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FOREX PRO WEEKLY, October 16-20, 2017

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Oct 14, 2017.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    (Reuters) - The dollar was little changed against a basket of currencies on Friday, shaking off early weakness, after data showed U.S. consumer prices rose less than expected in September, pointing to muted inflation that could worry Federal Reserve officials.

    The Labor Department said on Friday its Consumer Price Index jumped 0.5 percent last month after advancing 0.4 percent in August. Economists polled by Reuters had forecast a 0.6 percent increase.


    September’s increase was the biggest in eight months, but it stemmed mostly from soaring gasoline prices after hurricane-related production disruptions at Gulf Coast area oil refineries. Underlying inflation remained muted.

    The dollar index, which tracks the greenback against six major currencies, was up 0.02 percent at 93.072 after falling to a more than two-week low of 92.749. The index was down about 0.75 percent for the week, its worst weekly performance in five.


    “We did see a knee-jerk reaction that was perhaps overdone. On more sober reflection, traders are coming to bid up the dollar,” said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.

    The Fed has raised its benchmark rate twice this year and signalled a third hike later this year.

    Financial markets are pricing a roughly 83 percent probability of a rate increase in December, according to CME Group’s FedWatch tool.

    The dollar edged higher after U.S. President Donald Trump struck a blow against the 2015 Iran nuclear agreement, choosing not to certify that Tehran is complying with the deal and warning he might ultimately terminate it.

    “Trump’s unwillingness to sign the nuclear deal is increasing global risk aversion, making markets more hesitant on the geopolitical outlook,” said Schamotta.

    The dollar slipped 0.37 percent against the Japanese yen.

    Japan is the world’s largest creditor nation and traders tend to assume Japanese investors would repatriate funds at times of crisis, thus pushing up the yen.


    The euro was down 0.07 to $1.1821 after European Central Bank President Mario Draghi said the euro zone continues to need substantial monetary stimulus as the ECB has not yet managed to increase inflation sufficiently.

    “Draghi did definitely pour some cold water on expectations around ECB’s Oct. 26 meeting,” said Schamotta.

    Britain’s pound hit an 11-day high in a volatile day of trading and was heading for its best week in four, benefiting from signs that Britain is to be offered a two-year Brexit transition deal.

    Chart of the Week: Brexit-Related Uncertainty Weighs on Economic Sentiment in Q3
    by Fathom Consulting

    By distilling information from numerous consumer and business surveys into one measure, Fathom’s UK Economic Sentiment Indicator (ESI) provides a monthly snapshot of underlying growth momentum.

    [​IMG]

    Since the beginning of this year, survey-based measures of economic output, including Fathom’s ESI, have required a large pinch of salt — exceeding official output data by some way. More recently, however, that wedge has narrowed, with the UK ESI falling throughout the third quarter, to 0.5% in September.

    While the vast majority of survey respondents were less confident than they were in the second quarter, the deterioration was most marked in the construction sector. Notably, the recent drop in the Construction Purchasing Managers’ Index to below the key threshold of 50 has brought it more in line with official data, which has pointed to a contraction in building activity for several months now. Respondents identified political and economic uncertainty weighing on investment decisions and extending lead times for budget approvals as the principal cause.

    Looking ahead, we expect both our ESI and official GDP data to soften further from here.

