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The GBP/USD spiked during early trading hours, and despite the holiday markets we see volatility in the GBP/USD pair. At this point, we can see a bullish zig-zag pattern trying to close above the D H3 level with a bullish candle. A dip towards POC zone (W L3, D L3, ATR projection low, EMA89, bullish order block)1.3450-3470 could spike the price up towards 1.3550 again but also watch out for a 4h candle close above 1.3540. Strong momentum above 1.3540 might lead the pair to 1.3570, 1.3586 and 1.3623.

Here are the latest developments in global markets:

FOREX: The dollar traded slightly higher versus a basket of currencies after yesterday reaching its lowest since late September. The euro retreated a bit versus the dollar after trading around three-year high levels on Tuesday.

STOCKS: Hong Kong's Hang Seng was 0.1% higher, trading at its highest in a decade. Other major Asian indices were in the green, while Japanese markets were closed for a holiday. Euro Stoxx 50 futures were up by 0.3% at 0725 GMT, while Dow, S&P 500 and Nasdaq 100 traded higher by 0.2%, 0.1% and 0.1% respectively. The S&P 500 and the Nasdaq Composite yesterday finished the day at record highs, with the latter gaining the most after strong gains by tech stocks and closing above 7,000 for the first time.

COMMODITIES: WTI and Brent crude were down, though not by much, trading at $60.32 and $66.51 per barrel respectively after yesterday touching their highest since mid-2015. Gold was 0.4% lower at $1,312.97 after rising in every single trading day since mid-December.

Major movers: Dollar slightly above Tuesday's low; euro takes breather; sterling momentarily pierces $1.36 level

The dollar index was slightly up at 91.96 after touching 91.75 on Tuesday, its lowest in three-and-a-half months. The US currency was losing ground yesterday even as Treasury yields were on the rise. Dollar/yen gained, though not by much as well, trading at 112.36. Yesterday the pair hit 112.04, its lowest since mid-December.

Euro/dollar, which was on the forefront yesterday, slipped slightly after touching 1.2082 on Tuesday and coming close to early September's 1.2092 which is also the highest the pair has reached since the beginning of 2015. Hopes of policy normalization on behalf of the ECB and positive signs for economic activity in the eurozone – December's manufacturing PMI which was confirmed at 60.6 yesterday constitutes the strongest reading since the series began two decades ago – have been supporting the common currency. The pair was at 1.2042.

Pound/dollar was marginally higher, not far below the 1.36 handle after previously piercing through it to record its highest since late September.

The oil-linked Canadian dollar was little changed versus the greenback, trading above the 1.25 level after hitting 1.2496 earlier in the day, its lowest since October 20.

Aussie/dollar and kiwi/dollar were down by 0.2% and 0.1%, at 0.7815 and 0.7095 respectively. Despite the decline they both traded around fresh multi-week high levels reached yesterday, benefitting from higher metal prices in recent days.

Day ahead: Dollar awaits FOMC meeting minutes

On Wednesday, the Federal Open Market Committee will publish minutes from its latest meeting that took place on December 12-13 at 1900 GMT, with investors being cautious to see whether Fed policymakers continue to support further monetary tightening the next months. Moreover, they will be eager to hear the central bank's view on the freshly signed US tax legislation and its impact on the country's economic growth. Any perceived hawkish message is anticipated to push the dollar higher and vice versa.

Earlier at 1500 GMT, the Institute for Supply Management (ISM) will deliver readings on the US manufacturing PMI. The index is expected to inch down by 0.1 points to 58.1 in December. Any value above 50 indicates that the sector is growing and therefore the economy is strengthening.

In the eurozone, Germany's unemployment rate due at 0900 GMT might bring some volatility to the euro. According to forecasts, the rate is said to remain flat at a record low of 5.6% in December, while the number of unemployed people is forecast to reduce by 12,000 compared to a reduction of 18,000 seen in the previous month.

In energy markets, investors will be waiting for the API weekly report to show changes in the US oil inventories at 2130 GMT.

