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Daily Pivots: (S1) 0.8664; (P) 0.8696; (R1) 0.8718; More…

Intraday bias in EUR/GBP remains mildly on the downside for 0.8631 support. Decisive break there will indicate near term reversal and turn outlook bearish. On the upside, though, above 0.8728 will bring retest of 0.8750 first. Firm break there will resume the larger rally towards 0.8867 fibonacci level.

In the bigger picture, rise from 0.8221 medium term bottom is seen as a corrective move. While further rally cannot be ruled out, upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Considering bearish divergence condition in D MACD, firm break of 0.8631 support will be the first sign that this corrective bounce has completed. Sustained trading below 55 W EMA (now at 0.8539) will confirm, and bring retest of 0.8221 low.

Daily Pivots: (S1) 1.7628; (P) 1.7721; (R1) 1.7789; More...

Intraday bias in EUR/AUD remains neutral first. On the upside, break of 1.7795 resistance will suggest that pullback from 1.7929 has completed. Bias will be back on the upside for this resistance first. On the downside, however, sustained break of 61.8% retracement of 1.7245 to 1.8155 at 1.7593 will bring deeper fall to 1.7245 resistance, as part of the corrective pattern from 1.8554 high.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern. Deeper fall could be seen as the pattern extends, but downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Uptrend from 1.4281 is expected to resume at a later stage.

Daily Pivots: (S1) 0.9296; (P) 0.9322; (R1) 0.9336; More...

EUR/CHF's fall from 0.9452 resumed by breaking through 0.9311 and intraday bias is back on the downside for 0.9265 support. Firm break there will bring deeper fall to 0.9218 low. For now, risk will stay on the downside as long as 0.9371 resistance holds, in case of recovery.

In the bigger picture, the down trend from 0.9204 (2018 high) might still be in progress considering that EUR/CHF is staying well inside the long term falling channel. However, with bullish convergence condition in W MACD, downside potential should be limited in case of another fall. Instead, firm break of 0.9660 resistance will be an important sign of medium term bullish trend reversal.

Daily Pivots: (S1) 1.3933; (P) 1.3950; (R1) 1.3961; More...

Intraday bias in USD/CAD is turned neutral again with current retreat. While another rise cannot be ruled out, strong resistance is expected from 1.4014 cluster to complete the corrective rally from 1.3538. On the downside, below 1.3895 support will turn bias back to the downside for 1.3725. However, sustained break of 1.4014 will carry larger bullish implications.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 cluster resistance (38.2% retracement of 1.4791 to 1.3538 at 1.4017) holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 (2025 high) at 1.3069. However, sustained break of 1.4014 will argue that fall from 1.4791 has completed, and bring stronger rally to 61.8% retracement at 1.4312.

Daily Pivots: (S1) 0.6595; (P) 0.6608; (R1) 0.6631; More...

No change in AUD/USD's outlook and intraday bias stays neutral. On the upside, firm break of 0.6627 resistance will suggest that pullback from 0.6706 has completed as correction, after drawing support from 55 D EMA (now at 0.6557). That will keep the larger rally from 0.5913 alive and bring retest of 0.6706 high. However, on the downside, sustained trading below 55 D EMA will confirm rejection by 0.6713 fibonacci resistance, and bring deeper fall to 0.6413 cluster support (38.2% retracement of 0.5913 to 0.6706 at 0.6403).

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. Outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, sustained break of 0.6713 will be a strong sign of bullish trend reversal, and pave the way to 0.6941 structural resistance for confirmation.

Daily Pivots: (S1) 1.1668; (P) 1.1699; (R1) 1.1747; More...

Intraday bias in EUR/USD remains neutral for the moment, and further decline is mildly in favor as long as 1.1778 resistance holds. On the downside, break of 1.1644 and sustained trading below 55 D EMA (now at 1.1679) will indicate medium term topping at 1.1917, on bearish divergence condition in D MACD. Further fall should then be seen to 1.1390 support. Nevertheless, break of 1.1778 resistance will retain near term bullishness and bring retest of 1.1917 high instead.

In the bigger picture, rise from 1.0176 (2025 low) is seen as the third leg of the pattern from 0.9534 (2022 low). 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916 was already met. For now, further rally will remain in favor as long as 1.1390 support holds, and firm break of 1.2000 psychological level will carry larger bullish implications. However, firm break of 1.1390 will suggest that rise from 1.0176 has already completed and bring deeper fall to 55 W EMA (now at 1.1265).

Daily Pivots: (S1) 1.3437; (P) 1.3464; (R1) 1.3511; More...

Intraday bias in GBP/USD stays neutral for the moment. With 1.3535 resistance intact, further decline is mildly in favor. On the downside, break of 1.3322 will resume the fall from 1.3725 to 1.3140 support. On the upside, though, firm break of 1.3535 will argue that pullback from 1.3725 has already completed, and bring stronger rise to retest 1.3725/87 key resistance zone.

