eFXplus DATA

• EUR/USD marginally bearish bias although down move is losing momentum
• Further highs below daily cloud top at 1.1420 will encourage bears
• Close under 55-DMA @ 1.1385 should spark fresh selling
• Marginal break of 76.4% retr 2019 rally @ 1.1371 suggest deeper drop
• Full retrace is 1.1310. 76.4% bigger rally since Nov 2018 is 1.1301
• Close back over 21-DMA 1.1427 needed to refresh early year bullish view

• Modest rebound in USD/ZAR feeding through to firmer GBP cross
• Dovish tilt to SARB rhetoric after Thurs no change call in the mix
• Brexit noise favouring GBP but fragile as uncertainty still stalks
• However, GBP/ZAR near good technical resistance-fade-stop levels
• 17.9265 sell-off high from Jan 14, 17.9348 cloud base and 18.0063 200DMA
• Look for a return to Jan 15 or Dec 4 lows, 17.4896 and 17.3184 respectively

• Nudge above 1.30 Thurs took price clear above 1.2943 upper 30DMA Bolli
• Our short stop raised to 1.2875, 125-pts locked in
• Drop in Friday momentum as price eases back to the 1.2960s
• Risk of a softer session as week-end adjusting bites: Bolli line risk
• 100DMA seen key for bulls, 1.2893, 200DMA remains a target at 1.3097
• Weeklies flirting with a close above 30WMA at 1.2935

• GBP/USD has reached an opportune level to pick a top for today's data
• UK Dec retail sales at 9.30GMT are f/c -0.8%mm, smart estimate -0.95%
• According to BRC Christmas sales were the worst in a decade nL9N1M100K
• GBP/USD 1.3001 high yesterday with bullish closes over cloud and 100-DMA
• Given market net short, if data disappoints 1.2880-1.2900 may well hold
• If data surprises to beat estimates expect test of 200-DMA @ 1.3097

• AUD/USD rallies with stocks in early trade, but loses steam and retreats
• Range for Asia 0.7186/0.7205, market optimistic on US-China trade talks
• Techs mostly supportive, but AUD/USD needs to make progress soon
• Resistance clear at recent daily highs and 76.4 Fibo at 0.7225/35
• Initial support at 10 DMA at 0.7181, close below would suggest consolidation
• Stronger support 0.7135/45, close below negates bullish outlook

Bank of America Merrill Lynch Research discusses USD/JPY outlook and adopts a structural bearish bias, revising its targets 101 by year-end. 

"We find live signs that Japan's domestic USD demand has started to fall. We remain bearish and cut USD/JPY forecasts. 1. USD/JPY has started to fall in Tokyo market hours. 2. Japan's outward security investment is slowing down. 3. Oil price decline in 4Q18 to depress energy imports in 1Q19. 4. Machine tool order slump signals M&A slowdown," BofAML notes. 

"We revise USD/JPY forecasts to the downside with the year-end forecast revised down from 105 to 101. We did not pencil in 100 in our forecasts as 101 would provide significant support as in 2016. However, a breach of 100 could precipitate a further move lowertowards 95 given the higher USD/JPY conviction that prevailed in 2018," BofAML adds. 

• -0.1% in a 1.2968/1.2994 range - active Asia, especially for a Friday
• EUR/GBP +0.15%, after trading a 0.8775/88 range - occasional decent flow
• Momentum studies, 5, 10 & 21 DMAs climb - daily charts are bullish
• Close above 1.2957, 61.8% Sep/Jan fall targets 1.3097 falling 200 DMA
• NY 1.3001 high, then 1.3086, 76.4% of the Sep/Jan fall first resistance
• 1.2883 NY low then London 1.2833 base initial support

• -0.1%, after closing +0.8%, as chances of a no deal Brexit receded
• Leaders do not want a new referendum, but it gains traction nL3N1ZH5I3
• YouGov poll yesterday showed 'remain' has a 12pt lead nL8N1ZH2OM
• Momentum studies, 5, 10 & 21 DMAs climb - daily charts are bullish
• Close above 1.2957, 61.8% Sep/Jan fall targets 1.3097 falling 200 DMA
• NY 1.2883/1.3001 range is initial support/resistance

• AUD/USD edging higher as S&P e-minis up 0.2%, Nikkei +0.9%
• Stocks rebound despite US Treasury denial of WSJ China tariff story
• High so far 0.7205, resistance clear at 0.7225/35 with highs and 76.4 Fibo
• Momentum studies and 5, 10, 21 DMAs heading higher, supports uptrend
• Initial support at 10 DMA at 0.7182, strong support 0.7135/45
• Any progress on US-China trade should see rally towards 200 DMA at 0.7316
  

• Tight early after closing little changed, but a fifth lower daily low
• 1.1375-80 1BLN, 1.1390-1.1405 3BLN and 1.1415-25 2BLN strikes contain
• Italy approved flagship welfare reforms at a cost of EUR 11bln nL8N1ZH66W
• Interesting to see the debt market response at current low Italian yields
• Momentum studies slip, negative 5 DMA cross of 10 & 21 DMAs - bearish setup
• 1.1371, 76.4% of the January bounce and 1.1406 NY high support/resistance

Citi discusses USD outlook and notes that investor flow remain overall USD negative.

"The Citi CitiFX Flows team notes net USD outflows by real money (RM) investors over the past 3-weeks which follow a long period of net buying.

The shift in USD RM flows coincides with the mid-December downturn in USD and more dovish Fed speak," Citi notes. 

Citi also notes the US govt shutdown continues to be one of the factors weighing on USD sentiment (albeit in the short term).  

