FOREX PRO WEEKLY, July 03-07,2017

[Sive Morten]

Fundamentals


(Reuters) - The U.S. dollar recovered slightly on Friday, but posted its biggest quarterly decline against a basket of rival currencies in nearly seven years after hawkish signals from foreign central banks this week pressured the greenback further.

Investors have ramped-up expectations for tighter monetary policy from the European Central Bank, Bank of England and Bank of Canada after hints from officials this week.

This has made the greenback less attractive, in addition to skepticism that the Federal Reserve would be able to raise interest rates again this year given a recent batch of weak U.S. economic data and doubts that U.S. President Donald Trump could enact his pro-growth agenda.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, declined about 4.6 percent for the second quarter to mark its steepest quarterly percentage drop since the third quarter of 2010.

The euro accelerated more than 7 percent against the greenback for its biggest quarterly percentage gain since the third quarter of 2010. The euro racked up about 2 percent of its gains and the dollar index posted about 1.6 percent of its losses this week alone. The dollar gained about 1 percent against the Japanese yen over the quarter.

"What really gave the hawkish central banks extra punch was how it seemed to be a coordinated effort to signal a shift away from low-rate policies," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

He said improving economic growth in Europe and Canada opened the door for those comments and was "a reality check how the U.S. isn't standing head and shoulders above everyone else."

Analysts said Friday's bounce for the dollar came as some traders likely took profits on gains in the euro as well as the sterling. The dollar fell against the Canadian dollar, however, and was last at C$1.2971 after touching a nearly 10-month low of C$1.2948 earlier.

"It appears as though the euro and the pound could be testing some resistance levels, and that could also contribute to ... the profit-taking," said Eric Viloria, currency strategist at Wells Fargo Securities in New York.

Fathom StRRiM rises to its highest level of the year
by Fathom Consulting

The Fathom StRRiM (Sterling Relative Risk Metric) has risen to its highest level this year, as uncertainty over monetary policy has added to existing political uncertainty.

Following this month’s Bank of England MPC meeting, and the announcement that three MPC members had voted to increase interest rates, last week we received important speeches from two MPC members. First, Governor Carney stated that “now is not yet the time” to begin raising rates. Indeed, he spoke of wanting to assess evidence “over the coming months”, suggesting that, for now at least, he is not minded to vote for tighter policy any time soon. The pound fell and short sterling interest rate futures rallied as markets pushed back expectations of an imminent rate rise. However, Bank Chief Economist Andy Haldane followed up with a hawkish speech on Wednesday, where he argued that a reversal of the 25 basis point cut enacted after the Brexit vote last year would be “prudent relatively soon”. Markets changed course once again, and are now fully pricing in a 25 basis point increase in interest rates by the middle of next year.

In our central view, UK monetary policy is on hold for at least the next two years. Nevertheless, we do see a risk that last year’s futile 25 basis point post-referendum cut is reversed. With the UK macroeconomic outlook set to deteriorate through the second half of this year, any modest tightening would need to happen sooner rather than later. On that basis, August would be the most likely month for a move.

All three major components of StRRiM — foreign exchange, fixed income and equities —are now in positive territory, meaning that relative risk in all sterling markets is higher than the norm. With heightened political uncertainty likely to remain for some time, the metric is likely to remain elevated until the future of monetary policy is resolved.

COT Report

Recent report doesn't show any change yet in sentiment, as it stands on 27th of June, while recent rally has happened later, at the end of the week. Still, even some moments that we see there point on some "indecision" situation. Take a look how open interest has dropped in last two weeks, while net short position mostly stands the same. It means that longs and shorts were closed approximately at equal values. It will be interesting to see how sentiment will change in next report:

Technicals
Monthly

Today, guys, we just can't ignore changes that we see on GBP. Even Fathom consulting has changed its opinion and now suggests that some short-term tightening could happen, starting in August. At the same time they talk that this will not be full cycle, but 1-2 hikes, because overall situation in UK economy is not very positive.

At the same time possible upside action not harm overall bearish technical picture on monthly chart. In fact Cable could show very high retracements there and they still will be just retracement. Action to YPR1 around 1.4240 will be just minor retracement up. To break overall bearish picture here price should exceed 1.72 C point. Hardly this happen very soon.

Upside target that we can estimate right now here is double of harmonic retracement, which mostly coincides with 1.42 Yearly Pivor Resistance 1 area.

