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For the 24 hours to 23:00 GMT, the GBP rose 0.4% against the USD and closed at 1.3900.

In the Asian session, at GMT0400, the pair is trading at 1.3895, with the GBP trading slightly lower against the USD from yesterday’s close.

The pair is expected to find support at 1.3831, and a fall through could take it to the next support level of 1.3768. The pair is expected to find its first resistance at 1.3944, and a rise through could take it to the next resistance level of 1.3994.

Moving ahead, traders would focus on UK’s Halifax house prices data for February, slated to release in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.85% against the JPY and closed at 105.51.

In the Asian session, at GMT0400, the pair is trading at 105.69, with the USD trading 0.17% higher against the JPY from yesterday's close.

Early morning data showed that Japan's preliminary leading economic index eased to a level of 104.8 in January, more than market expectations for a fall to a level of 106.5. In the previous month, the index had recorded a level of 107.4. Moreover, the nation's flash coincident index registered a more-than-expected drop to a level of 114.0 in January, compared to market consensus for a fall to a level of 115.3. The index had registered a reading of 120.2 in the prior month.

The pair is expected to find support at 105.29, and a fall through could take it to the next support level of 104.88. The pair is expected to find its first resistance at 106.27, and a rise through could take it to the next resistance level of 106.84.

Going ahead, investors would keep a close watch on Japan's final 4Q GDP and (BOP basis) trade balance data for January, both due to release overnight.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.29% against the CHF and closed at 0.9368.

On the macro front, Switzerland’s consumer price index (CPI) rose 0.6% on an annual basis in February, meeting market expectations and marking its weakest growth rate since August 2017. The CPI had advanced 0.7% in the previous month.

In the Asian session, at GMT0400, the pair is trading at 0.9371, with the USD trading slightly higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9348, and a fall through could take it to the next support level of 0.9324. The pair is expected to find its first resistance at 0.9407, and a rise through could take it to the next resistance level of 0.9442.

With no key macroeconomic releases in Switzerland today, investor sentiment would be governed by global macroeconomic events.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.45% against the CAD and closed at 1.292.

In economic news, Canada's seasonally adjusted Ivey purchasing managers' index (PMI) climbed to a level of 59.6 in February, compared to a level of 55.2 in the prior month.

In the Asian session, at GMT0400, the pair is trading at 1.2927, with the USD trading 0.1% higher against the CAD from yesterday's close.

The pair is expected to find support at 1.2862, and a fall through could take it to the next support level of 1.2796. The pair is expected to find its first resistance at 1.2994, and a rise through could take it to the next resistance level of 1.3060.

Later in the day, investors would turn their attention to the Bank of Canada's (BoC) monetary policy decision, wherein the central bank is widely expected to stand pat on interest rates.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

DAX is correcting higher degree cycle from February 2016. Short-term Elliott Wave view suggests that Primary wave ((X)) ended with the rally to 12597.51. Decline from there is unfolding as a Zigzag Elliott Wave structure where Intermediate wave (A) ended at 11725 and Intermediate wave (B) is proposed complete at 12270.50 high in New York earlier today. However, Index still needs to break below Intermediate wave (A) at 11725 to give validity to this view.

Zigzag structure is a 5-3-5 sequence and according to Elliott wave theory, after ending the first 5 waves, there should be a correction against the first leg in 3, 7 or 11 swings. The correction should then fail & extend in another 5 waves into the direction of first leg, i.e either Higher/lower. In DAX case, Intermediate wave (B) bounce appears complete at 12270.50, and Index should do another extension lower in Intermediate wave (C) lower.

The internals of Intermediate wave (A) unfolded as 5 waves Elliott Wave Impulse structure where Minor wave 1 at 12388, Minor wave 2 ended at 12515.5, Minor wave 3 ended at 11867, Minor wave 4 ended at 12006.50, and Minor wave 5 of (A) ended at 11725. Internals of Intermediate wave (B) unfolded as Elliott Wave Zigzag correction where Minor wave A ended at 12028, Minor wave B ended at 11942.5, and Minor wave C of (B) ended at 12270.50. Near term, while bounces stay below 12270.50, and more importantly below 12597.5, expect the Index to extend lower.

DAX 1 Hour Elliott Wave Chart

Daily Pivots: (S1) 1.2347; (P) 1.2384 (R1) 1.2440; More....