    COT Report

    So, as you probably understand, today we will take a look at GBP again. Our last research was important as we've discovered some contradiction between investors' expectations on rate change in November and real situation in economy. Besides, BoE has a reputation of tricky promiser, who has cried wolf, repeatedly trying to persuade investors that they have failed to price in a sufficiently aggressive interest rate path, only to have a change of heart come the next meeting.
    Right now could happen the same stuff. In our previous weekly research on GBP we posted Fathom consulting view on possible rate hike and its far from confidence that this definitely will happen. Right now again - economy sentiment indicator shows slow down.
    CFTC data shows that investors were looking positively on perspectives of rate change, at least 2-3 weeks ago, when net bearish position has diminished significantly. Take a look - now it has turned bullish. But this shifting stands on a background of miserable drop in open interest. It means that investors just contract shorts, but not taking new longs right now.
    Besides, last week net long position slightly decreased but open interest rises. Is it mean that market treats current level comfortable for selling?
    GBP net position stands around 19K contracts. Historical highs stand around 40-50K. It means that position is very close to saturation. It points that upside potential of cable right now is limited. This sentiment is difficult to call "bullish" as we do not see any new purchases of UK currency. It seems that investors mostly stand aside and try to catch good entry point to re-establish shorts...
    upload_2017-10-14_12-59-44.

    Technicals
    Monthly

    So, long-term view for GBP is not really positive. Fundamental picture points on structural problems in economy, while very long-term technical analysis suggests 1.12 target. But right now, as market stands in upside action - we're mostly interested with its perspectives.

    Trend is bullish here and there are some moments that we should take care on. First is uncompleted AB-CD target around 1.1650 area. Market has turned up just 350 pips above it, which is small distance for monthly scale. When such turning happens, this creates friable background of upside action. In fact, you never know where precisely market could stepped out and start dropping again, tending to uncompleted target. The same situation we have here. The nature of price action definitely shows that this is not a trend - too many overlapping candles, long shadows and no thrusting action.

    If we will take a look at reasons for this action, from technical point of view we will find nothing but 0.618 target of all time AB-CD pattern. No Fib supports, Pivots, OB/OS levels, nothing more. Taking it all together, it seems that upside action should not be too extended. Usually market shows either small reaction on minor target or sometimes no reaction at all. This leads us to second issue.

    As market is not at OB right now, it seems that nearest upside target stands around 1.3860-1.3975 K-resistance here. Obviously, this is rather strong resistance cluster as we have YPR1 and OB levels slightly higher, around 1.42 area.

    Also this is previous very important monthly lows. By they point on rather wide range of 1.36-1.42 area.

    That's being said, combined all tools that we have here right now, we could say that cable could turn down at any point of 1.36-1.42 area. But as we have K-resistance, we suggest that retracement market should not break it and this lets us to narrow range a bit to 1.36-1.40 probably.
    gbp_d_16_10_17.


    Weekly

    So, our suggestion that market should pull back was correct. Indeed, as price has reached Fib level and OB level, which, in fact, has given us DiNapoli bearish "Stretch" pattern and it has worked nice.

    Now there are two important issues here. First is completion of retracement harmonic swing, second - bullish grabber that suggests action at least above previous top.

    It means that until grabber is valid - it is dangerous to go short against it.

    gbp_w_16_10_17.

    Daily

    Now guys, we're coming to most sophisticated moment on the market. What do you think - what we will get either upside continuation on weekly grabber or downside AB-CD pattern?

    In fact, recent upside action was a reaction on daily OS and K-support area. But overall price action doesn't look strong enough to treat it as upside reversal and trend. Besides, on other assets, such as EUR, DXY we mostly watch for downside action, and even bearish reversal patterns were formed on intraday charts. Our DRPO's on EUR and DXY...

    Finally, bullish grabber on weekly chart looks a bit irrational. Because, GBP has formed bullish reversal swing and was at weekly! OB. This combination suggests deeper retracement, by normal technical response. Only some external driving factors, such as political news, BoE decision etc. could overcome technical factors.
    gbp_d_16_10_17.

    Intraday

    Based on intraday picture, it is difficult to say that we have clear bullish setup. Recent drop and re-testing of trend line was a perfect daily B&B "Sell" actually.

    Here we could watch for upside AB=CD pattern. CD leg looks fast, and in general, this action is based on Brexit procedure approvement by GB parlament. Market has passed through K-resistance, but currently it makes sense to watch for 1.3370-1.3415 area - completion of AB-CD, WPR1 and Fib resistance. Now picture doesn't look cloudless at all here and after minor upside continuation upward action could stop.
    gbp_4h_16_10_17.


