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USD/CHF Bearish pause.

USD/CHF has paused after sharp exit from uptrend channel. Hourly support is given at 0.9862 (31/01/2017 low) has been broken. Key resistance can be found at a distance at 1.0344 (15/12/2016 high). Expected to consolidate.

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 Trying to bounce.

USD/CAD is trying to bounce near support at 1.3277. However a break of resistance at 1.3353 is needed to invalidate the current short term bearish technical structure. The road seems wide-open 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 Monitor the key resistance at 0.7778.

AUD/USD has successfully tested the support at 0.7497. A break of the key resistance at 0.7778 (08/11/2016 high) is needed to open the way for further strength. Hourly supports can be found at 0.7664 (16/03/2017 low).

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.

EUR/USD Challenging its rising channel top.

EUR/USD is challenging the resistance implied by its rising trendline (around 1.0795). A break of upside would signal persistent buying pressures. Key resistance is still given at a distance 1.0874 (08/12/2017 high). Strong support can be found at 1.0493 (22/02/2017 low). The technical structure suggests deeper increase towards resistance at 1.0874.

In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD Challenging its declining trendline.

GBP/USD has successfully tested the support at 1.2110 and continues to bounce higher. A break of key resistance (at 1.2429) is needed to open the way for further strength. Yet, the pair remains in a clear downtrend suggesting short term correction. Key resistance can be located at 1.2570 (24/02/2017 high). Hourly support is at 1.2324 (03/17/2017 low).

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Moving lower within sideways channel.

USD/JPY has failed to break key resistance given at 115.62 (19/01/2016 high confirming persistent selling pressure. The pair remains stuck in sideways trading pattern between 111.36 and 115.62. Hourly support given at 112.47 (nitraday low). Hourly resistance can be located at 113.57 (16/03/2017 high).

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

News and Events:

USD sell-off ahead of busy week for Fed members

The USD started the week on the back foot against the backdrop of easing US yields and growing investor impatience over Trump's tax cut and fiscal stimulus reforms. High-yielding currencies were buoyed this morning as the low volatility environment encouraged investors to load on risk. In the G10 complex, the Aussie and the Kiwi were the best performers, rising 0.44% and 0.63% respectively. The Japanese yen consolidated last week's gains but did not rise further as market participants resumed the 'hunt for yield'.

The single currency continues to gain ground despite the uncertainty stemming from ongoing French elections. It seems now that the market is already pricing in a defeat from Marine Le Pen or at least indicating that it will not jeopardise the future of the eurozone. The spread between German and French two-year yields continues to narrow. After reaching 0.45%, the spread narrowed to 0.33% as German yields recovered.

After an uneventful G20 meeting in Baden-Baden, investors will have limited data to sink their teeth into. Otherwise, it will be a relatively light week, with the exception of a few speeches from Fed members, which could potentially create some waves in the FX market. We expect the USD sell-off to take a breather in the short term; however further down the road, we are not ruling out further dollar weakness as patience grows thin over Trump's promised economic boost.

G20 stumbles, China will be the long term beneficiary

The stakes on risk to global trade have risen on the back of the G20's failure to reject rising protectionism. In a surprise twist, the G20 published a communiqué removing the wording: 'resist all forms of protectionism' - highlighting the diverse group's ineffectiveness to work together to form a compromise. In a complete role reversal, US Secretary Mnuchin refused to cull protectionism, while China's President Xi was vocal in supporting free trade. The compromised statements included commitment to 'strengthening the contribution of trade to our economies'. The effect on markets was muted however, the risk of destabilising US trade policy has increased. Trump's administration has been preoccupied with domestic policy failures, forcing international issues to the side. US Secretary of State Tillerson was in China to ease bilateral tensions. However, key issues such as North Korea, FX policy concerns and trade were not discussed.

Trump's next move on currency & trade policy is anyone's guess. Instead of delivering on his campaign promise to label China a currency manipulator and slap a massive tariff on Chinese's imports from 'day one', Trump has only targeted China for cheap political points. We suspect that Trump is bluffing in regards to an aggressive Chinese policy, yet the risk of radical unilateral action cannot be ruled out. In the long run, we suspect that the biggest gainer from Trump's non-traditional actions (unstable political partner & withdrawal from Trans-Pacific Partnership etc ) will be China, gaining total dominance in the Asian region. In this regard, we continue to value China assets. USDCNY remains stable around 6.90, on a slightly weaker fix at 6.89.

