Talking Points:

FOREX

EUR/USD:The market has finally managed to find some bids and although the broader underlying trend remains intensely bearish, the risks from here are for additional corrective gains back towards the 100-Day SMA in the 1.3400 area before the next lower top carves out. Some falling trend-line resistance has already been broken on the daily chart and the 10-Day SMA has now crossed back above the 20-Day SMA to provide added confirmation for short-term bullish structural shift. Setbacks should now be well supported ahead of 1.2800, while only a daily close back under this figure would negate short-term bull bias. A bullish reversal week further supports short-term constructive outlook.  USD/JPY: Despite the latest pullbacks, we continue to hold onto our constructive outlook while the market holds above 76.55 on a daily close basis. We believe that any setbacks from here should be limited in favor of a fresh upside extension back towards 79.55 over the coming weeks. Look for a break above 78.30 to confirm and accelerate, while only a daily close below 76.55 negates and gives reason for pause. GBP/USD:The market has mostly been locked in some sideways chop over the past few weeks with any rallies very well capped ahead of 1.5800 and setbacks supported on dips below 1.5300. Until either side is convincingly broken, we would expect to see additional range trade. Therefore the preferred strategy is to look to buy range dips and sell by range highs. Only a weekly close above 1.5800 or below 1.5250 would give reason for outlook shift. USD/CHF:Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. As such, from here, we see risks for additional setbacks towards 100-Day SMA by 0.9100 from where a fresh higher low is sought out. Ultimately, only a sustained break back under 0.9000 would negate constructive outlook and give reason for pause. Dips towards the psychological barrier should therefore be used as formidable buy opportunities. AUD/USD:The recent break and close back above the 200-Day SMA is concerning and compromises our broader bearish outlook for the pair. However, we still see any additional gains beyond 1.0500 as limited with the market at risk for carving out the next major lower top ahead of a fresh downside extension back below parity. Rallies have now extended beyond 1.0600 to leave daily studies in overbought territory and the market now focuses on next key resistance by 1.0755 from late October. We will look to be aggressive sellers on a push beyond 1.0700 in anticipation of a major bearish reversal back below parity. NZD/USD:The recent break and close back above 0.8000 is concerning and compromises our broader bearish outlook for the pair. However, we still see any additional gains beyond 0.8000 as limited with the market at risk for carving out the next major lower top ahead of a fresh downside extension back below 0.7400. Rallies towards the late October highs by 0.8240 will therefore be used as formidable sell opportunities, while a break and close back below 0.7865 will also confirm bearish outlook. USD/CAD: Our constructive outlook remains intact despite the latest interday pullback with the market largely still consolidating above parity ahead of what we believe will be an eventual retest of the key October highs by 1.0660. From here, look for any interday pullbacks to be very well supported above 1.0000 on a daily close basis, while ultimately, only below 0.9900 would give reason for concern. EUR/JPY:Although the market remains locked in an intense downtrend, daily studies are finally correcting from oversold territory and out from multi-year lows with the market looking to establish back above 100.00. From here, there is room for additional corrective gains, with a break back above 102.55 to officially alleviate immediate downside pressures and potentially open a legitimate trend reversal. Setbacks should now be well supported ahead of 98.00, while only back under 97.00 negates and opens fresh downside. A bullish outside week further confirms short-term constructive outlook. GBP/JPY:The latest setbacks have been very well supported ahead of the record lows at 116.80 from September, with the market reversing course and potentially looking to carve a fresh base. For now, the underlying trend remains grossly bearish, but there is room for this correction to extend, with a break back above 123.00 to officially alleviate immediate downside pressures. Interday setbacks should now be well supported ahead of 118.00, while only back under 117.25 negates and gives reason for concern. US DOLLAR INDEX: The market remains locked in a multi-day consolidation and continues to chop between the 9,800-10,100 area. Overall, we do retain a bullish outlook given the broader recovery structure out from a major base in 2011 and therefore recommend looking to buy on dips towards 9,800 or on a break back above 10,135.