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USD/CHF rose to 0.9241 last week but failed to break through 0.9273 resistance and retreated. Initial bias remains neutral this week first. Another rise is mildly in favor as long as 0.9128 minor support holds. Firm break of 0.9273 will resume the whole rise from 0.8925 to 100% projection of 0.8925 to 0.9273 from 0.9017 at 0.9365. On the downside, however, break of 0.9128 will turn bias back to the downside for 0.9017 support instead.

In the bigger picture, the failure to sustain above 55 week EMA (now at 0.9184) retains medium term bearish in USD/CHF. Break of 0.8925 support should resume the whole decline form 1.0342 (2016 high) through 0.8756 low. However, break of 0.9273 resistance and sustained trading above 55 week EMA will be an early sign of bullish trend reversal. Focus will then turn to 0.9471 resistance for confirmation.

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's consolidation pattern from 0.7288 extended last week and outlook is unchanged. Initial bias stays neutral this week for some more sideway trading first. As long as 0.7443 resistance holds, outlook stays bearish for further decline. On the downside, break of 0.7288 will resume the fall from 0.8006 to 161.8% projection of 0.8006 to 0.7530 from 0.7890 at 0.7120 next. On the upside, break of 0.7443 will bring stronger rebound to 0.7530 support turned resistance instead.

In the bigger picture, rise from 0.5506 medium term bottom could have completed at 0.8006, after failing 0.8135 key resistance. Correction from there could target 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051). We'd look for strong support from there to bring rebound. However, sustained break of this level would argue that the whole medium term trend has indeed reversed.

In the longer term picture, rise from 0.5506 could have completed at 0.8006. But subsequent fall is now seen as a correction only. As long as 0.6991 structural support holds, we'd expect another rise through 0.8006 at a later stage. However, sustained break of 0.6991 would argue that the trend has reversed and put 0.5506 low back into radar.

USD/CAD extended the consolidation from 1.2421 last week and outlook is unchanged. Initial bias remains neutral this week for some more sideway trading. Still, further decline is expected was long as 1.2605 resistance holds. On the downside, break of 1.2421 will resume the fall from 1.2805 to 1.2301 cluster support (61.8% retracement of 1.2005 to 1.2805 at 1.2311). On the upside, break of 1.2605 will turn bias back to the upside for retesting 1.2805 high instead.

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.

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, sustained break of 1.2061 will be a sign of long term bearishness. Deeper fall would be seen to 61.8% retracement at 1.1424 and below.

GBP/JPY was still stuck in range after failing to break through 153.42 resistance last week. Initial bias remains neutral this week first. On the upside, break of 153.42/46 resistance will reaffirm the case that correction from 156.05 has completed at 148.43. Intraday bias will be back on the upside for retesting 156.05. On the downside, though, below 151.14 will bring deeper fall back to retest 148.43 instead.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). Focus remains on 156.59 resistance (2018 high). Sustained break there should confirm long term bullish trend reversal. Next target is 61.8% retracement of 195.86 (2015 high) to 122.75 at 167.93. On the downside, sustained break of 149.03 support, however, will argue that rise from 123.94 has completed. Further break of 142.71 would open up the bearish case for retesting 122.75 low.

In the longer term picture, the strong break of 55 months EMA was an early sign of long term bullish reversal. Firm break of 156.69 resistance should now confirm the start of an up trend for 195.86 (2015 high).

EUR/JPY stayed in the consolidation pattern from 128.58 last week and outlook is unchanged. Initial bias remains neutral this week for some more sideway trading. Downside breakout is expected as long as 131.07 resistance holds. On the downside, break of 128.85 support will resume the fall from 134.11 to 127.07 resistance turned support next. On the upside, break of 131.07 resistance will argue that choppy fall from 134.11 has completed. Intraday bias will be turned back to the upside for 132.68 resistance first.

In the bigger picture, rise from 114.42 is seen as a medium term rising leg inside a long term sideway pattern. As long as 127.07 resistance turned support holds, further rise is still expected to retest 137.49 (2018 high). However, firm break of 127.07 will argue that the medium term trend has reversed, and open up the case for retesting 114.42.

In the long term picture, EUR/JPY is staying in long term sideway pattern, established since 2000. Another rising leg in progress for 137.49 resistance and above.

