Strong rally in past three days eventually broke and closed above key barriers at $50.00/10 (psychological barrier / Fibo 38.2% of $55.01/$47.06 descend), generating firmer bullish signal.

Recovery from $47.06 base peaked at $50.45, with subsequent easing signaled by reversal of 4-hr RSI / slow stochastic from overbought territory.

Dips may extend below $50, now acting as initial support and should be ideally contained above $49.25/16 support zone ( yesterday's low / broken 20SMA / Fibo 38.2% of $47.08/$50.45 rally) ahead of fresh attempts higher.

Also, weekly close above $50.0 handle would be seen as strong bullish signal for extension towards next strong barrier at $51.03 (50% retracement of $55.01/$47.06) reinforced by 100SMA.

Res: 50.45; 51.03; 51.21; 51.73
Sup: 50.00; 49.50; 49.16; 48.67

The European Union Council President Donald Tusk was in focus during Friday's trading session as he shared the draft guidelines on the future of the UK relationship after Brexit. Although the European Union is willing to discuss with Britain the future of free trade deals before the two parties officially agree on the terms of Brexit, a divorce settlement must first be in place. The visible fact that the EU leaders have rejected Theresa May's demand for parallel talks and her Brexit timetable continues to suggest that the European Union may be willing to play hardball.

With many in the bloc also insisting that the UK must fulfill its financial obligations by paying the 50 billion Brexit bill, there may be some obstacles in the road ahead. Although Tusk stated that the EU will not punish the UK in the Brexit talks, this may only be the case if the UK follows the rules put in place by the bloc. Now that the UK is on the other side of the negotiation table, markets will be observing how Theresa May responds with any complications rekindling the hard Brexit fears.

Sterling was under pressure during Friday's trading session as investors digested the European Union's draft guidelines. Although UK GDP was confirmed at 0.7% in the final quarter of 2016, this had no real impact on Sterling with investors focusing on the Brexit developments. While the Pound may be on route for its first quarterly gain against the Greenback since June 2015, a vulnerable Dollar played a key part. From a technical standpoint, weakness below 1.2400 could encourage a further decline towards 1.2300.

Currency spotlight - EURUSD

The EURUSD was under renewed selling pressure this week with prices sinking towards 1.0670 on Friday after soft data from the Eurozone reinforced expectations of the ECB maintaining a dovish stance. A resurgent Dollar from the improving sentiment towards the US economy has fueled the downside on the EURUSD with sellers back in action. From a technical standpoint, bulls lost their opportunity to break above 1.0900 with the breakdown below 1.0750 invalidating the bullish daily setup. Previous support around 1.0750 could transform into a dynamic resistance that encourages a further decline lower towards 1.0500.

Commodity spotlight - Gold

Gold found itself under selling pressure on Thursday with prices sinking lower on Friday after the positive fourth quarter GDP figure from the US boosted the Dollar. The rising expectations of further US rate hikes this year following the hawkish speeches from Fed officials have also compounded to the downside with sellers dragging prices towards $1242 as of writing. While bears may be commended on their ability to exploit the Dollar's resurgence to attack Gold, the metal remains supported above $1225. With risk aversion set to heighten amid the Brexit developments, Gold bulls still have an opportunity to propel prices higher. Although most investors remain somewhat optimistic over Donald Trump's pro-growth policies boosting US growth, a situation where the reality is well below market expectations could bolster the yellow metal's allure. From a technical standpoint, the current technical correction could act as a foundation for bulls to challenge $1260.

Euro Area Inflation Data Continues to Move Off Multi-Year Highs; UK Q4 GDP Revised Slightly Lower

Notes/Observations

• EU draws up tough stance on Brexit transition deal
• German employment trend continues its robust progress as unemployment rate hits afresh post unification low 5.8% v 5.9%e)
• UK Q4 Final GDP revised lower for its lowest annual pace since Q1 2013
• Euro Zone Mar CPI Estimate falls back below the ECB target of 'just under 2%'
• South Africa President Zuma sacks Gordhan as finance minister in Cabinet reshuffle

Overnight:

Asia:

• China Mar Manufacturing PMI (Govt official) registers its highest level since Apr 2012 (51.8 v 51.7e)
• Japan Feb Jobless Rate hits lowest since June 1994 (2.8% v 3.0%e)
• Japan Feb National CPI registers its 5th consecutive increase (Y/Y: 0.3% v 0.2%e) while CPI Ex-Fresh Food (Core) rose at its fastest pace since April 2015

Europe:

• South Africa President Zuma fired his Fin Min Gordhan as part of cabinet reshuffle
• Scotland First Min Sturgeon sent letter (section 30) to UK govt formally requesting 2nd Scottish independence referendum (**Note: UK Govt have already said that they would block any potential Scottish referendum until at least after the Brexit process)
• EU President Tusk expected to issue Brexit negotiation guidelines on Fri,

Americas:

• US President Trump: Meeting with China to be a difficult one amid concerns over trade deficits and jobs
• Fed's Dudley (dove, FOMC voter): Rate rises are needed to keep expansion on track; economic risks may be tilting toward the upside
• Fed's Kaplan (moderate, voter): 3 rate hikes good 'base case' for 2017; could be > 3 hikes this year depending on data
• White House spokesperson Spicer noted that the Administration would wait until the G7 summit in late May to complete their review of the Paris treaty on climate change

Energy:

• Venezuela's President Maduro supports extending OPEC production cuts; extending cuts needed to boost prices

Economic Data

• (DE) Germany Feb Retail sales M/M: 1.8% v 0.7%e; Y/Y: -2.1% v +0.4%e
• (UK) Mar Nationwide House Price Index M/M: -0.3% v +0.3%e; Y/Y: 3.5% v 4.0%e
• (FR) France Mar Preliminary CPI M/M: 0.6% v 0.7%e; Y/Y: 1.2% v 1.2%e
• (FR) France Mar Preliminary CPI EU Harmonized M/M: 0.7% v 0.7%e; Y/Y: 1.4%v 1.4%e
• (FR) France Feb Consumer Spending M/M: -0.8% v +0.1%e; Y/Y: 0.5% v 1.1%e
• (TR) Turkey Feb Trade Balance: -$3.7B v -$3.7Be
• (TR) Turkey Q4 GDP (unadj) Y/Y: 3.5% v 1.9%e
• (DE) Germany Mar Unemployment Change: -30K v -10Ke; Unemployment Rate: 5.9% v 5.9%e (post unification low)
• (NO) Norway Mar Unemployment Rate: 2.9% v 3.0%e
• (UK) Q4 Final GDP Q/Q: 0.7% v 0.7%e; Y/Y: 1.9% v 2.0%e
• (UK) Q4 Current Account: -£12.1B v -£16.0Be
• 05:00 (EU) Euro Zone Mar Advance CPI Estimate Y/Y: % v 1.8%e; CPI Core Y/Y: % v 0.8%e
• 05:00 (IT) Italy Mar Preliminary CPI (including tobacco) M/M: % v 0.1%e; Y/Y: % v 1.5%e

**Fixed Income Issuance:

• None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 -0.5% at 3,465, FTSE -0.5% at 7,330, DAX -0.2% at 12,238, CAC-40 -0.4% at 5,069, IBEX-35 -0.5% at 10,359, FTSE MIB -0.3% at 20,315, SMI -0.6% at 8,656, S&P 500 Futures -0.3%]

Market Focal Points/Key Themes: European equity indices are trading lower, paring back some of the weekly gains, as market participants consolidate month-end; Markets jittery after formal Brexit proceedings occurred on Wednesday; Banking stocks generally lower across the board; Commodity and mining stocks sharply lower in the FTSE 100 as copper prices trade marginally lower intraday.

Upcoming scheduled US earnings (pre-market) include BlackBerry, DXP Enterprises, and Fang Holdings.

Equities (as of 09:50 GMT)

• Consumer Discretionary: [Entertainment One ETO.UK +2.9% (trading update)]
• Financials: [Shawbrook Group SHAW.UK +9.8% (Marlin Bidco confirms 330p/share cash offer to acquire Shawbrook Bank)]
• Healthcare: [AstraZeneca AZN.UK -0.1% ($250M Tersera agreement for Zoladex rights; Tagrisso FDA approval), CVS Group CVSG.UK +7.1% (H1 results)]
• Industrials: [MAX Automation MXH.DE +0.8% (FY16 results), VAT Group VACN.CH -0.6% (final FY16 results)]
• Technology: [iomart IOM.UK -1.5% (trading update), Nemetschek NEM.DE +8.1% (Q4 results)]