That's being said price could take a pause in long-term downside action for few months, may be even till the end of 2017 due coming events that we've just discussed above.

Still longer term perspective situation also stands unclear. GB has bought Brexit ticket, but currently it is difficult to suggest where it will lead it. Fathom consulting has negative fundamental view on perspective of UK economy. We place their articles here regularly. In two words speaking they think that UK has "deffered" effect of Brexit. It will come, but later, despite that many economists were fast to aknowledge that no negative effect will happen as we do not see it right now. Finally, taking in consideration possible 150 points US rate hike in 2 years also will be headwind to GBP. That's why we have doubts on perspective of GBP rising in long-term.

Besides, if you will take a look at all-time GBP chart, you'll see that market already has broken major 5/8 Fib support and on a way down, drop is really fast since first leg was on 2008 crisis. Overall fundamental situation is mostly supportive to this scenario, besides, 20 points is not really big distance to GBP that is more volatile than many other major currencies.

Thus we will keep for some case here our next downside target, which is 1.1240 area. This is 1.618 butterfly extension and Yearly Pivot Support 1 area.

Weekly

This idea of 1-2 rate increasing mostly corresponds to our technical picture around weekly butterfly. When we saw it for the first time and planned the first trade down we said that price could fluctuate freely till 1.26-1.2650 strong support area. 1.26 is a fulcrum. Breaking it down will mean long-term bearish trend continuation while standing above it will keep chances on action to next 1.618 extension of weekly butterfly. By this reason our target on first trade down was 1.26 support area. So, it seems that as technical as fundamental situation mostly gravitates to scenario of upside continuation right now.

Next nearest target on weekly chart stands at 1.3255 area. This is 1.618 butterfly extension and also this will be an area near weekly overbought level.

Daily

On daily chart cable has hit our last week ceil level almost pips-to-pips. Indeed overbought level and MPR1 around 1.3050 held price from further appreciation. On daily chart we have another pattern that points on the same 1.3250 area. This is 1.618 AB-CD target.

Currently situation is simple here. We need to take in our favor situation with overbought and try to catch meaningful retracement down. Other words speaking - we could try to buy some deep on intraday charts.

As major retracement and reaction on weekly butterfly 1.27 target already has happened. It was the action from .13050 top to 1.26 bottom - right now price stands in extension mode and retracement will be relatively small. For trading we could focus only on most recent swing up:

4-hour

Here is guys, our major trading chart for coming week. It is needless to say that it is better to take position as lower as possible but we need to be reasonable with levels' choice.

Retracement indeed could start here. Besides of daily OB, market here has completed Double Bottom target and price is forming DRPO "Sell" pattern. We have two K-support areas that stand side-by-side to each other and in fact they make 1.2830-1.29 area difficut to pass. Let's try to estimate major issues here.

First, taking in consideration all background that we've talked above - price should not drop below 1.2830 area. First - this is neckline of double bottom, second - this is WPS1, and finally, if price will drop through it - it will break two side-by-side K-support areas. This action will be hard to accept as bullish action.

DRPO pattern (if it will be formed, of course), suggests 50% drop, approximately to major 1.2860 3/8 Fib support area. That's why, good area to think about taking at least some part of long posiiton is around MPP and Fist K-area @ 1.2880. You could add a bit more, if price will reach 1.2830-1.2850 level.

As we plan extended trades on daily chart, be prepared for far stops and reduce trading volume correspondingly. Your money potential loss should be the same as in any trade (I do not risk more than 2% of assets in any trade). It seems that initial stop should be placed somewhere below 1.28, but better even below 5/8 Fib level and MPS1 around 1.2720 to get market room to breath. As soon as upward action will re-establish, stop should be moved below new lows.

If this is too far for you - wait when major retracement will be finished and market will start new leg up, then you could try to get in on minor retracement. This will let you to use tighter stop, but this is more difficult to do.

Conclusion:

Although recent new fundamental background assumes bullish changes for few months, our long-term view on GBP still stands intact and we expect downward continuation in 2017-2018. Our next long-term target stands around 1.12 area.

In shorter-term perspective possible 1-2 rate hikes starting in August could lead to solid rally on daily chart. First - to 1.3250 and later to 1.42+ area. Thus, trading process mostly will stand around this new scenario.


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.