• Slide from January's peak extends but fails to break support near 0.7145
• Risk gains in NY; stocks, copper & AUD/JPY gain, AUD/USD lifts from support
• Pair gains despite recent soft AU data; traders focused on central banks
• Views grow that easier central bank policy should buoy growth and high betas
• Market particularly focused on recent Fed rhetoric and PBOC actions
• AUD/USD consolidation persists, higher levels possibly due nL1N1ZH10F

If AUD/USD bulls have one thing in their favor, even in the face of new worries about housing and consumers, it's that global central banks are turning cautious. Australian November housing finance data affirmed housing concerns while the slide in January's Melbourne Institute and Westpac index show consumers growing leery.
And yet, AUD/USD has remained resilient.
The pair's recent consolidation phase remains intact nL1N1ZG1AX after support near 0.7145 held.
Central bank influence is likely the main driver and could help AUD/USD to new heights. The Fed's rhetoric of patience suggests rate hikes in 2019 are unlikely while the PBOC seems dedicated to easy policy in order to spur growth.
Easier monetary policy should bolster global growth prospects, to the benefit of the aussie.
Positioning likely remains a factor to keep AUD/USD buoyed as well.
CFTC positioning updates remain unavailable but net-long U.S. dollar exposure may still be elevated.
With Fed rate hikes possibly a thing of the past, reduction of those long positions should persist and help underpin AUD/USD.
AUD/USD consolidation should resolve with a break higher.
Bears need to clear 0.7050/80 support to gain control.

ING discusses EUR/USD technical outlook and adopts a neutral bias on a multi-days basis.

"Prices declined within the short-term consolidation phase, although already nearing solid support between the MA-50 line at 1.1383 and the underlying trend line and former upper end of the falling trend channel, both around 1.1340.

From here we could see another rally towards the strong resistance area between the horizontal line around 1.1530 and the declining EMA-200 line at 1.1570. A break above this resistance area should not be ruled out, indicating further upside with next strong horizontal resistance coming in around 1.1820," ING notes.

Support for GBP/USD, which rallied after Parliament rejected a proposed Brexit plan, has held, suggesting there's more room to squeeze those who have sold the pound.
With so much uncertainty still surrounding Brexit and UK data clearly deteriorating, this is unlikely to be a sustainable GBP rise, yet it could have a fair bit of scope.
A GBP/USD close over the 100-DMA at 1.2893 and daily Ichimoku cloud top at 1.2868 today would indicate that traders remain short GBP, perhaps too short.
The steep drop from 1.2917 to 1.2670 on the day of the Brexit vote did a lot of damage, forcing traders to hedge a bigger drop and trigger a lot of tech selling.
Tech followers will have to respect any bullish tech signal regardless of the uncertainty driving towards option interest around 1.3000, exposing stops above.
If those are triggered there's scope for the 200-DMA at 1.3103 and last November's 1.3173 high.
By then, traders will likely be long, and it's worth betting on another major peak.

 NZB discusses NZD/USD technical outlook and maintains a medium-term bullish bias targeting a move towards 0.71 in 3 months. In the near-term, NAB thinks that dips will likely be short lived, and targets the pair at 0.70 in 1-month.

"There consecutive new 2019 highs in the past week confirms a textbook interim uptrend structure. Consecutive small down days this week are typical of a multi-day correction (not a sustainable reversal).

The break of the last low at 0.6797 will damage that interim uptrend structure and confirm ST consolidation /correction risk. We anticipate that dips will be short-lived," NAB notes. 

Societe Generale Research discusses EUR/GBP outlook and maintains a tactical bearish bias, expressing that via staying short* the cross targeting a move towards 0.8650.

"EUR/GBP managed to get below year-ago levels after the UK Government survived yesterday evening's confidence vote. That result nurtured hopes that whatever happens now, a no-deal exit from the EU will be avoided. However, the Conservative Party is completely divided and Labour leader Jeremy Corbyn declined the offer of cross-party talks with the Prime Minister yesterday," SocGen notes. 

"A ‘soft Brexit' deal, agreed after an extension of the Article 50 timetable, may the most likely outcome but a ‘no deal' exit, a second referendum and a General Election are all possible. EUR/GBP shorts are still working, but it's not going to be restful," SocGen adds. 

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*Recorded in eFXplus Orders

• AUD/USD ran into resistance at 0.7172 (100DMA) after firming from 0.7147
• 0.7147 = early Europe one-week low, as US/China news weighed on AUD
• US legislation steps up pressure on Huawai/ZTE, China calls it "hysteria"
• See: nL1N1ZG1ST. 0.7235 = recent 1-month high on US/China trade deal hope
• China confirms VP Liu to visit US for trade talks Jan 30-31 nL3N1ZH2GT
• Large 0.7145 and 0.7115 option expiries Friday, A$832mn and A$878mn strikes

• Offers pre-1.29 have kept lid on cable since MP's rejected May's Brexit deal
• Latest failure ahead of the figure was in early Asian trade, 1.2899 high
• 1.2833 = subsequent low (in early London trade). 1.2825 was Wednesday's low
• Fresh offers are tipped near 1.29 (1.2893 is the 100-day moving average)
• Stops may be sheltering above 1.2900 and 1.2930 (Monday's two-month high)
• Divided and riven by crisis, UK searches for Brexit 'plan B' nL8N1ZH1IJ

• EUR/USD bears managed to register a daily close below the 1.1393 Fibo
• 1.1393 is a 50% retrace of the 1.1216 to 1.1570 (November to January) rise
• Which in turn has unmasked cloud base at 1.1359 and 1.1351 Fibo (61.8%)
• The market is now sell on rallies near to the cloud top now at 1.1419
• A daily close back above the daily kijun line at 1.1420
• EUR/USD bears previously failed to close below key Fibo nL1N1ZG072