• Bull run stalling just ahead of the thin daily cloud, 1.3778-1.3781

• Trend resumption above Friday's 1.3773 high

• Minimum correction off 1.3412-1.3773 Sept 29-Oct 15 climb at 1.3688

• Oct 25 1.3767-78 cloud twist could limit corrective weakness

• A close below 1.3730 55DMA to weaken the cloud pull

• Close back above weekly cloud Friday added to bullish risk for this week

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• Big up day Oct 13 ran into a bout of market indecision Thurs-Frid

• Doji candles highlighting loss of bullish confidence and momentum

• Our short play back in the game and looking for 1.1350

• Oct 4 1.1640 high pivotal topside and our stop placed just above

• Initial support close to market at 1.1573, 10DMA line

• Year's low, 1.1522, Oct 12: possible tipping point to Jul 2020 1.14 low

• 14-day momentum bearish and RSI turning over in neutral territory.

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• Touch softer at the base of a 1.3737-1.3765 range - hectic early, then busy

• Early flow on restated hawkish outlook from BoE Governor Bailey nL1N2RD0IG

• UK finance chiefs - supply chain drag for at least another year nL8N2RB4ES

• If supply chain issues persist, chance of rising inflationary pressure grows

• Charts; 5, 10 & 21 day moving averages base or rise, 21 day Bolli's expand

• Momentum studies head north - Friday's mixed signals have turned positive

• Upper 21 day Bolli a good indicator of an overbought market - capped Friday

• 1.3781 upper Bolli now rising, which supports a strategy of buying dips

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• EUR/USD opened 1.1598 after closing 1.1595/1.1600 for 3rd straight day

• It traded up to 1.1602 early before light JPY and USD buying capped

• After easing to 1.1583 it is settling around 1.1590 into the afternoon

• Resistance is at 1.1624, which was last week's high and the 21-day MA

• Support is at the 10-day MA at 1.1575 and break shifts pressure to downside

• EUR/USD struggling to maintain upward momentum due to rising US yields

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• China Q3 GDP +4.9% Y/Y versus +5.2% expected nB9N2R700A

• China Sept data mixed with retail sales better and IP worse than expected nB9N2R700B

• Little reaction in the AUD/USD, which is around 0.7410/20 before and after

• AUD/USD traded 0.7438 earlier when hot NZ retail sales sent the NZD higher

• AUD/USD was down to 0.7410/15 before the China data, as Asian equities slightly lower

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• +0.15%, as BoE Governor Bailey repeated his hawkish outlook nL1N2RD07B

• Asking prices for UK homes up across the board 1st in 14 years nL8N2RB4OV

• Property price inflation is a major problem in most developed countries

• Charts; 5, 10 & 21 day moving averages base or rise, 21 day Bolli's expand

• Momentum studies head north - mixed signals Friday have turned positive

• Upper 21 day Bolli a good indicator of an overbought market - capped Friday

• Upper Bolli now rising, which supports a strategy of buying dips

• Targets a test of 1.3831, 50% of 2021 fall - 1.3623 21 DMA pivotal support

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• EUR/USD trading around 1.1600 after three straight closes at 1.1595/1.1600

• Higher US yields cap while buoyant risk appetite underpins for now

• Resistance is around 1.1625 where last week's high and 21-day MA converge

• A break above 1,1640 would reignite upward momentum and suggest more upside

• Support is at 10-day MA at 1.1575 and break would put pressure on downside

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• NZD/USD traded to 0.7105 after Q3 NZ CPI came in highest in over 10 years nW9N2OR01D

• The hot inflation data will harden hawkish RBNZ expectations and support NZD

• FX market rewarding yield differentials as NZD/JPY spiked 4% last week

• NZD/USD stalling around 0.7100 with 200-day MA at 0.7101 offering resistance

• A clear break above the 200-day MA targets the Sept trend high at 0.7170

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• AUD/USD opens where it closed Friday & Thursday after gaining 1.5% last week

• Heightened risk appetite and strong commodities underpinning trend higher nL1N2RB2MUnL1N2RB0TB

• Rising US yields/hawkish Fed expectations limits upward momentum for AUD/USD

• Resistance at Friday's 0.7440 high and Sept 3 trend high at 0.7477

• AUD/USD trending higher with 5, 10 and 21-day MAs in bullish alignment

• A break below 10-day MA at 0.7351 would ease upward pressure for now

• Key will be Aus bond yields as FX market focussing on yield differentials

• AUD/JPY flows also key after the cross soared over 3% last week

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• USD net spec long steadies in Oct 6-12 reporting period nL1N2RB296

• EUR spec short reduced 3,936, now short 18,398; EUR -0.57% in period

• USD/JPY +1.9% in period, spec yen short grew by 12,940 contracts to -76,634

• GBP +0.29% in period, specs +8,039 contracts short reduced to -11,979

• AUD +0.84% in period, record short reduced by 2,371 contracts to -87,860

• BTC +7.66% in period specs bought 92 contracts now short 1,426

The dollar index eased slightly on Friday but the U.S. currency rallied versus the yen after much-stronger-than-forecast U.S. retail sales nAPN0AVCWF, while the pound also surged as investors focused on divergence in central bank policy expectations.

