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As widely anticipated, RBNZ left the OCR unchanged at 1.75% and maintained the neutral bias in the monetary policy stance. Domestic economic developments remained upbeat with rising inflation and positive growth outlook. Policymakers attributed weaker-than-expected 4Q17 GDP to temporary factors. The central bank acknowledged the recent depreciation in trade-weighted exchange rate. Yet, it reiterated that a weaker kiwi would be needed for more balanced growth. RBNZ warned that geopolitical uncertainty remained the biggest challenge in the global economic development. We expect RBNZ would stand on the sideline throughout the year.

RBNZ acknowledged that headline inflation had 'returned to the target band as past declines in oil prices dropped out of the annual calculation'. It expected the headline reading would be variable over the next 12 months due to 'one-off effects from recent food and import price movements, but is expected to return to the midpoint of the target band over the medium term'. The central bank maintained the longer-term inflation expectations at 'around +2%'. Policymakers also noted moderation in house price, thanks to 'loan-to-value ratio restrictions and tighter lending conditions'. What is uncertain is 'whether this moderation will be sustained given the continued imbalance between supply and demand'.

New Zealand's GDP expanded +2.7% y/y and +0.7% q/q, in 4Q16, compared with consensus of +3.2% and +0.7%, respectively. Yet, RBNZ noted that 'some of this is considered to be due to temporary factors'. It remained confident that 'the growth outlook remains positive, supported by on-going accommodative monetary policy, strong population growth, and high levels of household spending and construction activity'. RBNZ also remained positive over the global economic outlook. Yet, it cautioned that the major challenges would be 'on-going surplus capacity' and 'extensive geopolitical uncertainty'.

On exchange rate, policymakers welcomed the -4% decline in the trade-weighted New Zealand dollar index since February. They believed the depreciation was partly driven by 'weaker dairy prices and reduced interest rate differentials'. Nonetheless, they emphasized that 'further depreciation is needed to achieve more balanced growth'.

The monetary decision had been widely anticipated. Following three rate cuts in 2016, the central bank would likely leave the policy rate unchanged throughout 2017. Bloomberg estimates suggest that the market is pricing in about 38% chance of a +25 bps rate hike by the end of this year. The chance of such an increase in 2018 has been fully priced in.

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

EUR/USD

During the course of yesterday's sessions, the H4 candles remained sandwiched between a supply at 1.0828-1.0814 and a support area drawn from 1.0797-1.0780. Seeing as price concluded the day within the walls of this support area, there's a possibility that the bulls may attempt to lift the pair north today. While this may be true, we believe the bears could have the upper hand here for two reasons:

The spike seen below the support area likely activated a truckload of sell stops (black arrow), and thus potentially may have weakened bids here.

Higher-timeframe structure shows that the major recently crossed paths with a weekly resistance barrier coming in at 1.0819 that stretches as far back as mid-2015. Adding to this, the closest higher-timeframe support structure does not come into view until we reach the daily support area formed at 1.0714-1.0683.

Our suggestions: In view of the above points, we believe that a reasonably strong bearish bias is present. Nevertheless, before our desk can become sellers, a H4 close will need to be seen beyond the current H4 support area. This – coupled with a strong retest to the underside of this zone would, in our humble opinion, be enough to justify a sell, targeting the H4 demand at 1.0705-1.0723 (positioned around the top edge of the aforementioned daily support area).

Data points to consider: US jobless claims at 12.30pm, Fed Chair Janet Yellen speaks at 12.45pm, US new home sales at 2pm, FOMC member Kashkari speaks at 4.30pm, FOMC member Kaplan speaks at 11pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for price to engulf 1.0797-1.0780 and then look to trade any retest seen thereafter (stop loss: dependent on the rejection candle, as we'd look to place it beyond the rejection candle's wick).