    Situation is a bit tricky with this retracement guys. Mostly, because weekly grabber looks not quite logical in current environment and mostly has appeared due political action in Parliament last week.

    Overall price action looks so, that as bullish setup as bearish will lead to some action in the direction of setup. For example, on 4-hour chart, if price will complete AB=CD we will get "222" Sell pattern. Thus, bears could watch this area for position taking. The major thing is to not forget to move stops at breakeven as soon as possible.
    Bulls, in turn, need to wait for some deeper retracement.

    Conclusion:

    Short-term picture slightly stands in favor of bears. Existence of weekly grabber should not become a barrier for taking short position on intraday charts around 1.34 area, based on "222" Sell pattern. Major thing is to not forget move stop at break even as soon as possible.
    Bulls need to wait for retracement and control validity of weekly grabber. If market will drop below its lows - do not be long.

    All other stuff that we've talked previously about longer-term view on GBP is still valid. This is another reason, by the way, why we're not too fascinating with upside potential of cable right now...


    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.
     
  2. Lolly Tripathy

    Lolly Tripathy Master Sergeant

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    Logical analysis as always..
    Good luck everyone
    Good wishes for Dear Sive Sir
     
  3. Joh

    Joh Sergeant Major

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    Thank you Sive for another splendid report, with all that is going on in the world it feels difficult for me to get some bearings at times, am ever so glad we have you to guide us. Have a Super week! :)
     
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  4. Joshnix

    Joshnix Private, 1st Class

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    Thanks Sive, I have found that the long term trends really make the play. I see an attempt at the 161.8 fib extension on the monthly. I did appreciate your analysis on the 1.3255 on the downside as it helped me protect my profits on the upside. I see 1.37 as an extension target. I am in at 1.3167 using the Dinapoli principle of retracement. Anyways I use Person's and MACD to enter my longtern trades. If you have the capital to withstand being slightly wrong it makes money. Also I am very surprised that news will facilitate the technical aspect of Dinapoli. Almost like it was predeteremined.
    upload_2017-10-15_0-40-37.
     

    Attached Files:

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  5. DevTrader

    DevTrader Private, 1st Class

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    GBP/USD is now more tradeble pair as you will get avg 100 pips in a day. Those were the days where EUR/USD was favourite. Don’t know the reason why it lost interest in the pair even though festival season is far and hope it will increase volatility in coming days as traders will settle their books.
     
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  6. yousimon

    yousimon Private, 1st Class

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    which software you use as shown by you picture?
     
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  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - The dollar edged up against its peers on Tuesday, supported by a rise in Treasury yields following a report that U.S. President Donald Trump was favoring a policy hawk as the next head of the Federal Reserve.

    Treasury yields bounced from two-week lows and rose after a report on Monday that President Trump was favoring Stanford economist John Taylor, seen as more hawkish than current Chair Janet Yellen, to head the Fed.

    “Taylor’s mention came as a surprise as he was lower on the list of rumored Fed chief candidates including (Fed governor Jerome) Powell, (former Fed governor Kevin) Warsh, Yellen and (Trump’s top economic advisor Gary) Cohn,” said Shin Kadota, senior strategist at Barclays in Tokyo.


    “However, it is also being reported that Trump will meet Yellen on Thursday. News regarding the Fed chairmanship is in constant flux and the market finds it hard to move significantly in either direction until some clarity is established.”

    Trump will meet Yellen on Thursday as part of his search for a new candidate for her position, a source familiar with plans for the meeting said.


    The dollar index inched up 0.05 percent against a basket of six major currencies .DXY to 93.365 after rising 0.25 percent overnight.

    The index had stooped to a 17-day low of 92.749 on Friday in the wake of disappointing U.S. inflation data.

    “The dollar was under pressure as Treasury yields declined last week. But it was allowed to rebound as a stronger Wall Street, good U.S. data, and the report about Taylor all came into place to stop the yield decline,” said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.

