medium term outlook. On the upside, break of 1.1149 will resume the whole rise from 1.0505 (2020 low). On the downside, break of 1.0694 will revive some medium term bearishness for 1.0505 and below.

Daily Pivots: (S1) 0.8567; (P) 0.8605; (R1) 0.8632; More...

EUR/GBP retreated ahead of 0.8668 key structural resistance and intraday bias is turned neutral first. On the upside, sustained break of 0.8668 will be a strong sign of larger bullish reversal. Next target will be 161.8% projection of 0.8448 to 0.8612 from 0.8499 at 0.8764. On the downside, though, break of 0.8499 will bring retest of 0.8448 low instead.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8668 resistance holds, towards long term support at 0.8276. However, firm break of 0.8668 resistance would argue that a medium term bottom was already formed. Stronger rise would be seen to 0.8861 support turned resistance to confirm completion of the corrective pattern.

Daily Pivots: (S1) 1.5945; (P) 1.6056; (R1) 1.6132; More...

Intraday bias in EUR/AUD remains neutral at this point. On the upside, above 1.6232 will resume the rebound from 1.5907 to retest 1.6434 high. Overall, rise from 1.5250 is still in favor to continue as long as 1.5898 support holds. However, sustained break of 1.5898 will argue that whole rise from 1.5250 has completed, and turn near term outlook bearish.

In the bigger picture, rise from 1.5250 medium term bottom is currently seen as a correction to the down trend from 1.9799 first. Stronger rise could be seen to 38.2% retracement of 1.9799 to 1.5250 at 1.6988 next. We'd tentatively expect strong resistance from there to limit upside, at least on first attempt. Meanwhile, break of 1.5898 support will indicate that the rebound has completed. Larger down trend from 1.9799 might be ready to resume through 1.5250 low.