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Daily Pivots: (S1) 1.0902; (P) 1.0917 (R1) 1.0946; More....

EUR/USD continues to be bounded in consolidation below 1.0949 temporary top. And, intraday bias remains neutral at this point. With 1.0777 minor support intact, further rise is expected. But still, choppy rebound from 1.0339 is seen as a correction. Hence we'd look for topping again on next rise. Meanwhile, on the downside, break of 1.0777 will turn turn bias to the downside for 1.0569 support first.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. This would also be supported by sustained trading above 55 week EMA.

Daily Pivots: (S1) 1.2888; (P) 1.2913; (R1) 1.2963; More...

GBP/USD continues to engage in consolidative trading below 1.2965 temporary top. Intraday bias remains neutral at this point. With 1.2755 support intact, further rise is expected. Break of 1.2965 will target 161.8% projection of 1.2108 to 1.2614 from 1.2365 at 1.3184. At this point, price actions from 1.1946 are still interpreted as a correction pattern. Therefore, we'd expect strong resistance below 1.3444 to bring larger down trend resumption. On the downside, break of 1.2755 minor support will turn bias to the downside. Further break of 1.2614 resistance turned support will now indicate near term reversal.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Daily Pivots: (S1) 0.9897; (P) 0.9930; (R1) 0.9948; More.....

USD/CHF is still staying in consolidation above 0.9893 temporary low. Intraday bias remains neutral for the moment. As 0.9999 resistance stays intact, deeper decline is still mildly in favor. Below 0.9893 will target 0.9812 and below to extend the correction from 1.0342. But break of 0.9812 should be brief and we will look for bottoming signal below there. On the upside, above 0.9999 minor resistance argues that fall from 1.0107 is finished, with bullish convergence condition in 4 hour MACD. In that case, intraday bias will be flipped back to the upside for 1.0107 resistance first.

In the bigger picture, we're still maintaining that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. However, the corrective nature of the fall from 1.0342 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.

Daily Pivots: (S1) 111.74; (P) 112.02; (R1) 112.27; More....

Upside momentum is seen as diminishing in 4 hour MACD after breaching 112.19 resistance. But there is no clear sign of topping in USD/JPY yet. Further rise is expected to 115.49 resistance next. Corrective fall from 118.65 should have completed with three waves down to 108.12 already. Break of 115.49 will resume larger rally from 98.97 to 125.85 high. On the downside, break of 110.86 will bring lengthier consolidation before staging another rise.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Meanwhile, break of 115.49 resistance will extend the rise from 98.97 to retest 125.85. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

European equity markets are expected to open relatively flat on Wednesday as we await the release of GDP data from the eurozone, unemployment data for Germany and Spain and the construction PMI for the UK.

Needless to say, it should be quite a lively morning in Europe, despite the uninspiring open. The eurozone is expected to have grown 0.5% in the first quarter, a decent number given the ongoing challenges facing the region. One challenge that it appears to be overcoming is the rise of populist parties, with the French looking to follow in the footsteps of the Dutch this year in selecting a pro-EU candidate for President. Emmanuel Macron still holds a commanding lead over Marine Le Pen in the polls ahead of voting this Sunday.

The polling average line looks at the five most recent national polls and takes the median value, ie, the value between the two figures that are higher and two figures that are lower.

Source – BBC

French Election Timeline

May 3 – TV debate between the two remaining candidates

May 5 – [from midnight] Poll blackout

May 7 – Second round of French presidential elections. Last polls close at 19:00 BST / 14:00 EDT, with an exit poll result announced immediately.

May 11 – Official proclamation of the new President.

May 14 – [from midnight] End of Francois Hollande's mandate

June 11 – First round of legislative elections

June 18 – Second round of legislative elections.

While the Fed decision itself may not surprise anyone – with markets pricing in only a 5% chance of a rate hike this evening – the statement could offer important clues on the central banks intentions at upcoming meetings. In the absence of a press conference with Chair Janet Yellen, the statement is all we have to go off and if the Fed is aiming to raise rates again in June, it may signal its intention to do so.

Fortunately, with markets already pricing in a June rate hike at 66%, the Fed doesn't have to work as hard to manage expectations as it did earlier this year and so any signal may be fairly subtle.

While I expect the central bank to see through the first quarter weakness in the economy, it may refrain from sending a stronger signal in order to give itself room to manoeuvre, should the data not improve between now and the June meeting.

Given the trend that we've seen in recent years of the first quarter disappointing, I would expect to see a similar rebound in the data over the coming months. The jobs data on Friday is expected to report a rebound in hiring following March's surprising increase of only 98,000. Today's ADP release may offer some insight into what we could see here on Friday, although it should be noted that last month it indicated that 263,000 jobs were added in March, not quite in line with the official data. The final services and non-manufacturing PMIs will also be released this afternoon to wrap up a busy session for the US.