Technical Analysis: USDJPY hovers near two-week lows; bearish in short-term

USDJPY had a disappointing start in the first trading day of 2018, increasing negative momentum as it touched a two-week low of 112.04. In the short -term, the pair holds a bearish bias given that the RSI is currently below its neutral level (50) and the MACD has moved below its trigger line.

Support for further decreases could come at the 200-day exponential moving average at 111.91 and the 23.6% Fibonacci mark at 111.70 of the downleg from 114.72 to 110.83.

A move to the upside might see the 50-day EMA at 112.67, which is marginally below the 50% Fibonacci, acting as resistance. Breaking above this area, the 61.8% Fibonacci at 113.20 could act as another potential barrier before the focus shifts to the previous high of 113.74 and the nine-month high of 114.72.

Yesterday's US trading session ended positively with the S&P500 equity index closing at a new record high, while Dow Jones and Nasdaq100 also gained and ended up close to all-time highs. Currency markets were mainly flat during the Asian session, commodity currencies AUD, NZD, and CAD retreated slightly against the U.S. Dollar. At the start of the European session, EUR is trading close to 1.2000 against the U.S. Dollar, while GBP is trading close to 1.3600 level in anticipation of the construction PMI data release, which is scheduled for today and could impact this currency pair to some degree. The geopolitical front is dominated by reports that North Korea will reopen a cross-border communication channel with South Korea, according to officials in Seoul. The proposed communication would aim to establish formal dialogue about sending a North Korean delegation to the PyeongChang Winter Olympics. This is possibly seen as another sign of easing tensions between north and south.

German Markit Manufacturing PMI (Dec) came in unchanged at 63.3, as expected. Eurozone Markit Manufacturing PMI (Dec) data was also unchanged at 60.6, as expected. Last month's number was the highest this decade, showing strength in the economy. EURUSD moved higher on the data from 1.20450 to 1.20776.

UK Markit Manufacturing PMI (Dec) was lower than expected at 56.3 v 58.0, with a previous number of 58.2. EURGBP moved higher from 0.88853 to 0.89180 after the data was released.

Canadian Markit Manufacturing PMI (Dec) came in at 54.7, higher than the consensus of 54.5, and the previous value of 54.4. USDCAD sold off after the release to retest 1.2500.

US Markit Manufacturing PMI (Dec) came in at 55.1, slightly above the consensus, which predicted an unchanged value of 55.0. USDJPY moved lower from 112.264 to 112.093 before recovering.

EURUSD is down 0.20% overnight, trading at around 1.2033.

USDJPY is almost flat 0.02% in early session trading at around 112.30.

GBPUSD is up 0.04% to trade around 1.3595.

Gold is down 0.19% in early morning trading at around $1,315.00.

WTI is up 0.04%, trading around $60.40.

Major data releases for today:

At 08.15 GMT, Swiss Real Retail Sales (YoY) (Nov) is due for release, with the prior number coming in at -3%. CHF pairs will be under scrutiny if the number is wide of the mark.

At 09.00 GMT, Eurozone Unemployment Rate s.a.(Dec) data is expected to be 5.5%, with the previous reading coming in at 5.6%. Unemployment Change (Dec) is also due out at this time, expected to be -12K with a prior of -18K. EUR pairs could see price movement if the data released varies from the consensus.

At 09.30 GMT, UK Construction PMI (Dec) is out and expected at 52.7, with a prior number of 53.1. GBP crosses may experience volatility if the number differs from the expected reading.

At 15:00 GMT, US ISM Prices Paid (Dec) is due out with a consensus of 65.0 expected. The previous reading was 65.5. ISM Manufacturing PMI (Dec) is also out at this time, with an expectation for a number of 58.2 v 58.2 prior. Finally, Construction Spending (MoM) (Nov) is expected at 0.6% from the previous reading of 1.4%. USD crosses could be impacted by the volume of data releases at this time, which may result in turbulent price action.

At 19:00 GMT, Federal Open Market Committee Meeting Minutes will be released. Traders will look for details concerning what was discussed and where the committee is positioned in regard to Interest Rates and forward guidance. Their Positioning may affect USD pairs.

