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Daily Pivots: (S1) 1.4158; (P) 1.4224; (R1) 1.4259; More...

EUR/AUD drops sharply after hitting 1.4289 and intraday bias is turned neutral first. Price actions from 1.4025 are viewed as a correction. On the downside, break of 1.4093 will turn bias to the downside for 1.4025 low first. Break will resume the larger fall from 1.6587 to key support level at 1.3671. We'd expect downside to be contained there to bring reversal. Meanwhile, above 1.4289 will target 1.4322/4467 resistance zone first.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a consolidative pattern. 50% retracement of 1.1602 to 1.6587 at 1.4095 was already met. While further fall cannot be ruled out, we'd expect strong support above 1.3671 to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4721 resistance will be the first sign of resumption of up trend from 1.1602 and target retesting of 1.6587 high first.

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Daily Pivots: (S1) 1.0674; (P) 1.0685; (R1) 1.0703; More...

Intraday bias in EUR/CHF remains neutral for consolidation above 1.0635 temporary low. Near term outlook, though, remains bearish as long as 1.0749 resistance remains intact. Below 1.0635 will target 1.0620 support. Decisive break there will confirm resumption of whole fall from 1.1198. In that case, next downside target will be 1.0485 fibonacci level.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Such correction is still in progress. Sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485. On the upside, break of 1.0897 resistance is needed to confirm completion of such fall. Otherwise, outlook will stay bearish.

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• BoE to swallow pride again with higher growth forecasts expected;
• With inflation rising and input prices rising rapidly, will Carney stand by warnings on the economy?
• Trump never far from the headlines, markets to remain sensitive despite UK focus today.

While Super Thursday should put the focus firmly on the UK today, the first two weeks of Donald Trump's presidency has been eventful, to say the least, so it's safe to assume potentially market moving headlines here are never too far away.

Super Thursday marks the day once a quarter when the Bank of England announces its latest monetary policy decision, releases the minutes of the meeting, its quarterly inflation report including new forecasts and Governor Mark Carney chairs a press conference. Needless to say, it's often quite an eventful day, particularly in post-Brexit Britain when so much uncertainty exists for the economy.

The BoE is expected to be forced to swallow some pride again today and take another step down from its pre-referendum position on the economic impact of Brexit and announce upgrades to its growth forecasts following another few months of stronger data. Carney in particular came in for severe criticism for his pre-referendum warnings and that has not eased as the economy has outperformed most expectations in the near term.

While the BoE will likely announce higher near term growth forecasts in today's inflation report, I still expect the central bank to stand by its warning that the economy is on the cusp of an inflation-induced slowdown. The CPI inflation numbers are rising fast and the rapid and substantial increase in input prices – up 15.8% year on year in December – are going to put further pressure on businesses to pass on higher costs. The real test of the economy will come from how the consumer responds to higher prices or how businesses manage to absorb them but in the absence of higher wages, the former is not sustainable for too long.

The question today will be how traders respond to the combination of higher growth forecasts and repeated warnings of downside risks from the BoE. It will also be interesting to see how the combination of the two impacts its outlook for interest rates and whether it maintains its previous neutral stance here, indicating that the next move is as likely to be a hike as a cut. Any suggestion that this has tipped slightly in the favour of a hike could send the pound higher, which could see it test 1.28-1.2850 against the dollar, an important level for the pair.

As noted, Trump has been extremely active in his first two weeks as President, signing executive orders on a range of matters and imposing his controversial travel bank that has attracted mass criticism and protests. I don't expect Trump to be too far away from the headlines any time soon and traders will likely be sensitive to any new announcements throughout the day.

Daily Pivots: (S1) 1.0728; (P) 1.0767 (R1) 1.0808; More.....

EUR/USD's rise from 1.0339 is still in progress and intraday bias stays on the upside for 1.0872 resistance. At this point, we're still viewing choppy rise from 1.0339 as a corrective move. Thus, upside should be limited by 1.0872 resistance and bring reversal. On the downside, break of 1.0619 will indicate that such rise is completed and turn bias to the downside for retesting 1.0339 low.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

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Daily Pivots: (S1) 1.2573; (P) 1.2626; (R1) 1.2710; More...

