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For the 24 hours to 23:00 GMT, the EUR declined 0.1% against the USD and closed at 1.0668.

On the data front, the Euro-zone's final Markit services PMI surprisingly dropped to a level of 56.0 in March, from a level of 56.5 recorded in the preliminary print. In the prior month, the PMI had registered a reading of 55.5.

Separately, activity in Germany's services sector was confirmed at a fifteen-month high level of 55.6 in March, compared to a level of 54.4 registered in the previous month.

In the US, minutes of the Federal Reserve's (Fed) March meeting revealed that the central bank is on course to begin reducing its $4.5 trillion balance sheet later this year if economic data holds up. Further, minutes also revealed that policymakers judged that the labour market continues to strengthen and the economic outlook hasn't changed much since January.

The US Dollar climbed earlier in the session, on the back of robust ADP jobs report in the US.

Data revealed that the US ADP private sector employment increased more-than-anticipated by 263.0K in March, adding the most number of workers in over two years, thus suggesting that the nation's job growth is off to a strong start in 2017. The private sector employment had recorded a revised gain of 245.0K in the prior month, compared to market expectations of an advance of 185.0K

On the contrary, the nation's ISM non-manufacturing PMI declined more-than-expected to a level of 55.2 in March, hitting its lowest level in five months, while investors had envisaged a decline to a level 57.0. The non-manufacturing PMI had recorded a reading of 57.6 in the previous month. Additionally, the nation's final Markit services PMI was revised lower to a level of 52.8 in March, compared to a fall to a level of 52.9 registered in the flash estimate. In the previous month, the PMI had registered a level of 53.8. Further, the nation's mortgage applications eased 1.6% in the week ended 31 March 2017, after recording a fall of 0.8% in the prior week.

In the Asian session, at GMT0300, the pair is trading at 1.0674, with the EUR trading 0.06% higher against the USD from yesterday's close.

The pair is expected to find support at 1.0641, and a fall through could take it to the next support level of 1.0608. The pair is expected to find its first resistance at 1.0698, and a rise through could take it to the next resistance level of 1.0722.

Going ahead, investors will look forward to the minutes of the European Central Bank's (ECB) recent meeting along with Germany's factory orders for February, slated to release in a few hours. Additionally, the US weekly jobless claims data will also be on investors radar.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.4% against the USD and closed at 1.2486, after latest data indicated that UK's service sector activity grew more-than-expected in March.

Britain's Markit services PMI advanced to a level of 55.0 in March, soaring to its highest level in three months, compared to market consensus of an advance to a level of 53.5, thus easing some worries that the nation's economy is losing momentum. The PMI had recorded a reading of 53.3 in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.2479, with the GBP trading 0.06% lower against the USD from yesterday's close.

The pair is expected to find support at 1.2433, and a fall through could take it to the next support level of 1.2386. The pair is expected to find its first resistance at 1.2513, and a rise through could take it to the next resistance level of 1.2546.

With no economic releases in Britain today, investor sentiment would be governed by global macroeconomic events.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.29% against the JPY and closed at 110.50.

In the Asian session, at GMT0300, the pair is trading at 110.48, with the USD trading marginally lower against the JPY from yesterday’s close.

The pair is expected to find support at 110.02, and a fall through could take it to the next support level of 109.56. The pair is expected to find its first resistance at 111.19, and a rise through could take it to the next resistance level of 111.90.

Going ahead, traders await the release of Japan’s flash leading and coincident indices for February, due tomorrow.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.24% against the CHF and closed at 1.0039.

In the Asian session, at GMT0300, the pair is trading at 1.0035, with the USD trading a tad lower from yesterday’s close.

The pair is expected to find support at 1.0004, and a fall through could take it to the next support level of 0.9974. The pair is expected to find its first resistance at 1.0071, and a rise through could take it to the next resistance level of 1.0108.

Looking ahead, Switzerland’s consumer price inflation data for March, slated to release in a few hours, will garner a significant amount of market attention.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.25% against the CAD and closed at 1.3430.

In the Asian session, at GMT0300, the pair is trading at 1.3441, with the USD trading 0.08% higher against the CAD from yesterday's close.

The pair is expected to find support at 1.3397, and a fall through could take it to the next support level of 1.3354. The pair is expected to find its first resistance at 1.3464, and a rise through could take it to the next resistance level of 1.3488.

Ahead in the day, market participants await the release of Canada's building permits data for February.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

Key Points:

• Near-term slip is forecasted if the current resistance level holds firm.
• Technical bias is near-term bearish but long-term bullish.
• Fundamentals should inspire a rally after the forecasted tumble.

