FOREX PRO WEEKLY, January 16 - 20, 2017

Sive Morten

Special Consultant to the FPA
Messages
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Fundamentals

(Reuters) - The U.S. dollar edged lower on Friday, putting in on track for its worst week since early November against a basket of currencies as traders grew uneasy about the scarcity of new information regarding U.S. President-elect Donald Trump's economic policies.

The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.16 percent at 101.190. The minor gains combined with losses on Wednesday and Thursday to lead to a roughly 1 percent drop for the week.

The index had gained earlier Friday, and the dollar had risen as much as 0.6 percent against the yen to a session high of 115.44 yen, after the Commerce Department said retail sales increased 0.6 percent in December and November's sales were revised up to show a 0.2 percent rise.

The gains wore off, however, and the dollar was last down 0.11 percent against the yen at 114.58 yen. The dollar was set to drop 2 percent against the yen for the week to mark its worst weekly showing since late July 2016.

"We're having a pretty profound risk-off sentiment percolating through the currency markets," said Karl Schamotta, director of FX strategy at Cambridge Global Payments in Toronto. "There is just a paucity of information around (Trump's)deregulation, tax reform, and fiscal stimulus plans."

The dollar tumbled on Wednesday and Thursday, and hit five-week lows against the euro, yen and Swiss franc on Thursday, on disappointment that Trump did not address pro-growth economic policies at his first news conference since his Nov. 8 election victory.

The dollar index, which also hit a five-week low Thursday, had rallied 4 percent between the election and Jan. 11 on expectations that Trump's policies would boost inflation and encourage the Federal Reserve to raise interest rates.

Analysts said the dollar would likely trade within a range until Trump's policies became clearer. Trump is set to be sworn in as president on Jan. 20.

"Right now, (traders) are probably waiting for the inauguration, to what type of speech President-elect Trump presents," said Joseph Trevisani, chief market strategist at WorldWideMarkets in Woodcliff Lake, New Jersey.

The euro was last up 0.3 percent at $1.0640 after touching a session low of $1.0597 after the U.S. retail sales data. The euro was set to post its best week against the dollar since early November with a roughly 1 percent gain.


Now - very interesting article on Yen perspectives:
BoJ – trusting to luck
by Fathom Consulting

In November, the BoJ got a lucky break as markets anticipated a more rapid tightening from the US Fed, and the yen fell back. But relying on lucky breaks is not a sustainable strategy – Abenomics must change radically or be abandoned. Japan’s economy is weighed down by debt and its policymakers must reduce that burden or accept another lost decade.
USDJPY.jpg

Despite appreciating sharply in the first three quarters of 2016, the Japanese yen ended the year just 3% higher against the US dollar. Expectations of policy divergence, as well as a more ‘risk-on’ environment, appear to be the driving force behind the coveted depreciation that took place in November and extended into mid-December.

To date, Mr Trump’s election victory has not been the disaster that many had feared. His promise to enact a ‘fiscal splurge’ has fostered expectations of higher US inflation and a faster pace of US interest rate tightening. Together with the Bank of Japan’s commitment to keep yields on ten year Japanese Government Bonds (JGBs) at zero, this has seen the spread between US treasuries and the Japanese benchmark widen considerably.

But there remains a significant risk that Mr Trump’s protectionist campaign rhetoric will become reality, upsetting the apple cart and sending the safe-haven yen soaring once again. The Bank of Japan cannot rely on the policy whims of its rate-setting counterparts to slay its deflationary behemoth and end decades of economic malaise. Depending on lucky breaks is not a sustainable strategy.

We stand by our view that helicopter money, meaning a money-financed fiscal expansion, will prove to be Japan’s only real option. When the nation’s problems began in the late 1980s, its government debt stood at a little under 70% of GDP. After more than two decades of failed public works, that ratio has reached just over 230%. With tepid growth, and muted inflation, this money will never be repaid.