The breach of 1.2673 suggests that GBP/USD's rebound from 1.1986 is resuming. Intraday bias is back on the upside for 1.2774 resistance. Still, such rise is seen as the third leg of the consolidation pattern from 1.1946. Hence, we'd expect strong resistance from 1.2774 to limit upside and bring down trend resumption eventually. On the downside, firm break of 1.2411 minor support will argue that it's completed and turn bias to the downside for 1.1946 low.

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.

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Global Markets:

• Asian stock markets: Nikkei down 0.80 %, Hang Seng lost 0.55 %, ASX 200 fell 0.30 %
• Commodities: Gold at $1216 (+0.70 %), Silver at $17.61 (+0.90 %), WTI Oil at $53.55 (-0.60 %), Brent Oil at $56.50 (-0.50 %)
• Rates: US 10-year yield at 2.46, UK 10-year yield at 1.46, German 10-year yield at 0.47

News & Data:

• Australia Trade Balance (AUD) Dec: 3511M (est. 2000M, prev. 1243M), Imports: +1%, Exports: +5%
• Australia Building Approvals (MoM) Dec: -1.2% (est. -1.50%, prev. 7.00%)
• Australia Building Approvals (YoY) Dec: -11.4% (est. -10.80%, prev. -4.80%)
• Japan PM Abe: We have not conducted FX intervention under my administration
• FX restrictions should not be part of negotiations
• South Korea CPI (YoY) Jan: 2.0% (est. 1.50%, prev. 1.30%)
• South Korea CPI (MoM) Jan: 0.9% (est. 0.35%, prev. 0.10%)
• Fed leaves interest rates unchanged, remains upbeat on economy – RTRD
• U.S. factory, private payrolls data point to firming economy – RTRS
• Asian shares at four-month high, dollar soft after nonchalant Fed – RTRS

Markets Update:

The US Dollar rose initially following a much stronger than expected ADP Nonfarm Employment Change print. However, momentum waned after the Federal Reserve meeting and the Dollar eventually declined against all other major currencies in Asia. The Fed decided to keep rates unchanged, as expected, and maintained its hawkish bias. However, this was not enough to keep the Dollar rally alive, as traders had already anticipated such an outcome.

The Australian Dollar was the best performing currency overnight, after the trade balance showed a surge in exports. AUD/USD rose to almost 0.7650, while AUD/JPY rallied to 0.8650.

The focus today will be on the Bank of England rate decision. There certainly is potential for it moving the markets, as we not only get the announcement from the BoE, but also a press conference by Governor Carney and the updated economic forecasts from the central bank.

Upcoming Events:

• 08:15 GMT – Swiss Retail Sales
• 09:30 GMT – UK Construction PMI
• 12:00 GMT – Bank of England Rate Decision
• 12:30 GMT – Bank of England Governor Carney speaks
• 13:30 GMT – US Initial Jobless Claims

Daily Pivots: (S1) 0.9889; (P) 0.9922; (R1) 0.9960; More.....

USD/CHF's downside momentum diminished mildly after hitting 0.9860 and intraday bias is turned neutral first. Deeper decline is still expected as long as 1.0043 minor resistance holds. As noted before, decline from 1.0342 is seen as the third leg of the pattern from 1.0327. Below 0.9860 will target 61.8% retracement of 0.9443 to 1.0342 at 0.9786 and below. Meanwhile, break of 1.0043 will indicate short term bottoming and turn bias back to the upside.

In the bigger picture, rejection from 1.0327 resistance suggests that consolidation pattern from there is still in progress. Fall from 1.0342 is seen as the third leg and retest of 0.9443/9548 support zone could be seen. But we'd expect strong support from there to contain downside. At this point, we're still expecting the larger rally to resume later to 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

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Daily Pivots: (S1) 112.60; (P) 113.27; (R1) 113.92; More...

