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U.S. markets are closed today for Presidents' Day so European markets are struggling for direction. With lighter trading volumes anticipated there are likely to be few trading triggers today. There are no high impacting economic data releases due, however traders will look cautiously at a speech by Bank of England (BOE) Governor Mark Carney about leadership and values especially given his hawkish tone at the BoE meeting last week.

FTSE 100

In the daily timeframe, FTSE 100 has recovered from the lows of the sharp declines and is now testing the important 7300 zone. A break of the trend line from March above 7330 would put the bulls in control with initial resistance at 7355 and then the 61.8% retracement at 7460. However, if the trend line is confirmed as resistance then any downside move will find support at 7275, 7205 and then 7170.

DAX

German stocks were modestly higher on Monday as oil prices advanced and the EURUSD held steady above 1.24. The rally in the DAX index has stalled at 12550 and represents a retracement of less than 50% of the decline from the highs. A break of 12550 is needed for a continued bullish move with resistance at 12665 and 12742 before reaching the 61.8% retracement at 12870. Major trend line and horizontal resistance will be found near 13000. On the flip-side further declines would find support at 12200 and 12050.

The euro has paused on Monday, after strong losses on Friday. Currently, the pair is trading at 1.2420, up 0.08% on the day. On the release front, the eurozone current account surplus narrowed to EUR 29.9 billion, short of the estimate of EUR 30.5 billion. There are no US indicators, as US markets are closed for Presidents' Day. On Tuesday, Germany releases ZEW Economic Sentiment and the eurozone will publish releases Consumer Confidence.

The euro lost close to 1% on Friday, as the US posted sharp housing and consumer confidence reports. Building Permits jumped to 1.40 million in January, up from 1.30 million in December. This easily beat the estimate of 1.29 million. Housing Starts followed suit and improved to 1.33 million in January, up from 1.19 million a month earlier. This was well above the forecast of 1.28 million. There was more positive news from consumer confidence, as UoM Consumer Confidence climbed to 99.9, well above the estimate of 95.4 points. This marked a 4-month high.

The recent volatility in the currency markets has not gone unnoticed by Mario Draghi & Co. Last week, the ECB head expressed confidence that eurozone inflation is moving closer to the Bank's target of just below 2 percent, due to improving economic growth. However, Draghi listed currency market volatility as an obstacle to the inflation target, and added that the ECB would carefully monitor the euro's exchange rates. The ECB tapered its massive stimulus program from EUR 60 billion to 30 billion/mth in January, and the markets are on the lookout for hints as to whether the ECB will normalize policy and wind up stimulus in September. Any hints from ECB policymakers about a change in policy could have a strong impact on the movement of the euro.

The strong bullish momentum that prevailed in the market last week allowed the Euro to hit a new 2015/2018 high of 1.2550 against the US Dollar early on Friday. This sentiment did allay during the following hours, thus leaving the rate at the psychological 1.24 mark on Monday morning.

It is expected that this latest wave down was just a minor correction against the overall up-trend, as bulls were gaining strength for further appreciation within the following trading hours.

Meanwhile, this session should be relatively calm for the pair, as no significant fundamentals are to be released. Thus, the Euro is likely to fluctuate within the bounds of the 55– and 200-hour SMAs in the 1.2472/1.2350 territory. Supported by the weekly PP and the 100-hour SMA at 1.24, the pair could be tended slightly north.

Following a test of 1.4150 on Friday morning, downside risks took over the market and pushed the rate 0.92% lower during the following hours. As a result, the pair was testing the weekly PP and the 100-hour SMA circa 1.40 early today.

It is likely that this psychological level provides an unbreakable support, thus allowing for further gains in this session. The rate could demonstrate low volatility, especially if no fundamentals are scheduled until the evening. Thus, the Pound could fluctuate between the 55– and 100-hour moving averages for a brief period of time before breaching the former and approaching the weekly R1 at 1.4204.

Meanwhile, the lowest point today should be the 200-hour SMA and the 38.20% Fibo retracement at 1.3950.

The US Dollar managed to regain some lost positions against the Japanese Yen on Friday, thus reversing its period of decline apparent since February 2. By Monday morning, the Greenback had surpassed the 55-hour SMA and was moving towards the weekly PP, the monthly S1 and the 100-hour SMA circa 107.00.

Technical indicators on the daily time-frame suggest that the pair could edge higher this week, as bulls might want to use this opportunity to push the rate away from its 2017/2018 low of 105.70 reached early on Friday.

Strong gains, however, could be limited in this session due to the strong resistance at 107.00. The ultimate daily high should be the 200-hour SMA at 108.00 and the low—the 105.00 mark.

The yellow metal has remained stable against the US Dollar during the following two weeks. Along the way, the rate did manage to reach a new 2017/2018 high at 1,360.00. The rate has since edged slightly lower and breached the 55-hour SMA. 