GBP/USD:  

For those who read Wednesday's report you may recall our team highlighting the H4 sell zone seen at 1.2523/1.25. The reasons for selecting this area were as follows:

• The 1.25 handle.
• A H4 trendline resistance taken from the low 1.2346.
• An 88.6% H4 retracement seen at 1.2518.
• A daily Quasimodo resistance level coming in at 1.2523.
• All of the above structures are located within weekly supply positioned at 1.2569-1.2404.

Well done to any of our readers who took advantage of this move yesterday.

Moving forward, we can see that daily support was brought into play yesterday at 1.2430. The rebound from here is considered strong, in our book. As a result, this could force daily price to challenge the daily Quasimodo resistance at 1.2523 sometime today, which as we already know is housed within the aforementioned weekly supply.

Our suggestions: With offers now likely weakened around the 1.25 boundary from yesterday's move, our focus turns to the daily Quasimodo resistance seen just above it at 1.2523. Merging closely with the H4 trendline resistance taken from the low 1.2346, an 88.6% H4 retracement seen at 1.2518 and not forgetting where this daily line is positioned on the weekly timeframe (see above), we'll be (dependent on the time of day) looking to short from here with stops placed above the weekly supply at 1.2571.

Data points to consider: MPC member Broadbent speaks at 9.15am, UK retail sales at 9.30am. US jobless claims at 12.30pm, Fed Chair Janet Yellen speaks at 12.45pm, US new home sales at 2pm, FOMC member Kashkari speaks at 4.30pm, FOMC member Kaplan speaks at 11pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.2523 region (stop loss: 1.2571).

AUD/USD

Amid yesterday's trading, the commodity-linked currency pair ran into a strong floor of bids after momentarily surpassing the H4 mid-way support at 0.7650 and tapping March's opening level at 0.7642. In addition to this, over on the daily chart, price pierced through the lower edge of a support area drawn at 0.7699-0.7656, and ended the day forming a daily buying tail. Having said this though, one also has to take in to account that weekly action is currently selling off from a weekly trendline resistance taken from the high 0.7835.

Our suggestions: Despite the daily buying tail, upside still looks weak, in our view. However, at the same time, selling into a daily support area is just too risky for our liking, no matter what the weekly timeframe suggests!

Before our team can consider shorts, a H4 close is required beyond March's opening level mentioned above at 0.7642. Not only will this likely clear bids from within the current daily support area, it seems to also open up some space on the H4 chart down to the 0.76 handle. Therefore, a H4 close below 0.7642, followed up with a strong retest to this line as resistance would be ideal grounds to sell this market!

Data points to consider: US jobless claims at 12.30pm, Fed Chair Janet Yellen speaks at 12.45pm, US new home sales at 2pm, FOMC member Kashkari speaks at 4.30pm, FOMC member Kaplan speaks at 11pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for price to engulf 0.7642 and then look to trade any retest seen thereafter (stop loss: dependent on the rejection candle, as we'd look to place it beyond the rejection candle's wick).

USD/JPY

Beginning with a look at the weekly chart this morning, the buyers and sellers remain battling for position around the weekly support area at 111.44-110.10. Down on the daily chart, nevertheless, we can see that the sellers printed a seventh consecutive bearish candle yesterday, which happened to engulf the daily demand base at 111.35-112.37. Leaving the nearby daily broken Quasimodo line at 110.58 unchallenged, price is now seen retesting the underside of the recently broken daily demand as resistance.

Jumping across to the H4 chart, the 111 handle held firm despite two back-to-back whipsaws. However, we do not consider this a buy signal, for two reasons:

• Daily price could respect the underside of 111.35-112.37 as resistance.
• Daily price may want to dive lower to connect with the aforementioned daily broken Quasimodo line.
• Our suggestions: While 111 could remain intact today, we would prefer to wait for price to touch gloves with the daily broken Quasimodo line at 110.58 before looking to go long. That way, traders have the option of placing their stops beyond the weekly support area!

Data points to consider: US jobless claims at 12.30pm, Fed Chair Janet Yellen speaks at 12.45pm, US new home sales at 2pm, FOMC member Kashkari speaks at 4.30pm, FOMC member Kaplan speaks at 11pm GMT.

