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USD/CHF Approaching uptrend channel.

USD/CHF is still riding within uptrend channel and is on its way to monitor support implied by lower bound of the uptrend channel. Key resistance is given at a distance at 1.0344 (15/12/2016 high). Hourly support is given at 1.0075 (13/03/2017 low). 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 Sideways price action.

USD/CAD's bullish pressures are definitely on after breaking key resistance at 1.3353 (20/01/2017 high). Yet, as long as this resistance was not broken (20/01/2017 high), bullishness was limited. Expected to see further upside potential for the pair.

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 Short-term demand is fading.

AUD/USD's technical structure is still negative. The road is wide-open for further weakness towards support given at 0.7494 (19/01/2017 low). Key resistance is given at 0.7778 (08/11/2016 high) while hourly resistance is given at 0.7592 (13/03/2017 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 Ready to increase.

EUR/USD continues to strengthen despite ongoing bearish consolidation. Hourly resistance given at 1.0679 (16/02/2017 high) has been broken while hourly support at 1.0493 (22/02/2017 low). The technical structure suggests deeper increase towards resistance at 1.0874 (08/12/2017 high).

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 Continued weakness.

GBP/USD continues to edge lower despite ongoing consolidation since the pair has broken support given at 1.2254 (19/01/2017 low). The road is wide-open for further decline. Hourly resistance is now 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 Pausing below resistance at 115.62.

USD/JPY is pushing higher towards key resistance given at 115.62 (19/01/2016 high). Hourly support can be found at 113.56 (06/03/2017 low). Expected to push higher.

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 - 1.0092

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the greenback retreated after meeting resistance at 1.0109 and mild downside bias is seen for test of 1.0060 support, however, break there is needed to signal the fall from 1.0171 top has resumed and extend weakness to 1.0035-40 but support at 1.0009 should remain intact, risk from there has increased for a rebound to take place later.

On the upside, above said resistance at 1.0109 would bring rebound to 1.0120 but break of resistance at 1.0142 is needed to signal low is formed and suggest the fall from 1.0171 has ended, bring another rise towards this level later. As near term outlook is still mixed, would be prudent to stand aside in the meantime.

GBP/USD - 1.2182

Original strategy :

Buy at 1.2155, Target: 1.2255, Stop: 12120

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2140, Target: 1.2250, Stop: 1.2105

Position : -

Target :  -

Stop : -

Although cable resumed recent decline and extend weakness to 1.2109 yesterday, the subsequent rebound suggests low is possibly formed there and consolidation with upside bias is seen for gain to 1.2260-65, above there would add credence to this view, bring retracement of recent decline to 1.2290-95 (50% Fibonacci retracement of 1.2479-1.2109), however, resistance at 1.2301 should limit upside and price should falter below 1.2335-40 (61.8% Fibonacci retracement), bring another decline later.

In  view of this, we are looking to buy cable on dips as 1.2135-40 should limit downside. Only below said support at 1.2109 would extend recent decline to 1.2090, however, loss of downward momentum should prevent sharp fall below 1.2070 and reckon 1.2040-50 would hold from here, sterling may stage another rebound from there later.

EUR/USD - 1.0620

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the single currency slipped to as low as 1.0600, as euro found good support there and has rebounded again, suggesting consolidation above this level would be seen and gain to 1.0660-65 cannot be ruled out, however, break there is needed to signal low is formed, bring further gain to 1.0680-85 but price should falter below this week’s high at 1.0714.

On the downside, below said support at 1.0600 would signal top has been formed at 1.0714 and downside risk remains for the fall from there to bring retracement of recent rise to 1.0570-75, then 1.0550 but reckon downside would be limited and support at 1.0525 should remain intact. As near term outlook is mixed, would be prudent to stand aside in the meantime.

The Greenback was under pressure during early trading on Wednesday as bears exploited the pre-FOMC jitters and anxiety to attack prices lower. Although sellers may be commended on their ability to trigger a sharp technical correction ahead of the FOMC meeting, the downside risks may be limited especially after Tuesday's impressive inflation data reinforced expectations of a probable rate hike in March. Much attention will be directed towards both the FOMC statement and economic projections this evening which may offer investors some insight on the pace of hikes this year. An upwards shift in the updated 'dot plot' could heighten speculations of the Federal Reserve raising US interest rates at least four times in 2017. The Dollar should remain buoyed with confidence consistently rising over the health of the US economy and prospects growing over higher US interest rates this year.

From a technical standpoint, although the Dollar Index is slightly pressured on the daily charts, a decisive breakout above 101.50 could open a path back towards 102.00.

Sterling could turn chaotic

Investors should be prepared for a chaotic rollercoaster ride when dealing with Sterling as the Brexit developments, political risk and overall uncertainty sparks explosive levels of volatility. It was only on Monday investors were speculating that Article 50 will be triggered as soon as Tuesday before markets confirmed that Theresa May will start the Brexit negotiations at the end of the month. Recent reports released during early trading on Wednesday suggesting that the European Union could force the UK to wait until June to start the Brexit talks has compounded to the confusion which may translate to more pain for Sterling in the longer term. With the ongoing Brexit woes effectively strengthening the relationship between uncertainty and Sterling, further downside losses should be expected.