The solution cannot be more debt — whether government, corporate or household. And in a desperate bid to stimulate demand, the Bank of Japan’s interest rate strategy has done more harm than good — progressively undermining the supply side of the economy by preventing the gales of creative destruction. Japan, and other economies following in its footsteps, need to move from a high-debt/low yield equilibrium to a normal debt/normal yield equilibrium.

COT Report

COT Report doesn't show big changes in sentiment on EUR. Net speculative position stands bearish, but not extremely. Last week some shorts were closed and replaced by longs as position dropped for 5 K contracts, while open interest has contracted just for 1 K contracts. But this change is not very significant and typical for retracement action. Thus, CFTC data does not bring something special or really new to our analysis.
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Technical
Monthly


Right now we know that fundamental background mostly looks bearish for EUR - Potentially more hawkish Fed policy, ECB QE prolongation, coming elections in many EU countries, bringing more uncertainty. After GB, separatistic sentiment start to appear in other countries of EU, as Italy, France, Netherlands, Spain that are not satisfied with Brussels domination in governing EU.

So as New year is going to start, we will take a look at big picture and also bring new yearly pivots numbers.
Yearly Pivot (YPP) stands at 1.0828 area, YPR1 = 1.1305, YPS1 = 1.0040. Last one has major importancy for us. It is interesting that 2017 YPS1 coincides with parity.

January stands as inside month by far and mostly has no impact on monthly chart yet. The only pattern that we could watch here is possible bearish grabber is January will climb slightly higher and touch MACDP line.

On a way down, guys, EUR has passed through all major Fib levels. Last one was at 1.12 area and now we do not have any below current market. Also price has dropped below 1.27 extension of this big butterfly. Thus, on monthly chart the only logical destination point stands at parity - 1.618 butterfly extension, chanell trend line support and YPS1.

Among other patterns that we have, we could mention bearish dynamic pressure. But mostly it has completed it's target as 1.05 lows has been taken out.

Also take a look at different behavior near low border of channel. Previously when market has touched it - it shows immediate upside pullback, it was V-shape reversal. Right now behavior is absolutely different, price just hangs on the border and shows no upside action. Any tight consolidation near trendline could become a sign of coming breakout.

Thus, based on monthly chart we could make two major conclusions. First is - real bullish trend will be re-established only when EUR will erase reversal candle and overcome its top above 1.16. Our next target on Monthly chart is parity - 1.618 Butterfly extension, YPS1 and trendline support.

In general guys, we think that steps that already have been announced by ECB and Fed should be enough to push EUR right to parity during "price-in" process, when market will "anticipate" them. But further dynamic will depend on real action from Fed, Trump administration and ECB. How they will fulfill their promises and obligations. Any surprising hawkish measures could push EUR even below parity, while step out from pormises could lead to appearing of reverse H&S pattern on monthly/weekly charts.

In shorter-term perspectives, as we've come to conlcusion that EUR could show deeper upside retracement, our attention is attracted by YPP, that stands at 1.0830 area. This is , in turn, logical destination for short-term upside retracement, as we said earlier:
eur_m_16_01_17.png


Weekly

Trend is bearish on weekly chart, but market is not at oversold. In short-term perspective we've got important pattern last week - bearish stop grabber. This pattern suggests taking out of 1.0350 lows, if it will not fail, i.e. if market will not continue upside action. Thus, in short-term perspective we will watch for two moments - continue tracking of upside bounce on daily chart, but also will take a look at it through the prism of our weekly grabber. If we will see some hints on reversal, it could mean that grabber will trigger downward action...

With big picture on weekly chart we have 2 major patterns - butterfly and inner AB-CD pattern. Now market shows reaction on 1.0 extension target.

Final destination 1.618 point coincides with 1.618 butterfly target. Although we have multiple targets inside 1.0-1.05 area, ther are all minor ones. Recall, that we have daily 1.0230 extension. Also, if you will take a careful look, you could recognize another smaller butterfly inside right wing here. It also has target at 1.02 and 1.013.

