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Daily Pivots: (S1) 1.2208; (P) 1.2248 (R1) 1.2290; More....

EUR/USD continues to draw support from 1.2222 and recovers today. Intraday bias stays neutral with focus on 1.2222. Sustained break there should confirm rejection from 1.2516 key fibonacci level, as well as near term reversal, on bearish divergence condition in 4 hour MACD. That could also signal completion of medium term up trend from 1.0339. In that case, near term outlook will be turned bearish for 38.2% retracement of 1.0339 to 1.2537 at 1.1697. On the upside, though, above 1.2403 minor resistance will revive bullishness and turn focus back to 1.2537.

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. 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. 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) 0.7756; (P) 0.7800; (R1) 0.7824; More...

Intraday bias in AUD/USD is turned neutral for consolidation above 0.7758 temporary low. But further decline is expected as long as 0.7909 resistance holds. Below 0.7758 will target 0.7500 key support. At this point, there is no clearly sign of larger trend reversal yet. Hence, we'd look for strong support from 0.7500 to contain downside and bring rebound. On the upside, above 0.7909 minor resistance will turn bias back to the upside for retesting 0.8135 high.

In the bigger picture, medium term rebound from 0.6826 is seen as a corrective move. It might still extend higher but we'd expect strong resistance from 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside to bring long term down trend resumption. On the downside, break of 0.7500 support will now be an important signal that such corrective rebound is completed.

Daily Pivots: (S1) 1.2530; (P) 1.2607; (R1) 1.2655; More...

Intraday bias in USD/CAD remains neutral for consolidation below 1.2687 temporary top. Further rise is in favor as long as 1.2489 minor support holds. Above 1.2687 will extend the rise from 1.2246 to 1.2919 resistance next. However, below 1.2489 will turn bias back to the downside for 1.2246 again.

In the bigger picture, the rebound from 1.2246 is mixing up the medium term outlook. Nonetheless, USD/CAD is staying below falling 55 day EMA, hence, the bearish case is in favor. That is, fall from 1.4689 is not completed yet. Sustained break of 1.2061 key support will carry larger bearish implication and target 61.8% retracement of 0.9406 to 1.4689 at 1.1424. However, firm break of 1.2919 will revive the case of medium term reversal and turn outlook bullish.

Daily Pivots: (S1) 108.10; (P) 108.70; (R1) 109.36; More...

Intraday bias in USD/JPY remains mildly on the downside. The fall from 114.73 has just resumed. It's part of the pattern from 118.65 high and should target 106.48 fibonacci level. On the upside, break of 110.47 resistance is needed to indicate near term reversal. Otherwise, outlook will stay bearish in case of recovery.

In the bigger picture, current development argues that the corrective pattern from 118.65 is extending. There is risk of dropping further to 61.8% retracement of 98.97 to 118.65 at 106.48. But this level should provide strong support to contain downside and bring resumption of rise from 98.97. However, sustained break of 106.48 will now likely send USD/JPY through 98.97 to resume the corrective fall from 125.85 (2015 high).

Daily Pivots: (S1) 0.9356; (P) 0.9382; (R1) 0.9416; More...

Intraday bias in USD/CHF remains neutral at this point. Also, note that there is no clear sign of trend reversal yet. Therefore, in case of another rise, we'd be cautious on strong resistance from 38.2% retracement of 1.0037 to 0.9254 at 0.9553 to limit upside and bring down trend resumption. On the downside, below 0.9339 minor support will turn bias to the downside for 0.9254. Nonetheless, firm break of 0.9553 will bring stronger rebound to 55 day EMA (now at 0.9616).

In the bigger picture, fall from 1.0342 is developing into 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) 1.3814; (P) 1.3940; (R1) 1.4035; More.....

Intraday bias in GBP/USD remains on the downside as the decline from 1.4345 is still in progress for 1.3651 resistance turned support. At this point, it's still unsure whether decline from 1.4345 is correcting rise from 1.3038, or that from 1.1946, or it's reversing the trend. Break of 1.3651 will turn focus to key fibonacci level at 1.3429. For the moment, further decline will remain expected as long as 1.4066 minor 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 1.4279 so far. Break of 1.3038 support, will suggests that rise from 1.1946 has completed and will turn outlook bearish for retesting this low.

Key Highlights

• The Euro started a fresh downside move this past week and traded below 1.2350 against the US Dollar.
• There was a break below a major bullish trend line with support at 1.2400 on the 4-hours chart of EUR/USD.
• The pair has to stay above the 1.2180-1.2200 support area to avoid further declines.
• The US Wholesale Inventories in Dec 2017 increased 0.4%, compared with the forecast of 0.6%.

EURUSD Technical Analysis

After a decent upside move, the Euro found sellers near the 1.2520 level against the US Dollar. The EUR/USD pair started a fresh downside wave and traded below a key support at 1.2350.