Levels to watch/live orders:

• Buys: 110.58 region (stop loss: ideally beyond the current weekly support area at 110.08ish).
• Sells: Flat (stop loss: N/A).

USD/CAD

With oil prices gaining strength yesterday, the USD/CAD hit the brakes and reversed from the 1.34 handle going into the early hours of the US segment. The day ended with price closing just ahead of March's opening level at 1.3312. Considering that this monthly level converges with a H4 Quasimodo support at 1.3303 and the 1.33 handle, would we deem this a stable enough zone to trade long from today? Well, weekly action is currently trading below the 2017 yearly opening level at 1.3434, and shows room to drop lower from here. Daily action on the other hand, offers very little in terms of direction given that the unit is seen meandering mid-range between a supply coming in at 1.3494-1.3439 and a support area at 1.3212-1.3169.

Our suggestions: While a bounce is highly likely to be seen from the H4 1.33/1.3312 neighborhood, we would strongly advise waiting for a lower-timeframe confirming signal to take shape before pressing the buy button (see the top of this report), due to the lack of higher-timeframe confluence.

Data points to consider: US jobless claims at 12.30pm, Fed Chair Janet Yellen speaks at 12.45pm, US new home sales at 2pm, FOMC member Kashkari speaks at 4.30pm, FOMC member Kaplan speaks at 11pm GMT.

Levels to watch/live orders:

• Buys: 1.33/1.3312 ([waiting for a lower-timeframe buy signal to form is advised before pulling the trigger] stop loss: dependent on where one confirms this area).
• Sells: Flat (stop loss: N/A).

USD/CHF

In recent sessions, the Swissy punched its way through the H4 demand at 0.9903-0.9921 and the 0.99 handle, leaving price free to tag February's opening level at 0.9890 as the US opened their doors for business. With the help of the daily support area seen at 0.9842-0.9884, bids held firm from 0.9890 and rallied strongly into the closing bell. Although H4 upside looks relatively clear up to the broken Quasimodo line at 0.9951, which happens to merge nicely with a daily resistance level at 0.9950 and a nearby daily supply at 1.0001-0.9957, we're a tad concerned by the recent break of the weekly trendline support etched from the low 0.9443.

Our suggestions: Without knowing whether or not the break of the weekly trendline is genuine or just a deep fakeout, this market is a tricky beast to trade at the moment.

In addition to the above, even if one were to take a long in this market, there's little wiggle room seen for price to move before we connect with the 0.9950 region! Therefore, in the absence of clearer price action, we'll remain flat for the time being and reassess structure going into tomorrow's open.

Data points to consider: US jobless claims at 12.30pm, Fed Chair Janet Yellen speaks at 12.45pm, US new home sales at 2pm, FOMC member Kashkari speaks at 4.30pm, FOMC member Kaplan speaks at 11pm. CHF Gov. board member Maechler speaks at 5pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

DOW 30

Following the DOW's rather impressive downside move on Tuesday, the index managed to hold ground, albeit after multiple whipsaws, around the H4 demand base drawn from 20620-20654. To our way of seeing things, the next upside target is located close by around the underside of the daily resistance area at 20714, followed closely by the H4 resistance area at 20769-20801. Therefore, entering long at current prices is not something that interests us. Selling, however, is also not something we'd be comfortable taking part in due to the current support structure in play, and the fact that the US equity market is still in a strong position according to the weekly chart!

Our suggestions: Quite simply, we would recommend placing this market on the backburner today and revisiting it at tomorrow's open. Hopefully, we'll see some development by then.

Data points to consider: US jobless claims at 12.30pm, Fed Chair Janet Yellen speaks at 12.45pm, US new home sales at 2pm, FOMC member Kashkari speaks at 4.30pm, FOMC member Kaplan speaks at 11pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

GOLD

Kicking this morning's report off with a quick peek at the weekly chart, we can see that the buyers and sellers continue to battle for position around the resistance line pegged at 1241.2. The story on the daily chart, nonetheless, shows that price recently engulfed the Quasimodo resistance level at 1244.3, and is, at the time of writing, now seen retesting it as support. In the event that this boundary holds ground, the next area of interest can be seen around a daily resistance line at 1262.1.

