For the 24 hours to 23:00 GMT, the EUR rose 0.9% against the USD and closed at 1.0795, after the Euro-zone's flash consumer price index (CPI) jumped more-than-expected by 1.8% on an annual basis in January, surging to its highest level in nearly four-years, a development that is likely to amplify calls for the European Central Bank to reconsider its monetary policy stance. Meanwhile, the CPI registered a rise of 1.1% in the previous month, while markets were anticipating for an advance of 1.5%. Additionally, the region's seasonally adjusted preliminary gross domestic product (GDP) showed that the economy expanded 0.5% QoQ in the fourth quarter, meeting market expectations and following a revised rise of 0.4% in the previous month. Further, the region's unemployment rate surprisingly plummeted to a seven-year low level of 9.6% in December, highlighting that the labour market is gaining strong momentum. In the previous month, the unemployment rate had registered a revised level of 9.7%, whereas investors had envisaged for an increase to 9.8%.

Separately, Germany's seasonally adjusted unemployment rate unexpectedly declined to a record low level of 5.9% in January, whereas investors were expecting the unemployment rate to remain steady at 6.0%. Moreover, the nation's retail sales unexpectedly eased 0.9% on a monthly basis in December, defying market expectations for an advance of 0.6%. In the previous month, retail sales had dropped by a revised 1.7%.

The greenback lost ground against its key counterparts, after the US CB consumer confidence index dropped to a level of 111.8 in January, surpassing market anticipation for the index to ease to a level of 112.8 and compared to a revised level of 113.3 in the previous month. Also, the nation's Chicago Fed purchasing managers index unexpectedly fell to a level of 50.3 in January, hitting its lowest level since May 2016 and confounding market expectation for a rise to a level of 55.0. In the previous month, the index recorded a revised level of 53.9 in the prior month.

In the Asian session, at GMT0400, the pair is trading at 1.0792, with the EUR trading marginally lower against the USD from yesterday's close.

The pair is expected to find support at 1.0712, and a fall through could take it to the next support level of 1.0631. The pair is expected to find its first resistance at 1.0842, and a rise through could take it to the next resistance level of 1.0891.

Ahead in the day, investors will closely monitor the release of final Markit manufacturing PMI for January across the Euro-zone and the European Commission's economic growth forecast report. Also, the US ADP employment change, ISM manufacturing and final Markit manufacturing PMI, all for January, along with construction spending for December, scheduled to release later in the day, will keep investors on their toes.

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 0.7% against the USD and closed at 1.2580, after the UK's number of mortgage approvals for house purchases rose to a level of 67.9K in December, notching its highest level in nine-months, against market consensus for a rise to a level of 69.0K and following a reading of 67.5K in the previous month. Meanwhile, the nation's net consumer credit rose less-than-expected by £1.0 billion in December, growing at its slowest pace in five-months, thus signalling that Britons may have grown more cautious on spending amid rising inflation. In the prior month, net consumer credit had registered an increase of £1.9 billion, while market expected for an advance of £1.7 billion.

In the Asian session, at GMT0400, the pair is trading at 1.2571, with the GBP trading 0.07% lower against the USD from yesterday's close.

Overnight data showed that the nation's BRC shop price index dropped 1.7% YoY in January, following a revised decline of 1.4% in the prior month.

The pair is expected to find support at 1.2455, and a fall through could take it to the next support level of 1.2340. The pair is expected to find its first resistance at 1.2641, and a rise through could take it to the next resistance level of 1.2712.

Going ahead, UK's Markit manufacturing PMI and nationwide house prices, both for January, scheduled to release in a few hours, will pique a lot of market attention.

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

For the 24 hours to 23:00 GMT, the USD declined 0.94% against the JPY and closed at 112.66.

In the Asian session, at GMT0400, the pair is trading at 113.13, with the USD trading 0.42% higher against the JPY from yesterday’s close.

