UOB Research discusses AUD/USD technical outlook and sees a scope for further gains over the coming weeks.

"AUD/USD moved above 0.7478 on Tuesday (19 Oct) and quickly extended its gain (high of 0.7545 at the time of writing). At this stage, we view the current AUD/USD strength as part of a recovery and not the start of a major reversal. That said, weekly MACD has just turned positive and this suggests that there is room for the recovery to extend further. The resistance level of note is at the declining trend-line, currently at 0.7660, this level is also close to the top of the weekly Ichimoku cloud," UOB notes. ,

"Looking ahead, a clear break of 0.7660 would increase the risk of a sustained rally in AUD/USD (the next resistance above 0.7660 is at 0.7780). On the downside, support is at 0.7350. The bottom of the Ichimoku cloud (and minor trend-line) at 0.7210 is not expected to come into the picture within these couple of month," UOB adds. 

AUD/USD rallied to a fresh 3-month high Thursday but after hitting 0.75465 it erased those gains, and longs might have to deal with a correction driven by investors' Fed expectations and emerging technical signals.

Below-estimate weekly and continuing claims nL1N2RG2F0 indicate the U.S. labor market continues to tighten.
That tightening likely induced investors to pull forward Fed rate hike expectations.
June 2022 eurodollar prices EDM2 are falling again and look set to test the Oct.
18 low, a break of which could reinforce investor perceptions of risks that the Fed could tighten sooner.

Technical signals emerged on daily charts that might drive AUD/USD longs to take some profit.
AUD/USD's rally stalled just short of the bull channel top on daily charts and the 200-DMA.
It halted just short of the key 50% Fibo of the 0.8007-0.7107 decline.
Daily RSI diverged on Thursday's high and a daily inverted hammer candle formed.

The thin daily cloud could become magnetic as thin clouds have a tendency to do.

The risk that AUD/USD corrects lower and tests key support near 0.7300/25 is now increasing.

For more click on FXBUZ

Bank of America Global Research takes stock of rates markets after the sell-off. 

"The chart of the day offers a neat summary of the extremes to which the GBP and NZD rate markets have repriced, with hikes now expected to be followed by cuts within the next few years," BofA notes.

"Beyond the question of dislocations in the front-end of the curve, we ask ourselves whether what is being priced makes sense cross market, as well as in terms of the decomposition of the move into real yields and breakevens, as well as term premia and rate expectations. To us, the UK stands out on all accounts: negative term premia and real yields, elevated rate expectations and breakevens. EUR and USD rates look largely fair. AUD rate expectations have room to recover," BofA adds. 

MUFG Research sees a scope for further JPY weakness over the coming weeks.

" The US dollar has been reversing gains recorded last month. The best performing G10 currencies (click here) this month have been the high beta commodity currencies of the NOK (+5.2% vs. USD), NZD (+4.2%), AUD (+3.8%) and CAD (+2.9%); and the GBP (+2.5%). The commodity currencies in particular have now more than fully reversed their losses from last month. In contrast, the EUR, CHF and JPY have still not reversed last month’s losses," MUFG notes. 

"In a clear sign of JPY specific weakness it is the only G10 currency that has extended losses for the second consecutive month as it has weakened sharply across the board. The JPY has been hit hardest by the sharp adjustment higher in global yields and energy prices since the summer. The more recent reversal in USD performance has coincided with the rebound in global equity," MUFG adds. 