Moving across to the H4 chart, structure shows that price briefly broke above the March 1st high at 1250.5 yesterday, and retreated into the close. With the H4 candles now seen trading back below March's opening level at 1245.9, there is space seen for this unit to test the support area at 1235.7-1238.1.

Our suggestions: However, taking a trade short on the basis of the break below March's opening level is not something we'd label high probability. Weekly action remains undecided around the 1241.2 neighborhood, and daily price is, as we mentioned above, seen testing 1244.3 as support. With that, our team's position will remain flat going into today's segment.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

Daily Pivots: (S1) 1.0774; (P) 1.0799 (R1) 1.0823; More.....

EUR/USD lost some upside momentum again with 4 hour MACD crossed below signal line. But further rally is still expected with 1.0718 minor support intact. Break of 1.0828 resistance will target 100% projection of 1.0339 to 1.0828 from 1.0494 at 1.0983. However, as rise from 1.0339 is seen as a corrective move. We'd expect upside to be limited by 1.0983 to complete the correction. On the downside, break of 1.0718 minor support will turn bias to the downside for 1.0494 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 resume later. 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.

Daily Pivots: (S1) 1.2434; (P) 1.2470; (R1) 1.2517; More...

GBP/USD's rise from 1.2108 is still in progress. Intraday bias remains on the upside for 1.2569 resistance first. Break there will target 1.2705/74 resistance zone. But still, price actions from 1.1946 are seen as a consolidation pattern. Hence, we'd expect strong resistance from 1.2705/2774 to limit upside and bring down trend resumption. On the downside, break of 1.2340 support will turn bias back to the downside for 1.2108 support. Though, sustained break of 1.2774 will extend the rise towards 1.3444 key resistance level.

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 bottoming 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) 0.9881; (P) 0.9913; (R1) 0.9946; More.....

No change in USD/CHF's outlook as fall from 1.0169 is still in progress. Intraday bias stays on the downside for 0.9860 support next. Whole decline from 1.0342 is likely resuming and break of 0.9860 will target 100% projection of 1.0342 to 0.9860 from 1.0169 at 0.9687. Nonetheless, on the upside, break of 1.0002 minor resistance will turn bias back to the upside for 1.0169 resistance instead.

In the bigger picture, USD/CHF is staying in medium term sideway pattern between 0.9443/1.0342. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of another fall, we'd expect strong support from 0.9443/9548 support zone.

Daily Pivots: (S1) 110.67; (P) 111.22; (R1) 111.72; More...

USD/JPY dipped to as low as 110.27 but quickly recovered. At this point, we'd still expecting strong support around 111.12/13 cluster support to bring rebound. This level represents 61.8% projection of 118.65 to 111.58 from 115.49 at 111.12 and 38.2% retracement of 98.97 to 118.65 at 111.13. Break of 112.86 resistance will turn bias back to the upside for 115.49 resistance first. However, sustained break of 111.12/13 will bring deeper decline to 100% projection of 118.65 to 111.58 from 115.49 at 108.42.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Nonetheless, sustained trading below 55 week EMA (now at 111.19) will extend the consolidation from 125.85 with another fall through 98.97 before completion.

EUR/USD

Following a consolidative stage that extended during the first half of the day, the EUR/USD extended its monthly advance up to 1.824 after the US opening, as the dollar got dragged lower by poor US data and falling equities. The EUR/USD pair however, was unable to hold on to gains, and closed the day pretty much flat a few pips above the 1.0800 level. Risk aversion was again the main theme leading the markets, as following Wednesday's equities slump, a terrorist incident took place near the UK Parliament with at least two people dead.