The Euro eases on Wednesday, taking a breather after strong four-day rally which peaked at 1.2081 (the highest since early Sep 2017) on Tuesday. Strong uptrend remains intact and underpinned by weak dollar, showing scope for eventual attack at 1.2092 (2017 high, posted on 08 Sep) break of which to extend current wave C of five-wave sequence from 1.1737 towards its 200% Fibonacci expansion at 1.2150 and 1.2166 (Fibo 50% of larger 1.3992/1.0340 descend). Meanwhile, the pair may extend pullback on overbought daily studies towards initial support at 1.2000 (psychological support/Tuesday's low, with deeper dips seen towards 1.1950 (daily Tenkan-sen) and 1.1922 (rising 10SMA). Buying dips remains favored scenario while 10SMA holds. German jobs data are in focus in the European session while US ISM manufacturing data and FOMC minutes are the highlights of the US session.

Res: 1.2092, 1.2110, 1.2150, 1.2166
Sup: 1.2031, 1.2000, 1.1961, 1.1950

The British pound trades higher on an intraday basis against the U.S dollar, moving to a fresh weekly top, hitting 1.3610. The GBPUSD pair has continued to surge, after breaking above the December price-high on Tuesday, with buyers now looking towards the 2017 price-high, which is located at 1.3657. During the upcoming European trading session, the main market moving event for sterling will be the UK Construction PMI. Most economists are expecting that construction activity in the UK moved lower in December, compared to the November reading.

The GBPUSD pair is further bullish while trading above the 1.3567 technical level, buyers will now likely target the 1.3657 and 1.3700 resistance levels.

Should price-action on the GBPUSD pair move below the 1.3567 level, sellers may move to re-test the 1.3500 support region.

The euro has recovered upside trading momentum against the U.S dollar, with price-action trading towards the 1.2060 level, moving ever closer to the 2017 price-high, at 1.2093. Yesterday, the EURUSD pair gave back strong intraday gains, after the United States Manufacturing PMI moved to its highest level since March 2015, briefly boosting the greenback. Wednesday trading will be heavily data driven, as we see the release of German Unemployment data and the U.S ISM Manufacturing report for the month of December.

The EURUSD pair is strongly intraday bullish while trading above the 1.2030 level, further upside towards 1.2093 and 1.2150 remain likely.

Should the EURUSD pair start to move below the 1.2030 level, sellers may push price-action towards the 1.1989 and 1.1958 support zones.

Monetary policy will dominate the headlines on Wednesday in a week filled with high-profile data releases. The minutes of the December Federal Open Market Committee (FOMC) meeting will be closely scrutinized by market participants involved in equities and currencies.

Investors can expect a steady stream of economic data ahead of the FOMC minutes. Action begins at 08:00 GMT with a report on Spanish unemployment. Over the next 30 minutes, investors will also monitor a pair of Swiss reports, including retail sales and PMI.

At 09:00 GMT, investors can expect the latest German unemployment figures to make the rounds. Unemployment in Europe’s largest economy is forecast to drop by 12,000 in December, with the overall jobless rate holding steady at 5.5%.

IHS Markit and the Chartered Institute of Purchasing & Supply will report on UK construction PMI at 09:30 GMT. The monthly indicator is expected to fall to 52.7 in December from 53.1 the previous month.

Reports on Portuguese consumer and business confidence will make the rounds ahead of the North American session.

Headlining the US economic calendar is the monthly manufacturing PMI courtesy of the Institute for Supply Management (ISM). The monthly gauge is expected to show a reading of 58.2 in December, unchanged from the previous month.

Separately, the Department of Commerce will report on construction spending for the month of November. Construction outlays are projected to rise 0.6% in November after rising 1.4% the previous month.

The FOMC minutes will be released at 19:00 GMT, and will provide a more granular look at the Federal Reserve’s decision to raise interest rates last month. The FOMC is expected to continue its path of gradual policy normalization under the guidance of Jerome Powell, who takes over as Chair in February.

EUR/USD

The euro opened the year at four-month highs, as the greenback posted sharp declines against a basket of currencies. The EUR/USD exchange rate advanced past 1.2050 on Tuesday, and would later settle around 1.2060. At press time, the pair was trading in the mid-1.20 region, with initial resistance likely to come at 1.2095. On the opposite side of the spectrum, the pair faces immediate support at 1.2020.