• AUD/USD hits a fresh 3-mo high in Asia, 0.75465 trades then sellers emerge

• Europe drives AUD/USD down to 0.7477, soured risk provides bears a tail wind

• Equities ESv1, copper HGv1, iron-ore DCIOc2, AUD/JPY all trade lower

• Broad based US$ buys add to risk-off, USD/CNH rallies above 6.4000

• AUD/USD opens NY near 0.7490 & tech signals are warning longs

• Daily inverted hammer candle, diverging daily RSI warn a correction possible

• Bearish daily signals emerge near key technical impediments

• Emerge near 50% Fib 0.8007-0.7107, 200-DMA, top of bull channel on day chart

• For more click on FXBUZ

• RBA Gov Lowe speaks late Thur, likely to counter market rate hike pricing

• Dovish rhetoric likely to present a dip buying opportunity

• AUD/USD profit takes before 200-dma 0.7564 in Asia, sub 0.7500 since

• Risk aversion weighs now, support Wed low 0.7465, bids touted 100-dma 0.7403

• Options shedding volatility and downside risk premiums all week

• 1-month risk reversal sold 0.7, 3-month 1.0 AUD puts - lowest since June

• 1-month implied volatility recent low 8.5, before mild demand Thur

• Flows show more buyers of options to benefit from gains toward 0.7600 n/t

For more click on FXBUZ

• Lack of bounce off the 0.8424-25 lows doesn't bode well for EUR/GBP longs

• However, we maintain a long from 0.8425 for 0.8640 with a stop at 0.8380

• Doji candles hint at bears' indecision, which could favour the long side

• Nov 1 0.8557-59 cloud twist also fighting the bull's corner

• Key topside levels at 0.8465 and 0.8479, 10DMA and 23.6% Fibo

• Below 0.8424 could trigger drop to Feb 2020 sub-0.83 lows

  For more click on FXBUZ

• In 2021 EUR/USD has traded a series of slowly falling ranges

• The last of these (rough 1.16-19) held between June and September

• As 1.16 also represented longer-term lows a break should have sparked vol

• Volatility remained low, break uninspiring, another range likely to develop

• If this range is close to 1.15-18 then EUR/USD is already on neutral ground

• If the 1.16 break has more impact, range may be lower, perhaps 1.14-17

• Pair's rise has slowed since trading 1.1670, 38.2% drop from Sep's high

• Correction target for drop since June Fed meeting is 1.1756

• Options suggest no big movement, spec shorts are likely to grow

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• GBP/USD falls to 1.3796 as equity losses weigh on risk-sensitive pound

• Nikkei closed down 1.87% nL4N2RH1GN. European stocks open lower

• See: nL4N2RH1PX. U.S. equity futures negative. 1.3796 = intra-day low

• Cable matched Tuesday's one-month high of 1.3834 in Asia, before risk soured

• 1.3743 was Wednesday's low, after slightly below forecast UK Sept CPI data

• UK borrowing slightly lower than forecast in September nL8N2RH1TE

• Minimum retrace off 1.1909-1.1522 met at 1.1670 Tues

• Bulls can now target the key 50% Fibo at 1.1716: pivotal level

• Tight ranges but bull bias holding and our long in play

• We target 1.1745 with a stop just below 1.1600-EBS pricing

• 14-day momentum and RSI confirming gains

• Last week's hammer candle (bullish) set to be confirmed this week

• Key supp. Weekly cloud base 1.1557 and 200DMA 1.1571

  For more click on FXBUZ

• Potential short-term top in place at 1.3834, Oct 19 high

• Early Thurs high 1.3834 and price drifting lower

• We are long at 1.3767: will monitor action at 1.38 with a view to squaring

• Both daily momentum and RSI have turned lower

• Risk of a retrace to 1.3734, minimum correction off 1.3412-1.3834

• However, weeklies bullish with gain consolidation above wkly cloud

• Cloud parameters 1.3157-1.3695: Wkly momentum flips positive, RSI climbing

  For more click on FXBUZ

• Trades +0.05% at the top of a tight 1.3822-1.3830 range with moderate flow

• Bank of England to raise rates to 0.25% in Q1, or sooner poll nL8N2RG245

• UK pay awards set to regain pre-pandemic pace - XpertHR nL8N2RG39N

• Private sector employers expect 2.5% pay increases to Aug 22 - no huge jump

• Charts; 5, 10 & 21 day moving averages climb, 21 day Bollinger bands expand

• Daily momentum studies head north - positive signals continue to build

• Targets 1.3831 break, 50% of 2021 fall, and test of 1.3913 September high

• Close below 1.3705 rising 10 DMA needed to undermine the topside bias

For more click on FXBUZ

• EUR/USD opened at 1.1650 when USD eased during US session

• It grinded higher through the morning as the USD retained an offered tone

• Heading into the afternoon it is at the session high at 1.1666

• Resistance is at the 38.2 of the 1.18909/1.1522 move at 1.1670

• A clear break targets 1.1715 where the 50% retrace and 55-day MA converge

• Support is at the 21-day MA at 1.1615 and break eases upward pressure

• For more click on FXBUZ

• AUD/USD has traded above 0.7530 to a fresh 3-month high

• Key resistance at 0.7555/65 now in focus as Aus bond yields climb

• 10-year Aus yield is around 1.83% - 16 BPs higher than US 10-year yield

• The 50% of the 2021 high/low is at 0.7556 and 200-day MA is at 0.7565

• The strong resistance may slow the relentless aUD/USD gains for now

• For more click on FXBUZ

The EUR/USD bounce has entered its second week, led by a weaker U.S. dollar, and has further to run technically.
In the bigger picture, this is a healthy correction in the primary downtrend.

The outlook for interest rate differentials remains supportive of the USD in the longer term. The Federal Reserve is on track to taper this year despite moderating U.S.
economic growth, as inflationary and wages pressures build nL1N2RG2BX.
In Europe, inflationary pressure is seen as transitory nW1N2LK03OnF9N2PW017and the European Central Bank is about to lose its most prominent hawk nL8N2RG2LK.