In the data front, the EU released a minor report, the its current account for January, which recorded a surplus of €24.1 billion, below market's expectations, and December result, this last revised lower to €30.8B. In the US, sales of existing homes fell by 3.7% in February, at a 5.48 million seasonally adjusted annual rate, below previous 5.69M and expectations of 5.58M. Also, Fed's Kaplan hit the wires, reaffirming that the US Central Bank would need just two more rate hikes this year, and that policymakers will continue trimming its massive balance sheet gradually.

Despite still contained by a major Fibonacci resistance at 1.0820, the 50% retracement of the post-US election slide, the pair retains its bullish bias, at least technically, given that in the 4 hours chart, technical indicators have resumed their advances within positive territory after approaching their mid-lines, whilst 20 SMA maintains a sharp bullish slope below the current level. The pair peaked at 1.0828 last Friday, the level to surpass to confirm additional gains up to 1.0873, December monthly high. As long as the price holds above the 1.0700 region, bulls will remain in control of the pair.

Support levels: 1.0765 1.0730 1.0700

Resistance levels: 1.0830 1.0870 1.0910

USD/JPY

The USD/JPY pair trades at its lowest for this 2017 and not far from a daily low of 110.74, as risk aversion fueled demand for the safe-haven currency, exacerbated by the technical breakout of the 111.60 level earlier in the day. The pair plummeted at the beginning of the day after Wall Street's sharp decline weighed on Asian equities, further weighed through the day by the continued weakness in US Treasury yields, with the 10-year note benchmark falling down 2.39% after closing on Tuesday at 2.44%. The decline paused during the Asian session, as the Japanese trade surplus surged to a multi-year high of ¥813.4 billion in February. Exports in the same month surged by 11.3%, beating expectations, albeit imports increased by just 1.2%, from previous 8.5% advance. The technical outlook is clearly bearish according to the 4 hours chart, with technical indicators heading sharply lower within extreme oversold territory, whilst the price has extended further below its 100 and 200 SMAs. A break below 110.70, the immediate support, should lead to a continued decline towards 109.90, the 50% retracement of the November/December rally.

Support levels: 110.70 110.30 109.90

Resistance levels: 111.15 111.60 112.00

GBP/USD

Despite multiple negative headlines coming from the UK, the GBP/USD pair managed to close the day flat around 1.2481. There were no macroeconomic releases in the UK, but Brexit jitters were at top of the list, as, ahead of the trigger of the Art. 50 next week, the EU and the UK are already engaged in a discussion. EU authorities are claiming a bill that can go up to £60 billion for different liabilities including UK's share of pensions liabilities, loan guarantees and spending on UK-based projects, whilst UK government don't recognize such debt, talking about a maximum payment of £2-3 billion. Also, the Scottish parliament was set to debate on a second independence referendum, but got suspended it in the wake of the Westminster terror attack. At least two people died in an incident at the Housed of Parliament, with a vehicle mowing down about a dozen pedestrians on London's Westminster Bridge, before crashing into the Houses of Parliaments and stabbing a police officer being shot down. The GBP/USD pair bottomed at 1.2423 with the news, and slowly moved back higher to match its opening level. From a technical point of view, the risk remains towards the downside, given that the pair held above 1.2425, a major Fibonacci support, while in the 4 hours chart the price bounced sharply after flirting with a bullish 20 SMA. In the same chart, technical indicators have resumed their advances within positive territory, now nearing overbought territory, with scope to extend up to 1.2540, on a break above 1.2505, the daily high.

Support levels: 1.2460 1.2425 1.2390

Resistance levels: 1.2505 1.2540 1.2585

GOLD

Gold prices kept rallying this Wednesday, with spot reaching a fresh 1-month high of $1,25.24 a troy ounce, to settled around 1,249.75. The commodity advanced for a fifth consecutive day, backed by a decline in high-yielding assets, although gains were moderated considering the slump in worldwide equities. A weaker dollar alongside with falling yields and increasing risk aversion, supported the metal. From a technical point of view, the daily chart shows that technical indicators have extended their advances, maintaining their upward momentum now near overbought readings, whilst the price has settled above a still bearish 200 DMA for the first time since last October, supporting some further advances up to 1,263.79, February high. Shorter term, and according to the 4 hours chart the risk is also towards the upside, as technical indicators have resumed their advances within overbought territory, whilst the 20 SMA accelerated its advance below the current level, after surpassing the 100 and 200 SMAs.