GBP/USD

Pound sterling also enjoyed strong upside on Tuesday, with cable trading at more than three-month highs. The GBP/USD is trading right around the 1.3600 mark, with the bulls eyeing fresh highs near 1.3655. That represents the high point of 2017.

USD/JPY

The USD/JPY resumed its downtrend on Tuesday, with prices falling to their lowest level in a month. The pair recovered slightly overnight, but continued to trade around 112.33. The pair risks falling below the first technical support near 111.75, which represents the 200-DMA. On the flipside, resistance is likely found at 112.50.

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The precious metal, gold has started the year with a bang, thanks to the saggy dollar index. The yellow metal has enjoyed a nine-day rally and it crossed above a critical point of $1300. Crossing this level was a clear indication that the bulls are in strong control of the price and the longer trend is skewed to the upside. Having said that, it is also important to pay attention to technical indicators and the 14 day - Relative Strength Index is giving a warning sign because it has topped the level of 70. This is usually a sign that some overbuying is taking place in the market and perhaps some correction may be on the cards. Nonetheless, the index can stay in the overbought territory for more than the usual time, especially when the momentum is strong and the bulls control the balance of power.

Wall Street started the year with the same momentum as the last year and both Nasdaq and S&P500 posted some record highs. This is supporting the sentiment over in Europe.

The EUR/USD dollar has eased off this morning after a smashing start for this year. The rally is primarily pumped by the optimism that the eurozone's economy is performing well and the European central bank would stay on track to finish its ultra-loose monetary policy this year in September. We do think that the path of least resistance for the euro-dollar pair is skewed to the upside and the pair could touch the level of 1.28 by the end of this year. The currency pair has touched a four-month high of 1.2081 yesterday and the September 2017 high of 1.2092 remain very much on the table.

The dollar index is trading towards its low of the day and it has already broken the November 27 low of 92.49 and now targeting the September 08th low of 91.41. The FOMC minutes are due later today and traders would like to know the more reasonable answer around the biggest debate -inflation. During Janet Yellen's tenure, she hasn’t made any meaningful progress around inflation. A vast majority of Fed staff do think that weakness in the core inflation may continue this year and the upcoming Fed chairman, Jerome Powell would have to address this issue pretty much head-on. The Fed needs to explain if they have any plans to increase the interest rate more than 3 times this year given that they did increase the outlook for economic growth.

Over in Iran, the protests accelerates mainly due to the orchestra from abroad chiefly Mr Trump who took the matters to Twitter to divide the nation further. Mr Trump had a meeting with his administration to put sanctions on Iran. Any action which involves new or old sanction on Iran by the US would not be taken lightly by Iran and that would have some serious impact on the gold price. Oil is hovering near a 30-month high and investors are concerned if the situation get out of control it would have supply disruption and Iran pumps nearly 3.8 million barrels a day.

Bitcoin has bounced back up after a WSJ report showed that a venture firm (which has a track record on betting big firms like Airbnb and SpaceX) has been accumulating bitcoin and the fund may be holding approximately $20million worth of Bitcoin. BTC has crossed above the 15K mark, an important resistance level broken, and this opens the floor for Bitcoin to move towards the 20K mark (as long as it stays above 15K).

NZDUSD (0.7066): The New Zealand dollar is showing signs of exhaustion to the rally following the previous two day's doji close. A bearish close today could indicate a near term correction in price. Support at 0.7062 remains a key level for the currency pair. A break down below this level could see the correction extending lower to 0.6917. To the upside, if the support holds, NZDUSD is likely to extend the gains to the next resistance level found at 0.7160.

USDJPY (112.25): The USDJPY extended declines for a third consecutive daily session. The lower high formed on the daily chart and the subsequent declines suggest that the downside momentum could push USDJPY towards the 110.70 level of support. Price action remains largely in a consolidation mode within the range of 114.00 - 110.70 region. On the 4-hour chart USDJPY was seen bouncing off the short term support near 112.04. The short term gains could be limited however. In the event that the support at 112.04 breaks, further declines could see USDJPY extending towards the next lower support near 111.61 - 111.57 area.