USD/JPY's fall from 118.65 is still in progress and intraday bias remains on the downside. Such decline would target 38.2% retracement of 98.97 to 118.65 at 111.13. However, such fall is seen as a corrective move. Hence, we'd expect strong support from 111.13 to contain downside an bring rebound. On the upside, above 115.36 resistance will argue that such correction is finished and turn bias to the upside for 118.65. Break will resume whole rise from 98.97 and target 125.85 key resistance.

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. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

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Key Points:

• Underlying pessimism beginning to fade to a degree.
• ABC wave poised to extend gains during leg C.
• Closing above the 100 day moving average is generating some bullish sentiment.

The Cable's defiance of last session's swing back to the dollar stands as a testament to the shift in underlying sentiment towards the embattled pair. Indeed, the market's reaction to Parliament's rather unified response to the Article 50 vote could be a bellwether of easing uncertainty and the return of some much needed optimism regarding the GBP's future. As a result, the 1.30 handle may not be as far out of reach as it has been over the past few months.

From a technical perspective, there is also some fairly tangible evidence of at least an end to the relentless selling pressure that has been besetting the Cable. Notably, the pair's recent surge in popularity has seen it finally cross back above the 100 day EMA in accordance with its bullish Parabolic SAR bias. Combined with the bullish MACD readings and the configuration of the two shorter period moving averages, upside potential is certainly at its highest point in some time.

Currently, the major impediment to any real and sustainable gains is the 61.8% Fibonacci level. This retracement coincides with the old downside constraint of the sideways channel that dominated the charts in the immediate aftermath of June's referendum. Additionally, stochastics are quite heavily overbought which will be providing some resistance as the pair attempts to push higher.

Fortunately, the presence of a corrective ABC wave alongside the other technical signals should help to generate the requisite momentum to see this robust zone of resistance broken. Moreover, whilst the stochastics are overbought, the RSI reading still has some room to maneuverer which makes the Cable's overbought status somewhat ambiguous.

Ultimately, if we do see the breakout occur, we expect the rally to end somewhere between the 61.8% and 78.6% Fibonacci retracement levels. Presently, the 1.30 handle is a likely candidate for where we can expect to see this C leg complete given the slight psychological barrier it poses. However, fundamentals around this point are likely to have a large influence on just where the ABC wave ends and they should, therefore, be watched closely as this point draws nearer.

Key Points:

• RSI Oscillator trending higher despite price falling.
• ABCD pattern completes near key support zone.
• Upside move likely in the coming days.

The Loonie has been under pressure the past few weeks as the pair has reacted to slumping sentiment for the greenback, as well as rising crude oil prices which have buoyed the CAD. Subsequently, price action has continued to creep lower over the ensuing period bringing it to a relatively critical juncture. However, there are some encouraging signs appearing amongst the technical indicators that could just be predisposing the pair to a rally in the near term.

In particular, a quick technical analysis for the pair has proved relatively illuminating as the 4-hour timeframe currently highlights the current inflexion point. Price action is currently sitting right on some strong support at 1.3020 which, if broken, could take the pair sharply lower. However, an ABCD pattern has just completed which suggests that a retracement is the likely move ahead.

In addition, the past week has started to show some interesting pressure building within the RSI Oscillator. After having reached oversold territory, in the latter part of January, the oscillator is now trending steadily higher in contrast to price actions current direction. Subsequently, there is divergence evident within the indicator which is likely to predispose the pair to a retracement in the coming days.

Fundamentally, much of the Canadian Dollar’s strength against the greenback has come from the rising crude oil prices that have been seen throughout most of 2017. This was largely due to an OPEC agreement on production which seemingly cut some excess supply. However, the evidence to date is starting to suggest that Iran, Iraq, and Nigeria are likely to undermine the agreement and that we might have seen the last of the oil price rises for the quarter. Subsequently, this adds some weight to the view that the CAD might now start to retreat against the US Dollar.

Ultimately, the USDCAD is unlikely to fall much further given the depth of support around the 1.30 handle. This is especially the case given the completed ABCD pattern and the current RSI Oscillator divergence. Subsequently, watch for an upward move over the next few sessions back towards the initial take profit point around the 1.31 handle.