In the bigger picture, rise from 1.0351 (2022 low) is still seen as a corrective move. Further rally could be seen to 61.8% projection of 1.0351 to 1.3433 (2024 high) from 1.2099 (2025 low) at 1.4004. But strong resistance could be seen from 1.4248 (2021 high) to limit upside. Sustained break of 55 W EMA (now at 1.3176) will argue that a medium term top has already formed and bring deeper fall back to 1.2099.

Daily Pivots: (S1) 0.7932; (P) 0.7963; (R1) 0.7979; More…

Range trading continues in USD/CHF and intraday bias stays neutral. On the upside, sustained trading above 55 D EMA (now at 0.8004) will suggest that rise from 0.7828 is already correcting whole fall from 0.9200. Further rise should the be seen to 0.8170 resistance and possibly above. However, break of 0.7908 will turn bias back to the downside for retesting 0.7828 low.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).

Markets

French PM Lecornu’s resignation was the latest domino in the country’s domestic political crisis triggered by President Macron’s snap elections last summer. On the president’s request, Lecornu will remain in a caretaker role with a Wednesday evening deadline to hold final talks with political blocks to explore the ability to nevertheless form a government. In case of a positive outcome to talks, Macron will name a new prime minister – which would be the sixth since 2022 – to try align the country’s hung parliament to pass a budget as soon as possible. The official October 13 deadline is impossible to make, so in first instance we’ll be looking at emergency legislation to extend this year’s budget. If deliberations between now and Wednesday lead to nothing, Macron will have little choice but to dissolve parliament and call another snap election. Those two-round votes would need to take place 20-to-40 days later implying a huge tail risk of (EMU) uncertainty in the run-up to and around early November. New presidential elections (normally 2027) are Macron’s final options, but seem unlikely. He’s constitutionally barred from running again and current opinion polling gives a good chance that extreme right leader Bardella (RN) comes out on top; a risk the centrist President is probably unwilling to run. The French 10y swap spread temporarily rose to a new YTD high at 89 bps before closing at 86 bps. European stock markets underperformed the US. Losses ranged between 0.4% for the EuroStoxx50 to 1.36% for the French CAC40. The single currency underperformed with EUR/USD sliding from 1.17+ levels to an intraday bottom at 1.1650 before rebounding into the close. EUR/GBP ended at 0.8685 from a start at 0.8725. We expect this “precaution” to persist into Wednesday evening. Yesterday’s overall modest reaction implies that markets currently go with the muddling through scenario of appointing yet another new PM. We think they severely underestimate the risk of new parliamentary elections which could have a more profound (negative) impact on the likes of the euro and French assets.

Today’s empty eco calendar won’t inspire, leaving ample room for political themes to play out. The Japanese yen remains in the defensive (USD/JPY 150.50 & EUR/JPY 176) as money markets reduce the likelihood of a BoJ rate hike at the end of this month following after Abenomics-cheerleader Sanae Takaichi won LDP leadership elections this weekend, becoming new PM. Yesterday’s 15 bps increase at the very long end of the curve, did lure better than average buying interest in this morning’s 30-yr JGB auction. The US Treasury starts its mid-month refinancing operation with a $58bn 3-yr Note auction today, but (market) focus) will be on 10-yr and 30-yr sales tomorrow and on Thursday.

News & Views

In a podcast released yesterday, Hungarian Prime Minister Victor Orban said he would prefer lower interest rates as he tried to revive economic growth in the country. The Hungarian prime minister is heading for elections next year and his party falls behind the opposition in the polls. Orban admitted that it is the task of MNB governor Varga and his monetary policy committee to set the policy rate. At the same time, he described the approach of Varga as cautious and he also acknowledged that such a cautious approach is needed to protect the forint’s stability. At the same time, he assessed that at 6.5% the policy rate is already higher than it should be. In its (fiscal) policy, the Hungarian government already to some extent ‘sidesteps’ monetary policy as it provides subsidies for mortgages and other loans. This weekend the government also announced to offer additional loans for small and medium sized companies (fixed rate 3%) up to a cap of HUF 150mn. The forint yesterday declined marginally (EUR/HUF 388.6), but is holding near the strongest levels since June last year.

Australian consumer confidence declined for the second consecutive month. The Westpac index declined 3.1%, having already dropped 3.5% in September. At 92.1%, the index suggests that more people are turning pessimistic than optimistic (100% is balance reference). Both the current conditions index (-2.8%) and the expectations component (-4%) declined. Families in particular turned more negative on personal finances, both over the previous year (-4.8%) and even more for the next year (-9.9%). The decline comes as the Reserve Bank of Australia last week left its policy rate unchanged at 3.60% because of signs that the disinflation process might be slowing and as labour market conditions remain rather tight. The Aussie dollar this morning eased marginally (AUD/USD 0.6605) but holds a tight short-term range between 0.65 and 0.67.

Daily Pivots: (S1) 149.45; (P) 149.97; (R1) 150.88; More...

Intraday bias in USD/JPY remains on the upside at this point. Break of 150.90 will resume larger rally from 139.87 to 151.22 fibonacci level. Sustained break there will carry larger bullish implication. On the downside, below 149.74 minor support will turn intraday bias neutral again first.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.