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GOLD (in USD) Surging.

Gold's weakness has paused as the precious metal surged yesterday out of the Fed rate hike. Strong support is given at 1177 (11/01/2017 low). The short-term momentum seems strong and it would not be abnormal to see an increase again towards resistance at 1263 (27/02/2017 high).

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 (in USD) Strong increase.

Silver's selling pressures have stopped below 17.00. Strong support is given at 16.63 (27/01/2016 low). Hourly resistance is now given at 17.52 (intraday high). Expected to further consolidate,

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 (in USD) Short-squeeze.

Crude oil's bearish pressures continues despite ongoing consolidation due to some shortsqueeze. The commodity had been unable to mount a serious challenge to 55.24 (03/01/2017 high) resistance. Strong support given at 49.61 (08/12/2016) has been broken. Expected to see deeper selling pressures.

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).

FTSE hit a series of fresh record highs after 7382/7254 correction was fully retraced and strong bullish acceleration commenced above previous high at 7382.

The rally was inspired by surge in commodity stocks on Fed’s rate hike.

Strong bullish setup of technical studies is complementing positive environment after Fed that would result in further upside action.

The price is eyeing its Fibo 161.8% projection at 7461 as next target, after previous one at 7431 (Fibo 138.2%) was taken out.

Rally could extend towards psychological 7500 barrier and 7511 (Fibo 200% projection of the upleg from 7254 trough).

Former top at 7382 now acts as good support, followed by rising 10SMA at 7352.

Res: 7440, 7461, 7500, 7511
Sup: 7400, 7389, 7382, 7352

News and Events:

The Fed’s three-hike pipe dream

As widely expected, the Federal Reserve increased borrowing rates by 25bps to 0.75%-1%. This is the second interest rate lift in four months and nobody got it wrong. So, no surprise here, however the greenback plunged sharply during Yellen's press conference with rates collapsing along the yield curve. Monetary sensitive 2-year treasury yields as well as the 10-year slid 9bps to 1.30% and 2.48% respectively. In the FX market, the single currency hit 1.0746 against the dollar as investors unwound their long USD positions. Interestingly, the disappointing defeat of Geert Wilders’ Freedom Party provided an additional boost.

So what exactly happened? Just as we wrote yesterday, the market mis-priced the tightening path beyond the March rate hike and when Janet Yellen adopted a dovish tone and wording during the press conference, investors quickly caught on that the three rate hikes promised for 2017 were in fact a pipe dream. Yes, the US economy is still in recovery in that growth is positive, however dark clouds have begun to gather on the horizon. One of the most disconcerting of all - as also mentioned in our report yesterday - is the negative trend in real wage growth. In February, data showed that real wages contracted 0.5% compared to a year ago. This is a major issue as consumer spending accounts for roughly 70% of the US GDP. Moreover, less disposable money for consumers means less price pressure, which translates into falling consumer prices, which ultimately means that the Fed will have to increase rates slowly if not taking a break during the process altogether.

The greenback is staring down the barrel of some complicated times ahead as investors slowly switch to risk-on mode and move towards higher yielding assets. In the short-term, EUR/USD will continue to suffer from the political uncertainty stemming from the French election. CHF and JPY have room for further appreciation against the USD.

SNB maintains course

Unsurprisingly, the Swiss central bank has decided to steer straight ahead, holding interest rates unchanged at -0.75%. Even though defending the franc is a clear SNB priority, rates will not be pushed much lower out of fear of boosting capital outflows. Recent strong intervention from the Swiss central bank pushed the EURCHF towards 1.0800 before bouncing lower.

These periods of uncertainty of having more margins to defend the Swiss franc seem to define the SNB’s strategy as the currency is still largely seen as overvalued.

In terms of data, retail sales saw a drop in January at -1.4% y/y, while Switzerland’s Q4 2016 printed below expectations at 0.6%.

The SNB’s wait-and-see approach is clearly set to continue as Europe remains on tenterhooks despite Geert Wilder’s Populist Party defeat. In the short-term, it is likely that we will see further euro weakness against the CHF.

Today's Key Issues (time in GMT):