Today's Key Issues (time in GMT):

• mars.17 Domestic Sight Deposits CHF, last 467.4b CHF / 09:00
• 4Q Labour Costs YoY, last 1,50% EUR / 10:00
• Unieuro SpA IPO press presentation EUR / 10:00
• Central Bank Weekly Economists Survey (Table) BRL / 11:25
• Jan Wholesale Trade Sales MoM, exp 0,50%, last 0,70% CAD / 12:30
• Feb Chicago Fed Nat Activity Index, exp 0,03, last -0,05 USD / 12:30
• Feb Unemployment Rate, exp 5,60%, last 5,60% RUB / 13:00
• Feb Real Disposable Income, exp 0,30%, last 8,10% RUB / 13:00
• Feb Real Wages YoY, exp 2,20%, last 3,10% RUB / 13:00
• Feb Retail Sales Real MoM, exp -1,50%, last -24,50% RUB / 13:00
• Feb Retail Sales Real YoY, exp -2,00%, last -2,30% RUB / 13:00
• mars.17 Bloomberg Nanos Confidence, last 58,2 CAD / 14:00
• Bundesbank President Weidmann speaks in Loerrach, Germany EUR / 16:45
• Fed's Evans Speaks on Economy and Policy in New York USD / 17:10
• mars.19 Trade Balance Weekly, last $1725m BRL / 18:00
• BOE Chief Economist Andy Haldane Speaks in London GBP / 18:20
• Feb Net Migration SA, last 6460 NZD / 21:45
• 4Q BoP Current Account Balance, exp -$12.00b, last -$3.40b INR / 22:00
• mars.19 ANZ Roy Morgan Weekly Consumer Confidence Index, last 113,1 AUD / 22:30
• Feb Tax Collections, exp 93000m, last 137392m BRL / 23:00

The Risk Today:

EUR/USD is challenging the resistance implied by its rising trendline (around 1.0795). A break of upside would signal persistent buying pressures. Key resistance is still given at a distance 1.0874 (08/12/2017 high). Strong support can be found at 1.0493 (22/02/2017 low). The technical structure suggests deeper increase towards resistance at 1.0874. In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD has successfully tested the support at 1.2110 and continues to bounce higher. A break of key resistance (at 1.2429) is needed to open the way for further strength. Yet, the pair remains in a clear downtrend suggesting short term correction. Key resistance can be located at 1.2570 (24/02/2017 high). Hourly support is at 1.2324 (03/17/2017 low). The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY has failed to break key resistance given at 115.62 (19/01/2016 high confirming persistent selling pressure. The pair remains stuck in sideways trading pattern between 111.36 and 115.62. Hourly support given at 112.47 (nitraday low). Hourly resistance can be located at 113.57 (16/03/2017 high). We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

USD/CHF has paused after sharp exit from uptrend channel. Hourly support is given at 0.9862 (31/01/2017 low) has been broken. Key resistance can be found at a distance at 1.0344 (15/12/2016 high). Expected to consolidate. 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.

EUR/USD has started the week quietly, as the pair trades at 1.0754 in the Monday session. It’s also subdued on the release front, with no major releases on the schedule. German CPI slipped to 0.2%, well off the forecast of 0.7%. In the US, President Trump will speak at an event in Louisville, Kentucky. As well, FOMC member Charles Evans will deliver a speech in New York City.

The Federal Reserve raised rates by a quarter-point last week, but the US dollar responded with broad losses. EUR/USD jumped on the bandwagon, climbing to 5-week highs late last week. Why the negative response? Firstly, there was disappointment in the markets with the Fed policy statement, which was more dovish than expected. The rate move was priced in at over 90 percent, and there had been speculation that a red-hot US economy would propel the Fed to accelerate its pace of monetary tightening, with possibly four rate hikes this year. Instead, Fed Chair Janet Yellen reiterated that further rate hikes would be “gradual” and the Fed made no changes to its “dot plot”, with a projection for three rate hikes in 2017. As well, the US dollar may have lost ground due to traders and investors acting on “buy on rumor, sell on fact”. What’s next for Janet Yellen & Co? Analysts do not expect another rate move in May, while a hike in June is currently priced in at 50%. The markets will be looking for clues about the Fed’s monetary plans. A host of FOMC members will be speaking this weak, highlighted by Janet Yellen’s speech on Thursday at an event in Washington. The market will be looking for clues regarding monetary policy. In the past, Fed policymakers have presented conflicting positions, and if the market senses divisions within the Fed, the US dollar could lose ground.