But, guys, if EUR will be on a road to parity, all these intermediate targets will be hit very fast one by one.
Also, it is not very probable that market will stuck around 1.27 butterfly and will not go to parity. By two reasons - first is, pshychological pressure, second - when price will hit 1.27, it will be between 1.0 and 1.618 extensions of AB-CD pattern and this position is very unstable, market gravitates to some target... That's why parity probably should be hit.

And after that most interesting thing will come. Take a look that butterfly could become part of large reverse H&S pattern. But whether it will be formed or not will depend on fundamental factors, D. Trump ficsal policy, US economy data and Fed reaction. Thus, we have more or less single road to parity, but later, around it we will get a crossroads...If there will be something bearish that wasn't priced in yet - EUR could drop even further. If not - H&S will start to form...
eur_w_16_01_17.png


Daily

On daily chart price action looks heavy. EUR has changed market mechanics in favor of 2-leg upside retracement, but it looks rather weak to show this 2-leg retracement. Although price stands above MPP, but is stuck below 1.0670 Fib level. Now we know that this top is important since this is weekly bearish grabber pattern. Despite new top, price still has closed inside of previous retracement swing...

Daily nearest target stands around 1.02 - 1.0220 area - butterfly extension and 1.618 AB-CD objective point. Overall upside action looks heavy and not impressive. Existence of untouched important targets makes chances on solid upside bounce phantom. Now it is interesting whether market will be able to move at least to YPP and 1.0850 area. Currently it is difficult to bet on this event.

eur_d_16_01_17.png


Intraday

We mostly are not interested in bullish trades on EUR and mostly searching chances for short entry. Although upside action looks very fragile and not reliable, EUR still somehow keeps valid as butterfly pattern, as theoretical chances to form reverse H&S pattern.

At the same time, as you can see - EUR has failed to break minor Fib level and WPR1. As WPR1 has held upside action, it confirms retracement quality of current upside action. Besides, the shape of this action itself looks like retracement.

Thus, on coming week we will look for upside breakout. If this will happen - EUR will keep chances on upside continuation to 1.0850 area. Theoretically chances still stand here - EUR has formed multiple bullish grabbers, that suggest upside continuation. But...
eur_4h_16_01_17.png


Take a look, what we have on hourly chart. I have strong doubts that EUR will turn back to upside action. Long shadows right before closing of sessions suggest solid sell-off. Right after that high wave doji has been formed and then it was broken down. May be I'm overvalue its meaning, but I suspect that this could be important detail for price action on next week. It is possible that precisely this action will become the first nail in the coffin of upside retracement.
eur_1h_16_01_17.png



Conclusion:

In a big picture, we think that announced measures by ECB, Fed and D. Trump administration will be gradually priced-in and this should be enough to push EUR to parity. Further action will depend on fulfillment of their promises and new factors that will appear.

In short-term perspective, It seems EUR stands in last effort on it's exhausting uspide power to hold on a road to 1.0850 destination point. We will not be surprised if EUR will fail to pass through 1.0670 resistance, since even right now some signs of weakness have appeared around.
As we do not want to trade EUR up, we continue to monitor chances to go short, especially if EUR will fail to move higher and weekly grabber will start to work...



The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
 
Good morning,

(Reuters) - The pound hovered near three-month lows versus the dollar on Tuesday and stocks were mostly weaker as investors waited for British Prime Minister Theresa May to lay out plans to exit the European Union amid fears Britain will lose access to the single market.

Safe-havens such as the yen, gold and Treasuries gained in turn.

According to her office, May will say in a speech later in the day that Britain will not seek a Brexit deal that leaves it "half in, half out" of the EU. She is due to set out her 12 priorities for upcoming divorce talks with the bloc.

Those priorities will include leaving the EU's single market and regaining full control of Britain's borders, media reported, reinforcing fears of a 'Hard Brexit' which has pushed the pound to some of the lowest levels against the U.S. dollar in more than three decades and weighed on other riskier assets.

Sterling hovered around $1.2070, in striking distance of $1.1983, its lowest since Oct. 7 struck the previous day.

Growing uncertainty over the policies of Donald Trump have also hurt equities, which had rallied in many parts of the world thanks to speculation that the U.S. President-elect would enact bold stimulus and reflationary measures once in office.