EUR/USD's rebound from 1.2154 is still in progress. Intraday bias remains on the upside for retesting 1.2555 high. The corrective structure of the fall from 1.2555 to 1.2154 argues that larger rally is not finished. More importantly, firm break of 1.2555 and 1.2516 long term fibonacci level will carry larger bullish implications. On the downside, below 1.2268 minor support will turn bias back to the downside for 1.2154 instead.

In the bigger picture, key fibonacci level at 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 remains intact despite attempts to break. Hence, rise from 1.0339 medium term bottom is still seen as a corrective move for the moment. Rejection from 1.2516 will maintain long term bearish outlook and keep the case for retesting 1.0039 alive. Firm break of 1.1553 support will add more medium term bearishness. However, sustained break of 1.2516 will carry larger bullish implication and target 61.8% retracement of 1.6039 to 1.0339 at 1.3862.

Daily Pivots: (S1) 1.3826; (P) 1.3877; (R1) 1.3939; More....

While GBP/USD's recovery from 1.3711 extends, there is no sign of pick up in momentum. The pair is also bounded inside near term falling channel. Such rebound is viewed as a corrective move and intraday bias stays neutral, with mild bearish near term outlook. On the downside, break of 1.3711 will extend the fall from 1.4345 through 1.3651 resistance turned support. We'll look for strong support from 38.2% retracement of 1.1946 to 1.4345 at 1.3429 to contain downside and bring rebound. This will be the preferred case as long as 1.4144 resistance holds.

In the bigger picture, as long as 1.3038 support holds, medium term outlook in GBP/USD will remains bullish. Rise from 1.1946 is at least correcting the long term down from 2007 high at 2.1161. Further rally would be seen back to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466. However, GBP/USD fails to sustain above 55 month EMA (now at 1.4259) so far. Break of 1.3038 support, will suggest that rise from 1.1946 has completed and will turn outlook bearish for retesting this low.

Daily Pivots: (S1) 0.9369; (P) 0.9394; (R1) 0.9429; More...

USD/CHF is staying in range of 0.9321/9490 and intraday bias remains neutral. On the downside, break of 0.9321 will indicate completion of the rebound from 0.9186. Intraday bias will be turned back to the downside for 0.9186 first. Break will resume larger down trend to 0.9115 projection level. On the upside, break of 0.9490 will revive the case of near term reversal, on bullish convergence condition in 4 hour MACD. In that case, outlook will be turned bullish.

In the bigger picture, fall from 1.0342 is seen as a medium term down trend. Deeper decline should be seen to 100% projection of 1.0342 to 0.9420 from 1.0037 at 0.9115. Break will target 161.8% projection at 0.8545. In any case, sustained trading above 55 day EMA is needed to be the first sign of medium term reversal. Otherwise, outlook will stay bearish even in case of strong rebound.

Daily Pivots: (S1) 105.82; (P) 106.14; (R1) 106.43; More...

USD/JPY's recovery was limited below 4 hour 55 EMA and weakened. But still, it's staying in range above 105.24 temporary low. Intraday bias remains neutral first. Again, as long as 107.67 resistance holds, near term outlook will remain bearish. Break of 105.24 will resume larger decline from 118.65 and target 100% projection of 118.65 to 108.12 from 114.73 at 104.20 next. Firm break there will pave the way to 98.97 key support level and below. However, break of 107.67 will indicate short term bottoming, on bullish convergence condition in 4 hour MACD. In such case, stronger rebound would be seen back to 55 day EMA (now at 108.92) first.

In the bigger picture, current development argues that the corrective pattern from 118.65 is extending. The solid break of 61.8% retracement of 98.97 to 118.65 at 106.48 now suggests that the pattern from 125.85 high is possibly extending. Deeper fall could be seen through 98.97 key support (2016 low). This bearish case will now be favored as long as 110.47 resistance holds.

Dollar is broadly pressured on news of White House economic advisor Gary Cohn's resignation. The dollar index dipped to as low as 89.42 and staying below 90 handle. EUR/USD is staying comfortably back above 1.24 and is set to have a take on 1.2555 key resistance. Meanwhile, USD/JPY might take the lead and test 105.24 support. Canadian Dollar remains the weakest one for the week as Canada, as the closest ally of the US, would be severely hurt if a trade war starts. Also, the ongoing NAFTA renegotiation is not seeing an end yet.

Stock markets are pretty steady though. DOW closed 8- 0.04% at 24884.12 overnight. S&P 500 rose 0.26% while NASDAQ rose 0.26%. Nikkei trades slightly lower by -0.7% at the time of writing. Hong Kong HSI is down -0.35%. Gold breached 1340 handle briefly on this week's strong rebound. But after all, Gold is staying in near term range between 1300/1365.