• 4Q Labour Costs YoY, last -0,50% EUR / 08:00
• mars.16 SNB Sight Deposit Interest Rate, exp -0,75%, last -0,75% CHF / 08:30
• mars.16 SNB 3-Month Libor Lower Target Range, exp -1,25%, last -1,25% CHF / 08:30
• mars.16 SNB 3-Month Libor Upper Target Range, exp -0,25%, last -0,25% CHF / 08:30
• Feb Unemployment Rate, exp 7,30%, last 7,30% SEK / 08:30
• Feb Unemployment Rate Trend, last 6,90% SEK / 08:30
• Feb Unemployment Rate SA, exp 6,80%, last 6,80% SEK / 08:30
• mars.16 Deposit Rates, exp 0,50%, last 0,50% NOK / 09:00
• Feb CPI MoM, exp 0,40% EUR / 10:00
• Feb F CPI YoY, exp 2,00%, last 2,00% EUR / 10:00
• Bank of Italy's Visco Speaks in Milan on EU Treaties EUR / 10:00
• Feb F CPI Core YoY, exp 0,90%, last 0,90% EUR / 10:00
• mars.15 FGV CPI IPC-S, exp 0,34%, last 0,34% BRL / 11:00
• mars.16 Benchmark Repurchase Rate, exp 8,00%, last 8,00% TRY / 11:00
• mars.16 Overnight Lending Rate, exp 9,25%, last 9,25% TRY / 11:00
• mars.16 Overnight Borrowing Rate, exp 7,25%, last 7,25% TRY / 11:00
• mars.16 Late Liquidity Lending Rate, exp 11,75%, last 11,00% TRY / 11:00
• mars.10 Foreigners Net Bond Invest, last -$99m TRY / 11:30
• mars.10 Foreigners Net Stock Invest, last $134m TRY / 11:30
• mars.16 Bank of England Bank Rate, exp 0,25%, last 0,25% GBP / 12:00
• Mar BOE Asset Purchase Target, exp 435b, last 435b GBP / 12:00
• Mar BOE Corporate Bond Target, exp 10b, last 10b GBP / 12:00
• Jan Int'l Securities Transactions, last 10.23b CAD / 12:30
• Feb Housing Starts, exp 1264k, last 1246k USD / 12:30
• Feb Housing Starts MoM, exp 1,40%, last -2,60% USD / 12:30
• Feb Building Permits, exp 1268k, last 1285k, rev 1293k USD / 12:30
• Feb Building Permits MoM, exp -1,90%, last 4,60%, rev 5,30% USD / 12:30
• mars.11 Initial Jobless Claims, exp 240k, last 243k USD / 12:30
• mars.04 Continuing Claims, exp 2050k, last 2058k USD / 12:30
• Mar Philadelphia Fed Business Outlook, exp 30, last 43,3 USD / 12:30
• mars.10 Gold and Forex Reserve, last 393.4b RUB / 13:00
• mars.12 Bloomberg Consumer Comfort, last 50,6 USD / 13:45
• Mar Bloomberg Economic Expectations, last 50 USD / 13:45
• Jan JOLTS Job Openings, exp 5562, last 5501 USD / 14:00
• Revisions: Job Openings and Labor Turnovers USD / 14:00
• ECB's Praet speaks in Brussels EUR / 18:00
• Feb BusinessNZ Manufacturing PMI, last 51,6 NZD / 21:30
• 4Q BoP Current Account Balance, exp -$12.00b, last -$3.40b INR / 22:00
• Feb Foreign Direct Investment YoY CNY, exp -4,20%, last -9,20% CNY / 23:00
• Feb Industrial Production YoY, exp 1,30%, last 2,30% RUB / 23:00
• Feb Tax Collections, exp 93244m, last 137392m BRL / 23:00

The Risk Today:

EUR/USD is strengthening. The pair is lying in an uptrend channel. 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 is moving up but the pair remains around support given at 1.2254 (19/01/2017 low). The road is still wide-open for further decline. Hourly resistance is given at 1.2300 (05/03/2017 high). 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). Hourly support given at 113.56 (06/03/2017 low) has been broken. Expected to push lower. 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 exited uptrend channel. Hourly support given at 1.0075 (13/03/2017 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/CHF Moving sideways between 1.0700 and 1.0750.

EUR/CHF's renewed bearish pressures continues to increase. 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). Temporary surges seem the new normal for the CHF.

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 Bearish pressures increase.

EUR/JPY's demand has ended. Hourly support lies at 121.13 (intraday low). Strong resistance is given at a distance at 123.31 (27/01/2017 high). Expected to show further decrease.

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 Moving sideways.

EUR/GBP is trading mixed. Selling pressures increase around 0.8800. Key resistance is given at 0.8854 (15/01/2017 high). Yet, the road is wide-open for further weakness as there is no close support.

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.

USD/CHF Bearish breakout.

USD/CHF has exited uptrend channel. Hourly support given at 1.0075 (13/03/2017 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 Bullish pressures have faded.

USD/CAD's bullish pressures have ended abruptly. The road seems now wide-open for larger decline. Key resistance 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 Strong short-term bullish pressures.

AUD/USD's technical structure has changed. Support is given at 0.7494 (19/01/2017 low). Expected to target key resistance can be found at 0.7778 (08/11/2016 high).

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 Surging.

EUR/USD is strengthening. The pair is lying in an uptrend channel. 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 Trading higher within downtrend channel.

GBP/USD is moving up but the pair remains around support given at 1.2254 (19/01/2017 low). The road is still wide-open for further decline. Hourly resistance is given at 1.2300 (05/03/2017 high).

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 Selling pressures surged.