"Markets affected by the twin political black swans of 2016 - the Brexit vote and Trump win - remain volatile and uncertain," wrote David Croy, senior rates strategist at ANZ.

"Europe is going to be dominating the headlines today, and the focus is justifiably on May's speech, and also on the interviews that Trump gave to European newspapers," said Stefan Worrall, director of Japan equity sales at Credit Suisse in Tokyo.

The euro nudged up 0.3 percent to $1.0642 to pare most of its overnight losses.

The yen benefited from its safe-haven status, gaining versus the dollar, euro and sterling.

The dollar was down 0.3 percent at 113.790 yen having gone as low as 113.610 the previous day, its weakest since Dec. 8. The greenback also pulled back against the Swiss franc, another currency sought out when risk sentiment sours.

The Australian dollar was up 0.3 percent at $0.7499 , inching back towards a one-month high of $0.7519 reached last week on the back of higher iron ore prices.


So, we continue to discuss EUR today, as we see new details on intraday charts. On daily picture mostly we have the same situation, but, as you can see - price is coiling below resistance. This is potentially bullish sign, since usually market stands tight under resistance, when it intends to challenge it.
Mostly this agrees with "2-leg" retracement idea and existence of multiple targets around 1.0820-1.0840 area. At the same time this absolutely doesn't cancel medium -term bearish view...at least by far.
eur_d_17_01_17.png


Recall our conclusion from weekly analysis - "it is good that we have bearish grabber on weekly chart, but it is not sufficient. We need real confirmation of reversal on intrday charts. Until we will not get them, we can't go short".
But right now EUR really has a problem with bearish patterns and currently we do not see any signs of reversal on horizon. Or it is better to say - EUR forms bullish signs.

Take a look that we have definite signs of acceleration inside butterfly. Right now EUR stands above MPP and WPP, which was tested yesterday, btw. And it forms bullish flag right under 1.0670 resistance. It could mean that EUR is preparing for upside breakout. Next target will be 1.27 butterfly and inner AB=CD around 1.0735. Since this level stands very close to daily overbought, hardly EUR will pass it today.

But potentially, we can't exclude reaching of 1.0840 area - Fib level, YPP, 1.618 butterfly destination...
eur_4h_17_01_17.png


That's being said, currently it seems that upside action is more probable that downward reversal. Only if EUR will break flag down and drop below WPP - this could bring us back to discussion of downward continuation.
But, to be honest, guys, I think that EUR could climb higher right till innaguration day, since it brings a lot of uncertainty and those who still keep shorts on EUR, could unwind their positions a bit...
 
Good morning,

(Reuters) - The dollar took a breather on Wednesday after falling to a seven-week low against the yen as investors await Federal Reserve Chair Janet Yellen's speech on monetary policy, while sterling gave back some of the previous session's rally.

The greenback added 0.4 percent to 113.05 yen , after hitting a seven-week low of 112.57 yen. The yen had strengthened for seven straight sessions.

The dollar index, which measures it against a basket of six major peers, last stood at 100.50, up 0.2 percent, after falling to 100.26 on Tuesday, its lowest since Dec. 8.

The euro slipped 0.2 percent to $1.06970 , after it hit a high of $1.07195 on Tuesday, its highest since Dec. 8.

Yellen's speech later on Wednesday, to the Commonwealth Club in San Francisco, could offer clues about the direction of policy.

San Francisco Federal Reserve Bank President John Williams on Tuesday said he sees a "good case" for three rate hikes this year even without any fiscal stimulus, but if the economy accelerates, the Fed would need to raise rates faster.

Fed Governor Lael Brainard on Tuesday joined the growing chorus of policymakers at the Fed warning that sustained wider budget deficits could fuel inflation.

Investors also awaited the U.S. consumer price index due later on Wednesday. According to a Reuters survey of economists, the CPI probably advanced 0.3 percent last month after gaining 0.2 percent in November.

Sterling slipped 0.6 percent to $1.2341, a day after posting its biggest one-day percentage gain since at least 1998 after British Prime Minister Theresa May outlined her 'Brexit' plans.

