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The Canadian dollar is showing little movement to start off the trading week. Currently, USD/CAD is trading at 1.2874, up 0.05% on the day. On the release front, Canada releases Foreign Securities Purchases. There are no major events in the US. On Tuesday, the US will release Building Permits.

It could be a volatile week for the currency markets, as the Trump tax plan continues to wind its way through the corridors of Congress. On Friday, the House and the Senate reconciled their tax bills. The uniform bill now goes to both branches, where it is expected pass by a slim margin, as all Democrats plan to vote against the bill. Crucially, two Republican senators who were opposed to the bill have now lent their support to the bill. The legislation is the first major overhaul of the US tax code in 30 years, and would represent a major victory for President Trump, who has campaigned vigorously for the legislation and wants to sign it into law before Christmas.

The Canadian currency gained ground on Wednesday following comments from Bank of Canada Governor Stephen Poloz. who spoke at an event in Toronto. Poloz presented an upbeat assessment of the Canadian economy, and indicated that there is more room for rate hikes next year. With the Fed raising rates this week, and almost certain to do so again at the January meeting, the BoC will be under pressure to increase rates early in 2018, or else the Canadian dollar could take a tumble.

The U.S dollar remains mixed against the Japanese yen, with the pair moving higher on the day, but failing to move above the 112.70 resistance zone. The USDJPY pair received a boost during the Asian trading session, with strong Japanese trade data and rising global stock markets underpinning risk-on sentiment. During the European session, the pair has turned modestly lower, as the U.S dollar index starts to come under pressure after a strong weekly price-close. Traders now await the Bank of Japan interest rates decision, and a raft of high-impacting macroeconomic data from the United States this week.

The USDJPY pair remains bearish while trading below the 112.70 technical level, price-action may decline back towards the 112.40 and 112 support levels.

Should price-action start to move above the 112.70 technical level, buyers may push price-action towards the 113.10 resistance levels. Extended USDJPY resistance is found at the 113.40 and 113.73 levels.

The British pound is starting to turn higher against the U.S dollar, as buyers start to test intraday demand above 1.3360 level. The GBPUSD pair has moved higher on broad-based weakness in the U.S dollar index, with the decline getting underway during the European trading session. Pound sellers failed to push price-action below the key 1.3300 level, further encouraging dip buyers to step-in, and attempt another technical re-test of the 1.3360 level. Traders now await the release of key housing, wage and inflation data from the United States economy this week.

GBPUSD buyers retain control of the pair while price-action trades above the 1.3360 technical level. The 1.3400 and 1.3442 levels remain the key upside resistance levels.

Should price-action fall below the 1.3360 level, sellers will likely push price action back towards the 1.3330 and 1.3300 support levels.

The DAX index has posted sharp gains to start the week. Currently, the index is at 13,320.50, up 1.66% on the day. On the release front, Eurozone Final CPI improved to 1.5%, matching the forecast. On Tuesday, Germany releases Ifo Business Climate.

Investors are keeping a close eye on the Trump tax plan, which is winding its way through Congress. The Republicans appear on the verge of a major legislative victory, and this has boosted global stock markets on Monday. On Friday, the House of Representatives and the Senate reconciled their tax bills. The uniform bill now goes to both branches, where it is expected pass by a slim margin, as all Democrat lawmakers plan to vote against the bill. Crucially, two Republican senators who were opposed to the bill have now lent their support to the bill. The legislation is the first major overhaul of the US tax code in 30 years, and would represent a massive for President Trump, who has campaigned vigorously for the legislation and wants to sign it into law before Christmas.

The ECB is content to hold course and reiterated this stance on Thursday, when policymakers maintained interest rates at a flat 0.00%. ECB President Draghi sounded optimistic about economic conditions in the eurozone, noting that that ECB projections were "going in the right direction". Draghi added a key caveat, stating that "an ample degree of monetary stimulus remains necessary". The ECB raised its forecasts for growth and inflation, but this clearly wasn't enough to coax the cautious Draghi to signal another taper of the Bank's ultra-loose stimulus program. Some policy makers favored signaling a change in policy if inflation continues to move higher, but the majority favored staying the course, which means the ECB will continue buying bonds till September 2018 (or later) and will keep interest rates at record lows even longer. One factor which could cause the ECB to reconsider and tighten policy is if inflation moves higher. In November, Eurozone Final CPI edged higher to 1.5%, up from 1.4% a month earlier.

The CAC index has posted strong gains in the Monday session. Currently, the index is at 5412.50, up 1.18% on the day. In economic news, Eurozone Final CPI improved to 1.5%, matching the forecast. Eurozone Final Core CPI remained unchanged at 0.9%, also matching the estimate.