USD/JPY has failed to break key resistance given at 115.62 (19/01/2016 high). Hourly support given at 113.56 (06/03/2017 low) has been broken. Expected to push lower.

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).

The People's Party for Freedom and Democracy (VVD), the liberal, centre-right party led by incumbent Prime Minister Mark Rutte, has emerged as the biggest party, fighting back the predicted challenge of Geert Wilders' far-right PVV party. Rutte is likely to have benefited from the high voter turnout (81%) and his tough stance in the diplomatic row with Turkey over the past week. EUR/USD moved up one figure to 1.073 on the publication of the exit poll, which shows that VVD remains the largest party.

Wilders, despite a projected second place with around 20 seats, is not likely to be part of any coalition negotiations, with all major parties unwilling to work with his populist, anti-immigration MPs. The PVV is likely to spend another four to five years in the opposition.

The unexpected victor of the night was GreenLeft, led by 30-year-old Jesse Klaver, which increased its four seats to a projected 14. It could now play a crucial part in the upcoming coalition talks.

Rutte's party is likely to get 33 seats (a loss of eight versus 2012) and will need to enter into coalition talks to form a new government, although Rutte is likely to stay on as Prime Minister. The collapse of Rutte's former coalition partner, the social democratic PvdA, tumbling from 38 seats to a projected nine, means the PM will need to seek new agreements. The Christian Democrats CDA (centre-right) and Democrats 66 (centre), each with an expected 19 MPs, are the most obvious candidates to join a VVD coalition. However, that still leaves him five seats short of the 76 needed for a majority, which is why a fourth coalition partner will be needed. The Christian Union CU (centre-right) or the GreenLeft could also be candidates.

Talks are likely to last for some time – possibly months. The final official election results will be published on 21 March by the Dutch Election Commission.

The new parliament will meet for the first time on 23 March, when official coalition talks will begin. However, informal coalition talks are likely to start today.

Depending on the composition of the new governing coalition, we might see more fiscal easing in the Netherlands going forward, as most parties want to increase borrowing and lower taxes to boost jobs and growth. However, the economy is in good shape generally and there is fiscal room for growth-enhancing reforms.

The first defeat for populists in Europe might also have important repercussions for the upcoming French presidential election on 23 April and we could see Le Pen losing momentum in the polls and markets starting to reprice risk. For the short-term market implications of a Le Pen win see also Le Pen – What If? Implications for Euro and Nordic markets, 13 February 2017.

Spot Gold peaked at $1229 on Thursday, on extension of post-Fed strong rally formed base at $1195 zone and signaled that correction from $1263 to $1195 might be over. Strong dollar's negative sentiment that came after Fed, boosted yellow metal and turned near-term bias higher. Bullish extension met initial target at $1129 (daily Kijun-sen / 50% retracement of $1263/$1195) and could extend towards next barrier at $1337 (Fibo 61.8%) after consolidation. Sustained break above $1237 is needed to confirm reversal. Broken daily Tenkan-sen offers solid support at $1215, followed by thickening daily cloud that contained correction from $1263 and is now underpinning recovery. Cloud top lies at $1210 and is expected to contain extended downticks to keep fresh near-term bulls in play.

Res: 1229, 1237, 1244, 1247
Sup: 1221, 1215, 1210, 1208

Downside risk towards strong support zone, formed by 200 / 100 SMA's has been sidelined after strong post-Fed rally that tested again 0.7700 barrier and closed marginally above it. Long bullish daily candle that was formed yesterday, underpins fresh upside action, together with widening daily cloud that contained 0.7739/0.7489 pullback. Corrective easing on overbought conditions could be expected ahead of fresh attempts higher and re-test of 0.7739 (23 Feb high). Dips should be ideally contained at 0.7630 (Fibo 38.2% of 0.7489/0.7717 recovery rally), while renewed downside pressure could be expected on loss of 0.7600 handle (daily Tenkan-sen / 50% retracement).

Res: 0.7717, 0.7739, 0.7758, 0.7776
Sup: 0.7663, 0.7630, 0.7600, 0.7576

USD/CHF - 0.9990

Original strategy :

Sell at 1.0050, Target: 0.9950, Stop: 1.0085

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0050, Target: 0.9950, Stop: 1.0085

Position : -

Target :  -

Stop : -

Although the greenback dropped sharply overnight and fell to as ow as 0.9978, current recovery suggests consolidation above this level would be seen and rebound to 1.0020 is likely, however, reckon upside would be limited and price should falter below previous support at 1.0060 (now resistance) and bring another decline later. A break of said support at 0.9978 would extend recent decline from 1.0171 top towards key support at 0.9967 but break there is needed to retain bearishness and extend fall to 0.9930-40.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0040-50 should limit upside. Above said previous support at 1.0060 would defer and suggest low is formed instead, risk rebound to 1.0090 and then test of resistance at 1.0109.