May pledged to hold a parliamentary vote on whatever deal Britain eventually reaches to leave the European Union. As expected, May said Britain will pull out of the EU's single market when it exits the bloc and not look for a compromise deal to retain some of its benefits.

Sterling rose by about 3 percent against the dollar on Tuesday, touching $1.2416, its highest level in nearly two weeks.

However, some analysts say much of pound's gain was due to the dollar's broader fall.

"Markets cannot be too optimistic about the UK parliament having the final vote. Brexit, hard or not, will weigh on the UK economy," said Masashi Murata, currency strategist at Brown Brothers Harriman.

"The pound is still on a downward trend according to the technical analysis, compared to the highs marked in September and December last year," Murata added. The sterling marked highs of $1.3445 in September and $1.2775 in December 2016.

On Tuesday, a sell-off in the dollar had deepened as U.S. traders returned from a long weekend after Martin Luther King Jr Day and reacted to President-elect Donald Trump's weekend comments. In an interview with the Wall Street Journal, Trump said U.S. companies "can't compete with (China) now because our currency is strong and it's killing us."

The dollar had surged at the end of 2016 on expectations that Trump's proposed fiscal stimulus would boost growth and inflation. But on the other hand, Trump has also continued to strike a harsh tone toward Beijing, and his protectionist rhetoric is beginning to play a larger role in investors' expectations.

A senior adviser to Trump also warned on Tuesday about the risk from a stronger dollar. Anthony Scaramucci of Skybridge Capital said "we need to be careful about the rising currency" at the World Economic Forum in Davos.

Junya Tanase, chief forex strategist at J.P. Morgan in Tokyo, said "If the U.S. government officials further talk down the dollar, the greenback could weaken and the correlation to the interest rate differentials may end."

Higher U.S. Treasury yields had fuelled demand for the dollar relative to currencies such as the euro and yen.


While our scenario on EUR is still forming - EUR moves upward, as we've suggested yesterday, it makes sense to take a look at AUD. Here we could get nice short-term setup.

On daily chart we have nice upward thrust that is good background for DiNapoli either B&B or DRPO pattern. Aussie stands at resistance right now - 5/8 Fib level, OB, WPR1 and AB-CD minor target, which creates an Agreement resistance. Thus, some short-term drop is possible.
Right now it is difficult to suggest what particular pattern will be formed. Fast upside action stands in favor of B&B, but strong resistance, reversal swing and possible shape of reverse H&S mostly looks supportive for DRPO pattern:
aud_d_18_01_17.png


That's why first we will watch for 0.74 K-area. If market will reach it - this will trigger B&B pattern, otherwise AUD will form DRPO that could lead price right to 0.7315 Fib support:
aud_4h_18_01_17.png


On hourly chart AUD has formed butterfly Sell that could finalize upside action and later turn to H&S pattern. So, mostly all preliminary action has happened, no we need to monitor how signal itself will be formed:
aud_1h_18_01_17.png
 
Good morning

(Reuters) - The dollar kept broad gains against its major rivals on Thursday, after rebounding sharply overnight on comments by Federal Reserve Chair Janet Yellen suggesting U.S interest rates could be raised quickly this year.

The dollar's rise, however, was tempered as traders were cautious ahead of U.S. President-elect Donald Trump's inauguration on Friday.

The greenback was little changed at 114.670 yen. The U.S. currency rallied nearly 2 percent the previous day, when it pulled ahead from a seven-week low of 112.570 and snapped a seven-day losing streak.

The pound, which had jumped 3 percent on Tuesday to vault above $1.2400 following British Prime Minister Theresa May's Brexit speech, lost more than 1 percent overnight. It last traded at $1.2277, up a fraction on the day.

The euro was flat at $1.0638 after falling 0.8 percent the previous day.

The dollar was given a lift as U.S. debt yields pulled away from seven-week troughs and rose after Yellen said on Wednesday that "waiting too long to begin moving toward the neutral rate could risk a nasty surprise down the road - either too much inflation, financial instability, or both."

