Sample Category Title

The USDCHF pair fell for three straight sessions, trading around 0.8960 during Monday’s Asian session. The daily chart shows a bearish trend, with the pair staying below the 9- and 14-day Exponential Moving Averages (EMAs). The 14-day Relative Strength Index (RSI) is below 50, signaling continued weakness. If the pair drops further, it could find support at 0.8900, with a break below that possibly leading to the two-month low of 0.8736. On the upside, resistance levels are at 0.9009 and 0.9026, based on the 9- and 14-day EMAs. A break above these could boost momentum toward the recent high of 0.9201.

USDCHF – H4 Timeframe

When the price sweeps above/below a previous turning point (high or low) before breaking the structure in the opposite direction, the new high/low created becomes a “protected” point. Regarding the price action on the 4-hour timeframe chart of USDCHF, we see that the price is currently approaching a “protected” low after having printed a double break of the structure pattern. The expected outcome here is bullish.

USDCHF – H3 Timeframe

On the 3-hour timeframe chart of USDCHF, the price still has an unfilled FVG (fair value gap) area, meaning it could be seeking an avenue to return to the FVG before embarking on the bullish continuation.

Analyst’s Expectations:

• Direction: Bullish
• Target- 0.91199
• Invalidation- 0.88900

Bank of Canada (BoC) Governor Macklem has recently said the economy is improving due to stronger consumer demand but warned that a trade war with the US could cause serious harm. He estimated that such a conflict could shrink Canada’s economy by nearly 3% over two years and lower long-term growth by 2.5%. Macklem emphasized that the situation is uncertain, and the BoC will adjust its policy as needed at the 12th Mar. meeting. The Canadian Dollar (CAD) weakened last week, particularly against the Japanese Yen (JPY), falling below 105 to its lowest level since last September. This drop broke a key support level, suggesting the CAD could decline further. Diverging policies between the BoC and Bank of Japan (BoJ) and trade tensions may continue to pressure the CAD.

CADCHF – H4 Timeframe

The price action on the 4-hour timeframe chart of CADCHF has recently been rejected off the demand zone at the origin of a double break of structure pattern. This has led to a reversal in the initial bearish momentum, thus implying a change in the trend. At present, the bullish impulse is expected to push prices to create a new higher high.

CADCHF – H3 Timeframe

The 3-hour timeframe chart of CADCHF shows a more detailed presentation of the double break of structure pattern, showing the swept low, the initial high, and the induced high. Such price behavior often confirms a change in the character of the market sentiment.

Analyst’s Expectations:

• Direction: Bullish
• Target- 0.63786
• Invalidation- 0.62807

•  Nasdaq-100 falling inside sideways price range
• Likely to reach support level 20820.00

Nasdaq-100 index recently reversed from the resistance level 22190.00 (the upper border of the sideways price range inside which the index moved from December) intersecting with the upper daily Bollinger Band.

The downward reversal from the resistance level 22190.00 started the active short-term correction ii.

The Nasdaq-100 index can be expected to fall further to the next support level 20820.00 (which has been reversing the price from December).

• USDCAD reversed from the support area
• Likely to rise to resistance level 1.4380

USDCAD currency pair recently reversed from the support area between the pivotal support level 1.4180 (former monthly high from November), 61.8% Fibonacci retracement of the upward impulse from November and the lower daily Bollinger Band.

The upward reversal from this support area stopped the A-wave of the active ABC correction (2) from the end of January.

Given the clear daily uptrend and the oversold daily Stochastic, USDCAD currency pair can be expected to rise to the next resistance level 1.4380.

• USDJPY reversed from the support area
• Likely to rise to the resistance level 150.95

USDJPY currency pair previously reversed up from the support area set between the support level 149.00 (which has been reversing the price from October), 50% Fibonacci retracement of the upward impulse (1) from September and the lower daily Bollinger Band.

The upward reversal from this support area stopped the C-wave of the previous ABC correction (2) from the start of January.

Given the rising bearish yen sentiment seen across the FX markets today, USDJPY currency pair can be expected to rise to the next resistance level 150.95 (the former low of wave A from the start of February).

• EURJPY reversed from the support zone
• Likely to rise to the resistance level 158.00

EURJPY currency pair recently reversed up from the support zone between the multi-month support level 156.00 (which has been reversing the pair from last August) and the lower daily Bollinger Band.

The upward reversal from this support zone is likely to form the daily Japanese candlesticks reversal pattern Piercing Line – if the pair closes today near the current levels.

Given the strength of the support level 156.00 and the bullish euro sentiment seen today, EURJPY currency pair can be expected to rise to the next resistance level 158.00.

The euro rose as much as 0.55% on Monday but has pared most of these gains. In the North American session, EUR/USD is trading at 1.0467, up 0.11%.

Merz’s conservatives win German election

Germany has voted and Friedrich Merz is slated to become the next president. Merz’s conservatives came in first place, followed by the far-right AfD party. Merz’s first order of business will be the formation of coalition government, likely with the Social Democrats. The new government will need to improve the flagging economy and will have to contend with the Russia-Ukraine war on its doorstep and the new Trump administration which is giving Europe a cold shoulder.

German business climate remained unchanged in February at 85.2, shy of the market estimate of 85.8. Businesses indicated less optimism about current business conditions and confidence weakened among service providers, although manufacturers were less pessimistic.

There were no surprises from eurozone inflation for January, which came in at 2.5% y/y, unchanged from the initial estimate. This marked the highest rate since July 2024, largely driven by a sharp jump in energy costs. Monthly, core inflation fell 0.3%, in line with the market estimate and following a 0.4% gain in December. Core inflation gained 2.7%, confirming the initial estimate and ticking higher from the 2.4% gain in December. The core rate hasn’t moved in five straight months. Today’s inflation report indicates that inflationary risks remain which could complicate the ECB’s plans to reduce interest rates and kick-start the weak eurozone economy. The ECB meets next on March 6.