Overnight data revealed that Japan’s final Nikkei manufacturing PMI advanced to a level of 52.7 in January, expanding at its fastest pace in almost three-years, suggesting that the nation’s manufacturing sector gathered pace in the start of the new year. The preliminary figures had indicated a rise to a level of 52.8 and after recording a reading of 52.4 recorded in the previous month.

The pair is expected to find support at 112.13, and a fall through could take it to the next support level of 111.12. The pair is expected to find its first resistance at 114.05, and a rise through could take it to the next resistance level of 114.96.

Looking ahead, traders look forward to Japan’s consumer confidence index for January, due to release tomorrow.

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

For the 24 hours to 23:00 GMT, the USD declined 0.57% against the CHF and closed at 0.9891.

In the Asian session, at GMT0400, the pair is trading at 0.9900, with the USD trading 0.09% higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9849, and a fall through could take it to the next support level of 0.9799. The pair is expected to find its first resistance at 0.9958, and a rise through could take it to the next resistance level of 1.0017.

Moving ahead, investors will keep a close watch on Switzerland’s real retail sales for December, set to release tomorrow and SVME-purchasing managers’ index for January, scheduled to release in some time.

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

For the 24 hours to 23:00 GMT, the USD declined 0.54% against the CAD and closed at 1.3041.

The Canadian Dollar gained ground, after Canada’s gross domestic product (GDP) expanded more-than-expected by 0.4% on a monthly basis in November, driven by strength in the manufacturing sector. Markets expected for a rise of 0.3%, following a revised drop of 0.2% in the previous month.

In the Asian session, at GMT0400, the pair is trading at 1.3084, with the USD trading 0.33% higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.2993, and a fall through could take it to the next support level of 1.2902. The pair is expected to find its first resistance at 1.3149, and a rise through could take it to the next resistance level of 1.3214.

Investors this afternoon will await Canada’s RBC manufacturing PMI for January.

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

Global Markets:

• Asian stock markets: Nikkei up 0.25 %, Hang Seng fell 0.75 %, ASX 200 rose 0.45 %
• Commodities: Gold at $1211 (+0.02 %), Silver at $17.51 (-0.17 %), WTI Oil at $52.70 (-0.20 %), Brent Oil at $55.40 (-0.30 %)
• Rates: US 10-year yield at 2.47, UK 10-year yield at 1.43, German 10-year yield at 0.44

News & Data:

• China Manufacturing PMI Jan: 51.3 (est. 51.2, prev. 51.4)
• China Non-Manufacturing PMI Jan: 54.6 (prev. 54.5)
• New Zealand Unemployment Rate Q4: 5.2% (est. 4.80%, prev. 4.90%)
• New Zealand Employment Change (QoQ) Q4: 0.8% (est. 0.70%, prev. 1.40%)
• New Zealand Participation Rate Q4: 70.5% (est. 70.20%, prev. 70.10%)
• Australia AIG Manufacturing Index Jan: 51.2 (prev. 55.4)
• Japan Nikkei Manufacturing PMI Jan F: 52.7 (prev. 52.8)
• South Korea Nikkei Manufacturing PMI Jan: 49 (prev. 49.4)
• South Korea Trade Balance (USD) Jan: 3200M (prev. 6800M)
• South Korea Exports (YoY) Jan: 11.2% (est. 8.70%, prev. 6.40%)
• South Korea Imports (YoY) Jan: 18.6% (est. 8.50%, prev. 8.00%)
• NIESR UK Outlook 2016 GDP Growth: 2.0% – 2017 GDP Growth: 1.7% – 2018 GDP Growth: 1.9%

Markets Update:

The US Dollar declined overnight and the Yen was in demand amid broad risk aversion in global markets. Concerns about the introduced measures by the Trump administration and uncertainty what will follow next have led to profit-taking in stocks. In the FX market, traders and investors were seeking a safe haven in the Japanese Yen.

The Euro remained bid after a strong rally in yesterday’s early NY session. Higher than expected Euro Zone inflation data led to broad EUR demand and pushed EUR/USD above 1.08. Resistance is now seen at 1.0875, and a break above could signal that the rally could extend to 1.10.