Technical indicators demonstrate that some slight downside potential still exists in the market. But given that the pair is facing a strong support of the 100-hour SMA and the weekly and monthly PPs, losses should not exceed 1,338.10. From the upside, Gold is restricted by the 55-hour SMA circa 1,355.00. 

Banks in the US are closed today; thus, the market is unlikely to introduce significant changes to the pair's positioning. The rate might even consolidate and remain between the 55– and 100-hour SMAs. If bulls are to prevail, gains could be capped at 1,360.00.

The USD/JPY has been rejecting the POC zone 106.16-30 and the price formed a V-shaped bottom. The recent USD recovery aims for 106.60 and if the price makes a 4h close above 106.60 we could see 107.20. At this point the pair is supported but for bulls to dominate 106.60 must be broken. A steep retracement trend line break suggest further up, but if the price breaks below 106.00, we could see bears dominating again and the price might turn down to 105.40 zone.

W H3 -Weekly Camarilla Pivot (Weekly Interim Resistance)

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Daily Camarilla Pivot (Daily Support)

D L4 – Daily H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

Trading volume is going to remain low
The recent selloff was clearly an opportunity
The dollar index is still not showing any clear sign of robustness

European markets are picking up a bullish sign from Asian trading session although some of the countries are still celebrating the Chinese Lunar New Year holidays. Trading volume is going to remain low as the US markets are also closed due to a national holiday- President's Day. Qualms are lingering again over in the US about Russia interfering in the US election in 2016 and this impacted the last trading session over in the US. Nonetheless, this is something which investors have heard way too many times and the impact on the markets of this particular event is minimal. The S&P500 index closed the week on a higher note with a weekly gain of 4.3%.

Global equities are also showing more healthy signs as the recovery continues. The recent selloff was clearly an opportunity and bargain hunters have taken an advantage of this opportunity.

The energy in the Japanese yen is something which forex traders are paying close attention as the currency is drifting around a 15-month high. The Japanese economic data, export and import, confirmed that the economy is in a healthy condition and both numbers grew strongly in January from a year ago. In today's data, we have seen the import numbers picking up more steam and this resulted in a trade deficit- something not witnessed since May 2017.

The dollar index is still not showing any clear sign of robustness and it appears that the overall bearish trend could continue. It is likely that the index could touch the level of 85 in the coming months if the momentum continues in this manner. The weaker dollar is boosting the gold shine. The precious metal could test the resistance of 1384 and this is despite the fact that the Fed could change its stance towards a more hawkish monetary policy. Gold is also an option for an inflation hedge trade and a more aggressive monetary policy by the Fed, could trigger the risk off trade. Both of these affairs are working in gold's favour.

This is an important week for the equity and forex market. The GBP/USD touched the high of 1.4345 on January 25th but since then we have seen a correction for the pair. We have a slew of UK economic data due this week which includes the fourth-quarter GDP and employment figures. We know that some members of the BOE have adopted a more hawkish stance towards the monetary policy. If the numbers are overwhelming, it is likely that we could see more strength for Sterling.

A number of Fed's policymakers are speaking this week, not to mention that we also have the FOMC minute due on Wednesday. The Fed is behind the curve and inflation is picking up more steam, hence the Fed would have to adopt a more aggressive stance towards their monetary policy. This is the angle through which forex traders will be gauging the message from the Fed committee.

The ECB's monetary policy meeting accounts due on Thursday, something which will give us an idea if the ECB is going to end their tapering program as per the plan. It won't be long before the market participant would expect the ECB to start talking about the increase in the interest rate. Such an event would be highly bullish for the euro traders.

In terms of earning, equity traders are going to keep an eye on consumer sector and Wallmart is the important name. HSBC and Barclays are the two prominent names in the banking space coming up with their earnings. In the mining area, we will be paying attention towards BHP Billiton's earning.

Crude oil increases back, trading above 62 range and heading higher. Crude oil is contained between resistance at 64.77 (11/01/2017) and support at 55.82 (07/12/2017 low). The technical structure suggests short-term upside moves.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness is very likely. For the time being, the pair lies in an upside trend since June 2017. Support lies at 42.20 (16/11/2016) while resistance is located at 77.83 (20/11/2014). Crude oil is trading largely above its 200 DMA.

Silver is heading lower following recent sideways trading. Silver lies between hourly resistance and support at 17.07 (09/11/2018 high) and 16.03 (05/12/2017 low). The technical structure suggests further short-term weakness.

In the long-term, the trend remains negative/ sideways. Further downside is very likely. The pair is trading below its 200 DMA. Resistance is located at 21.58 (10/07/2014 high). Strong support can be found at 11.75 (20/04/2009).