Last week’s Dutch election was good news for backers of the EU. There had been fears that the far right-wing Freedom Party of Geert Wilders would make substantial gains. Wilders is a fierce critic of the EU and pledged to hold a referendum on the Netherland’s membership in the EU (with the catchy slogan “Nexit”). Dutch Prime Minister Mark Rutte won the election handily, bringing a sigh of relief from governments in Western Europe. Still, Wilders commands the second largest party in the country and his party will be a major player on the Dutch political scene. Next stop is France, which goes to the polls in April. Polls have far rightist Marine Le Pen and centrist Emmanuel Macron and running neck and neck in the first round of the presidential election on April 23. Still, Macron is expected to win in the second-round vote in May.

USD/CHF - 0.9983

Original strategy :

Sell at 1.0020, Target: 0.9920, Stop: 1.0055

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0020, Target: 0.9920, Stop: 1.0055

Position : -

Target :  -

Stop : -

As the greenback has rebounded after finding support at 0.9942 on Friday, suggesting consolidation above this level would be seen and corrective bounce to 1.0005-10 (38.2% Fibonacci retracement of 1.0109-0.9942) cannot be ruled out, however, reckon upside would be limited to 1.0025 (50% Fibonacci retracement) and bring another decline later. Below said support at 0.9942 would extend recent decline from 1.0171 to 0.9920-25 but loss of near term downward momentum should prevent sharp fall below 0.9900 and reckon 0.9870-75 would hold from here.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0025 (current level of the upper Kumo) should limit upside and bring another decline. Only above previous support at 1.0060 (now resistance) would abort and signal low is formed instead, risk rebound to 1.0090-95 first.

GBP/USD - 1.2407

Original strategy :

Buy at 1.2325, Target: 1.2445, Stop: 1.2290

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2325, Target: 1.2445, Stop: 1.2290

Position : -

Target :  -

Stop : -

As cable has risen again after finding renewed buying interest at 1.2335, suggesting recent upmove from 1.2109 (this month’s low) is still in progress and may extend further gain to 1.2445-50, however, loss of near term momentum should prevent sharp move beyond previous resistance at 1.2479, risk from there has increased for a retreat to take place later.

In view of this, would not chase this move from here and we are looking to buy cable on pullback as said support at 1.2335 should limit downside and bring another rise. Below previous resistance at 1.2310 would defer and suggest top is possibly formed, risk correction to 1.2265-70 but price should stay above indicated support at 1.2241.

EUR/USD - 1.0751

Original strategy  :

Buy at 1.0710, Target: 1.0810, Stop: 1.0675

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0710, Target: 1.0810, Stop: 1.0675

Position : -

Target :  -

Stop : -

As the single currency has maintained a firm undertone after last week’s rally, suggesting recent erratic upmove from 1.0493 low is still in progress and may extend further gain towards previous chart resistance at 1.0829, however, loss of near term upward momentum should prevent sharp move beyond 1.0850-60 and price should falter well below 1.0890-00, risk from there has increased for a retreat to take place later.

In view of this, would not chase this rise here and we are looking to buy euro on subsequent pullback as 1.0706 support should limit downside and bring another rise later. Below 1.0675-80 would defer and suggest top is possibly formed, risk weakness to 1.0640 (previous resistance now support) but still reckon indicated support at 1.0600 would remain intact.

USD/JPY - 112.84

Original strategy  :

Sell at 113.50, Target: 112.40, Stop: 113.85

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 113.50, Target: 112.40, Stop: 113.85

Position :  -

Target :  -

Stop : -

As the greenback has remained under pressure after meeting renewed selling interest at 113.54, suggesting recent decline from 115.51 is still in progress and may extend further weakness to 112.35-40 (50% projection of 115.20-112.90 measuring from 113.54), then 112.10-15 (61.8% projection), however, loss of downward momentum should prevent sharp fall below previous support at 111.69, risk from there has increased for a rebound to take place later.

In view of this, would not chase this fall here and would be prudent to sell dollar on subsequent recovery as said resistance at 113.54 should limit upside, bring another decline later. Only above  the upper Kumo (now at 113.90) would abort and signal low is formed instead, bring rebound to 114.20-25 later.

The common currency gave back some of its recent gains on Friday, following the release of a poll on the French presidential election. The poll showed that although the far-right Eurosceptic candidate Marine Le Pen is still expected to lose the 2nd voting round, she has recovered some ground on her main rival, Emmanuel Macron. EUR/USD slid after it hit resistance near the 1.0775 (R1) level, but the slide was stopped near 1.0735 (S1). However, the pair recovered all of its aforementioned losses during the Asian morning Monday, perhaps due to a poll released on Sunday showing that Macron would lead the first round, and also beat Le Pen in the second round by a larger margin than previous polls showed. At the time of writing, the rate looks to be headed for another test near the 1.0775 (R1) resistance, where a clear break is possible to aim for a test near the very important territory of 1.0800 (R2).