On Friday, US Services PMI for February disappointed and contracted to 49.7, down from 52.9 in January and below the market estimate of 53.0. This marked the lowest level since January 2023. The services sector, which has been the major driver of the US economy, showed strong growth until the end of 2024 and has weakened for two straight months. The Manufacturing PMI improved to 51.6, up from 51.2 and above the market estimate of 51.5.

EUR/USD Technical

• EUR/USD tested resistance at 1.0474 and 1.0499 earlier.
• 1.0436 and 1.0411 are the next support lines

EURUSD hit one-month high (1.0528) in early Monday trading, in immediate reaction to German election results, but fresh gains were quickly reversed, mainly due to the lack of bigger election surprises.

Initial signs of recovery stall under significant barriers at 1.0533/73 zone (former top of Jan 27 / daily cloud top/100DMA/Fibo 38.2% of 1.1214/1.0177) would materialize if bulls repeatedly fail to clear this resistance zone and the price drops below 1.0400 pivot (Feb 19 trough/55DMA).

Conflicting daily indicators lack clearer direction signal, with little support from data showing that bloc’s inflation remains elevated, though near-term bias is expected to remain bullish while the price stays above rising 10DMA (1.0448).

Expect stronger signals on violation of either breakpoint (1.0400 at the downside and 1.0573 at the upside).

Res: 1.0506; 1.0528; 1.0547; 1.0573.
Sup: 1.0448; 1.0422; 1.0400; 1.0372.

Markets

The German Parliamentary elections yesterday paved the way for Friedrich Merz of the winning CDU/CSU (28.6% of the votes) to take the initiative form a Grand Coalition with the Social Democrats of outgoing Chancellor Olaf Scholz even as the latter faced a sharp stack (16.4% of the votes, the worst outcome for the group in more than hundred years). In advance, this outcome was seen as the most market friendly with both traditional parties having the governing experience seen as the best combination to cope with economic and (geo)political challenges the country is facing. Even so, the reaction on European markets this morning/today was very guarded. Merz said the country needs an effective government as soon as possible. Still he suggested that this ‘as soon as possible’ probably still means two months of negotiations. Both parties are prepared to step up (targeted) fiscal spending. However, as the tree mainstream parties have no two third majority in Parliament, smaller parties including AfD, might complicate increasing spending on the likes of defense which needs a revision of the constitutional debt brake. While there might be ways to circumvent these debt brake issues, (FT suggests that current Parliament might already change the debt brake), the process might face a bumpy path. German yields opened the day even in slightly negative territory, but gradually the prospect for some fiscal stimulus further down the road triggered (admittedly) hesitant steeping of the German curve with yields changing between -1 bp (2-y) and +2.5 bps (30-y). The German DAX (+0.6%) outperforms the broader EMU indices (EuroStoxx 50 -0.5%). The euro in Asia trading looked like preparing an attack on the EUR/USD 1.0533 YTD top, but momentum already dwindled going into the start of European trading. At 1.047, the pair currently trades almost unchanged from Friday’s close. Whether it is related to the outcome of the German elections or to hope on a Ukraine ceasefire is unclear, but CEE currencies again outperform today.

US markets are looking for direction after a rather abrupt risk-off repositioning on Friday. This sell-off was partially triggered by disappointing US data (PMI’s). We look out whether uncertainty due to the Trump announcements/ policy at some point might become negative for the US economic exceptionalism narrative. The jury is still out. The Trump administration taking several measures against China including targeting investment in (strategic) US sectors and other trade-related measures, suggest that the trade war is at risk of further escalating rather than cooling down. US equities at the open show only a highly unconvincing rebound after Friday’s sell-off (Nasdaq +0.1% vs 2.20% decline on Friday). The rebound in US yields is also negligible after Friday’s decline of +/- 7.0 bps. Regarding the data later this week, in the US we look out for US consumer confidence (conf. board tomorrow) and the January PCE price deflators (Friday). At the end of this week EMU member states, including Spain, France and Germany will already publish preliminary February CPI data.

News & Views

The German Bundesbank in its monthly bulletin projected slight growth in the first quarter of this year following a 0.2% Q/Q decline in Q4 2024. Factors like high uncertainty, increased financing costs, and low capacity utilization still weigh on investments, but recent improvements in order intake could support demand. Exports might perform better, especially if there are anticipatory effects due to potential US tariffs. Private consumption and services are expected to continue supporting the economy. The German national bank also backed the case to raise the debt brake (which limits public deficits to 0.35% of GDP). "Binding fiscal rules make a very important contribution to ensuring solid state finances. In principle, however, it is entirely justifiable to adapt the debt brake's borrowing limit to changing conditions when the public debt ratio is low.".

The Belgian debt agency conducted its first regular OLO-auction of the year. They raised a combined €3.04bn by tapping OLO 102 (€0.71bn 2.7% Oct2029), OLO 73 (€1.28bn 3% Jun2034) and OLO 76 (€1.05bn 1.9% Jun2038). The auction bid cover was a good 2.39. Earlier this year, the BDA raised €7bn via a new 10-yr syndicated deal (OLO 103 3.1% Jun2035). Two more syndications, one with a 5-yr tenor and one with a longer-dated one (long 20y, 2046? long 25y, 2051?) are expected later this year. With regards to 2025 funding, the debt agency plans to issue €42bn of OLO’s to cover the lion’s share of the €44.65bn gross borrowing requirement.