Markets not too surprised at Cohn's resignation

White House economic top economic adviser Gary Cohn resigned yesterday . It's reported that the decision was made hours after direct confrontation with Trump regarding the steel and aluminum tariffs. Trump requested Cohn to publicly support the tariff plan. But Cohn, as a free trade advocate, didn't answer. The meeting with industry executives, arranged by Cohn for persuading Trump not to impose the tariffs, was also canceled.

Cohn said in a statement that "it has been an honor to serve my country and enact pro-growth economic policies to benefit the American people, in particular the passage of historic tax reform."

Trump said regarding Cohn that "Gary has been my chief economic adviser and did a superb job in driving our agenda, helping to deliver historic tax cuts and reforms and unleashing the American economy once again." And, "he is a rare talent, and I thank him for his dedicated service to the American people."

Stock markets reaction to the news was quiet muted. DOW continued to struggle around 55 H EMA, closed up 0.04% at 24884.12/. Technically, it's also in proximity to 25000 handle, 50% retracement of 25800.35 to 24127.47 at 25008.91. This will a key near term hurdle for DOW to overcome.

Fed Brainard: Mounting tailwinds tip the balance of policy considerations

Fed Governor Lael Brainard said that in the early period of recovery "strong headwinds sapped the momentum" and "weighed down the path of policy. However, "today, with headwinds shifting to tailwinds, the reverse could hold true." And, there will be "substantial" boost from tax cuts and public spending. She pointed out that "mounting tailwinds at a time of full employment and above-trend growth tip the balance of considerations." And, "with greater confidence in achieving the inflation target, continued gradual increases in the federal funds rate are likely to be appropriate."

RBA Low: No strong case for a near term hike

RBA Governor Philip Lowe expressed his optimism on the economy and said it's going to be "stronger" in 2018. He pointed to better business conditions "at any time since before the financial crisis." The economy is "moving in the right direction" and it's likely that the next move in interest rates is "up, no down". However, the board does not see a strong case for a near-term adjustment of monetary policy", thanks to slow progress in unemployment and inflation.

Regarding the steel and aluminum tariffs of the US, Lowe slammed it as "highly regrettable and bad policy". He added that "history is very clear here. Protectionism is costly." If it's confined to steel and aluminum tariffs, Lowe believed "it's manageable for the world economy." However, he warned that "this could turn very badly, though, if it escalates."

RBA is generally expected to keep rates on hold throughout 2018, except that NAB predicts one hike. Slowing growth figure in Q4 and risk of trade wars would add to the case for RBA to stand pat.

Australia GDP grew 0.4% qoq in Q4, below expectation of 0.5% qoq and slowed from prior 0.7% qoq. In the release Chief Economist for the ABS, Bruce Hockman, said that "growth this quarter was driven by the household sector, with continued strength in household income matched by growth in household consumption."

Looking ahead

BoC rate decision is the main focus of the day. It's widely expected to keep interest rate unchanged at 1.25%. Considering the risks regarding NAFTA and trade, there is little chance for the central bank to hike again soon. Elsewhere, Swiss will release Foreign currency reserves in European session. Eurozone will release Q4 GDP final. US will release ADP employment, non-farm productivity and trade balance. Fed will also release Beige Book economic report. Canada will release labor productivity and trade balance.

USD/JPY Daily Outlook

Daily Pivots: (S1) 105.82; (P) 106.14; (R1) 106.43; More...

USD/JPY's recovery was limited below 4 hour 55 EMA and weakened. But still, it's staying in range above 105.24 temporary low. Intraday bias remains neutral first. Again, as long as 107.67 resistance holds, near term outlook will remain bearish. Break of 105.24 will resume larger decline from 118.65 and target 100% projection of 118.65 to 108.12 from 114.73 at 104.20 next. Firm break there will pave the way to 98.97 key support level and below. However, break of 107.67 will indicate short term bottoming, on bullish convergence condition in 4 hour MACD. In such case, stronger rebound would be seen back to 55 day EMA (now at 108.92) first.

In the bigger picture, current development argues that the corrective pattern from 118.65 is extending. The solid break of 61.8% retracement of 98.97 to 118.65 at 106.48 now suggests that the pattern from 125.85 high is possibly extending. Deeper fall could be seen through 98.97 key support (2016 low). This bearish case will now be favored as long as 110.47 resistance holds.

Economic Indicators Update