 

[Sive Morten]

Good morning,

(Reuters) - The yen gained broadly on Tuesday after North Korea's missile launch deepened geopolitical concerns, while the Australian dollar slipped after the Reserve Bank of Australia wrongfooted speculators who had bet it would switch to a hawkish stance.

The dollar was down 0.4 percent at 112.910 yen, pulling away from a seven-week high of 113.480 reached the previous day.

The greenback had earlier taken in stride news that North Korea had launched a missile on Tuesday, which Tokyo said appeared to have landed in its Exclusive Economic Zone (EEZ). But it took a dip after Pyongyang later said it would make a major announcement later in the day.

"The yen gained as North Korea's actions came just ahead of the G20 summit scheduled this weekend and cooled risk sentiment," said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.

"Dollar/yen is still confined in reasonable range right now. The market will want to see what North Korea's announcement is about before deciding if further gains by the yen are warranted."

The Japanese currency, sought in times of risk aversion, also bounced back from lows marked earlier against other major currencies.

The euro was down 0.6 percent at 128.105 yen after rising to a 16-month high of 128.970 earlier. Sterling fell 0.4 percent to 146.12 yen, nudging away from a seven-week peak of 146.84 yen.

The Australian dollar shed 1.1 percent to 85.92 yen after touching 86.96 yen, its strongest since March 21.

The Australian currency was particularly hard hit on Tuesday.

The Aussie was 0.7 percent lower at $0.7609 following the RBA's monetary policy announcement.

While the RBA's decision to keep interest rates unchanged did not come as a surprise, currency bulls were disappointed as the central bank refrained from taking a hawkish tilt.

Australia's central bank stuck to a neutral stance on the economy and interest rates on Tuesday, a marked divergence from some of its peers abroad who have recently signalled an intent to tighten policy.

The Australian dollar had risen to $0.7685 earlier in the session as some market participants had expected the RBA to join a shift towards a hawkish stance taken by peers like the European Central Bank, Bank of England and the Bank of Canada.

While the dollar slipped against the yen, it stood firm against other rivals.

The dollar index against a basket of six major currencies was steady at 96.254 after rising 0.6 percent overnight as a stronger-than-expected rise in the June Institute of Supply Management (ISM) national factory activity index propelled the 10-year Treasury yield to its highest since May 16. [US/]

Monday's developments helped the dollar index bounce back from a 9-month low of 95.470 plumbed on Friday.

The greenback was hit hard last week as expectations increased that central banks in Europe and Canada would eventually shift to tighter monetary policy.

"The dollar's latest rise is driven by direct demand, as opposed to the U.S. currency gaining thanks to the weakness of its peers," said Shin Kadota, a senior strategist at Barclays in Tokyo.

"Expectations towards the Federal Reserve hiking interest rates later this year had perhaps sunk too low. We are now seeing such lowered expectations being reversed a little."

The euro extended overnight losses and was last down 0.2 percent at $1.1343. The common currency has taken a step back from a near 14-month high of $1.1445 scaled on Friday.

Today guys, we have time to take a look at EUR finally, while GBP and CAD stands at expected retracement. BTW, we've got DRPO "Sell" on Cable as we've talked in weekly research. Now on EUR...

EUR right now doesn't provide any setups for immediate trading, but as many of of you would like to hear what is going on, we will give you our view.

In two words, we expect upside continuation on EUR in 2017 and reversal down in 2018, if nothing will change drastically in Central Banks policy. This expectation mostly is based on two moments. First is - EU economy is improving, QE is near to unwind, Fed will not rise rate in 2017 any more. This is good background for EUR growth. While in 2018 we expect major rate impact from Fed with 100 points rate increase. This will press on EUR...

Technical picture also shows some bullish signs. On Daily chart price has broken YPR1. This is the sign that upside action should continue further. Also EUR has exceeded 1.618 AB-CD target. It means that whole AB-CD action will become "AB" leg of some greater pattern. Yes, somewhere ahead deep retracement should happen, but then upside action should continue.

Right now EUR stands in minor retracement, because it has no resistance ahead - all levels have been broken. The only reason why EUR shows a pullback is daily OB. It means that retracement should be small. Applying of harmonic swings on daily chart points on 1.1287 level - re-testing of previous tops:

On 4-hour chart 1.1287 is 50% Fib level (not shown here) and it is favorite ratio for EUR. Right now price here stands at first Fib support and WPP+MPP area. Next important level is 1.1213-1.1243 K-support + MPS1+WPS1 + daily OS. This is perfect level to take long position or to hide stops below it.