    The New York Fed’s business conditions index published on Monday showed its highest reading since September 2014.

    “The euro likely holds the key to whether the dollar can remain firm. The European Central Bank is now considered less hawkish than the market had initially thought last month, pushing German bund yields lower and in turn favoring the dollar against the euro,” Ishikawa at IG Securities said.

    Ten-year bond yields in Germany hit one-month lows overnight, extending moves seen late last week on reports that ECB policymakers broadly agree on extending asset purchases at a lower volume at their Oct. 26 meeting, with views converging on a nine-month extension.

    The greenback was 0.1 percent lower at 112.070 yen after rising 0.3 percent overnight, when it pulled away from a three-week low of 111.650.


    The euro dipped 0.15 percent to $1.1780 after losing 0.25 percent the previous day.

    The Australian dollar was 0.15 percent lower at $0.7840 as its rally last week to a two-week high of $0.7898 on upbeat Chinese data lost momentum.

    Sterling slipped 0.1 percent to $1.3241, awaiting Bank of England Governor Mark Carney's comments due later in the session for potential cues.


    Today we will take a look at EUR. Now price shows action according to our analysis. As 1.1850 area has been met last week and price has formed top of right shoulder - downside action has started. Although potential of this H&S stands around 1.15 as EUR could form AB=CD pattern right to next fib support, but this level now stands below daily OS. That's why, this week, we probably should focus on possible return back to 1.17 neckline area:
    eur_d_17_10_17.

    Approximately the same picture we have at DXY. On 4-hour chart, as we've suggested EUR indeed has formed nicely looking DRPO "Sell" pattern, precisely at 50% Fib resistance and former neckline of minor H&S pattern.
    eur_4h_17_10_17.

    So, guys, those of you who have taken shorts there - think about moving stops to breakeven. Because I still keep in mind possible weekly DRPO "Sell" pattern that we've talked about in weekly research on EUR couple of weeks ago, and, we should be ready for possible surprises. And this surprise could look as follows:
    eur_4h1_17_10_17.

    This is just alternative view, and it is not the fact, that it will materialize, but it is better to buy insurance, especially if it is free as breakeven stop.
    Also keep an eye on possible price stop and upside reversal. This is not suggested by daily H&S pattern. Market should drop back to 1.17. If it will suddenly stop on some minor Fib support (as shown above) - be careful, it could be a first sign of our "alternative" scenario.
     
  8. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - The dollar held an upper hand against other major currencies on Wednesday as investors weigh the possibility that U.S. President Donald Trump will choose a more hawkish Federal Reserve chief with than the current chair, Janet Yellen.

    The dollar index stood at 93.475, extending its rebound from Friday’s 2 1/2-week low of 92.749. It rose as high as 93.729 on Tuesday.

    With the Federal Reserve expected to raise interest rates for the third time this year in December, markets are now looking to who will lead the Federal Reserve after Yellen’s term expires next February.


    Trump has a pool of five candidates to choose from for the next chair of the Federal Reserve and is likely to announce his choice before going to Asia in early November, a source familiar with the situation said on Tuesday.

    “Who will be the next Fed Governor is the most important focus of the market now,” said Yukio Ishizuki, senior strategist at Daiwa Securities.

    “But whoever it will be, the Fed is going to continue policy normalisation and U.S. interest rates will be higher next year,” he added.

    The dollar got an extra boost this week after Stanford University economist John Taylor emerged as a major candidate.

    Taylor is known as a proponent of a rule-based monetary policy and according to his formula, known as the Taylor rule, the Fed funds rate needs to be much higher than the current target of 1.0-1.25 percent.

    Thus investors bet he could raise interest rates faster.

    As the dollar gained broadly, the euro slipped to $1.1770, little changed in early Asian Wednesday trade but down 0.5 percent so far on the week.