Looking at the 4-hours chart, there was a double top pattern formed around the 1.2520-30 levels. The pair moved down and broke a major bullish trend line with support at 1.2400.

It opened the doors for more declines and the pair traded below the 1.2350 support and settled below the 100 simple moving average (red, 4-hours). The pair even broke the 1.2280 support and traded close to the 1.2200 level.

On the downside, the 1.2180-1.2200 area is a significant support. It acted as a major pivot region on many occasions and it could prevent declines in the near term. Moreover, the 200 simple moving average (green, 4-hours) is also positioned near 1.2180 to act as a support.

If the pair fails to hold the 1.2180 level, there may be further losses towards the next support at 1.2100. On the upside, an initial resistance is around the 23.6% Fib retracement level of the last drop from the 1.2522 high to 1.2205 low.

There is also a bearish trend line with resistance at 1.2300 on the same chart. A push above 1.2300 could take the pair towards the 50% Fib retracement level of the last drop from the 1.2522 high to 1.2205 low at 1.2364.

Today, there is no major economic release lined up in the Euro Zone and the US. Therefore, the market may perhaps follow a consolidation pattern before making the next move.

STOCKS

Dow (24190.90, +1.38%) may trade within 24500-23000 region and try to attempt levels above 24500 in the near term. Note support near 23200 on the 3-day candles which if holds, may take it higher towards 24800 in the coming sessions. .

Dax (12107.48, -1.25%) is sharply down and is likely to find some support in the 11900-11800 region from where a bounce could be expected in the coming sessions.

Nikkei (21382.62, -2.32%) is also likely to move up while support near 21000 holds for now. A bounce towards 22200 or higher looks possible.

Shanghai (3139.38, +0.30%) dropped sharply last week breaking below the channel support on the weekly charts. While it trades lower, a test of 3000 is possible. A break below 3000, if seen could be vulnerable for a sharper fall in the near to medium term. Watch price action near 3000.

Nifty (10454.95, -1.15%) and Sensex (34005.76, -1.18%) are likely to hold above current support levels near 10320 and 33500 respectively. While these supports hold in the coming sessions, a short term bounce is possible.

COMMODITIES

WTI (59.88) has moved up slightly from levels near 58. In case we see a dip below 58, WTI is likely to test 56-54 as visible on the 3-day charts before a bounce from there is seen.

Brent (63.43) on the other hand has been stable above 62-61 levels which seem to be a decent support for the medium term.

Brent-WTI Spread (3.53) has risen from support levels near 3. There is some scope of re-testing 3.00 in the near term before again starting to bounce back to higher levels.

Gold (1326.10) is likely to trade above 1300-1305 region and may inch up towards 1340-1360 levels in the coming sessions. Near term looks bullish.

Copper (3.0785) is trying to move above 3.0750 and if that happens, the price may again start moving up towards 3.15; else failure to move above 3.0750-3.0800 just now could push it down further towards 3.00-2.97 levels in the medium term.

FOREX

Dollar Index (90.176) is currently consolidating around 90.20 and could slowly move towards resistance near 90.5-90.75 on the daily candles .

Euro (1.2281) has seen some strengthening since Friday when it saw a low of 1.2206. It might again attempt a test of support near 1.220-1.225 on the daily candles this week.

Dollar Yen (108.70) saw a low of 108.05 on Friday, thereby breaking immediate support on daily candles near 108.5 and testing support on the 3 day candles near 108. As stated previously, 108.0-108.5 are strong support levels (which is reflected on the weekly line chart as well) and Dollar Yen could see a bounce from here towards resistance near 110.5-111.0 on the weekly line charts in the next 1-2 weeks.

Euro Yen (133.60) has gone back up above support near 133 on the daily candles. We see that there is decent support being provided by horizontal trend lines on the daily and 3 day candles near 131.5-132, which has held. We could see Euro Yen move up towards 134 in the coming sessions since the Yen could weaken relatively more against the Dollar as compared to the Euro in this week.

The Pound (1.3846) is again trending downwards after seeing 2 days of consolidation near 1.39. Infact it reached a low of 1.3765 on Friday and could test support on daily candles near 1.37 this week.

Dollar Rupee (64.4025) - is likely to trade below 64.50 while resistance near 64.50/40 may hold in the early sessions this week.

INTEREST RATES

US 10 Year Yield (2.8512), US 30 year Yield (3.1596), US 5 year yield (2.5433), US 2 year yield (2.0732) : US longer term yields moved up further 2 basis points on Friday while the nearer term yields both saw slight declines. There has been little volatility in the past 3-4 days as compared to the week prior. The short period of US govt shutdown on Friday also didn’t impact the yield movement much. We hence again repeat our expectation for the 4 yields to respect their long term resistance levels (2.85, 3.20 (changed from 3.15 previously), 2.7 (changed from 2.6 previously) and 2.2 respectively) in this month.