Gold is fast approaching a critical resistance level which could mean we have a few torrid weeks ahead of us. Specifically, on the one hand, the metal's underlying bullish sentiment remains intact which should see it push higher. However, on the other hand, gold is battling against a deteriorating technical bias which might necessitate a slip to the downside in the coming days. As a result, we may need to take a closer look at the metal to get a clearer picture of what is going on.

Firstly, we need to understand whether the bears or the bulls are likely to be in command of the metal in the near-term. At present, the bias seems to be in favour of the bears for a number of reasons. For one, gold prices are battling against a fairly robust zone of resistance that has previously remained unbroken. In addition to this, stochastics are overbought and the MACD is on the cusp of having a bearish signal line crossover.

The main technical arguments against near-term bearishness come from two key readings. Namely, the Parabolic SAR and the moving average bias which are both still rather bullish. However, these are unlikely to be able to counteract a swing against the metal. In the Parabolic SAR's case, the indicator is very close to inverting and, indeed, recent price action almost did manage to cause such a switch in bias. As for the moving averages, these are more indicative of long-term bullishness and, therefore, are unlikely to present a major impediment to the forecasted slip.

Overall, we expect that selling pressure should see the pair move back to the 1228.24 handle prior to the downside of the pennant capping losses. A breakout past this point is not expected which is due, in part, to the presence of the 50.0% Fibonacci retracement level. Although, the 100 day EMA is likely to intersect the trend line at around this price which will further add to support. From a more fundamental perspective, losses should be limited to this level as gold's underlying bullish sentiment remains intact. Said sentiment stems largely from increasing uncertainty in the market place, evidenced by the VIX whose average reading has been creeping steadily higher over the past few months.

As a result of this mixed sentiment, we would expect to see a rather sizable recovery for gold once it has tested the ascending trend line. This recovery should then extend back up to the current zone of resistance which will be intersecting the long-term descending trend line, meaning, either another reversal to the downside or a break out will be on the way fairly soon after. Unfortunately, we will have to take a look at the metal closer to this juncture before we hazard a guess at which is the more likely outcome.

Ultimately, keep an eye on gold as it has both upside and downside potential on offer moving ahead. As mentioned, the initial plunge and subsequent rally should result from a mix of countervailing technical and fundamental forces which could see the 1228.24 mark tested within a week or so. However, monitor both the developing Brexit story and the ever-present influence of Trump as they are sure to continue to impact the metal's performance as well.

Key Points:

• Kiwi Dollar depreciating strongly against the Japanese Yen.
• RSI Oscillator close to oversold levels.
• Watch for a bounce to breakout of the bearish channel in the days ahead.

The past few months have been relatively rough for the pair as the Kiwi Dollar has traded within a strongly bearish channel that has taken it from a high around 83.50 all the way down to price actions current level at 76.90. However, although things might presently be looking relatively bleak for the pair, it should be noted that there are some technical indicators presenting an interesting case for a short term breakout.

In particular, the RSI Oscillator is currently plumbing oversold levels which implies that we are likely to see, either a short term reversal, or at the minimum a period of moderation. There also appears to be another iteration of an ending diagonal evident on the 4-hr chart which would seems to suggest that a breakout could be afoot over the next few sessions. Subsequently, there are quite a few technical factors suggesting that, at the very least, we may see some moderation in the days ahead.

However, there are still plenty of fundamental bears waiting in the wings given the Yen’s current status as a “safe haven” currency. In addition, the New Zealand Retail Sales figures are also due out early next week which is forecast to contract by around 0.6% m/m. Subsequently, there could be a few negative surprises awaiting the Kiwi Dollar in the coming days.

Regardless, the presence of another ending diagonal, along with RSI nearing oversold levels, would seem to suggest that we could be in the early stages of seeing a short term breakout. Subsequently, the most likely scenario is one where price action rallies to breach to the top of the descending trend line around the 77.50 mark before commencing a run towards the first major resistance point at 78.50. However, it would be prudent to wait for a confirmation candle to close above the trend line before considering any form of entry.

Ultimately, the deep depreciation of the Kiwi Dollar can only go so far before we see some mean reversion in play. At this stage, price action is already depressed enough that a rebound is highly likely, especially given the technical indicators. Subsequently, watch for a bounce to the long side over the next few sessions.

Currency pair GBP/USD

The GBP/USD is building a contracting triangle chart pattern (red/blue lines). A break above resistance (red) could see price complete wave E (green). A break below support (blue) could see price challenge the 61.8% Fibonacci level of wave X vs W (blue).