Support levels: 1,244.50 1,236.80 1,230.10

Resistance levels: 1,251.30 1,263.80 1,272.80

WTI CRUDE

West Texas Intermediate crude oil futures fell down to $47.07 a barrel, following the US EIA stockpiles report, showing that crude inventories in the country rose by more than expected in the week ended March 17th, up by 4.954 million barrels, ringing total US crude oil inventories to 533.1 million barrels. The commodity bounced from the mentioned low, which was last seen in November, when the OPEC announced its output cut deal, and settled at $48.06 a barrel, down by 20 cents daily basis. The recovery was a consequence of persistent dollar's weakness rather than positive news from the sector, implying that the risk of additional declines on US increasing production headlines remains high. From a technical point of view, the bearish strength remains intact according to the daily chart, with the price further below all of its moving averages, and technical indicators consolidating within oversold levels. In the 4 hours chart, WTI remains below a bearish 20 SMA, whilst technical indicators have managed to bounce from oversold readings, but remain well below their mid-lines, limiting chances of a steeper recovery.

Support levels: 47.70 47.00 46.40

Resistance levels: 48.30 48.90 49.50

DJIA

US indexes managed to pared losses, with Wall Street closing mixed after Tuesday's slump. The Dow Jones Industrial Average closed at 20,661.30, down 6 points, whilst the Nasdaq Composite advanced 27 points and settled at 5,821.64 and the S&P also closed higher, up 4 points or 0.19%, to 2,348.45. The Dow was weighed by a sharp decline in industrials, with Nike leading losers, closing down 6.88%. Verizon Communications followed, but lost just 0.92%. The technology sector led the advance, with Microsoft up 1.1%, Apple adding 1.08% and Intel 0.98%. The DJIA established a fresh March low at 20,578, and the daily chart shows that it remains well below a now horizontal 20 DMA, whilst technical indicators have turned flat near oversold territory, not enough to suggest downward exhaustion. In the 4 hours chart, the bearish stance persists from a technical perspective, as indicators have resumed their declines within oversold territory, whilst the index was unable to recover above any of its moving averages, with the nearest being the 200 SMA at 20,707.

Support levels: 20,610 20,578 20,526

Resistance levels: 20,707 20,732 20,783

FTSE 100

The FTSE 100 extended its slide, shedding 53 points or 0.73%, to close at 7,324.72, as Wall Street's Tuesday decline weighed on investors' mood. Analysts blame the ongoing slump in equities to disappointment over US President Trump, as the promises made at the beginning of his mandate remained unfilled, particularly as the financial and industrial sectors were the worst performers these days. Within the Footsie, mining-related equities led gainers, with Antofagasta up 1.69%, followed by Anglo American that added 1.44% and Randgold Resources that closed 1.39% higher. In the losers' list, Kingfisher shed 5.09%, while Standard Life closed 2.78% lower. The index recovered modestly after the cross, as Wall Street pared losses. Nevertheless, the daily chart shows that the index remains below its 20 DMA, while technical indicators hold below their mid-lines, although having lost their bearish strength. In the 4 hours chart, the technical setting favors the downside, as the 20 SMA has turned lower well above the current level, whilst technical indicators have resumed their declines near oversold levels.