On hourly chart we do not see something really special - only starting downside channel. May be later EUR will form some AB-CD, let's see...

That's being said, currently it seems that 1.1287 is a good level to think on long entry with initial stops below 1.1213 K-support area. As usual - we do not want to see any black nasty candles here. Retracement should remain gradual. If strong plunge will happen by some reason - do not go long. This could be a sign of deeper retracement that we have discussed above.

 

[Sive Morten]

Good morning,

(Reuters) - The dollar slipped against the yen on Wednesday on concerns about rising tensions between the United States and North Korea while the Canadian dollar held firm after the nation's central bank chief backed an interest rate increase.

The dollar shed 0.3 percent in early trade to fetch 113.00 yen, slipping further from Monday's 1-1/2-month high of 113.48.

The yen tends to be bought back at times of heightened global uncertainty because of expectations Japanese investors may repatriate their foreign investment, despite the country's proximity to North Korea.

Pyongyang said on Wednesday it had conducted a test of a newly developed intercontinental ballistic missile (ICBM) that can carry a large and heavy nuclear warhead, triggering a call by Washington for global action to hold the isolated nation accountable for its pursuit of nuclear weapons.

The Pentagon condemned the missile test and said it was prepared to defend the United States and its allies, while South Korea's defence minister said he sees a high possibility of a nuclear test by North Korea.

"U.S. hi-tech shares have been getting a bit unstable of late and we had an ICBM during U.S. market holiday (on Tuesday). So the markets are becoming a bit risk averse," said Minori Uchida, chief forex analyst at the Bank of Tokyo-Mitsubishi UFJ.

The Canadian dollar also held firm, trading at C$1.2934 per dollar after having hit a 10-month high of C$1.2912 to the dollar on Tuesday.

Bank of Canada Governor Stephen Poloz told a German newspaper that Canada's inflation should be well into an uptrend by the first half of 2018, adding that policy normalization must begin before price growth hits its target.

His comments prompted markets to price in a more than 50 percent chance of a rate hike at the central bank's next meeting on July 12, a dramatic turn from less than two weeks ago when barely anyone had bet on a tightening.

The Bank of Canada is in tune with policy makers at the European Central Bank and the Bank of England who last week also signalled future tightening, supporting the euro and the pound against the dollar.

Although the common currency slipped early this week after rallying 2.1 percent last week, it has stabilised around $1.1359.

"If we have more comments from ECB officials clearly implying tapering of its stimulus, we could see further upside in the euro," said Bart Wakabayashi, Tokyo Branch Manager of State Street.

Last week's top of $1.1445, its highest level in over a year, is seen as its immediate target. A clear break of the $1.15-16 area would signal a major departure from its trading range since early 2015.

The euro may struggle, however, to break above that range if upcoming U.S. data support the case for the Federal Reserve to keep winding back its stimulus, some market players said.

The minutes of its last policy meeting due at 1800 GMT on Wednesday are expected to shed more light on the Fed's thinking on its future policy path.

Many market players expect the Fed to announce a plan to start reducing its balance sheet in September and raise interest rates in December.

The Australian dollar licked wounds at $0.7617 after the nation's central bank stuck to a neutral stance on the economy and interest rates on Tuesday, disappointing many traders who had expected a more hawkish tone.

The Aussie showed limited reaction to a private survey by Caixin/Markit for June showing a cooling in the services sector in China - Australia's major trading partner.

As yesterday markets were mostly quiet due holiday in US, situation has not changed much across the board. As we have valid setups on GBP and CAD, let's take a look how situation has changed on Cable.

Retracement that we've expected now stands under way. As we've suggested this retracement should create deep that we could buy and go long as GBP has solid upside potential. Retracement stands mostly due OB condition on the market:

On 4-hour chart our DRPO "Sell" pattern has started well. Price action stands rather gradual and this is good sign, when you plan go long. Now price is coming to first support area around 1.29 Fib level, enveloped by WPP and MPP. Still, it seems that price should move slightly lower, to next 1.2830-1.2860 support area. DRPO "Sell" pattern has minimal target around 50% level of thrust and it stands precisely around 1.2860

Second - on hourly chart we have bearish and signs of bearish dynamic pressure, as trend has turned bullish here but price action is not. It means that we should wait a bit more, when price will reach lower levels.