Speakers

• ECB's Knot (Netherlands) noted that th next QE decision must be to taper; ECB had 'no substantive discussion' on exit plan. (**Note: earlier (in Asia) noted that a rate hike in early 2018 was closer to his own expectations)
• ECB's Coeure (France): Latest incoming data has shifted the balance of risk for growth towards neutral territory; underlying inflation remains subdued. Projected path of inflation still remains highly conditional on our policy stance
• EU Brexit negotiation guidelines said to ban bilateral talks between UK and EU member States. Brexit could not offer same benefits as EU membership. EU-UK trade agreement could not offer partial single market access. Must prevent fiscal, social an environmental dumping. Britain would just have to show sufficient progress on its divorce settlement in a first phase of negotiations and EU states could release a lock and agree to launch trade talks in a second phase
• EU President Tusk stated that he would visit London with talks with PM May ahead of the Apr 29th summit; reiterated that UK must fulfill its financial obligation to EU. EU would not pursue a punitive approach to Brexit; wanted strong ties with UK after withdrawal from EU. Brexit negotiations would be difficult and might be confrontational and would seek to avoid hard border between Ireland and Northern Ireland
• Euro Working Group (EWG) said to suggest that EU/IMF mission chiefs return to Greece for bailout review talks
• Turkey Dep PM Simsek: Q1 GDP growth likely moderate
• Australia PM Turnbull: Tax cuts passed in Senate would help boost jobs and growth

Currencies

• FX markets were little changed as month-end and quarter-end kept participation at a minimum
• EUR/USD consolidated its recent losses as CPI outlook appeared to keep the ECB on hold for the 2017 period. Pair holding below 1.07
• GBP/USD was slightly softer around 1.2450 area after Q4 GDP YoY reading was revised lower to 1.9% for the slowest annualized growth in almost three years.
• South African Rand fell over 2% during the Asian session to approach the 13.63 area after South Africa President Zuma sacked the corruption-crusading Fin Min Gordhan and appoints his Minister of Home Affairs Malusi Gigaba as his replacement. The political unease re-surfacing in the country will place the focus on its sovereign ratings in the mist of turmoil. The pair was little changed ahead of the NY morning and back below the 13.40 level

Fixed Income:

• Bund futures trade at 161.33 down 11 ticks in quiet trade as we approach month and quarter end. Upside targets 161.60 followed by 161.87. Further downside eyes 161.06 low then 160.74 followed by 160.52 then 160.04.
• Gilt futures trade at 127.49 down 16 ticks, with UK final GDP reading coming inline m/m and revised slightly lower y/y . Resistance moves to 127.69 followed by 127.89. Support moves to 127.05 then 126.86 followed by 126.40. Short Sterling futures trade flat across the strip with Jun17Jun18 spread remaining steady at 20bp.
• Friday's liquidity report showed Thursday's excess liquidity fell to €1.534T a fall of €9B from €1.543T prior. Use of the marginal lending facility fell to €110M from €315M prior.
• Corporate issuance saw $6B come to market via 6 issuers headlined BMW 5 part $2.2B offering and CK Hutchinson $1.8B 2 part offering. This brings weekly issuance to $23.4B and Monthly issuance at $131.5B.
  For the week ending March 29th Lipper US Fund flows reported IG funds net inflows of $3.97B bringing YTD inflows to $39.1B. High Yield Funds showed net outflows of $248.5M bringing YTD net outflows to $5.94B.

Looking Ahead

• 05:30 (SL) Sri Lanka Mar CPI Y/Y: No est v 6.8% prior
• 06:00 (IT) Italy Feb PPI M/M: No est v 1.1% prior; Y/Y: No est v 2.8% prior
• 06:00 (UK) DMO to sell combined £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively)
• 06:45 (US) Daily Libor Fixing
• 07:30 (CL) Chile Central Bank (BCCh) Mar Minutes
• 07:30 (IN) India Weekly Forex Reserves
• 08:00 (PL) Poland Mar Preliminary CPI M/M: 0.1%e v 0.3% prior; Y/Y: 2.3%e v 2.2% prior
• 08:00 (BR) Brazil Feb National Unemployment Rate: 13.1%e v 12.6% prior
• 08:00 (CL) Chile Feb Unemployment Rate: 6.3%e v 6.2% prior
• 08:00 (ZA) South Africa Feb Trade Balance (ZAR): +0.3Be v -10.8B prior
• 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming bond auction
• 08:15 (UK) Baltic Dry Bulk Index
• 08:30 (US) Feb Personal Income: 0.4%e v 0.4% prior; Personal Spending: 0.2%e v 0.2% prior; Real Personal Spending: +0.1%e v -0.3% prior
• 08:30 (US) Feb PCE Deflator M/M: 0.1%e v 0.4% prior; Y/Y: 2.1%e v 1.9% prior
• 08:30 (US) Feb PCE Core M/M: 0.2%e v 0.3% prior; Y/Y: 1.7%e v 1.7% prior
• 08:30 (CA) Canada Jan GDP M/M: No est v 0.3% prior; Y/Y: No est v 2.0% prior
• 09:00 (RU) Russia Q4 Final Current Account: No est v $7.8B prelim
• 09:30 (BR) Brazil Feb Nominal Budget Balance (BRL): -49.5Be v +0.3B prior; Primary Budget Balance: -19.2Be v +36.7B prior
• 09:45 (US) Mar Chicago Purchasing Manager: 56.9e v 57.4 prior
• 10:00 (US) Mar Final Michigan Confidence: 97.6e v 97.6 prelim
• 11:00 (MX) Mexico Feb Net Outstanding Loans: No est v 3.62T prior
• 11:00 (CO) Colombia Feb National Unemployment Rate: No est v 11.7% prior; Urban Unemployment Rate: No est v 13.4% prior
• 11:00 (EU) Potential sovereign ratiungs after European close
• (ES) Spain Sovereign Debt to be rated by S&P ; Netherlands Sovereign Debt to be rated by Moody's; Norway Russia and Switzerland Sovereign Debt to be rated by Fitch; France Sovereign Debt to be rated by DBRS
• 13:00 (US) Weekly Baker Hughes Rig Count data
• 20:00 (KR) South Korea Mar Trade Balance: $6.3Be v $7.2B prior; Exports Y/Y: 12.8%e v 20.2% prior; Imports Y/Y: 23.9%e v 23.3% prior