Support levels: 7,294 7,262 7,239

Resistance levels: 7,367 7,400 7,439

DAX

European equities tracked losses from their overseas counterparts, with all of the major benchmarks closing in the red. The German DAX lost 57 points or 0.48% and closed at 11,904.12, as investors continued to unwind the so-called "Trump-trade." Volkswagen was the best performer, up 2.0%, followed by SAP that added 1.05%. Deutsche Boerse, on the other hand, led decliners, down 2.79%, and followed by Linde that closed 1.38% lower. From a technical point of view, the downward potential moderated, but is still present, given that in the daily chart, the index settled again below a now flat 20 SMA, but technical indicators lost bearish strength and stand horizontal right below their mid-lines. In the 4 hours chart, the German benchmark remained below its 20 and 100 SMAs, with the shortest gaining bearish strength above the largest, whilst technical indicators have recovered modestly from near oversold readings, but remain well below their mid-lines.

Support levels: 11,895 11,851 11,811

Resistance levels: 11,949 11,987 12,039

Daily Pivots: (S1) 1.3296; (P) 1.3352; (R1) 1.3386; More....

USD/CAD's rebound lost momentum after hitting 1.3408. 4 hour MACD crossed below signal line again and it's held by near term trend line too. Intraday bias is turned neutral first. On the upside, above 1.3408 will affirm the case that pull back from 1.3534 has completed. And, intraday bias will be back on the upside for retesting 1.3534. Break there will target 1.3598 high. On the downside, in case of another fall, we'd expect strong support from 1.3211 cluster level (61.8% retracement of 1.3008 to 1.3534 at 1.3209) to contain downside and bring rebound. Overall, we're still expecting the medium term rise from 1.2460 to resume later.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. Break of 1.2968 wold at least bring at retest of 1.2460 low. However, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

EM Asia

Reflationary trades have hit a speed bump. But while the latest headlines from the Foggy Dew are negatively impacting, the issue has more to do with the fact that the commodity-linked currencies failed to capitalise on the dovish Fed. At the same time, the confluence of political risk on both sides of the pond weighed and I suspect it is more to do with the recent commodity supply concerns stemming from the oil glut that has commodity traders parked temporarily in neutral.

In the meantime, Asia EM will be held ransom to the ebb and flow in risk appetite and overall commodity market conviction. But if we consider the softer outlook for the USD on the back of the dovish Fed hike, local EMs are unlikely to yield even more so that institutional and retail positioning isn't especially thick, which suggests there will be no sudden rush for the exits due to overweight books.

We've witnessed moderate sell-off in KRW, INR suggests that both pairs will have a high beta correlation to the sell-off in global equities and should reap the rewards on the anticipated return of risk.

The MYR is in a similar position but as we near the apparent bottom of oil prices, I expect the Ringgit to be more sensitive to volatile oil prices.

The pullback in commodity prices was anticipated, as we all know nothing goes up forever, even more so if we consider over extended positioning in both Copper and Iron Ore. But the Trump reflationary trade is far KO'd. Oil prices could conceivably move lower, but given the hawkish rhetoric from OPEC and the anticipated bounce in global growth, vis a vis US tax and fiscal reform, it's far too early to give up the plot. Don't let this wave of risk-off muddy the big picture as commodity traders are likely waiting in earnest to fade any further capitulation.

I still view the eventual move higher in US fixed income Yields as the most significant headwind for regional EM, and while US 10 year yields are expected to move higher throughout 2017, I suspect the undervalued regional equity markets and the higher yields on offer from local capital markets will keep the regional currencies in check.

Daily Pivots: (S1) 0.7647; (P) 0.7668; (R1) 0.7697; More...

AUD/USD is trying to draw support from 4 hour 55 EMA for the moment but recovery is weak. Intraday bias stays on the downside first. As noted before, rebound from 0.7490 should have completed. Deeper fall would be seen back to 0.7490 support. Break there will confirm completion of whole rise from 0.7158. On the upside, above 0.7748 will resume the rise from 0.7158. But in that case, we'd expect upside to be limited by 0.7849/50 cluster resistance to bring reversal. That level represents 61.8% projection of 0.7158 to 0.7740 from 0.7490 at 0.7850 and key long term retracement level at 0.7849.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seek to 55 month EMA (now at 0.8169) and above.