At the same time we do not want to see drop below WPS1. It will be not in a row with daily market mechanics, where major retracement already has happened, and drop below neckline of former Double Bottom pattern is irrational for bullish market.
Thus, let's keep an eye on 1.2830-1.2860 area and possible bullish reversal patterns there.

 

[Sive Morten]

Good morning,

(Reuters) - The dollar steadied against its peers early on Thursday after the Federal Reserve's policy meeting minutes took the wind out of its advance, with the market awaiting comments by central bankers and U.S. data for its next cues.

The dollar index against a basket of major currencies was flat at 96.275, having slid from a one-week high of 96.512 touched on Wednesday.

The greenback had rallied earlier in the week after upbeat U.S. economic indicators lifted Treasury yields to multi-week highs. The surge helped the dollar index come off a nine-month low of 95.470 reached last week as investors increased expectations for central banks in Europe to begin scaling back monetary stimulus later this year.

But the dollar's advance stalled after the Fed's minutes on its June 13-14 policy meeting released on Wednesday showed a rift among policymakers over the pace of future U.S. rate increases and disappointed some dollar bulls.

"Overall, the Fed's meeting minutes sounded hawkish in my view, as the possibility was mentioned for the reduction of its balance sheet in the near-term. But the dollar still slipped, showing that it has become top-heavy," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

"The market has gotten used to the dollar strengthening this week. So even if upcoming indicators like the U.S. ISM report are in line with expectations, the dollar may drop on disappointment. The currency may need a strong upside data surprise to move further up."

The dollar was little changed at 113.240 yen, pulling back from a seven-week high of 113.690 reached overnight.

"The dollar is expected to move in a 110-115 yen range through to September. The bias is for a stronger dollar as the Fed appears determined to normalise monetary policy," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

The euro inched down 0.1 percent to $1.1338 following its decline to a one-week trough of $1.1313 on Wednesday.

U.S. data on tap later in the day includes the ADP employment report, ISM non-manufacturing PMI and the initial jobless claims.

Investors will also look to comments from San Francisco Fed President John Williams and Fed Board Governor Jerome Powell for their potential impact on U.S. yields.

For the euro and European bond markets, markets await the European Central Bank's June policy meeting minutes due later on Thursday. ECB executive board member Peter Praet is also scheduled to take part in a conference in Paris.

The Australian dollar was 0.1 percent lower at $0.7593. It showed little reaction to data showing that Australia's trade surplus rebounded sharply in May.

The Aussie had plumbed a nine-day low of $0.7570 overnight, dragged down by declines in prices of commodities like copper and crude oil.

The overnight fall in oil also jerked the Canadian dollar away from 10-month highs. The loonie was 0.15 percent weaker at C$1.2976 per dollar.

It had reached $1.2912 per dollar on Tuesday, its strongest since September 2016, after Bank of Canada Governor Stephen Poloz added more support to the view the central bank will raise interest rates as early as next week.

Markets across the board show slow progress, thus we could move across our setups that we have. Previously we already have discussed EUR and GBP, now we will take a look at JPY. It seems that investors start preparation to ADP and NFP releases.

Now is the time to talk JPY as it comes to culmination point, a kind of moment of truth. Price stands as close to invalidaion point of bearish setup as never. If Yen will take out previous top it will erase three patterns simultaneously - daily AB=CD, daily butterfly and weekly stop grabber. That's why current level is very important.

At the same time, in process of upside retracement we've got new pattern that was not visible previously. This is simmetrical triangle. Price right now stands precisely at upper border and theoretically yen should start 5th final wave down... or... break it up.

Currently is very comfortable area to make a decision on short entry. My kind of culmination point as current level provides best risk/reward ration, because price stands very close to invalidation point:

On 4-hour chart we have upside channel and we need to get it broken down to get confirmation of real bearish reversal:

Inside the channel we have situation "either now or never". Bearish reversal patterns stand in progress. 1.27 butterfly already has been formed, and H&S pattern stands under progress. Right part of H&S could take the shape of "222" Sell pattern. So, if you're looking for chances to go short, you could watch for either H&S or "222" Sell here.
Stop could be placed differently. Best way is above daily invalidation point. But if it is too far for you, you could stick with harmonic patterns on hourly chart.