The main event today will be the Fed’s interest rate decision, and the central bank is expected to keep rates unchanged.

Upcoming Events:

• 08:45 GMT – Italian Manufacturing PMI
• 08:50 GMT – French Manufacturing PMI
• 08:55 GMT – German Manufacturing PMI
• 09:00 GMT – Euro Zone Manufacturing PMI
• 09:30 GMT – UK Manufacturing PMI
• 13:15 GMT – US ADP Nonfarm Employment Change
• 15:00 GMT – US ISM Manufacturing PMI
• 15:30 GMT – US Crude Oil Inventories
• 19:00 GMT – Federal Reserve Interest Rate Decision
• 19:00 GMT – FOMC Statement

EURUSD

The EURUSD had a bullish momentum yesterday after a false break below the bullish channel and 1.0650 key support as you can see on my H1 chart below. This fact keeps the bullish phase remains valid. The bias is bullish in nearest term testing 1.0850/75 region. Immediate support is seen around 1.0750. A clear break below that area could lead price to neutral zone in nearest term testing 1.0700 area but key support remains at 1.0650. Overall I remain neutral.

GBPUSD

The GBPUSD had a bullish momentum yesterday topped at 1.2596. The bias is bullish in nearest term testing 1.2670 area. Immediate support is seen around 1.2520. A clear break below that area could lead price to neutral zone in nearest term testing 1.2470 area. On the upside, a clear break and daily close above 1.2670 would expose 1.2790 key resistance. Overall I remain neutral but price is still in a bullish phase since bounced from 1.2000 psychological level.

USDJPY

The USDJPY continued its bearish momentum yesterday bottomed at 112.07. Price traded higher earlier today in Asian session hit 113.15. The bias remains bearish in nearest term testing 111.30. Immediate resistance is seen around 113.50. A clear break above that area could lead price to neutral zone in nearest term testing 114.00/20 region but as long as stay below 115.60 I still prefer a bearish scenario at this phase and any upside pullback should be seen as a good opportunity to sell.

USDCHF

The USDCHF had a bearish momentum yesterday bottomed at 0.9861. The bias is bearish in nearest term testing 0.9800 area. Immediate resistance is seen around 0.9950. A clear break above that area could lead price to neutral zone in nearest term testing 1.0000 area. Overall I remain neutral but price is still in a valid bearish phase since fell from 1.0335 (double top).

Key Points:

• Price action trading between a channel.
• RSI Oscillator close to oversold.
• Watch for a bounce towards the bearish trend line in the days ahead.

The USDJPY has been on a veritable roller coaster over the past few weeks as the currency has reacted to all sorts of sentiment shocks. Subsequently, price action has swung relatively consistently between the low at 112.50, and the short term high around 115.37, as it sought to form a sideways channel. However, the pair could potentially be about to reverse direction given some of the interesting technical factors.

In particular, a cursory review of the 4-hr chart demonstrates the current conundrum that faces the Dollar-Yen. Price action is currently resting upon the lower constraint of the short-term channel whilst the RSI Oscillator is continuing to trend lower towards oversold levels. Additionally, there is a relatively strong layer of support just below the pair’s current level.

Subsequently, there are plenty of technical indicators that suggest we are likely to see a retracement in the coming days. In particular, the pressure is building within the RSI Oscillator, as it moves towards oversold levels, which is likely to mean that a bounce will occur.

However, there is plenty of volatility currently flooding into the US Dollar cross pairs as President Trump stamps his peculiar form of leadership upon currency markets. The past 24 hours has seen the leader brand the Yen as overvalued which has caused plenty of air to evaporate out of the pair. However, the real risk is that President Trump may choose to take unilateral action on the issue which could have a deleterious impact upon the Japanese Yen’s current valuation. Subsequently, it would be worthwhile monitoring the political developments in the weeks ahead.