    However, the dollar made less headway against the yen, as investors remain hesitant to take big positions ahead of Japan’s election on Sunday.

    Although Prime Minister Shinzo Abe’s ruling party is expected to maintain a solid majority, the memory of recent election upsets in the United Kingdom and elsewhere has kept investors cautious.

    The dollar fetched 112.22 yen, little changed on the day.

    The British pound wallowed at $1.3188 having fallen 0.5 percent on Tuesday after comments by Bank of England policymakers were interpreted by markets as dovish.

    The Bank of England’s new deputy governor distanced himself from the central bank’s majority view that interest rates probably need to rise soon, and another newcomer said her support for that position was “very contingent on the data”.


    Prior to that, data on Tuesday showed British inflation hit 3 percent in September, its fastest pace in more than five years and above the BoE’s 2 percent target.

    The offshore Chinese yuan was little changed at 6.6035 after the United States on Tuesday refrained from naming China as a currency manipulator.

    Nor was there any reaction to comments from Chinese President Xi Jinping at the opening of a key Communist Party congress that China will deepen market-oriented reform of its exchange rate as well as its financial system.


    Today guys, we just have to take a look at GBP as our suspsions are coming to reality. Indeed, as we've said in our weekly research, appearing of weekly bullish grabber looks a bit artificial and doesn't correspond to current market's mechanics.
    Now we have more support of this thought. On daily chart we have two bearish side-by-side grabbers, which suggest drop below previous lows to 1.30 major support area. It includes daily OS, K-support, MPS1 and AB-CD minor target. Existence of AB-CD target below previous lows also makes these lows weak:
    gbp_d_18_10_17.

    On 4-hour chart downside action has started from our "222" Sell. So, if you've cought entry - now think about moving stop to breakeven:
    gbp_4h_18_10_17.

    If you were not as fast - then take a look at hourly chart. Right now price has completed AB-CD pattern and turned to retracement. Although small upside ab-cd looks attractive, but taking in consideration the speed of dropping, abscence of daily OS and any kind of support below market - this retracement could be smaller.

    Anyway, if you will decide to take short position here - you have to use stop above K-resistance and WPP. So calculate risk first and manage position value:
    gbp_1h_18_10_17.
    If it is still too much for you - wait either ab-cd or some other chance for entry...

    As a bottom line - we expect drop to 1.30 major support area within a week or so...
     
  9. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - The dollar hit its highest in about two weeks against the yen on Thursday, supported by this week’s rise in U.S. bond yields, with the market’s attention turning to who will next lead the Federal Reserve and this weekend’s Japanese election.

    The dollar index, which tracks the U.S. currency against a basket of six major rivals, was slightly higher on the day at 93.389.

    The dollar rose as high as 113.095 yen in early Asian trade, its strongest level since Oct. 6. The dollar last changed hands at 112.97 yen, steady from late U.S. trade on Wednesday.


    This week’s rise in U.S. bond yields helped lend support to the greenback. The two-year U.S. Treasury yield rose to its highest since November 2008 on Wednesday on the back of expectations for tighter global monetary policy.

    The benchmark U.S. 10-year Treasury yield touched a one-week high of 2.352 percent on Wednesday, and last stood at 2.342 percent, having risen six basis points so far this week.

    “In order for expectations of tighter U.S. monetary policy to increase, we will need to see more evidence to confirm that U.S. inflation is rising,” said Kumiko Ishikawa, FX analyst at Sony Financial Holdings in Tokyo.

    The dollar’s rise against the yen was likely to be capped by uncertainty ahead of this weekend’s election in Japan.

    Most polls show Japanese Prime Minister Shinzo Abe’s coalition on track to secure a roughly two-thirds majority in Sunday’s general election, ushering in continued political and monetary stability.

    “To be sure, the chances of an election surprise in Japan are indeed very small. But investors remember last year’s Brexit vote and the U.S. presidential election, so there is greater uneasiness around elections now,” Ishikawa said.