Concerns remain elevated over Brexit having negative impacts to the UK economy with the recent mixed jobs reports providing permission for bears to send the GBPUSD lower. Although the unemployment rate in the UK has declined to its lowest since 1975; the decline in average earnings that may rekindle concerns over the sustainability of UK's consumer fuelled economic growth could weigh heavily on sentiment. The Brexit anxieties have gripped the Pound and the frighteningly low buying sentiment may cap major upside gains moving forward.

From a technical standpoint, the GBPUSD is heavily pressured on the daily charts. Price weakness below 1.2150 could encourage a decline towards 1.2000.

Commodity spotlight – WTI

WTI Crude descended deeper into the abyss on Tuesday after reports of a surprise output jump from Saudi Arabia revived concerns of the excessive oversupply in the global markets. There was already a small seed of doubt over the compliance side of the production cut agreement with this release providing the permission for bears to attack oil prices. It is becoming clear that the optimism over the OPEC production cut is rapidly diminishing with fears of the cartel not renewing the deal for the second half of the year already translating to renewed selling pressures. Oil market weakness has become a key theme this quarter and bears may install fresh rounds of selling if U.S crude inventories continue to rise incessantly. From a technical standpoint, WTI Crude is heavily bearish on the daily charts. Previous light support around $49 may transform into a temporary resistance which may open a path back down towards $47.

USD/JPY - 114.69

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

As the greenback met renewed selling interest at 115.20 yesterday and slipped again, retaining our view that further consolidation below last week’s high at 115.51 is in store and risk of another fall to 114.48 support cannot be ruled out, however, reckon downside would be limited to 114.26 support and as this move is viewed as retracement of recent upmove, reckon downside would be limited to 114.00-05 (38.2% Fibonacci retracement of 111.69-115.51) and price should stay well above strong support at 113.56-61), bring rebound later.

In view of this, would be prudent to stand aside for now. A firm break above 115.20 would suggest low is formed, bring a stronger rebound but still reckon said resistance at 115.51 would cap upside. Only break there would revive bullishness and extend recent upmove to previous resistance at 115.62, then towards 115.90-00. 

EUR/USD remains under pressure, as the pair has dropped closed to the 1.06 line. Currently, the pair is trading at 1.0630. On the release front, Eurozone Employment Change edged up to 0.3%, above the forecast of 0.2%. In the US, it's a busy day. Retail sales and CPI indicators are expected to soften in February. Today's highlight is the Federal Reserve policy meeting, with the central bank widely expected to raise the benchmark rate a quarter-point, from 0.50% to 0.75%. On Thursday, the eurozone releases Final CPI, while the US publishes a host of key indicators, led by unemployment claims.

German numbers were a mixed bag on Tuesday. There was further indication that inflation continues to improve, as Final CPI rebounded with a gain of 0.6%, compared to a 0.6% decline a month earlier. The well-respected ZEW Economic Sentiment report improved to 1.28, although the markets had expected a stronger reading. Eurozone ZEW Economic Sentiment climbed to 25.6, its strongest gain since December 2015.

The eurozone continues to post improved inflation and growth data, and this has led to calls in some quarters for the ECB to tighten monetary policy. The ECB has kept the benchmark rate at a flat 0.0%, and its asset-purchase program does not expire until December. Will ECB President Mario Daraghi taper the monthly purchases or at least signal such an intent? Draghi is doing his best to perform a complicated balancing act. A stronger economy would favor tighter policy, but he does not want ECB to become entangled in heated political contests in Europe. Dutch voters are having their say on Wednesday, while France holds elections in April, followed by Germany in September.

With the markets expecting a quarter-point rate hike on Wednesday, will the currency markets react to a Fed move? Although a rate hike has been priced in by the markets at 93%, there have been disappointments in the past, so a rate move could boost the dollar at the expense of gold. Strong US employment numbers in February have reinforced market speculation that the Fed will raise rates for the first time this year. Nonfarm payrolls sparkled in February, as the indicator jumped to 235 thousand, easily beating the estimate of 196 thousand. Wage growth climbed 2.6% compared to February 2016, while the participation rate edged up to 63.0%, up from 62.9%. These solid job numbers have also provided President Trump with a much-needed boost. Trump is under pressure to present an economic agenda, but the markets won't mind giving him some additional breathing room, with the economy performing so well.

EUR/CHF : 1.0717



EUR/CHF: Major wave 5 trough ended at 0.8426 and correction has commenced from there for subsequent gain towards 1.1400-1.1500.
 