"Yellen's comments were not particularly new, but it helped participants buy back the dollar which had sunk low along with Treasury yields," said Shin Kadota, senior forex strategist at Barclays.

"But the dollar is making less headway from these levels with Trump's inauguration looming. The Fed is poised to hike rates successively, but monetary policy would also depend to a large degree on Trump's policy specifics."

The market's more immediate focus was on the confirmation hearing of Steve Mnuchin as U.S. Treasury Secretary later on Thursday.

Dollar bulls are wary of Mnuchin, who will be in a position to influence the Trump administration's currency policy, potentially expressing concern about a strong dollar.

The dollar benefited soon after Trump's stunning U.S. election win in November, boosted by hopes that he would embark on fiscally expansionary policies and prompt the Fed to follow through with a succession of rate hikes.

But the greenback has lost momentum lately as financial markets have also begun focusing on other aspects of a Trump administration that may not bode well for the currency.

"The best case scenario for the dollar is if Trump provides specifics for this stimulus policies at the inauguration. On the other hand, the worst scenario would be Trump expressing a protectionist stance," said Koji Fukaya, president at FPG Securities in Tokyo.

The dollar index against a basket of major currencies was up 0.3 percent at 101.250. It rose to a 14-year peak of 103.82 at the start of January before going as low as 100.260 on Tuesday.

The Australian dollar was up 0.1 percent at $0.7514 after sliding 0.8 percent the previous day.

The dollar's broad bounce has knocked the Aussie away from a two-month peak of $0.7569 reached on Tuesday. The currency was lifted earlier in the month thanks to higher commodity prices.

The New Zealand dollar inched up to $0.7135 after dropping 1.2 percent overnight. The kiwi had touched a one-month peak of $0.7219 on Tuesday.


As markets stand rather exciting while D. Trump innaguration is looming - this leads to a bit nervous activity and generates a lot of trading setups. Today we will take a look at CAD.

On daily CAD we have B&B "Sell" setup - thrust down, market has closed above 3x3 and reached major Fib level. But this is a bit tricky pattern, as price action on bottom mostly shows DRPO market mechanics but not B&B. Just watch video - there we've given detailed explanation of this moment...
As a result, we have not quite ordinary B&B, but a bit tricky pattern. You can see how fast market has jumped up and it is difficult to take short position against this jump, although CAD stands at Fib resistance and WPR1:
cad_d_19_01_17.png


When we have this kind setups, we need to take a look at lower time frame. Here you clearly could recognize mostly reversal pattern, some kind of Double Bottom. It means that we should not go short blindly, just because CAD has reached Fib resistance, but watch for 2 moments - reaching intraday targets and appearing of reversal pattern.
4-hour chart shows 2 targets - 1.618 and 2.0 I would bet on 2.0, by 2 reasons. First is - upward action is too fast, and probably CAD will move slightly higer. Second - 2.0 target is typical for Double Bottoms. Finally, this target stands at 1.3340 - around daily 50% FIb resistance. As we've said - price action mostly has features of DRPO rather than B&B, and minimal target of DRPO stands precisely around 50% level. Currently target of B&B stands around 1.3115, but it will drift slightly higher, if CAD will complete 1.3340 destination point.
cad_4h_19_01_17.png


Final step is to get reversal pattern. For that purpose we need hourly chart, but right now we have nothing there, only strong upside thurst. That's being said, our perfect setup for entry will be formed if we will get reversal pattern on hourly that will finalize upside action right to 1.3340 area and complete AB-CD 2.0 target. This will be good setup for B&B. Let's watch over it.
 
Good morning,

(Reuters) - The dollar lost momentum on Friday as U.S. Federal Reserve Chair Janet Yellen spoke of a gradual pace of rate hikes and sounded less hawkish than some had expected, while investors braced for U.S. President-elect Donald Trump to be sworn in.

The dollar index, which tracks the greenback against six major currencies, fell 0.2 percent to 100.97. It was on track to shed 0.2 percent for the week.

