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Bloomberg reported that European Commisions is planning to counter US President Donal Trump's steel and aluminum tariffs. And EU officials discussed retaliatory tariff of 25 against all US goods.

European Commission's chief spokesman Margaritis Schinas said regarding March 7 meeting

• "The Commissioners will discuss our reaction. It will be swift, firm, and proportionate - based on three main criteria compatible with WTO rules."
• "Let me remind you the trade policy is not a zero-sum game. It is not about winners or losers, and we believe that trade can and should be win-win."
• EU "cannot be expected to bury our heads in the sand when someone takes unilateral and unfair actions against us that put thousands of European jobs at risk".

Last week European Commission President Jean-Claude Juncker issed a statement as immediate response to Trumps tariffs proposal. Here is the old statement.

XAUUSD (1322.40): Gold prices remained muted to the Italian election outcome yesterday. However, price action is seen trading within Monday's range at the time of writing. Following the brief retest to the resistance level at 1328 - 1327, gold prices edged lower only to reverse some of the gains. A breakout above the resistance level could keep gold prices biased to the upside with the potential to target 1357 level of resistance. To the downside, gold prices will need to close lower below 1317 to post the declines toward 1303.

GBPUSD (1.3843): The British pound was seen extending the gains for the third consecutive day although the momentum looks to be slowing in the near term. The brief weakness in the U.S. dollar alongside a better than expected services PMI helped to push the currency pair higher on the day. On the 4-hour chart, price action was seen retracing back to 1.3860 level which marks the 38.2% retracement level. A reversal at this level could see GBPUSD retesting the previous lows at 1.3734. To the upside, price will need to breakout above 1.3897 to shift the bias to the upside.

EURUSD (1.2349): The EURUSD was seen edging posting gains on the day as the common currency brushed aside the uncertainty from the Italian elections. Price action was seen recovering back to the familiar resistance level of 1.2365 - 1.2330. A close above this level could potentially signal a shift in the bias to the upside and could also invalidate the bearish flag pattern which is already showing signs of invalidation. To the downside, EURUSD will be seen targeting 1.2260 level followed by a test of the lower support near 1.2090 - 1.2070 region.

The euro currency was seen muted to the outcome of the Italian elections which showed rising support for the anti-establishment parties while also resulting in a hung parliament. The various parties, led by the 5 Star Movement is expected to start coalition talks.

On the economic front, the UK's services PMI data improved, rising to 54.5 in February as the data beat estimates of 53.3 and gained from January's 53.0. In the Eurozone, retail sales data showed a 0.1% decline which was below estimates of a 0.3% increase.

The non-manufacturing PMI from ISM showed a flat print, as the index registered a print of 55.9, which matched estimates and was unchanged from the previous month's print.

For the day ahead, the economic calendar today will feature comments from NY Fed President; William Dudley followed the U.S. factory orders. Later in the day, the Bank of England's chief economists, Andy Haldane will be speaking. Following the RBA's decision earlier today, the RBA Governor Lowe is expected to speak later in the day.

The Australian dollar showed mild reaction on mixed Australian data and RBA rate decision on Tuesday.

The pair ticked above pivotal barriers at 0.7772/85 (100/200SMA’s) and hit session high at 0.7792, where rally was capped by falling 10SMA.

However, upticks were short-lived as the price returned to the levels where it traded before data at 0.7760 zone.

Australian current account surged in Q4, showing surplus of A$14 billion, up from A$11 billion surplus in Q3 and well above forecasted deficit of A$12.3 billion.

Positive impact from upbeat current account numbers was offset by weaker than expected retail sales which rose by 0.1% in Jan, undershooting forecast for 0.4% rise, but showing better result from Dec, when retail sales were down by 0.5%.

Reserve bank of Australia left interest rates unchanged as expected on today’s meeting. Australian interest rates remain at record low at 1.5% and the central bank signaled that will likely remain on hold in coming months as it is unlikely that the economy would grow 3% or more in 2018.

Techs on daily chart remain weak, with MA’s still in firm bearish setup and fresh bearish momentum building that keeps negative near-term outlook.

The pair remains in a choppy mode in past few sessions, with repeated downside rejections, keeping bears limited for now. Repeated failures to close below cracked pivot at 0.7742 (Fibo 61.8% of 0.7500/0.8135 rally) lacking firmer bearish signal which would be generated on sustained break below.

The upside actions remain limited and 100/200SMA’s still acting as active barriers, following today’s brief probe above and guard another strong barrier at 0.7817 (base of thick daily cloud).

The pair looks for a catalyst to spark fresh action to break out of current congestion and generate fresh direction signal.

Performance of the US dollar which firmed after initial fears about possible trade war started to fade, would give more clues about the near-term direction of the Aussie..

US jobs data on Friday are closely watched for fresh signals.

Res: 0.7772, 0.7785, 0.7792, 0.7817
Sup: 0.7758, 0.7742, 0.7712, 0.7700

BoJ Governor Haruhiko Kuroday said at upper house confirmation hearing:.

• "Underlying price moves remain weak, so our feeling is that there is some distance to achieving our price target,"
• "It's unthinkable to end or weaken the degree of monetary easing before our inflation target is met,"
• "We may adjust interest rates in the future depending on price developments"
• "But I don't have any plan now to raise short-term rates from the current minus 0.1 percent or abandon negative rates,"
• "We will continue to take whatever necessary steps to achieve our price target."

USD index is turning down from 91.00 area where we were looking for a top formation of a wave 4 bounce which shows evidences of a top after that nice sell-off to 90.00 which suggests that bears are not over yet. Ideally wave 5 is coming now within wave 5) towards 88.00/87.00 area.

USD Index, 4H

Swiss CPI:

• 0.4% mom vs exp 0.3% mom vs prior -0.1% mom
• 0.6% yoy vs exp 0.6% yoy vs prior 0.7% yoy

Quote from release

"The 0.4% increase compared with the previous month can be explained by several factors including rising prices for air transport. Foreign package holidays also recorded an increase, as did clothing and footwear due to the end of the seasonal sales. In contrast, prices for heating oil, coffee and overnight stays in hotels decreased."

Full release: Consumer prices increased by 0.4% in February

Comments: No impact on the markets, nor would it change SNB's neutral stance

GBPUSD completed three green trading days in a row, while during today’s European session is moving marginally lower. The price is capped by the 20 and 40 simple moving averages in the daily timeframe, but it jumped above the 23.6% Fibonacci retracement level at 1.3810 of the upleg with the low of 1.2120 and the high of 1.4345.

Having a look on the short-term indicators, the bearish correction remains in focus as both are endorsing the downside movement. The MACD oscillator is falling below the trigger and zero lines, while the RSI indicator is pointing south in the negative zone. It is worth mentioning that the 20-SMA is recording a bearish cross with the 40-SMA, suggesting further decline.

If price continues the downside retracement and extends its losses below the 23.6% Fibonacci mark, it could open the door for the 1.3660 – 1.3710 support area. If there is a fall below the latter level, there would be scope to test the next immediate support of 38.2% Fibonacci level slightly above the 1.3450 barrier.

Conversely, if cable penetrates to the upside the aforementioned bearish cross within the simple moving averages, it could then move towards the 1.4150 resistance level, taken from the peak on February 16. A break above this area could take the price towards the 1.4280 resistance barrier.

Looking at the bigger picture, the cable has been developing within an ascending move over the last year, hitting the uptrend line several times in the previous months.