News and Events:

EUR/CHF dips lower

EUR/CHF has been under constant pressure over the last few weeks as it tested continuously the 1.07 threshold that is broadly considered as the SNB’s implicit floor of 1.07. The market is getting ready for a tough year in the Euro area as the Brexit story together with ongoing and upcoming elections (Dutch national elections, French presidential and parliamentary elections and German federal election). However, the pressure has increased another notch yesterday as the euro dip to 1.0638 against the Swiss franc, the lowest level since the Brexit vote when the currency pair hit 1.0624.

We however think it a bit early to ring the alarm bell and call for the failure of the SNB’s FX intervention program. Indeed, the Swiss franc had to face some unexpected market conditions recently. First, the takeover of Swiss company Actelion by Johnson & Johnson created some disturbance, even though most the $280-a-share price will be paid in dollar. However, small shareholders will a possibility to get paid in CHF. Second, yesterday sell-off in worldwide equity markets are reduce investors’ risk appetite and triggered a slight risk-off move in favour of safe-haven currencies such as the CHF and JPY. We believe that there is no reason to worry yet as the SNB is still committed to defend the Swiss franc, it however means that the central bank is now more tolerant with respect to CHF strength.

BoJ bets on Trump

The Bank of Japan has left its policy balance rate unchanged at -0.1% in line with market expectations. The Japanese central bank will continue targeting 0% on the 10-year government bond.

The BoJ has clearly been in "wait and see mode" since Trump's election. Indeed, there are hopes that the new US president will spark better economic conditions which could in the end help Japan and increase inflationary pressures.

Donald Trump has stated over the past week that the greenback may be too strong. This supports our view that the yen should weaken in the medium term even though it is far too early to assess the future efficiency of Trump’s policies.

Inflation expectations have not changed following the meeting and it is still expected to come in at 1.5% by March 2018 - below the BoJ target of 2%.

One should not forget that even if Trump is at the centre of the markets’ attention, there are also downside risks in Europe that could offset Japanese inflationary pressures. Europe's political outlook appears more and more uncertain, especially given the upcoming French and German elections which may provide plenty of surprises. The market's fear of a nationalist party win could drive investors back to safe haven, causing further yen appreciation.

European inflation to grind higher

A big day is in store for European economic data and potentially for the single currency. Euro area preliminary Q4 GDP is expected to rise to 0.5% q/q from 0.3% q/q prior read, while the annual headline CPI estimate is expected to surge to 1.5% from 1.1% prior read. French CPI was released earlier coming in at 1.4% y/y against an expected 1.1% y/y indicating that an upside surprise in the Euro area read is probable. Overall, the Euro-area economy has clearly preserved its solid growth momentum. This improvement in the European outlook might catch many off guard as investors have been singularly focused on US President Trump's first week and the latest Brexit developments. However, as inflation grinds towards the ECB 2% target range we need to consider adjusting the central bank’s current ultra-accommodating policy. Given that the ECB has forecasted strong growth, today's read is unlikely to panic Draghi, however, higher sustainable inflation will eventually lead to tighter monetary policy. We suspect that the Trump pro-growth story and worries over the European political environment have clouded investors to the fact that Europe inflation is rising. Currently, FX markets are underpricing the risk of a sharp shift in ECB policy, quickly unwinding the USD dominant trade.

Today's Key Issues (time in GMT):