As you can see overall setup is thrilling as due downside potential (107.8 level) as due patterns that we have here. And the last thing... Of course it is not nessesary to keep trade for weeks, you could trade just harmonic patterns inside the day. This is personal and is based on each trader's approach and trading plan.

 

[Sive Morten]

Good morning,

(Reuteres) - The dollar gained in Asian trading on Friday, getting a leg up against the yen after the Bank of Japan increased its purchases of Japanese government bonds in a move aimed at stemming a rise in yields.

The dollar was on track for weekly gains, though investors were unlikely to push the upside significantly as they braced for monthly U.S. employment data later in the global session, following some downbeat jobs figures overnight.

The dollar extended gains against its Japanese counterpart after the BOJ's move, rising 0.6 percent to 113.830 yen after touching a session high of 113.835 yen, its highest level since May 12. It was up 1.3 percent for the week.

The BOJ offered to buy an unlimited amount of 10-year JGBs at yield of 0.110 percent and also increased its buying of five- to ten-year JGBs through an auction to 500 billion yen from 450 billion yen.

"The move shows the BOJ's determination to control JGB yields," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust in Tokyo, after the 10-year yield rose to a five-month high of 0.105 percent in the morning.

"The timing was not a surprise, because there are no operations scheduled on Monday, and if U.S. employment data surprises on the upside, today was the BOJ's only chance to take pre-emptive action against rising JGB yields," she said.

The dollar index, which tracks the greenback against a basket of six major rivals, was 0.2 percent higher on the day at 95.947, up 0.3 percent for the week.

Investors awaited the Labor Department's June nonfarm payrolls report. Economists polled by Reuters expect U.S. employers to have added 179,000 jobs last month, above May's relatively small gain of 138,000.

Ahead of Friday's jobs data, the ADP National Employment Report showed private-sector payrolls increased by 158,000 jobs last month, coming in below the 230,000 jobs created in May and below economists' expectations for a rise of 185,000.

Separate figures from the Labor Department showed initial claims for state unemployment benefits increased 4,000 to a seasonally-adjusted 248,000 in the week ended July 1, marking the third straight weekly increase in claims.

The U.S. services sector index, released by the Institute for Supply Management on Thursday, rose to 57.4 in June, compared with a forecast of 56.5. The employment index, however, fell to 55.8, compared with 57.8 in May, suggesting the labour market could be cooling.

The dollar was bolstered by higher U.S. Treasury yields which rose even after the uninspiring data, amid concerns that the U.S. Federal Reserve will begin unwinding its bond holdings sometime this year.

The benchmark U.S. 10-year yield touched a nearly eight-week high of 2.391 percent on Thursday. It last stood at 2.389 percent in Asian trading, above its U.S. close of 2.369 percent.

Minutes from the Fed's June meeting released on Wednesday showed that some policymakers wanted to announce the beginning of the central bank's reduction of its massive debt portfolio by the end of August, but others wanted to wait until later in the year.

The euro edged down 0.1 percent on the day to $1.1412 , and was down 0.1 percent for the week.

European Central Bank policymakers are open to a further step towards reducing their monetary stimulus but are likely to move slowly out of fear of causing market turmoil, minutes of their last meeting showed on Thursday.

Faster economic recovery in the euro zone is giving the ECB room to pare its extraordinary stimulus measures, Bundesbank President Jens Weidmann said on Thursday.

Today we will take a look at both setups - GBP and JPY, since they oppositely relates to each other. On JPY our hourly H&S has failed and now market is breaking daily triangle. But 114.40 top still stands intact. Anyway mostly it will depend on NFP release.

Still, as BoJ announced unlimited bond buy back program, it seems that NFP should be good. Besides, ADP yesterday was also positive. :

Still, technically bears still have last hope - it could be 3-Drive "Sell" pattern that now is forming there:

Although pattern looks really nice, but with nuances that we have around - I would call to not trade it until NFP data release. Reason is simple. Yen stands too close to invalidation point and risk now overcome entry neccesity. If somehow yen will drop - our target stands around 107.8 area and this is really far, we should get chance to enter later, after NFP release on some retracement.

Besides, on GBP market is forming AB=CD pattern. If you remember, we are waiting 1.2860 level for potential entry:

On GBP we could use "222" Buy pattern that could formed later in the day:

So, as you can see Yen and GBP point on different scenarios. And in this kind of circumstances it is better to wait for clarity...