    With the Federal Reserve expected to raise interest rates for the third time this year in December, markets are now looking for clarity on who will lead the U.S. central bank after Fed Chair Janet Yellen’s term expires next February.

    President Donald Trump will announce his decision on who will be the chair of the Federal Reserve in the “coming days,” White House spokeswoman Sarah Sanders said on Wednesday.

    Trump has an interview scheduled on Thursday with current Chair Yellen. She is one of five candidates Trump is considering for the job.

    The dollar has gained a boost this week after Stanford University economist John Taylor emerged as a major candidate for the next Fed chair.

    “If it turns out to be Taylor, that is likely to trigger selling of (U.S.) bonds, at least initially,” said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

    The dollar could edge higher against the yen under that scenario, Okagawa added.

    Taylor is known as a proponent of a rule-based monetary policy and according to his formula, known as the Taylor rule, the Fed funds rate needs to be much higher than the current target of 1.0-1.25 percent.

    Thus there is speculation that the Fed may start raising interest rates at a faster pace, if Taylor becomes the Fed chief.

    The euro edged up percent to $1.1799

    One focus for the euro is the European Central Bank’s policy meeting coming up next week.

    France’s central bank governor called on Wednesday for a reduction in the ECB’s bond purchases towards “their possible end” in light of stronger inflation, while saying monetary policy should stay easy.

    Easy monetary policy gives euro zone governments a window of opportunity to enact the reforms needed to boost growth once interest rates have to rise, ECB President Mario Draghi said on Wednesday.

    The Australian dollar edged higher after Australian jobs data for September came in stronger than expected.


    The Australian dollar rose 0.1 percent to $0.7850, pulling away from Wednesday's intraday low of $0.7819.

    Against the yen, the Australian dollar rose to 88.87 yen at one point, its highest level since late September.

    Economic data from China was largely in line with expectations. The Australian currency is sensitive to China developments because of the two countries’ massive trade relations.

    China’s economic growth slowed slightly as expected in the third quarter as the government’s efforts to rein in the property market and debt risks tempered activity in the world’s second-largest economy.

    In other data, China’s industrial output rose a stronger-than-expected 6.6 percent in September from a year earlier, while retail sales also outperformed, though investment growth eased more than expected and property sales fell for the first time in more than two years.


    Today we need to take a look at EUR, as our suspisions are coming to reality. Indeed, market has stopped downward action which is a bit irrational when price is forming right shoulder of H&S pattern. It means that right shoulder's top has not been completed yet and market could show another leg up before downward reversal will happen. This will not erase H&S setup yet, but will change the shape of the pattern slightly.

    Actually if we will take a look at the chart - indeed, market has not quite reached the same top as left shoulder:
    eur_d_19_10_17.

    it means that we mostly should be ready for "222" sell pattern that we already discussed previously:
    eur_4h_19_10_17.

    Other patterns also are possible (butterfly "Buy", for example), but it doesn't correspond to current market sentiment. That's why it is more logical to suggest some upside continuation here.

    Our DRPO "Sell" has been completed, as market has reached 5/8 Fib support. DRPO "Buy" has been formed as upside reversal pattern. Another important moment here - downward action stops at WPS1. It means that current action should be treated mostly as retracement of upside trend. And also supports idea of another leg up.
    eur_1h_19_10_17.

    That's being said, currently it is not good situation on EUR for any short positions as market could form another leg up before final reversal down.
     
  10. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - The dollar rose broadly on Friday, bolstered by increased optimism about the prospects for U.S. tax reforms, while the New Zealand dollar hit five-month lows, hampered by uncertainty over economic policies under a new government.

    U.S. President Donald Trump’s drive to overhaul the U.S. tax code cleared a critical hurdle late Thursday when the Senate approved a budget blueprint for the 2018 fiscal year that will pave the way for Republicans to pursue a tax-cut package without Democratic support.


    The dollar rose 0.5 percent on the day to 113.14 yen, having risen to as high as 113.315 yen at one point, its strongest level since Oct. 6.