The dollar came off peaks after Fed Chair Yellen spoke at the Stanford Institute for Economic Policy Research in early Asian trading hours.

Yellen noted the U.S. central bank should continue to raise interest rates slowly to keep inflation low and jobs plentiful and avoid harming the recovery the Fed has sought to nurture.

"Yellen did not particularly talk about speeding up the pace of rate hikes, which may have sounded as less hawkish for some," said FPG Securities President Koji Fukaya.

The dollar index had hit a high of 101.73 on Thursday on upbeat U.S. job and housing data, with homebuilding rebounding sharply in December as a firming economy boosted demand for rental housing. The number of Americans filing for unemployment benefits also dropped unexpectedly to near the lowest levels in decades.

Investors are now awaiting the inauguration of Trump later on Friday for catalysts.

"The dollar could fall if Trump pushes forward his protectionist rhetoric in his inauguration speech," said Minori Uchida, chief FX analyst at Bank of Tokyo Mitsubishi UFJ.

"Some investors also expect more details on his policies, so the dollar could also slip if Trump does not mention any specifics."

The dollar was last down 0.1 percent against the yen at 114.75 yen, on track for a weekly gain of 0.2 percent. The greenback retreated from a one-week high of 115.63 yen marked on Thursday, helped by the strong U.S. data and resulting rise in Treasury yields.

The 10-year U.S. Treasury yield spiked to a high of 2.496 percent on Thursday, but came off a touch after Yellen's speech. It last stood at 2.461 percent.

The euro gained 0.2 percent at $1.0679, adding to the rebound on the previous day after the announcement from the European Central Bank. It was up 0.3 percent for the week.

The ECB announced it would maintain its negative interest rate policy and continue its record pace of asset purchases to stimulate growth.

The euro had briefly dropped during a media conference with ECB chief Mario Draghi, who pointed to sagging inflation and the need for further monetary policy stimulus in Europe.

The euro slipped to $1.0589 during Draghi as spoke on Thursday, then rebounded as he noted no policy changes. The euro last stood at $1.0659.

Reaction was limited to a batch of data out of China on Friday. China's economy grew 6.8 percent in the fourth quarter from a year earlier, slightly more than expected, supported by higher government spending and record bank lending that has stoked concerns about an explosive rise in debt.


Currently, guys, to be honest is not a big deal what currency to discuss - market across the board stands quiet and wait for D. Trump speech. We have different setups that we've discussed on current week - AUD, JPY, CAD, EUR, but all scenarios will be triggered (or fail) depending on what Trump will say. Currently we could make only single suggestion - if he will say nothing, then, probably, this will be negative for USD...

Right now on EUR we have 2 things. First - we treat current upside action as retracement, and EUR is still could reach 1.0840 target. But to break current bearish tendency EUR will have to move above 1.16. Currently we think that this is hardly achievable. It means that as this euphoria or better to say histeria will calm down a bit, markets should return back to normal action and downward trend will continue. Our next target on daily chart is the same - 1.02-1.0220:
eur_d_20_01_17.png


On 4-hour chart EUR holds upside tendency, our butterfly, inner AB=CD are still valid. But we need to make 2 remarks here. First one is about targets -take a look that price has not quite reached them. I mean nearest ones around 1.0730. Definitely Trump speech should bring some volatility on markets, and it seems that 1.0730 should be completed, at least by some spike or occasional volatility jump.
Reaching of next 1.0840 target still stands under question, because it will depend on what Trump will say.

Second moment - price behavior still stands bullish. EUR has broken flag and Fib resistance to upside, later it has re-tested flag's border and WPP and now stands above it. That's why currently we can't say that EUR has lost all chances to go up. Here bullish setup is still valid:
eur_4h_20_01_17.png


But market can't stay in contraction mode forever, it will need the relief and probably it will happen sooner rather than later. EUR stands in narrowing wedge pattern. The shape of this wedge stands in contradiction to coming innaguarion event, that oppositely should bring volatility. So, it could happen that breakout will happen today... let's see.:
eur_1h_20_01_17.png
 
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