The DAX Index has edged higher in the Friday session, as the DAX trades at 12,249.50. On the release front, German data were strong. Retail Sales jumped 1.8%, well above the estimate of 0.7%. As well, unemployment claims dropped by 30 thousand, compared to the estimate of 10 thousand. Eurozone inflation data was not as strong, as CPI Flash Estimate dropped to 1.5%, short of the forecast of 1.8%. In the US, today’s highlight is UoM Consumer Sentiment, which is expected to improve to 97.8 points.

It’s been an excellent week for the DAX, which has gained 2.4 percent. Earlier on Friday, the DAX pushed above 12,260, its highest level since April 2015. The index has been boosted by strong German numbers across the German economy, as business confidence, retail sales and unemployment claims have all beat their estimates. The German economy, the largest in Europe, is looking sharp and has enjoyed a robust first quarter in 2017. Stronger global trade has led to increased demand for German exports, notably cars and machinery. Germany’s GDP expanded 1.6% in 2016, its highest rate since 2012. The generally positive picture in Germany has boosted the eurozone economy and if the strong numbers continue, the ECB will be under more pressure to tighten monetary policy.

Since Donald Trump assumed office in January, his administration has been beset by controversy and crises. Trump has yet to provide any details of an economic policy, much to the consternation of the markets. Last week, Trump’s proposed healthcare bill was dead on arrival before even being voted on, a humiliating defeat for the president. This setback has made the markets even more jittery about Trump, and the inquiry into the Trump administration’s links with Russia is gathering steam, which is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but the White House will need to improve coordination with Republican lawmakers to ensure that his next attempt to pass legislation is not a repeat of the healthcare debacle.

The GBP/JPY follows equities and currently we see the break of 1-3 trend line which might target 139.15 initially. The wave is strict which means that point 4 is between point 1 and 3. If profit taking on GBP continues, the pair might drop 138.78 - intraday target and 138.45 Daily L4 support. Full projection aims at 137.00 but for that to happen, the GBP/JPY will need a stronger support from Yen (particularly Nikkei and EU/US equities).

D L3 - Daily Camarilla Pivot (Daily Support)

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

W L3 - Weekly L3 Camarilla (Strong Weekly Support)

W L4- Weekly L4 Camarilla ( Very Strong Weekly Support)

Gold Starting a new leg lower.

Gold is getting stronger. The momentum seems back to bullish despite some consolidation. Strong resistance is located at 1263 (27/02/2017 high). Hourly support can be found at 1224.10 (16/03/2017 low). Expected to show further strengthening.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

Silver Consolidating Above $18.

Silver has increased above 18.00. Resistance given at 17.56 has been broken. Hourly support is given at 16.82 (15/03/2017 low).

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Crude oil Back above $50.

Crude oil's bearish pressures seems to fade. The commodity had been located in a bearish trend since the commodity had been unable to mount a serious challenge to resistance at 55.24 (03/01/2017 high). Hourly support is given at 47.09 (016/03/2017 low).

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 24.82 (13/11/2002) while resistance can now be found at 55.24 (03/01/2017 high).

EUR/CHF Trading sideways.

EUR/CHF's is moving up and down. The medium-term pattern suggests us to see continued bearish pressures towards key support that can be found at 1.0623 (24/06/2016 low). For now the support given at 1.0684 (06/03/20117 low) seems to be strong.