US 10-5 Year Yield Spread (0.31) is moving up fairly quickly towards the upside target at resistance near 0.35. However, there might be a dip in the coming days as the 10 Yr could move below current levels (near 2.85).

US CPI data release on Wednesday could be an important event for Bond yields. Higher inflation could increase the possibility of the next rate hike to happen in March.

German 10 Year bond yield (0.745) has dipped from resistance near 0.76 and the ranging between 0.7 and 0.76 could continue in this week.

The Asian markets are rather quiet with Japan on holiday. Dollar and Yen are paring back some of last week's gains. Meanwhile, Euro and Aussie are recovering. It now looks like EUR/USD is holding on to 1.2222 key support for the moment. Elsewhere in the Asian Pacific markets are steadily mixed with Hong Kong HSI trading up 1%, South Korea KOPSI up 1.1%, China SSE down -1.3% at the time of writing. The economic calendar is light today, with Swiss CPI as the main feature. Speeches of UK MPC member Ian McCafferty and Gertjan Vlieghe will catch some attention.

UK May planning a series of speeches on Brexit

In the UK, a series of speeches are planned by Prime Minister Theresa May and her cabinet officials in the coming weeks regarding Brexit. International Development Secretary Penny Mordaunt said that "what the public want is, they want the vision and they want some meat on the bone," and, "and that's what they are going to get." The topic of whether to stay in the EU customs union heated up in the past two weeks. EU negotiator Michel Barnier warned on Friday that a transition deal is not a given and that prompted selloff in the Pound. Locally, May is facing objections from Brexiteers on staying the custom union. And, Mordaunt said that May could face defeat in the House of Commons regarding the kind of Brexit that she wants, if "she's not careful".

ECB concerned with US political influence on exchange rate

ECB Governing Council member Ewald Nowotny said the central bank is "certainly concerned about attempts by the United States to politically influence the exchange rate." And he added "that was a theme of economic discussions in Davos, where the ECB addressed this, and it will certainly be a theme at the upcoming G20 summit." Regarding the US economy, Nowotny said that President Donald Trump "started with a good inheritance" from the pervious government. And the current low unemployment, robust growth and tame inflation stem from Trump's predecessor, not his own policies.

German Merkel defended her painful concessions

German Chancellor Angela Merkel defended her concessions to the SPD for reforming the grand coalition. The concessions include handing the finance minister foreign ministry. She described those as "painful" concessions and she "understand the disappointment" of her conservatives. In particular, the government's strict fiscal discipline enforced by former finance minister Wolfgang Schaeuble could be loosen up. But Merkel said that "we have also approved the policies and the finance minister cannot simply do as he likes." Also, she emphasized that "we need to show the we can start a new team".

Looking ahead

Inflation and GDP data will be two key focuses this week. Swiss, UK and US will release CPI. Japan and Eurozone will release GDP. In addition, Australia employment will also be watched. Here are some highlights for the week:

• Monday: Swiss CPI
• Tuesday: Japan PPI, machine tools orders; Australia NAB business confidence; Swiss PPI; UK CPI, PPI
• Wednesday: Japan GDP; New Zealand inflation expectation; German GDP; Eurozone GDP; US CPI, retail sales, business inventories
• Thursday: Australia employment; Eurozone trade balance; US PPI, Empire State manufacturing, Philly Fed manufacturing, industrial production, NAHB Housing index
• Friday: New Zealand manufacturing index; UK retail sales; Canada manufacturing sales; US housing starts and building permits, import prices, U of Michigan sentiment

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.2208; (P) 1.2248 (R1) 1.2290; More....

EUR/USD continues to draw support from 1.2222 and recovers today. Intraday bias stays neutral with focus on 1.2222. Sustained break there should confirm rejection from 1.2516 key fibonacci level, as well as near term reversal, on bearish divergence condition in 4 hour MACD. That could also signal completion of medium term up trend from 1.0339. In that case, near term outlook will be turned bearish for 38.2% retracement of 1.0339 to 1.2537 at 1.1697. On the upside, though, above 1.2403 minor resistance will revive bullishness and turn focus back to 1.2537.

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. 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. 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.

Economic Indicators Update

USDCHF - With the pair closing higher the past week, it looks to build up on that gain in the new week. On the downside, support lies at the 0.9350 level. A turn below here will open the door for more weakness towards the 0.9300 level and then the 0.9250 level. On the upside, resistance resides at the 0.9450 level where a break will clear the way for more strength to occur towards the 0.9500 level. Further out, resistance comes in at the 0.9550 level. Above here if seen will turn attention to 0.9550. All in all, USDCHF faces further recovery higher.