Dollar's retreat continues today as markets are back from holiday. Australian dollar is having the strongest recovery so far, helped by broad based rally in Asian stocks. Investors are a bit more optimistic after solid industrial production data from Japan. Industrial production rose 2.6% mom in November, fastest pace in 6 months. Momentum in production is expected to continue as recovery in China, Japan's largest trading partner, continues next year. Retail sales recovered by rising 0.2% mom in November, after a -0.9% drop in October. Consumer spending is still fragile and the sustainability of Japan's recovery is still heavily dependent on exports.
Technically, dollar index made a short term top at 78.45 last week and the consolidations from there would extend further in near term. Deeper pull back might be seen to channel support at 76.91. But downside should be contained well above 75.58 resistance turned support and bring rally resumption. Rise from 74.19 is expected to develop in to a five wave sequence and should target 38.2% retracement of 89.62 to 74.19 at 80.08 in the least bullish scenario.
GBP/JPY Daily Outlook
Daily Pivots: (S1) 145.69; (P) 146.06; (R1) 146.48; More
Intraday bias in GBP/JPY remains neutral for the moment. As noted before, with 147.43 resistance intact, we're holding on to the bearish view that choppy recovery from 141.99 is correction to fall from 149.15 only. A break below 143.78 minor support will suggest that such recovery is completed and will flip intraday bias back to the downside. Further break of 141.99 will target 139.26 support next. However, note that break of 147.43 will dampen this immediate bearish view and suggest that rise from 139.26 is still in progress for another high above 149.15 before completion.
In the bigger picture, medium term rebound from 118.18, which is a correction to the long term down trend from 07 high of 251.90, has completed at 163.05 already. Fall from 163.05 is expected to resume after sideway consolidation from 139.69 completes and should target a new low below 118.81. However, note that sustained break of 61.8% retracement of 163.05 to 139.26 at 153.96 will argue that fall from 163.05 has finished already and will, in turn indicate that rise fro 118.81 is still in progress to another high above 163.05 before conclusio
EUR/JPY Daily Outlook
Daily Pivots: (S1) 131.02; (P) 131.45; (R1) 132.00; More.
EUR/JPY's rebound from 127.50 extends further and at this point, intraday bias remains on the upside as long as 130.50 minor support holds and further rise could be seen to trend line resistance at 132.67. Break will suggests that choppy fall from 138.47 has completed and will turn focus to 134.54 resistance for confirmation. Break there will target upper side of medium term range at 139.21. On the downside, below 130.50 minor support will turn intraday bias neutral again and put focus back to 127.50 support.
In the bigger picture, at this point, EUR/JPY is still bounded in medium term range between 126.88 and 139.21 and outlook remains neutral for the moment. On the downside, a break of 126.88 support will revive that case that medium term rebound from 112.10 has completed at 139.21 already. And down trend from 169.96 is resuming. In such case, we'd expect deeper fall to 112.10 and beyond to resume the long term down trend. On the upside, however, break of 134.54 resistance will revive that case that recent price actions are merely consolidations to medium term rise from 112.10 already and another high above 139.21 should be seen before EUR/JPY tops.
EUR/GBP Daily Outlook
Daily Pivots: (S1) 0.8974; (P) 0.8996; (R1) 0.9025; More.
EUR/GBP's rebound from 0.8850 extends further to as high as 0.9017 so far and the break of 0.8990 resistance suggests that fall from 0.9153 has completed already. Intraday bias remains on the upside for the moment and further rise could be seen to 0.9153 resistance first. On the downside, though, below 0.8965 minor support will flip intraday bias back to the downside for retesting 0.8830 support.
In the bigger picture, medium term correction from 0.9799 has completed with three waves down to 0.8399 already and rise from there is tentatively treated as resumption of long term up trend. Such rise should target a test on 0.9799 first after completing the correction from 0.9410, which should be contained by 0.8704 support. Break of 9799 will bring rally to next medium term target at 61.8% projection of 0.6535 to 0.9799 from 0.8399 at 1.0416.
However a break of 0.8704 support will argue that firstly, rise from 0.8399 has completed at 0.9410 already. Secondly, this will indicate that correction from 0.9799 is still in progress for another low below 0.8399 before completion.
EUR/CHF Daily Outlook
Daily Pivots: (S1) 1.4888; (P) 1.4905; (R1) 1.4931; More
An intraday low is in place at 1.4874 and some sideway trading could be seen in EUR/CHF. Nevertheless, upside should be limited below 1.4988 resistance and bring fall resumption. Below 1.4874 will target 61.8% projection of 1.5138 to 1.4894 from 1.4988 at 1.4837 next.
In the bigger picture, the strong break of 1.5007 support argues that rebound from 1.4557 has completed after failing to take out 55 weeks EMA decisively. Whole decline from 1.5800 might be resuming and a break of 1.4557 will target a test on 2008 low of 1.4315. A break of 1.5138 resistance is needed to be the first signal that choppy fall from 1.5446 has completed and revive the case the rise from 1.4577 is still in progress. Otherwise, outlook will now remain bearish
EUR/USD Daily Outlook
Daily Pivots: (S1) 1.4328; (P) 1.4373; (R1) 1.4423; More
As discussed before, a short term bottom is in place at 1.4217 and rebound from there might extend further towards 38.2% retracement of 1.5143 to 1.4217 at 1.4571. Nevertheless, upside should be limited by 61.8% retracement at 1.4789 and bring fall resumption. Below 1.4217 will target 38.2% retracement of 1.2329 to 1.5143 at 1.4068 next.