EUR/GBP edged lower to 0.8448 last week but quickly recovered. Initial bias remains neutral this week first. Outlook stays mildly bearish as long as 0.8556 resistance holds. On the downside, break of 0.8448 will resume the whole decline from 0.9799, to retest 0.8276 key long term support level. However, break of 0.8556 will bring stronger rebound back to 0.8668 resistance.

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 0.8718 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.

In the long term picture, outlook will stay bullish as long as 0.8276 support holds. Break of 0.9499 is in favor at a later stage, to resume the up trend from 0.6935 (2015 low).

EUR/AUD dropped to 1.5898 last week but recovered ahead of 55 day EMA (now at 1.5885). Initial bias remains neutral this week and further fall is in favor with 1.6035 minor resistance. On the downside, sustained break of 55 day EMA will argue that choppy corrective rebound from 1.5250 has completed. Deeper fall would be seen to 1.5614 structural support for confirmation. On the upside, above 1.6035 minor resistance will turn bias back to the upside for retesting 1.6182 high instead.

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 would 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 1.5614 support will indicate that the rebound has completed and bring retest of 1.5250 low.

In the longer term picture, rise from 1.1602 (2012 low) should have already completed with three waves up to 1.9799 (2020 high). Fall from there is seen as a medium term to long term down leg as a long term down trend, or a sideway pattern. We'll assess the odds again at a later stage.

EUR/CHF rebounded strongly last week and hit as high as 1.0839, but retreated sharply since then. Initial bias remains neutral this week first. Another rise is mildly in favor as long as 1.0788 minor support holds. Above 1.0839 will resume the rebound from 1.0715 short term bottom to 38.2% retracement of 1.1149 to 1.0715 at 1.0881. We'd monitor the reaction to 1.0881 to assess the chance of bullish reversal. On the downside, break of 1.0788 minor support will turn bias back to the downside for retesting 1.0715 low instead.

In the bigger picture, rebound from 1.0505 (2020 low) should have completed at 1.1149 already. The three-wave corrective structure argues that the downtrend from 1.2004 (2018 high) is not over yet. Medium term outlook will now stay bearish as long as 55 week EMA (now at 1.0869) holds. Break of 1.0505 low would be seen at a later stage.

In the long term picture, rejection by 55 month EMA (now at 1.1058) retains long term bearishness. Break of 1.0505 low will resume down trend to 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223.

It's all about the consumers. After slowing core inflation and sharp deterioration in sentiment, Dollar took a steep dive towards the end of the week. Markets are suddenly less sure about a tapering announcement by Fed in September, not to mention anything concrete from Jackson Hole symposium later in the week. The greenback ended the week only slightly between than Sterling and Swiss Franc. The development suggests more downside in Dollar for the initial part of this week at least.

On the other hand, Yen rebounded strongly following the slide in treasury yields, even though US stocks extended the record runs. New Zealand Dollar follows as the second best, awaiting RBNZ rate hike this week. Canadian Dollar was the third winner. Euro and Aussie ended the week mixed.

Slowing core inflation, deteriorating consumer sentiment, and split Fed

Dollar's rally firstly slowed after decline in core CPI in July from 4.5% yoy to 4.3% yoy, while headline CPI was unchanged at 5.4% yoy. The data added to the view that current inflation is "transitory", or at least, it's not accelerating for now.

Then, heavy selling was triggered on Friday by poor U of Michigan economic sentiment, which tumbled sharply from 81.2 to 70.2. That's the lowest level since 2011. More importantly, the large scale decline was only exceeded by six occasions on record, all connected to sudden negative changes in the economy. While it's just one data point, it raised concern over the course of the economy ahead with surging spread of Delta variant in the back ground.

Some Fed officials like Esther George, Robert Kaplan, Eric Rosengren were affirmative on announcing tapering in September, on condition of further strong improvement in job markets. But some like, Thomas Barkin and Raphael Bostic sounded cautious, probably thinking about making the decision in fall. Doves like Charles Evans would like to see a few more job report before deciding. While Mary Daly is expecting tapering later this year or early next.