The GBP/USD is probably still in a larger ABC zigzag (pink) within wave X (blue) as long as price does not break the resistance (red) trend line. Price is also at an even 1.25 resistance level. A break below support (blue) could spark the wave C (pink) part of the expected bearish zigzag.

Currency pair EUR/USD

The EUR/USD continues to move sideways between support (light blue) and resistance (red). A break above resistance could see price retrace back to the Fibonacci levels of wave 2 vs 1 (light green) or wave B green) whereas a break below support still has other support levels nearby (blue trend lines).

The EUR/USD also continues to show a double divergence between the bottoms of price and the oscillator (green lines), which could spark a retracement. The wave count could still be in a wave ABC (orange) because it did not break below the 138.2% Fibonacci level of wave B vs A (orange).

Currency pair USD/JPY

The USD/JPY could have completed the WXY (orange) correction of wave B (brown). A break below support (green) could see price complete wave C (brown) at the 50% Fibonacci level of wave 4 vs 3 (purple).

The USD/JPY is at a major trend line (green) again. A bearish breakout could indicate a wave C (brown) continuation whereas a bullish bounce above 111 and 111.50 could expand wave B (brown) to higher Fibonacci levels.

EUR/USD

EUR/USD is approaching trendline resistance and a break above would confirm the double bottom pattern at 1.0630. However, the currency pair could struggle to rally, since solid resistance lies at 1.0720 and 1.0750.

Only a break above 1.0750 would signal that there might be potential for a larger recovery in EUR/USD.

GBP/USD

GBP/USD is consolidating within a triangle pattern. However, with plenty of data releases and other events in the upcoming 48 hours, a breakout seems imminent. Since the short-term trend in GBP/USD is positive, a break above 1.25 seems more likely.

This could then pave the way for a move towards 1.26, but immediate resistance is noted at 1.2550. Should the currency pair come under pressure, watch the 1.2420/30 area for key support.

USD/JPY

USD/JPY is moving towards 110 and a break below that level seems increasingly likely. The charts suggest that this would then pave the way for a move to at least 108.50.

While the currency pair is starting to look a bit oversold, there is still potential for a larger decline should 110 support break.

AUD/USD

The momentum in AUD/USD is increasing and the currency pair is approaching key support at 0.7490. The Aussie Dollar is likely to consolidate there for a while.

However, the short-term outlook for AUD/USD is negative and selling rallies the preferred strategy. Look for decent resistance at 0.7550 and 0.7585/90. Should the currency pair break below 0.7490 support, immediate support is then seen 0.7430, but it would likely extend losses further.

XAUUSD

Gold fell to 1244 in yesterday's trading session, but the strong bounce from there once again confirms that the metal is still in demand. Resistance between 1261 and 1263 is still a tough one to crack, but a breakout seems increasingly likely.

A move above 1263 would then suggest that the rally could continue to 1300 in the near-term.

EUR/JPY

EUR/JPY is trading within a descending channel and the outlook remains bearish following the break of 118 support.

Selling rallies is the preferred strategy. Watch for retests of the upper channel line, as well as 118.50 and 118.75.

Global Markets:

• Asian stock markets: Nikkei down 1.40 %, Shanghai Composite gained 0.10 %, Hang Seng fell 0.55 %, ASX 200 declined 0.65 %
• Commodities: Gold at $1256 (+0.60 %), Silver at $18.24 (+0.30 %), WTI Oil at $50.85 (-0.60 %), Brent Oil at $54.10 (-0.55 %)
• Rates: US 10 year yield at 2.34, UK 10 year yield at 1.10, German 10 year yield at 0.25

News & Data:

• Chinese Caixin Services PMI Mar: 52.1 (prev 52.6)
• Hong Kong Manufacturing PMI Mar: 49.9 (prev 49.6)
• PBoC Fixes USDCNY Reference Rate At 6.8930 (prev fix 6.8906 prev close 6.8975)
• Asia stocks slip, investors on edge for Trump-Xi meeting – RTRS
• Dollar sags on Xi-Trump summit nerves, geopolitical worries – RTRS

Markets Update:

Asian stock markets declined as risk appetite remains low. The market is waiting for the meeting between US President Trump and Chinese President Xi Jinping. Investors are hoping that Trump may moderate his tone and seek better relations with China.

In FX, it remains quiet. The FOMC meeting minutes did not reveal much new. Traders are now waiting for tomorrow's NFP release. The Dollar has strengthened slightly this week, although it declined against safe haven currencies such as the Japanese Yen.

USD/JPY is approaching the 110 level. A break below would be significant from a technical perspective and suggest, that the decline will extend to at least 108.50.

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