Yet there are short-term negatives for U.S. growth expectations and potentially the USD. Supply chain issues, a major contributor to inflationary pressures, appear set to persist for longer than initially thought nL1N2RF2LD.

While the market is confident that President Joe Biden will deliver a stimulus package, uncertainty over its size, composition and timing could undermine confidence nL1N2RG2VD.

Technically the short-term EUR/USD outlook is positive, though the primary downtrend since May remains in place. Since mid-July, EUR/USD has swung between the upper and lower 21-day Bollinger bands four times, pivoting around the 21-day moving average.

EUR/USD rejected the lower band in early October and closed above the 21-DMA on Tuesday.
The break was sustained on Wednesday, suggesting that the next move is a test of the falling upper band, at 1.1726 on Thursday.

For more click on FXBUZ

• EUR/USD opens 0.15% higher after failing to match Tuesday's high at 1.1670

• USD broadly weakened but most of the losses were against risk currencies

• Resistance is at the 38.2 of the 1.1909/1.1522 move at 1.1670

• This level needs to break soon or sideways trading will return

• Break above 1.1670 targets 1.1615 where the 55-day MA & 50% retrace converge

• Support is at the 21-day MA at 1.1615 and the 10-day MA at 1.1599

• A break below 1.1595 would suggest a short-term top is in place

• For more click on FXBUZ

• AUD/USD gained another 0.52% and is comfortably above 0.7500 as Asia opens

• Buoyant equity & commodity markets underpin, as high Aus yields also support nL1N2RG2X4

• Key resistance at 0.7555/65 in focus as the first objective of trend higher

• The 50% retrace of the year's high/low is at 0.7556 and 200-day MA at 0.7565

• Support is at former resistance at 0.7475/85 and 10-day MA at 0.7414

• Key will be whether Aus bond yields continue to outpace rise in US yields

• Lofty AUD/USD levels leave it susceptible to a negative mood change in risk

• For more click on FXBUZ

The dollar index tumbled on Wednesday after a rebound attempt failed to surpass the 21-day moving average, reaffirming its retreat from this month's highs as equities gains dimmed safe-haven demand for the U.S. currency and traders pruned Fed rate hike pricing.

The Fed's beige book report ahead of its Nov.
2-3 meeting reiterated the supply-side challenges including labor scarcity, cost pressures, disruptions and price hikes nNAQN04RNQ, though markets had already priced in much of this.

The dollar is facing an historically bearish setup presented by U.S. CPI now near its highest since 2008 and real 2-year Treasury yields near their most negative since 1980's post-dollar float low nL1N2RG1FR.

EUR/USD was up 0.2% after an early dip to the just cleared 21-DMA support on news Bundesbank President Jens Weidmann was leaving at year-end, perhaps making room for a less hawkish replacement nL8N2RG2LK.

The rebound from Wednesday's 1.1617 low on EBS remains below the 30-DMA and 38.2% Fibo of the September-October slide at 1.1666/70, but upside risks appear to be growing nL1N2RG19Z.

Adding to the sense the dollar's broader recovery has reached meaningful resistance and warranted a correction, was USD/JPY's 0.15% drop after a fleeting breach of long-term resistance and ahead of late-2017's high and major options barrier defense at 115.

USD/JPY is ripe for a retracement of October's 110.82-114.695 advance, with the 38.2% Fibo at last Thursday's 113.21 low an attractive target nL1N2RG13R.

Though USD/JPY is generally helped by risk-on flows, the drag from the drop in 5-year Treasury-JGB yields spreads more than offset it.

This comes as Japanese officials have been voicing concerns about the weakening of the yen in the context of soaring import prices and a slowdown in exports nL4N2RE057, though FX intervention looks far less likely than rhetoric geared toward keeping yen losses in check.

GBP/USD was up 0.24%, reversing an overnight pullback tied a slightly lower-than-forecast UK inflation print, and back up by the 50% Fibo of the June-September slide, that's also the weekly kijun, and Tuesday's recovery high at 1.3831/34.

Cable was on track to close above the 100-DMA for the first time since Aug.
5, being supported by aggressive BOE rate hike pricing nL1N2RG1DE.

The pound's advance was undeterred by sharply rising UK COVID cases, and related deaths now at their highest since March nL8N2RG1K5.

AUD/USD was up 0.64% and hit a 3-1/2 month high as a risk and commodities proxy and in anticipation of roughly 75bp of RBA hikes next year nL1N2RG27J.

USD/CAD fell 0.44% with Canadian inflation hitting an 18-year high in September nL1N2RG137.