The retail sales report bolstered existing Fed tightening expectations, but with tapering and a fair amount of late-2022 rate hiking already discounted it provided little impetus for fresh dollar buying.

With the BOE seen well ahead of the Fed on the way to withdrawing pandemic stimulus measures, and the renewed global risk acceptance since Wednesday, the risk-sensitive GBP/USD gained 0.63% this week.

Meanwhile, the BOJ is not only seen maintaining its -10bp policy rate and zero target for JGB yields, but it is also expected to lower its GDP and inflation forecasts at its Oct.
27-28 meeting nL1N2RB0E4.

EUR/USD was marginally lower Friday, weighed down by falling Bund-Treasury yields spreads following the strong U.S. retail sales report and after further indications the ECB will be cautious about removing pandemic supports nL1N2RB1F6.

GBP/USD was up 0.6% nL1N2RB1AK and closer to the 100-DMA that capped September's recovery and the downtrend line from May and September highs, last at 1.3809-19.

GBP/JPY's 1.16% gain Friday highlighted the contrast between BOE and BOJ policy expectations, as well as improved risk-taking favoring the pound and hurting the haven yen.

GBP/JPY's nearly 3% surge this week cleared resistance dating back to 2008 with much broader price objectives possible if the pre-Brexit vote June 2016 high is cleared nL1N2RB1VQ.

USD/JPY was up 0.55%, with a 114.47 high on EBS just shy of 2018's peak and the 76.4% Fibo of the 2016-20 drop at 114.54/55 that has been the main technical target this month nL1N2RB1VQ.

While a logical place for an overbought market to at least consolidate, there is risk up to the mid-118.00s if 115 barrier options are cleared, exposing the short-gamma risk beyond there nL1N2RB149.

The yen is also beset by surging import costs due to pandemic related shortages and price rises, exacerbated by the currency's broad slide to multi-year lows and limited leeway for Japanese businesses to pass along to price-sensitive domestic customers.

Japan's dependence on foreign energy also makes it more vulnerable the multi-year highs in oil and natural gas than the U.S.

AUD/USD and USD/CAD consolidated some the recent dollar losses in pre-weekend profit-taking.

Bitcoin rallied more than 7% on hopes the SEC will allow futures-based ETF trading nL4N2RB0T4, rising above 60k nL1N2RB1FV and closing in on April's record high.
Ether gained about 2.6%, but is still below September's high.

An unexpected drop in the Michigan consumer sentiment reading for October nAQN04R39X provided a staid intro to a quiet upcoming week of U.S. data.
Initial October PMI readings on Friday might be the week's highlight.

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• EUR/USD hits 1.1619 on EBS overnight, lift aided by equity, EUR/JPY gains

• EUR/USD sinks, NY opens near 1.1610, US sales nL1N2RA2BM extend slide

• Rise in US rate complex EDU2US10YT=RR lift the US$, EUR/USD hits 1.1589

• US$ weakens slightly, EUR/USD lifts and nears 1.1600 late in the session

• Daily doji candle forms, suggests indecision; EUR/USD above 10-DMA however

• EUR/USD also consolidating short-term rally & monthly RSI now rising

• Shorts face near-term risks but should benefit long-term nL1N2RB1F6

• For more click on FXBUZ

MUFG Research warns of a scope for an an abrupt correction lower in USD/JPY.

"The scale of JPY selling is looking excessive and while a break through 115.00 is still possible the risks of an abrupt correction lower are increasing," MUFG notes. 

"As can be seen below, the 1mth percentage change in USD/JPY divergence with the percentage change in DXY is at an extreme that looks unsustainable. A degree of USD/JPY correction lower and DXY higher tends to be the end result when these extreme divergences in performance emerge. In June 2020, a technical break of 110.00 fuelled the divergence, similar to the technical break of 112.00 on this occasion," MUFG adds. 

• EUR/USD rallies overnight but halted near the Oct 14 high & 21-DMA

• Sellers emerged on the pair gave back all of the overnight gains

• EUR/USD is now down small on the session & a daily inverted hammer forms

• Long upper wicks on recent daily candles imply rally sellers are in charge

• EUR/USD shorts need below the 10-DMA, 1.1565/75 zone for greater control

• Move through those supports suggests October's low is in play

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ING Research discusses EUR/USD outlook and sees a limited scope for further upside around current levels.

"EUR/USD remains almost solely driven by dollar dynamics and the lack of any clear idiosyncratic upside catalyst for the euro is likely limiting the pair’s upside," ING notes. 

"In EUR/USD, we think the rebound could follow a similar path to that seen in the first days of October, therefore stalling around the 1.1640 level," ING adds. 

There's been good demand for implied volatility on dips, especially USD/JPY, and for the 2-month expiry date, which captures a host of December's key central bank policy decisions.