Although the single currency staged a strong rebound to 1.0825, as euro met renewed selling interest there and has retreated, retaining our bearish view and consolidation with downside bias is seen for weakness to 1.0650-60, however, break of support at 1.0622 is needed to confirm early erratic decline from 1.1201 (2016 high) has resumed, bring subsequent selloff to 1.0550 and possibly towards 1.0500 but oversold condition should prevent sharp fall below latter level and reckon 1.0390-00 would hold from here, risk from there has increased for a rebound later.

To recap our preferred count, the decline from 1.6828 (end wave (B)) is labeled as the beginning of wave (C) which should unfold as an impulsive move with 1: 1.5326, 2: 1.6377 and wave 3 is sub-divided into (i): 1.4300, (ii): 1.5880 and wave (iii) is still unfolding with (1): 1.4577, (2): 1.5448 and wave (3) is an extended 3rd with i: 1.5006, ii: 1.5383, wave iii: 1.3073, then wave iv ended at 1.3925 and wave v at 1.3073, wave (4) ended at 1.3925 and wave (5) has ended at 1.2765 which also marked the low of wave (iii) and wave (iv) has ended at 1.3835 and wave (v) as well as larger degree wave 3 has ended at 1.0075. The selloff from 1.2650 signals wave 4 has ended there and we are taking a view that the wave 5 could also have ended 0.8426, hence consolidation is seen with mild upside bias for rebound to 1.1000 first, then towards 1.1400.

On the upside, expect recovery to be limited to 1.0750-60 and bring another decline. Only above said resistance at 1.0825 would abort and signal low has been formed, bring a stronger rebound to 1.0850 and later towards resistance at 1.0898 which is likely to cap euro’s upside, the pair shall head back south again from there.

Recommendation: Hold short entered at 1.0750 for 1.0550 with stop above 1.0825.

 
The long-term downtrend started from 1.9626 (Apr 1985) to 1.4166 (Sep 1995) is treated as wave (A) with A:1.6285 (Dec 1987), B: 1.9342 (May 1992) and C: 1.4166, then wave (B) ended at 1.6828 with A: 1.7147 (Feb 1997), B: 1.4398 (Sep 2001), C: 1.6828 (Nov 2007), therefore, wave (C) is now in progress with the breakdown indicated as above. This wave (C) already met indicated downside target at 1.1455/60 and 1.1300, it could have ended at 0.8426, consolidation with mild upside bias is seen for gain to 1.1000 and later towards 1.2000.

AUD/USD     –  0.7581

AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081




Although aussie has recovered after finding support at 0.7491 and consolidation with initial upside bias is seen for gain to 0.7600-05, reckon upside would be limited to 0.7630-35 and bring another decline, below 0.7530-35 would bring retest of 0.7491 but break there is needed to signal top has indeed been formed at 0.7741, bring retracement of recent upmove to 0.7455-60 but reckon downside would be limited to 0.7425-30 (50% Fibonacci retracement of 0.7158-0.7696) and price should stay above 0.7360-65 (61.8% Fibonacci retracement), bring another rise later.



We are keeping our count that top has been formed at 1.1081 (wave 5 of V) and major correction (A-B-C-X-A-B-C) has commenced, indicated downside targets at 0.7945 (61.8% Fibonacci retracement of entire rise from 0.6007-1.1081) and 0.7750 had been met and downside bias is seen for further weakness to 0.6800, then 0.6700 but reckon 0.6500 would hold from here.

Our preferred count is that the rally from 0.6007 to 0.7270 (7 Jan 2009) is marked as wave A, the retreat to 0.6248 (2 Feb 2009) is wave B and the subsequent upmove is labeled as wave C with wave (iii) and wave (iv) ended at 0.8265 and 0.7700 respectively and wave (v) as well as 3 ended at 0.9407, then wave 4 ended at 0.8066 (instead of 0.8578). The wave 5 has met our indicated projection target of 1.1060 and could ended at 1.1081, this level is now treated as the peak of wave (C) as well as larger degree wave B, hence major fall in wave C has commenced, our initial downside target at psychological support at 0.7000 has just been met and further weakness to 0.6500 would be seen later.



On the upside, whilst recovery to 0.7600-05 cannot be ruled out, reckon upside would be limited to 0.7635-40 and bring another decline. Above 0.7700 would risk retest of said resistance at 0.7741 but break there is needed to extend recent rise from 0.7158 to resistance at 0.7778. Looking ahead, only a break of this level would suggest another leg of major corrective upmove from 0.6827 low is underway for retest of 0.7835 resistance first, then 0.7900, however, psychological resistance at 0.8000 should hold from here.



Recommendation: Sell at 0.7635 for 0.7450 with stop above 0.7735


Our alternate count on the daily chart treated the top formed in 2008 at 0.9851 could be a larger degree wave I and was followed by a deep and sharp correction in wave II to 0.6007 and wave III is unfolding from there.

The long-term uptrend started from 0.4775 (2 Apr 2001) with an impulsive structure. Wave I is labeled as 0.4775 to 0.9851 (15 Jul 2008), wave II has ended at 0.6007 (Oct 2008) and wave III is still in progress which may extend further gain to 1.1265.