Ultimately, the technical factors currently argue that a retracement is the likely path ahead for the pair. Subsequently, the most likely scenario is one in which the pair trends sharply higher towards the falling bearish trend line around the 114.65 mark, and the top of the channel at 115.39 in extension. However, keep a close watch on the US Federal Funds Rate decision as the central bank could ultimately provide the markets with a surprise.

Key Points:

• Bearish trend line about to be felt yet again.
• Stochastics currently in overbought territory.
• Weaker employment data dragging the pair lower.

Despite some strong selling pressure in the prior session, the Kiwi Dollar seems to have reached a near-term peak which could signal that a reversal is now on the cards. If we do see the pair retreat from the 0.73 handle, the NZD could be dragged as low as the 0.7164 mark which would be broadly in line with the recent fundamental upset which is also worth keeping an eye on.

But first, a closer look at some of the technical readings and the recent price action paints a fairly bearish picture for the immediate future. Probably most noticeably, the long-term descending trend line is proving to be a major source of resistance, eroding much of the prior session’s solid gains. What’s more, capping gains around the 0.7324 mark respects the rather firm zone of resistance that historically exists around this point.

tact for a number of reasons. Primarily, it is because it has historically proven itself to be rather resistant to breakout attempts. However, whilst not shown, the 100 day EMA is also providing dynamic resistance around this level which will certainly be capping upside potential in the short to medium-term.

However, just because we see some relatively insurmountable resistance by no means ensures that we see a real retracement for the Kiwi Dollar. Fortunately, with the exception of the EMA bias, there are a number of other technical readings hinting at an imminent switch in momentum. Specifically, stochastics are highly overbought on the daily chart which will see selling pressure mount as the session opens. Moreover, the Parabolic SAR is on the verge of inverting from bullish to bearish, a signal typically indicative of a change in the near-term bias.

Indeed, we are already beginning to see the NZD slump despite the broader market swing back to the embattled USD. Some of this negative sentiment will, of course, stem from the surprise uptick in the New Zealand Unemployment Rate from a historically low 4.9% to 5.2%. However, by and large, the market will be reacting to the shifting technical bias which currently suggests a slip back to the 38.2% Fibonacci retracement is warranted.

Ultimately, as the latest employment data is interpreted and digested, the Kiwi Dollar could begin to shake off some of the immediate negative sentiment generated by the results. This would lead to a retesting of the trend line and potentially even a breakout. This being said, without another sizable surge in anti-US sentiment, there is little in the way of fundamental support for such a move within the coming sessions. As a result, the technical bias should carry the day and spark at least a near-term cooling-off for the recently red-hot pair.

EUR/USD

The American dollar plunged early US session following comments from Trump's trade chief, Peter Navarro, who accused Germany of taking advantage of the US and its European counterparts by keeping the euro "grossly undervalued." This is not the first time US President Trump moves to talk down the local currency, as he already said last week that the dollar was "too strong" making US production less competitive against countries like China, which has a government-regulated currency. The EUR/USD pair traded as high as 1.0811, level last seen early December, before pulling back modestly.

Macroeconomic releases both shores of the Atlantic favored the rally, as EU data surprised to the upside, with January inflation up to 1.8% YoY the highest rate since February 2013. Core inflation however, remained unchanged at 0.9%. Also, the preliminary estimate of the Q4 GDP came in as expected at 0.5%, with the third quarter growth revised up to 0.4% from previous 0.3%, leaving the annual rate of growth in the region up to 1.8% yearly basis. In the US, on the contrary, the employment cost index came at 0.5% for the three months to December, below the previous and expected 0.6%, whilst the Conference Board's consumer confidence index came in at 111.8 against previous 113.7.