USD/JPY erased 113.00-114.00 option barriers, but 115.00 is much bigger.
If broken, related short gamma will be exacerbated by a significant drop in the size of existing vanilla option positions above, potentially fuelling short covering and more volatility. nL1N2RB0KH

Implied volatility is already retesting the week's highs, but from a mid-6 handle, it's got room to run.
One-month JPY puts demand a rare premium to calls, which can boost implieds if USD/JPY keeps rising.

EUR/USD settles around 1.1600, and although downside premiums have eased, they remain intact.
Implied volatility has been bought on dips, especially 2-month, which captures December 15/16 U.S and European Central Bank decisions, with their risk of increased volatility. nL1N2RB0J7

GBP/USD vols also bought on dips, with 2-month favoured for its December 16 BoE inclusion. nL1N2RB0WE

One-week lira options captured Turkey's policy decision, but the market seems ready for further cuts and lira losses. nL1N2RB0IM

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Bank of America Global Research discusses USD/JPY outlook and maintains a structural bullish bias and long exposure in spot with a revised target at 117 (from 115).

"We raise the target for our long USD/JPY trade to 117.0: Supportive factors: seasonal rise in energy imports, policy divergence, potential rise in FX hedge in foreign investors' JP equity investment. Technicals see risk of a tactical dip but also a structural uptrend," BofA notes. 

"JPY tends to appreciate in risk off only when the trigger is a demand shock that forces the Fed to loosen policies. Supply shocks and inflation pressures today force the Fed to start looking towards policy tightening instead, which is positive for USDJPY as the BoJ remains on hold," BofA adds. 

Credit Agricole CIB Research discusses AUD outlook and highlights 2 reasons for staying cautious on the currency around current levels.

"The deal between US Democrats and Republicans to extend the debt ceiling and avoid a sovereign default has led to a rally in risk and the AUD and less so the NZD. The AUD has also been helped by a rally in iron ore post the Golden Week holiday period in China," CACIB notes. 

"We are not completely convinced by this rally just yet. First, the US debt ceiling deal has simply kicked the can down the road. Second, while our China economist expects electricity rationing to have peaked in September, China will still likely hold back steel production for longer than usual during winter in order to keep the air around Beijing clear for the winter Olympics," CACIB adds. 

• EUR/USD 1.1599-1.1619 EBS in Europe after 1.1589-15 Asia

• Hedging for today's EUR 825mln 1.1600 expiries may be influential

• Today's close key in relation 200-WMA 1.1573 and weekly cloud base 1.1558

• Pair dropped 8% to 1.0636 after last similar cloud break

• In the middle of a market boom EUR/USD should fall nL1N2RB0LK

• U.S. Sep retail sales 12.30GMT f/c -0.2% mm, +0.5% ex autos, control +0.4%

• Michigan sentiment for Oct eyed higher, inflation expectations in spotlight

• In the middle of a market boom EUR/USD should fall nL1N2RB0LK

• 
  

• GBP/JPY reaches 157 after vaulting 156.60 (February 2018 high)

• 157 is the highest level since the Brexit referendum in June 2016

• GBP/JPY was trading below 153 at the start of this week

• Yen has also fallen heavily against other major currencies this week

• BUZZ-Japan is being backed into a corner on weak yen nL1N2RB0I9

• Good example of why candle signals need next day confirmation

• A long upper shadow Thurs warned that demand was fading

• Early Friday and the shadow negated by a strong rebound

• A close above the 55DMA, 1.3734, needed to strengthen the bull bias

• Weekly action banging up against the cloud top, 1.3750

• Bulls target 1.3831, 50% Fibo off recent 1.4250-1.3412 drop

  For more click on FXBUZ

• USD/JPY bulls focus is now on the major long-term 114.53 Fibonacci level

• 114.53 Fibo is a 76.4% retrace of the 118.66 to 101.18 (2016 to 2020) fall

• A break and weekly close above 114.53 Fibo will accelerate further up

• Tuesday's 113.00 low limited the downside, our bid is now at 113.10

• Previous 112.40/23 (2019/2020) highs should now revert to support levels

• Fourteen-day momentum remains positive, reinforcing the bullish bias

• EUR/JPY has seen a 131.85-132.58 range so far. USD/JPY Trader TGM2336

• Expectation is that the recent recovery attempt will likely be limited

• But the recent daily close above the tenkan line at 1.1573 is a concern

• There is still a good chance of an eventual drop to the 1.1493 Fibo

• 1.1493: 50% retrace of the 1.0636 to 1.2349 (2020 to 2021) rise

• We remain short at 1.1585 in anticipation for losses to 1.1350

• Dollar's drop could potentially damage the uptrend nL1N2R936Z

• EUR/USD Trader TGM2334. Previous update nL1N2RA0AS

• Down trend still alive but Thurs hammer offers some hope for longs

• Long lower candle shadow bullish but signal needs Frid confirmation

• Price pulled up 5-pips shy of the key 0.8450 Aug and 2021 low

• Initial resistance to overcome at 0.8498 10DMA and 0.8518 Oct 12 high

• 14-day negative momentum slowing and RSI is turning higher

• Nov 1 0.8557-0.8559 cloud twist might start exerting influence

• We maintain an 0.8504 long play for high 85s with 0.8445 stop

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