UP Down Turnaround

This afternoon we'll also get the latest inventory data from EIA, a day after API reported a 4.15 million barrel drawdown helping oil prices bounce off their lowest levels since November. With Brent crude testing the psychologically significant $50 level, the inventory data could be a big test of sentiment in crude, with a break of this being rather bearish.

Daily Pivots: (S1) 0.8430; (P) 0.8444; (R1) 0.8473; More...

EUR/GBP's recovery from 0.8404 was weak and intraday bias is turned neutral first. On the downside, below below 0.8404 will turn focus back to 0.8303 low. Break there will extend the whole corrective pattern from 0.9304. On the upside, above 0.8529 will resume the rebound from 0.8312 towards 0.8786 resistance. Overall, price actions form 0.9304 are seen as a corrective pattern and is extending.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. In case of deeper fall, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Rise from 0.6935 (2015 low) will resume at a later stage to 0.9799 (2008 high). However, sustained break of 0.8116 could bring deeper decline to next key support level at 0.7564 before the correction completes.

Daily Pivots: (S1) 1.4456; (P) 1.4492; (R1) 1.4540; More...

EUR/AUD recovers ahead of 4 hour 55 EMA but it's still staying in range below 1.4649 temporary top. Intraday bias remains neutral for the moment. Also, we're holding on to the view of trend reversal after defending 1.3671 key support. Hence, in case of another fall, downside should be contained by 1.4334 resistance turned support and rise resumption. Above 1.4649 will target 1.4721 key resistance. Decisive break of 1.4721 will confirm our bullish view. However, break of 1.4334 will suggest rejection from 1.4721 and turn bias back to the downside for 1.3980 support instead.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction could be completed after defending 1.3671 key support. Break of 1.4721 cluster resistance (38.2% retracement of 1.6587 to 1.3624 at 1.4756) should confirm this case and target 61.8% retracement at 1.5455 and above. Overall, we'd expect the up trend from 1.1602 to resume later. However, sustained break of 1.3671 will invalidate our bullish view and would turn extend the fall from 1.6587 towards 1.1602 long term bottom.

Daily Pivots: (S1) 1.0811; (P) 1.0842; (R1) 1.0869; More...

Despite edging higher to 1.0872, EUR/CHF quickly retreated. Intraday bias is turned neutral again. At this point, further rally is still expected and break of 1.0872 should target 1.0897 resistance. Decisive break there should confirm our bullish view of reversal and will target 1.0999 resistance next Nonetheless, break of 1.0798 support will indicate short term topping and turn focus back to 55 day EMA (now at 1.0731).

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Current strong rebound is raising the chance that it's completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.0999 resistance will target a test on 1.1198 high. For now, this will be the preferred case as long as 1.0652 support holds.

Daily Pivots: (S1) 121.99; (P) 122.29; (R1) 122.77; More...

Intraday bias in EUR/JPY stays on the upside for the moment. Current rally should target 122.88 resistance next. As noted before, the correction from 124.08 should have completed with three waves down to 114.84 already. Break of 122.88 resistance will extend larger rise from 109.20 through 124.08 high. On the downside, below 120.60 minor support will turn bias neutral and bring consolidation before staging another rise.

In the bigger picture, focus is back on 126.09 support turned resistance. Decisive break there will confirm completion of the down trend from 149.76. And in such case, rise from 109.20 is at the same degree and should target 141.04 resistance and above. Meanwhile, rejection from 126.09 and break of 114.84 will extend the fall from 149.76 through 109.20 low.

Investors and traders across different asset classes are eager to know what the Fed is currently thinking, as U.S. equities sit at record highs, the U.S. dollar is close to November 2016 lows, and treasury yields are in a downtrend move.

The question today is not whether the Fed will hike rates or not, but whether the Fed will acknowledge a weak first quarter. Will the tightening pace be interrupted? Are they going to hint towards reducing the balance sheet? Although many questions will remain unanswered in a cautiously drafted statement, any minor tweaks will have a considerable impact on financial markets.

It's very important to realize that U.S. data saw more deterioration than improvement since the Fed last met on 14-15 March this year. Headline inflation moved away from the 2% target in March with the PCE price index falling 0.2%, marking the first decline since June 2016. Consumer spending, meanwhile was flat, suggesting that higher consumer confidence did not translate into more spending. Although I'm not an expert in the Auto industry, automakers reporting a fourth straight monthly decline in new cars sales is also not a good indication of consumers' behavior.

Although the Fed does not depend on one set of data, recent indicators should provide sufficient justification for policy markets to move into the defensive.

The most sensitive currency pair today is USDJPY. The pair has so far appreciated by more than 3.6% from April's low, and is currently trading at 112. I'll be closely watching the yield spread on the 2-year and 5-year treasuries for the next move. The gap between the two bonds has been narrowing since early March, and if the downtrend resumes after an initial pause, then USDJPY could find a short-term top at 112. However, if today's Fed statement ignores the weakness in recent data, the pair may be headed above 113.