10-year yield rejected by 55 day EMA, more range trading first

10-year yield rebounded further to 1.379 last week but retreated sharply after touching 55 day EMA, and closed at 1.297. The development suggests that TNX is not ready to confirm completion of the correction from 1.765 yet. Instead, it will extend the range trading between 1.128 and 1.420. That said , we don't expect a break of 1.128 support, which is close to 50% retracement of 0.504 to 1.765 at 1.134, in case of another fall.

The break of 1.420 resistance would come likely come when Fed shows more confidence with a concrete plan of tapering. In that case, we'd likely see TNX head back towards 1.765 high as talks of a rate hike late next year heat up.

Dollar index failed 93.43 resistance, reversed to close lower

Dollar index edged higher to 93.19 last week but failed to break through 93.43 resistance, and reversed from there to close lower for the week at 92.51. Given that DXY is still sitting above rising 55 day EMA comfortably, we'd favor another rise for the near term. Break of 93.13/43 resistance zone will target 38.2% retracement of 102.99 to 89.20 at 94.46.

The fibonacci level at 94.46 will be important to determine the underlying trend. Strong break there would indicate that DXY is already in a medium term up trend, that would extend through 61.8% retracement at 97.72. However, failure there and (early) break of 91.78 support could bring another attempt below 90 handle before taking a committed direction.

Gold rebounded after initial dive, but 1800 could cap upside

The initial selloff in Gold was brief, even though steep, mainly due to ultra thin liquidity. Subsequent rebound was actually quite impressive, riding on Dollar's weakness. Further rise would be mildly in favor as long as 1741.44 support holds. But 55 day EMA (now at 1800.05) which is close to 1800 handle) could cap upside, and bring another fall to take on 1676.65 key support. However, sustained break of the 55 day EMA would raise the odds of stronger rise back to 1916.30 resistance. That could be used to double-confirm DXY's break of 91.78 support if it happens.

Yen rebounded against Aussie and Kiwi

Yen's rebound last week was rather broad-based, including against commodity currencies. AUD/JPY was rejected by 91.64 resistance, then reversed to close at 80.74. Immediate focus is now on 80.69 minor support this week. Firm break there will argue that AUD/JPY is at least in another falling leg inside the consolidation pattern from 79.82. Deeper fall could be seen back to retest this low.

NZD/JPY's outlook was relatively more bullish than AUD/JPY, as the rebound to 77.91 was stronger. Yet, it also retreated notably after losing upside momentum, as seen in 4 hour MACD. Break of 76.87 minor support would also argue that corrective pattern from 75.25 has completed, and bring deeper fall, with prospect of retesting this low.

Some upside risks for NZD/USD on RBNZ hike

At the same time, the Kiwi is have some upside risks this week, on expectation of an RBNZ rate hike from 0.25% to 0.50%. NZD/USD could be popped through 0.7104 resistance should RBNZ delivers. That would affirm the case that corrective pattern from 0.7463 has completed shallower than expected at 0.6879. That could also come with some upside acceleration, to near term trend line resistance first (now at 0.7198), and then to 0.7315 resistance.

For now, it's unsure whether, if the bullish scenario realizes, that would come with a stronger rebound in NZD/JPY, or forces Dollar lower against commodity currencies.

EUR/USD Weekly Outlook

EUR/USD's late rebound last week suggests short term bottoming at 1.1705, on bullish convergence condition in 4 hour MACD. That also came just ahead of 1.1602/1703 key support zone. Initial bias is now on the upside this week for 1.1907 resistance first. Decisive break there will suggest that fall from 1.2265, as well as consolidation pattern from 1.2348, have completed. Near term outlook will be turned bullish for retesting 1.2265/2348 resistance zone. However, below 1.1705 will turn focus back to 1.1602/1703 key support zone again.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally remains in favors long as 1.1602 support holds, to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). Reaction from 1.2555 should reveal underlying long term momentum in the pair. However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again.

In the long term picture, focus remains on 1.2555 cluster resistance (38.2% retracement of 1.6039 to 1.0339 at 1.2516). Sustained break there should confirm long term bullish reversal and target 61.8% retracement at 1.3862 and above. However, rejection by 1.2555 will keep long term outlook neutral first, and raise the prospect of down trend resumption at a later stage.

Monday, Aug 16, 2021

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Tuesday, Aug 17, 2021

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Wednesday, Aug 18, 2021

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Thursday, Aug 19, 2021

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Friday, Aug 20, 2021

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