The pair is closing the day above its 100 DMA for the first time since early October ahead of the FED's monetary policy meeting this Wednesday. Given that this time is not a "live meeting," chances of a change in the ongoing policy or in the wording is less likely, which will only pressure the greenback further. Short term, the bias is towards the upside according to the 4 hours chart, as the price has broken above its 20 SMA, and stands far beyond the 38.2% retracement of the November/January decline at 1.0710. Technical indicators in the mentioned chart have pulled back from overbought readings alongside with price, but remain well above their mid-lines, far from suggesting an upcoming reversal. The pair has a major resistance area between 1.0800 and 1.0840, where the pair bottomed for most of 2015 and 2016, and where it also stands the 50% retracement of the mentioned slide at 1.0820. Should the price extend beyond this area, the rally has scope to extend up to 1.0930, the next Fibonacci resistance during the upcoming sessions.

Support levels: 1.0650 1.0610 1.0565

Resistance levels: 1.0710 1.0740 1.0770

USD/JPY

The USD/JPY pair fell to its lowest since November 30th, printing 112.07 following a new batch of US Trump protectionist comments. In a meeting with chief executives of several top drug-makers, he accused drug companies of outsourcing production because of currency devaluation in other countries. His trade chief, Peter Navarro, said that Germany is taking advantage of the US and its EU counterparts by using a “grossly undervalued” euro. Earlier on the day, the Bank of Japan keep its economic policy unchanged, but sounded mostly optimistic, rising its growth projections from 1.3% to 1.5% for the fiscal year starting this April. The pair initially rally with the news, but risk aversion kept the upside limited. After the dust settled, the USD/JPY pair bounced from the mentioned low, after flirting with the 38.2% retracement of the post-US election rally, but so far remains unable to extend beyond the 113.00 level, overall poised to extend its slide. Technical readings in the 4 hours chart support the bearish case, given that the price is now well below a bearish 100 SMA, whilst technical indicators have barely bounced from oversold readings, rather reflecting the latest bounce than suggesting downward exhaustion.

Support levels: 112.55 112.00 111.60

Resistance levels: 113.00 113.45 113.90

GBP/USD

The GBP/USD pair fell down to 1.2411, but closed the day above the 1.2560 level, reversing most of its weekly losses on broad dollar's weakness. The Pound fell early in the London session, following the release of the BOE's December money figures, as the data showed that personal borrowing grew at a slower pace in the last month of 2016 for the first time in five months. Consumer credit in December rose by £1.039B against an expected advance of £1.700B, and well below previous £1.926B, the smallest monthly increase since May 2015. Mortgage approvals also surged by less than expected, up by just under 68,000 in the month. From a technical point of view, the GBP/USD has bounced sharply from the 38.2% retracement of this January bullish run, and is back above the 23.6% retracement of the same rally around 1.2520. In the 4 hours chart, the price is also above a now flat 20 SMA, whilst technical indicators have lost their upward strength right after entering positive territory, indicating a limited upward potential. Nevertheless and with the ongoing dollar' weakness, the pair can recover further on a break above 1.2590, the daily high.

Support levels: 1.2460 1.2410 1.2375

Resistance levels: 1.2490 1.2530 1.2580

GOLD

Gold prices surged for a third consecutive day, with spot settling at $1,213.20, as the financial world continued to unwind the "Trump-trade." Stocks fell sharply alongside with the greenback, while safe-haven assets stood victorious amid increasing uncertainty over the US future. The US Federal Reserve will have a monetary policy meeting this Wednesday, but the meeting poises no risk for gold, as there are little chances that the FED will offer a hawkish stance in this "non-live" meeting. From a technical point of view, the upside is favored, given that in the daily chart, the bright metal is closing the day above a bearish 100 DMA, whilst technical indicators have bounced from their mid-lines, with the RSI heading sharply higher around 62. In the 4 hours chart, the price is well above its 20 and 100 SMAs, whilst technical indicators have pared gains within overbought territory, but with no signs of changing course. Spot topped at 1,220.02 this January, the level to surpass to confirm another leg higher towards the 1,230.00 region, where it has the 50% retracement of the latest monthly decline.