Ether's 6.3% advance led bitcoin's 3.8% rise to fresh record highs nL1N2RG1GH in the wake of Tuesday's strong debut for bitcoin futures ETF, and as risk-on flows and inflation fears work in favor of cryptos.

Unexpected drops in U.S. crude and petrol product inventories sent WTI to a 7-year high.

U.S.
claims, Philly Fed and existing homes sales top Thursday's releases.

For more click on FXBUZ

• Early rally past 2018's 114.55 high was reversed at 114.695

• That high shy of the Nov 2017 peak at 114.735, big 115 barriers

• Prices o/b on dailies and weeklies, due for at least a decent dip

• Oct's 110.82-114.695 EBS rise completes its Fibo objective

• 23.6% and 38.2% Fibos of Oct's rise are at 113.78/21

• Both Fibos are by recent daily highs and lows, look attractive

• Short-term Treasury-JGB yields spreads pulling back is a drag

• Japan govt is jaw boning against yen drop, specs already short

• Real 2-yr Tsy ylds now near most negative since 1980 nadir nL1N2RG1FR

• Real 2-yr JGB yields still positive, could limit USD/JPY gains

For more click on FXBUZ

• Sterling firms into NY close, ends by session high +0.26% at 1.3825

• GBP/USD finds res at 1.3831, 50% Fib of 1.4250-1.3412's 2021 range

• Post-UK CPI weakness reversed, UK rates price in 2021 hike BOEWATCH

• Sterling bulls shrug off UK CPI miss, highs above 1.38 in view nL1N2RG1DE

• Above 1.3831 bulls eye the upper 30d Bolli at 1.3899, late Jul high 1.3984

• 55-DMA supports by 1.3728, below 10/30-DMA support by 1.3680 in focus

• EUR/GBP slips 0.06% to 0.8428, Wed range 0.8458-25; risk bid as havens USD, JPY unwound

MUFG maintains a bearish and short GBP/USD exposure.

"The September inflation data has been released in the UK and there has been limited reaction to the weaker than expected print... The overall annual inflation rate slowed from 3.0% to 2.9% in September with goods inflation picking up only modestly from 3.3% to 3.4% while services inflation slowed from 3.0% to 2.6%," MUFG notes.

"In addition to the weaker inflation data, the pound has other news to deal with after the COVID data yesterday revealed an alarming 233 deaths from COVID, the biggest one-day total since early March. This followed a recent pick-up in infections as well with 44,145 cases reported yesterday," MUFG adds. 

• EUR/USD slide on Wednesday hit 1.1617 on EBS but buyers then emerge

• Buyers appear near the 21-DMA and a rally ensues with risk-on theme

• EUR/USD turns +ve on the day, bull tech signals get reinforced

• Daily bull hammer forms off the 21-DMA, daily RSI turns up again

• Rising monthly RSI, October monthly bull hammer reinforces bull signals

• Longs set to take on Oct 19 & Sep 29 highs, 38.2% Fib of 1.1909-1.1522 drop

• Break of those impediments puts 1.1750/60 zone, daily cloud in play

• For more click on FXBUZ

Bank of America Global Research maintains a bullish USD bias into year-end.

"A synchronized sharp rise in global yields on all three historical occasions (Jun-2013, Sep-2019, Jun-2021) were driven by rising US yields amid US bond tapering or tighter US credit (Exhibit 1)," BofA notes. 

"Ahead of the next FOMC meeting in November, where the market anticipates the Fed to announce the start of bond tapering, we expect the USD to be supported and the US to continue to act as the main driver of global FX market," BofA adds. 

EUR/USD bounced on Wednesday after initially extending its fall from the previous session's high, with options and technicals signaling upside risks.

EUR/USD risk reversals indicate the vol premiums for puts over calls is eroding and are either neutral or only slightly in favor of puts.

The current risk reversal trend suggests premiums for calls might soon exceed those for puts.
The price action suggest EUR/USD options investors are less wary of a downside move.

Technicals continue to suggest EUR/USD faces upside risks.
The drop from Tuesday's high stalled at the 21-day moving average in Europe.
After hitting a 1.1617 low on EBS buying took hold and the pair turned positive in early New York trading.
Daily RSI is rising again and a daily doji candle formed.

Monthly tech signals reinforce the bullish outlook.
Monthly RSI is rising and not near overbought.
A monthly bull hammer candle has formed after EUR/USD rallied away from the 50% Fib of the 1.0636-1.2349 rally.

The 38.2% Fib of the 1.1909-1.1522 decline and Sept.
29 daily high remain impediments for EUR/USD longs but they look vulnerable still.
Should they break longs are set to test 1.1750/60 resistance and the daily cloud which sits near 1.1800.

For more click on FXBUZ