In the bigger picture, medium term rise from 1.2456 has completed at 1.5143 on bearish divergence conditions in daily MACD. Focus now turns to 1.3737 cluster support (50% retracement of 1.2329 to 1.5143 at 1.3736). Decisive break there will also confirm the case that three wave consolidation from 1.2329 has finished at 1.5134 too. In other words, whole medium term term fall fro 1.6039 should be resuming for a new low below 1.2329. On the upside, above 1.5143 is needed to invalidate this view. Otherwise, outlook will now remain bearish
GBP/USD Daily Outlook
Daily Pivots: (S1) 1.5919; (P) 1.5971; (R1) 1.6014; More
Intraday bias in GBP/USD remains neutral for the moment and consolidations form 1.5919 might extend further. Another rise to 4 hours 55 EMA (now at 1.6113) cannot be ruled out. But after all, upside should be limited well below 1.6408 resistance and bring fall resumption. Current decline is still expected to continue to 100% projection of 1.6720 to 1.6166 from 1.6408 at 1.5854 first and then 1.5706 cluster support next.
In the bigger picture, we're still favoring the bearish case that medium term rebound from 1.3503, which is is treated as a correction to down trend from 2.1161, has completed at 1.7043. Focus now turns to 1.5706 cluster support (38.2% retracement of 1.3503 to 1.7043 at 1.5691) for confirmation. Break there will argue that whole down trend form 2.1161 is likely resuming for a new low below 1.3503. On the upside, however, break of 1.7043 will indicate that rise from 1.3503 is still in progress to resistance zone of 1.7332/8236 (50% and 61.8% retracement of 2.1161 to 1.3503) before completion.
USD/CHF Daily Outlook
Daily Pivots: (S1) 1.0328; (P) 1.0363; (R1) 1.0407; More
As noted before, USD/CHF's made a short term top at 1.8506 and consolidations from there is still in progress. At this point, intraday bias is mildly on the downside for deeper fall to 38.2% retracement of 0.9959 to 1.0506 at 1.0297 and below. Nevertheless, downside is expected to be contained well above 1.0175 cluster support (61.8% retracement of 0.9959 to 1.0506 at 1.0168) and bring rally resumption. On the upside, above 1.0403 minor resistance will flip intraday bias back to the upside. Break of 1.0506 will target medium term support turned resistance at 1.0590 next.
In the bigger picture, medium term fall from 1.1963 has completed with five waves down to 0.9916 already. Also, the three wave consolidation from 1.2296 should also be finished too. Current rise from 0.9916 is expected to extend further to medium term trend line resistance first (now at 1.1078). Sustained trading above the trend line will affirm the case that long term rise from 2008 low of 0.9634 is resuming for another high above 1.2296. On the downside however, a break of 0.9959 support will invalidate this bullish view and argue that medium term down trend in USD/CHF is still in progress for 0.9634 low.
USD/JPY Daily Outlook
Daily Pivots: (S1) 91.18; (P) 91.47; (R1) 91.83; More.
As discussed before, an intraday top is in place at 91.86 and intraday bias is turned neutral for the moment. USD/JPY's retreat could continue and might have another fall to 4 hours 55 EMA (now at 90.55). But after all, another rise is still in favor as long as 88.96 support holds. Above 91.86 will target 92.31 resistance first and then 100% projection of 84.81 to 90.75 from 87.36 at 93.30 next. However, note that break of 88.96 support will argue that whole rise from 84.81 has finished with bearish divergence conditions in 4 hours MACD. Focus will then be shifted to 87.36 support for confirmation.
In the bigger picture, as noted before, there is no clear indication of medium term reversal yet as USD/JPY is still trading well below 55 weeks EMA (now at 94.54) as well as the trend line resistance at 94.44. Whole down trend from 124.13 could still be in progress and might extend towards 1995 low of 79.75 after completing the rebound from 84.81. However, note that sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation
USD/CAD Daily Outlook
Daily Pivots: (S1) 1.0458; (P) 1.0482; (R1) 1.0517; More.
At this point, intraday bias in USD/CAD remains on the downside as long as 1.0530 minor resistance holds and fall from 1.0744 is still expected to continue. Such decline is part of the whole choppy consolidation pattern that started at 1.0851 and could extend further to 1.0405 and below. Nevertheless, downside should be contained above 1.0205 support to conclude such consolidations and bring rise resumption. On the upside, above 1.0530 will turn intraday bias neutral first. But break of 1.0744/80 resistance is needed to confirm that rise from 1.0205 is resuming for 1.1101 resistance. Otherwise, more choppy consolidations should still be seen with risk of another fall.
In the bigger picture, a medium term bottom might be in place at 1.0205 with bullish convergence conditions in daily MACD. As noted before, fall from 1.3063 is viewed as a correction to long term rise from 0.9056. Such correction might have already completed with three waves down to 1.0205 already (1.0784, 1.1732, 1.0205). Break of 1.1101 resistance will confirm this case and target 61.8% retracement of 1.3063 to 1.0205 at 1.1971 at least. On the downside, break of 1.0205 will invalidate this view and bring down trend resumption to parity instead