Support levels: 1,204.50 1,196.10 1,187.80

Resistance levels: 1,220.05 1,229.80 1,241.35

WTI CRUDE

Oil prices rose on dollar weakness, with WTI futures reaching a daily high of $53.55, but it was unable to hold on to gains and pulled back late US session, to settle marginally higher daily basis around 52.80. In the news, Iran’s Oil Minister Bijan Zanganeh said this Tuesday that US oil companies willing to do business in Iran will not be banned from doing so, despite Trump's executive order to suspend visas for Iranian citizens. US crude maintains the neutral technical stance seen on previous updates, as in the daily chart, technical indicators head nowhere around their mid-lines, whilst the price keeps hovering back and forth around a flat 20 SMA. Shorter term, and according to the 4 hours chart, the bias is also neutral, with the scale lean towards the downside as the price is hovering around horizontal 20 SMA, whilst technical indicators failed to surpass their mid-lines, turning back south ahead of the Asian opening.

Support levels: 52.00 51.60 51.10

Resistance levels: 53.00 53.65 54.30

DJIA

Worldwide equities closed in the red, with investors' sentiment undermined by US President Trump executive orders favoring protectionism, and failing to provide of clues on growth-related measures. The Dow Jones Industrial Average fell by 106 points or 0.53% at 19,84.36, while the Nasdaq Composite and S&P ended the day little changed, at 5614.79 and 2,278.90 respectively. Equities recovered some ground ahead of the close, with the DJIA trading as low as 19,783 intraday. Financials suffered the most from the Trump-trade unwind, with Goldman Sachs down 1.98% and JP Morgan shedding 1.72%. Heath care Pfizer was the best performer, up by 1.29%. The Dow settled a few points below a horizontal 20 DMA, whilst technical indicators keep heading south around their mid-lines in the daily chart, maintaining the risk towards the downside. In the 4 hours chart, the benchmark is far below a sharply bearish 20 SMA that reflects the strong downward momentum seen this week, whilst technical indicators have managed to bounce from oversold readings, but remain far below their mid-lines, far from suggesting an upcoming recovery for this Wednesday.

Support levels: 19,868 19,806 19,745

Resistance levels: 19,897 19,950 20,010

FTSE 100

The FTSE 100 extended its latest decline, down this Tuesday by 19 points to close at 7,099.15, as gains in the mining sector were offset by a sharp recovery in the Pound ahead of London's close. Randgold Resources added 2.66%, Anglo American surged by 1.88%, whilst Fresnillo closed 1.75%, all making it to the top 10 list. Tesco, on the other hand, was the worst performer, down by 5.9%, undermined by soft consumer's data released at the beginning of the day. The Footsie maintains a bearish bias according to technical readings, given that in the daily chart, indicators continue to grind lower within bearish territory, whilst the benchmark remains below its 20 SMA. In the 4 hours cart, a bearish 20 SMA keeps capping the upside, now around 7,154, while technical indicators hover within bearish territory with no clear directional trend, amid the limited intraday range seen over the past few days.

Support levels: 7,104 7,057 7,011

Resistance levels: 7,154 7,183 7,241

DAX

The German DAX fell 1.25% or 146 points, to close at 11,525.31, with all major European indexes closing in the red, despite encouraging inflation data coming from the region. EU CPI advanced to 1.8% in January, when compared to a year earlier, from previous 1.1% in December, whilst the unemployment rate in the region fell to 9.6% in the last month of 2016. In Germany, soft December retail sales dented local sentiment. Within the DAX, RWE AG was the best performer, up by 0.92%, followed by Deutsche Boerse which added 0.81%, but losers outnumbered gained, with Adidas being the worst performer, down by 2.75%. Technically, the daily chart shows that the index is below a now flat 20 SMA, whilst technical indicators have barely entering bearish territory, indicating some further slides are likely, particularly on a break below 11,533, the daily low. Shorter term, and according to the 4 hours chart, the risk is also towards the downside, with the benchmark below its 20 and 100 SMAs and technical indicators posting modest bounces from oversold readings.

Support levels: 11,533 11,480 11,425

Resistance levels: 11,645 11,699 11,745