France released key indicators on Thursday, and the numbers were reflective of positive economic conditions in the eurozone's second largest economy. The manufacturing and services sectors continue to point to expansion, with readings well above the 50-point level. However, inflation remains a sore point in France, reflective of low inflation levels across the eurozone. In the second half of 2017, French CPI has not cracked above 0.1%, with the exception of the August release. Still, the year is ending on an optimistic note in the eurozone's second largest economy. Growth has been steady, unemployment is lower, and investor and business confidence has been boosted by the election of pro-business Emmanuel Macron as president. Macron is a strong supporter of pan-Europeanism, and sees an opportunity for France to become a key leader in the EU, with Britain leaving the club in just over a year.

Global stock markets have started the week in green territory, as the Trump tax plan sprints towards the finish line. The Republicans appear on the verge of a major legislative victory, and this has boosted global stock markets on Monday. On Friday, the House of Representatives and the Senate reconciled their tax bills. The uniform bill now goes to both branches, where it is expected pass by a slim margin, as all Democrat lawmakers plan to vote against the bill. Crucially, two Republican senators who were opposed to the bill have now lent their support to the bill. The legislation is the first major overhaul of the US tax code in 30 years, and would represent a massive for President Trump, who has campaigned vigorously for the legislation and wants to sign it into law before Christmas.

USDCHF: The pair faces further downside pressure after it triggered a correction during early trading today. On the downside, support lies at the 0.9850 level. A turn below here will open the door for more weakness towards the 0.9800 level and then the 0.9750 level. On the upside, resistance resides at the 0.9950 level where a break will clear the way for more strength to occur towards the 1.0000 level. Further out, resistance comes in at the 1.0050 level. Above here if seen will turn attention to 1.0100. All in all, USDCHF faces further corrective pullback pressure.

Daily Pivots: (S1) 1.1727; (P) 1.1770 (R1) 1.1791; More....

EUR/USD is staying in tight range despite today's recovery. Intraday bias remains neutral at this point. Focus is on 1.1712 cluster support (61.8% retracement of 1.1553 to 1.1960 at 1.1708). Decisive break there should confirm completion of rebound from 1.1553 at 1.1960. This would also be supported by a head and shoulder pattern (ls: 1.1860; h: 1.1960; rs: 1.1862). And in that case, deeper fall should be seen through 1.1553 to extend the medium term decline from 1.2091. Meanwhile, above 1.1862 will revive near term bullishness and target 1.1960 and above.

In the bigger picture, rise from 1.0339 medium term bottom is seen as a corrective move for the moment. Therefore, in case of another rally, we'd be expect 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 to limit upside and bring reversal. Meanwhile, sustained trading below 55 week EMA (now at 1.1435) will suggest that such medium term rebound is completed and could then bring retest of 1.0339 low.

Daily Pivots: (S1) 1.3263; (P) 1.3354; (R1) 1.3410; More....

GBP/USD's correction from 1.3549 is still extending and intraday bias remains neutral at this point. As long as 1.3220 support holds, we'd favor another rise. Break of 1.3549 will target 1.3651 high next. Break there will resume medium term rally from 1.1946. However, firm break of 1.3220 will turn near term outlook bearish for 1.3038 key support level.

In the bigger picture, while the medium term rebound from 1.1946 low was strong, it's limited below 1.3835 key support turned resistance. As long as 1.3835 holds, we'd view such rebound as a correction. That is, we'd expect another leg in the long term down trend through 1.1946 low. However, sustained break of 1.3835 should at least send GBP/USD to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

Daily Pivots: (S1) 112.16; (P) 112.45; (R1) 112.87; More....

USD/JPY is staying in tight range and intraday bias remains neutral first. With 111.98 intact, we'd favor another rise in the pair. Above 112.87 minor resistance will turn bias to the upside for 113.74. Break will target 114.73 key resistance. However, firm break of 111.98 support will extend the decline from 114.73 with another fall, possibly to 61.8% retracement of 107.31 to 114.73 at 110.14 before completion.

In the bigger picture, we're holding on to the view that correction from 118.65 is completed at 107.31. And medium term rise from 98.97 (2016 low) is going to resume soon. Sustained break of 114.73 should affirm our view and send USD/JPY through 118.65. However, break of 107.31 will dampen this view and extend the medium term fall back to 98.97 low.

Daily Pivots: (S1) 0.9870; (P) 0.9902; (R1) 0.9931; More....

USD/CHF drops slightly today but intraday bias remains neutral at this point. On the upside, above 0.9977 will resume the rebound from 0.9734 for 1.0037 resistance. Break there will resume whole rally from 0.9420 and target 1..0342 key resistance next. On the downside, below 0.9839 will likely extend the correction from 1.0037 through 0.9734. But in that case, we'd expect strong support from 61.8% retracement of 0.9420 to 0.1.0037 at 0.9656 to contain downside and bring rebound.

In the bigger picture, range trading continues between 0.9420/1.0342. At this point, 0.9420 appears to be a strong support level. Therefore, in case of decline attempt, we don't expect a firm break of this level. Nonetheless, strong break of 1.0342 is also needed to confirm upside momentum. Otherwise, medium term outlook will stay neutral.