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

EUR/JPY Continued weakness.

EUR/JPY rejection at 122.88 has triggered a correction. The pair is also very volatile. Hourly support at 119.33 (23/03/2017 low) has been broken. Resistance stands at 122.88 (13/03/0217 high). Expected to show continued weakness.

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Lack of follow-through.

EUR/GBP's bullish flag finally ended up as a false flag. Strong resistance is given at 0.8787 (13/03/2017 high). Key resistance is given at 0.8854 (15/01/2017 high). Hourly support at 0.8605 (23/03/2017 low) has been broken. Expected to show continued weakness.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

EUR/USD remains under pressure in the Friday session. Currently, the pair is trading slightly below the 1.07 level. On the release front, eurozone numbers were mixed. German data was sharp, as Retail Sales jumped 1.8%, well above the estimate of 0.7%. As well, unemployment claims dropped by 30 thousand, compared to the estimate of 10 thousand. However, eurozone inflation data was not as strong, as CPI Flash Estimate dropped to 1.5%, short of the forecast of 1.8%. In the US, today's highlight is UoM Consumer Sentiment, which is expected to improve to 97.8 points.

It's been an eventful week for the euro, which has shown strong movement in both directions. The currency jumped above the 1.09 level on Monday, its highest level since November 2016. However, it's been all downhill since then, as the euro struggles to stay above the 1.07 line. The German economy, the largest in Europe, is looking sharp and has enjoyed a robust first quarter in 2017. Stronger global trade has led to increased demand for German exports, notably cars and machinery. Germany's GDP expanded 1.6% in 2016, its highest rate since 2012. The generally positive picture in Germany has boosted the eurozone economy and if the strong numbers continue, the ECB will be under more pressure to tighten monetary policy.

It's been a rocky start for the Trump administration, which has been beset by controversy and crises since Donald Trump assumed office in January. Trump has yet to provide any details of an economic policy, to the consternation of the markets. Last week, Trump's proposed healthcare bill was dead on arrival before even being voted on, a humiliating defeat for the president. This setback has made the markets even more jittery about Trump, and the inquiry into the Trump administration's links with Russia is gathering steam, which is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but the White House will need to improve coordination with Republican lawmakers to ensure that his next attempt to pass legislation is not a repeat of the healthcare debacle.

It's been a relatively slow start to trading on Friday, with the final day of the week also falling on the final day of the month and quarter which can often result in rather uneventful markets as we await any final quarter-end portfolio rebalancing.

The final hours of the week could be quite active though as final rebalancing occurs and with a number of important pieces of economic data being released at the same time, it could make for an interesting end to the day. The inflation outlook in the US, while being on track to hit the Federal Reserve's 2% target, continues to be the main reason behind the cautious tightening cycle that the central bank has embarked on and today we'll get some important figures on just that.

The core PCE price index is the Fed's preferred measure of inflation and currently lingers below its target at 1.7%, well below the core CPI equivalent which is actually above target. Any increase today would surely increase the possibility of a rate hike in June, especially with the Fed having to consider the possibility of substantial fiscal stimulus towards the end of the year.

A key contributor to the inflation outlook that has been lacking since the financial crisis is higher wages and spending, two more areas that we'll get insight on today. Personal income and spending figures will be released alongside the inflation numbers and are expected to be relatively consistent with what we've seen in recent months. This should ensure the tightening cycle remains gradual and doesn't risk choking off the ongoing recovery in the economy.

We'll also hear from a couple of Fed policy makers today, with James Bullard and Neel Kaskari – the most dovish of the voting members of the FOMC and the only one to have to dissented to a hike in March – both appearing throughout the day. Both appear after the release of the inflation, earnings and spending data so we may get early insight into their views on the numbers, particularly Kashkari's given that inflation being below target was a major factor in his decision to dissent.

USD/CHF Stalling around parity.

USD/CHF is strengthening. Hourly support is given at 0.9814 (27/03/2017 low). Key resistance can be found at a distance at 1.0344 (15/12/2016 high). Expected to show further consolidating below parity.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/CAD Ready for another leg lower.

USD/CAD is struggling to go any higher. A break of resistance area around 1.3400 is needed to invalidate the current short term bearish technical structure. The road seems still wideopen for larger decline. Key support is given at 1.2969 (31/01/2017 low).

In the longer term, there is a golden cross with the 50 dma crossing the 200 dma indicating further upside pressures. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low).

AUD/USD Bouncing.

AUD/USD is moving higher. The pair has failed to test the key resistance at 0.7778 (08/11/2016 high). Expected to see some short-term weakness towards support area around 0.7500.

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.