    “There’s still a lot of uncertainty around the timing and the exact kind of reforms that we will see, but it has given a bit of momentum behind that,” said Peter Dragicevich, G10 FX strategist for Nomura in Singapore, referring to the approval of the budget blueprint by the U.S. Senate.


    The dollar is likely to be supported against the yen in the near-term, Dragicevich said, helped by a widening in U.S.-Japan yield differentials and also since Japan’s general election on Sunday seems unlikely to lead to any surprises for the market.

    Recent media forecasts have suggested that Japanese Prime Minister Shinzo Abe’s ruling coalition is on track to roughly match the two-thirds “super majority” it held in parliament’s lower house before the snap election was called.

    In a sign of the dollar's broad gains, the euro fell 0.3 percent to $1.1818, while sterling shed 0.4 percent to $1.3107.

    The New Zealand dollar sank to a five-month low on concerns the new Labour coalition will take a harder stance on immigration and foreign investment than the outgoing center right government.

    The New Zealand dollar fell to as low as $0.6971 at one point, its lowest level since May 22. It was last down 0.6 percent at $0.6989, after having tumbled 1.7 percent on Thursday for its biggest one-day percentage drop in more than a year.

    New Zealand Prime Minister-elect Jacinda Ardern said she would spend Friday ironing out issues and ministerial posts with coalition partner New Zealand First, one day after becoming the Pacific nation’s youngest leader in more than 150 years.

    Some analysts are focusing on potential changes to New Zealand’s monetary policy framework under the new government.

    The Labour Party has said it wants to add employment to the central bank’s mandate, which would mark a big change for the Reserve Bank of New Zealand.

    While the Labour party and New Zealand First Party have floated some different ideas regarding monetary policy, the overall direction seems to be a possible preference for a weaker New Zealand dollar, said Teppei Ino, analyst for Bank of Tokyo-Mitsubishi UFJ in Singapore.

    “The common thread seems to be a preference for New Zealand dollar weakness,” Ino said, adding that monetary policy of New Zealand’s central bank may turn more dovish than before.


    While our setups on GBP and NZD feels good, today we will take a look at EUR, where we have tricky situation. To be honest, guys, currently I think that EUR is not suitable for trading, because a lot of uncertainty stands around it and contradictive setups are forming.
    So, I'll show you my opinion, but I'm not pretending on absolute meaning. By my thought major issue on daily chart is inability of EUR to complete H&S pattern and reach the neckline. This is the core that leads to important consequences. Particularly - higher upside action. At the same time this situation doesn't break existed bearish setup totally yet. H&S is still valid and downside action could start from a bit higher area.
    Right now situation looks so that EUR has not finished yet right shoulder.

    But, from another point of view - take a look at daily chart, price shows chances to form downside butterfly as well, and this is the risk:
    eur_d_20_10_17.

    On 4-hour chart we're mostly watching for final part of large "222" Sell pattern, which is AB=CD upside action. Here we could get another pattern - butterfly "Sell" as the one that could trigger downside reversal:
    eur_4h_20_10_17.

    yes, we have some additional bullish moments, such as divergence here, trend is bullish as on daily as on 4-hour chart, price has turned up right at WPS1. But still, currently guys, we need just watch. It is may be not as interesting as to trade, but our task here right now is to get first signs of clarity to not miss proper moment for entry.
    Definitely speaking, we need watch for price reaction on Fib supports, wether any bullish reversal patterns will be formed around on 15-min charts, whether we will get bullish grabber on 4-hour chart etc.
    eur_1h_20_10_17.

    As soon as we will get something, it should become more clear what to expect next. If market will break all intraday Fib supports and drop below 1.17 lows - this will be clear sigh that no upside action will happen.
    That's being said, right now I do not want to take any position on EUR, but situation could change fast and clarity could come even today. Personally I still feel that upside action has a bit more chances to continue.
     

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