We think that the common currency is likely to become increasingly more responsive to fresh polls heading into the ballots, considering that polls released a few weeks ahead of the elections may bear more importance in the eyes of investors. What's more, today the first French presidential debate between the 5 most popular candidates is set to take place. Depending on who the market sees as the winner of the debate, there could be an impact on the common currency. A strong showing by Le Pen could add momentum to her campaign and considering her anti-European views, it may prove a cause for euro weakness. Given that EUR/USD is trading close to the key resistance of 1.0800 (R2), this could encourage the bears to take advantage of that zone and initiate new short positions. On the other hand, if Macron is seen as emerging victorious, market participants could price out some probability of European disintegration. This is likely to fuel further the latest recovery in EUR/USD and it could even prove the catalyst for a clear break above the 1.0800 (R2) zone. Zooming out to the daily chart, we see that the 1.0800 (R2) critical resistance is also the neckline of a possible inverted head and shoulders formation. As such, a clear close above 1.0800 (R2) and the downtrend line taken from the peak of the 3rd of May 2016 could signal the completion of the pattern, and in combination with a potential defeat of Le Pen in the second round, it could lead to a medium-term trend reversal.

EUR/GBP got hit by Friday's poll as well and slid from 0.8725 (R1) to hit support at 0.8660 (S1), near the downside resistance line drawn from the peak of the 11th of October. The fact that the rate is still trading above that line leaves the door open for the bulls to enter the market and push the pair higher. Nevertheless, we would like to see a decisive break above the upper bound of the falling wedge that has been in place since the 10th of March before we get confident on such a rebound. The trigger for such a break could be a poor showing by Le Pen in today's debate.

G20 drop commitment to resist protectionism

Over the weekend, the financial leaders of the G20 nations did not reiterate a long-standing pledge to resist protectionism in their statement, amid opposition from the US. Even though there was no major FX market impact, this highlights the risk that the Trump administration could pursue a more protectionist approach on trade policy, in line with what the US President vowed on the campaign trail. In our view, this increased risk of global protectionism could have an impact on the rhetoric of the RBNZ and the RBA, considering that both of those economies are heavily export-oriented. In particular, at the latest RBNZ meeting Governor Wheeler indicated that one of the biggest risks he sees is US President Trump's potential protectionist trade policies. As such, we believe that this could fuel an even more cautious stance from the Bank when it meets on Wednesday (see below).

Today's highlights: The European day is particularly light, with no major events or indicators due to be released.

Besides the French presidential candidates, we have two more speakers on today's agenda: BoE Chief Economist Andy Haldane and Chicago Fed President Charles Evans.

As for the rest of the week, on Tuesday, the UK will release its CPI data for February. The forecast is for both the headline and the core rates to have risen, which could heighten market expectations with regards to a potential reduction in BoE stimulus.

On Wednesday, late during the day, the RBNZ rate decision will be in the spotlight. Expectations are for no change in policy. At its latest gathering, the Bank retained its easing bias despite improving domestic economic data, indicating that numerous uncertainties persist, particularly in the global outlook. As was later explained by Governor Wheeler, this was a reference to the risks surrounding exports and the prospect of increased global protectionism. As such, given that global risks remain elevated as was confirmed by the G20 gathering, we expect the RBNZ to retain its dovish bias and leave the door open for further easing.

On Thursday, the only major indicator we get is UK retail sales for February.

On Friday, we get the preliminary manufacturing and services PMIs for March from several European nations and the Eurozone as a whole. From the US, we get durable goods orders for February and from Canada, CPI figures for February.

EUR/USD

Support: 1.0735 (S1), 1.0710 (S2), 1.0675 (S3)

Resistance: 1.0775 (R1), 1.0800 (R2), 1.0830 (R3)

EUR/GBP

Support: 0.8660 (S1), 0.8635 (S2), 0.8590 (S3)

Resistance: 0.8725 (R1), 0.8760 (R2), 0.8790 (R3)

Spot Gold probed above last week's high at $1233on extension of strong rally from $1197 that was sparked by Fed.

Gold is holding firm bullish tone in the near-term and eyeing next strong barrier at $1237 (Fibo 61.8% of $1263/$1195 pullback), break of which would generate fresh bullish signal.

Overbought slow stochastic warns of consolidation / correction ahead of $1237 barrier, with top of thick hourly cloud (spanned between $1215 and $1227), seen ideally containing dips).

Alternative scenario sees violation of strong supports at $1218/15 (daily cloud top / hourly cloud base) as bearish signal for stronger losses.

Res: 1235, 1237, 1244, 1247
Sup: 1229, 1227, 1224, 1218