• Dec Unemployment Rate Gross Rate, exp 4,30%, last 4,20% DKK / 08:00
• Dec Unemployment Rate SA, exp 3,40%, last 3,40% DKK / 08:00
• Dec Foreign Tourist Arrivals YoY, last -21,40% TRY / 08:00
• Jan P CPI YoY, exp 2,40%, last 1,60% EUR / 08:00
• Jan P CPI MoM, exp -1,10%, last 0,60% EUR / 08:00
• Jan P CPI EU Harmonised MoM, exp -1,60%, last 0,50% EUR / 08:00
• Jan P CPI EU Harmonised YoY, exp 2,20%, last 1,40% EUR / 08:00
• ECB's Mario Draghi Speaks in Frankfurt EUR / 08:00
• Jan Unemployment Change (000's), exp -5k, last -17k, rev -20k EUR / 08:55
• Jan Unemployment Claims Rate SA, exp 6,00%, last 6,00% EUR / 08:55
• Nov Current Account Balance, last 2.0b EUR / 09:00
• Feb Norges Bank Daily FX Purchases, exp -1000m, last -1000m NOK / 09:00
• Dec P Unemployment Rate, exp 11,80%, last 11,90%, rev 12,00% EUR / 09:00
• Dec Net Lending Sec. on Dwellings, exp 3.2b, last 3.2b, rev 3.1b GBP / 09:30
• Dec Mortgage Approvals, exp 69.2k, last 67.5k GBP / 09:30
• Dec Money Supply M4 MoM, last 0,40% GBP / 09:30
• Dec M4 Money Supply YoY, last 6,40% GBP / 09:30
• Dec M4 Ex IOFCs 3M Annualised, last 4,20%, rev 4,60% GBP / 09:30
• Dec Unemployment Rate, exp 9,80%, last 9,80%, rev 9,70% EUR / 10:00
• 4Q A GDP SA QoQ, exp 0,50%, last 0,30%, rev 0,40% EUR / 10:00
• 4Q A GDP SA YoY, exp 1,70%, last 1,70%, rev 1,80% EUR / 10:00
• Jan CPI Estimate YoY, exp 1,50%, last 1,10% EUR / 10:00
• Jan A CPI Core YoY, exp 0,90%, last 0,90% EUR / 10:00
• Dec PPI MoM, last -0,20% EUR / 10:00
• Dec PPI YoY, last -0,30% EUR / 10:00
• Dec National Unemployment Rate, exp 11,90%, last 11,90% BRL / 11:00
• Dec Fiscal Deficit INR Crore, last 34489 INR / 11:00
• Dec PPI Manufacturing MoM, last 0,73% BRL / 11:00
• Dec PPI Manufacturing YoY, last -0,12% BRL / 11:00
• Dec Trade Balance Rand, exp 6.3b, last -1.1b ZAR / 12:00
• 2016 GDP Annual Estimate YoY, last 7,10% INR / 12:00
• ECB's Yves Mersch Speaks in Frankfurt EUR / 12:15
• Dec Net Debt % GDP, exp 45,80%, last 43,80% BRL / 12:30
• Dec Nominal Budget Balance, exp -105.2b, last -80.4b BRL / 12:30
• Dec Primary Budget Balance, exp -72.8b, last -39.1b BRL / 12:30
• 4Q Employment Cost Index, exp 0,60%, last 0,60% USD / 13:30
• Nov GDP MoM, exp 0,30%, last -0,30% CAD / 13:30
• Nov GDP YoY, exp 1,40%, last 1,50% CAD / 13:30
• Dec Industrial Product Price MoM, exp 0,50%, last 0,30% CAD / 13:30
• Dec Raw Materials Price Index MoM, exp 2,80%, last -2,00% CAD / 13:30
• Nov S&P CoreLogic CS 20-City MoM SA, exp 0,70%, last 0,63% USD / 14:00
• Nov S&P CoreLogic CS 20-City YoY NSA, exp 5,00%, last 5,10% USD / 14:00
• Nov S&P CoreLogic CS 20-City NSA Index, last 191,79 USD / 14:00
• Nov S&P CoreLogic CS US HPI YoY NSA, last 5,61% USD / 14:00
• Nov S&P CoreLogic CS US HPI NSA Index, last 185,06 USD / 14:00
• ECB's Benoit Coeure Speaks in Frankfurt EUR / 14:3
• Jan Chicago Purchasing Manager, exp 55, last 54,6, rev 53,9 USD / 14:45
• Jan Conf. Board Consumer Confidence, exp 112,8, last 113,7 USD / 15:00
• Jan Conf. Board Present Situation, last 126,1 USD / 15:00
• Jan Conf. Board Expectations, last 105,5 USD / 15:00
• Jan QV House Prices YoY, last 12,50% NZD / 16:00
• 4Q Unemployment Rate, exp 4,80%, last 4,90% NZD / 21:45
• 4Q Employment Change QoQ, exp 0,70%, last 1,40% NZD / 21:45
• 4Q Employment Change YoY, exp 6,10%, last 6,10% NZD / 21:45
• 4Q Participation Rate, exp 70,20%, last 70,10% NZD / 21:45
• 4Q Pvt Wages Ex Overtime QoQ, exp 0,50%, last 0,40% NZD / 21:45
• 4Q Pvt Wages Inc Overtime QoQ, exp 0,50%, last 0,40% NZD / 21:45
• 4Q Average Hourly Earnings QoQ, exp 0,60%, last 0,30% NZD / 21:45
• Bank of Canada's Poloz speaks at University of Alberta CAD / 22:20
• Jan AiG Perf of Mfg Index, last 55,4 AUD / 22:30

The Risk Today:

EUR/USD's momentum is now trading sideways. Hourly resistance area is given at around 1.0800. Hourly support lies at 1.0590 (19/01/2016 low) and 1.0341 (03/01/2017 low). Expected to see continued consolidation. 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 on the road towards 1.2771 (05/10/2016 high). The technical structure is still anyway showing positive potential. Hourly support is given at 1.2466 (30/01/2016 low). Expected to show further bullish move. 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 surprisingly exited the downtrend channel after monitoring resistance implied by the upper bound. Yet, the pair is back within it. Hourly resistance is given at 115.62 (19/01/2016 high) while a break of hourly support given at 112.57 (17/01/2017 low) is needed to confirm further downside moves. 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's momentum is bearish. Yet, the selling pressures are being reduced below parity. Key resistance is given at a distance at 1.0344 (15/12/2016 high). The road is nonetheless wide-open for further decline. 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.

The pair remains directionless, trading within initial 0.7510/0.7607 range.

Yesterday's Doji candle confirms indecision, as near-term studies are in neutral mode.

Key supports, 100/200 SMA's (0.7494/0.7487) remain intact for now and maintain sideways mode, following upside rejection at 0.7600 zone.

No clear direction could be expected while the price holds within the range, however, south-heading daily indicators see risk of fresh attempts lower.

Firm break below 100/200SMA breakpoint is needed to signal reversal and open next strong support s at 0.7467 (daily cloud top) and 0.7437 (Fibo 38.2% of 0.7163/0.7607 upleg).

Alternative scenario requires sustained break above 0.7600 pivot to expose immediate target at 0.7630 (Fibo 76.4% of 0.7776/0.7158), with possible acceleration higher on break.

Res: 0.7569, 0.7583, 0.7607, 0.7630
Sup: 0.7526, 0.7510, 0.7487, 0.7467

Rejection under strong 115.55 barrier (daily cloud top / Kijun-sen line) and yesterday’s fall, turned near-term focus lower.

Recovery from today’s low at 113.23 stays for now caped by daily Tenkan-sen at 114.05, with Tenkan-sen / Kijun-sen lines being in bearish setup, together with negative daily studies, maintaining downside pressure.

Extended upticks are expected to hold below 114.67, where daily 20/55SMA’s bear-cross is forming, ahead of fresh downside attempts that could extend towards key near-term support, 112.50 base and floor of near-term congestion.

Res: 114.05, 114.67, 115.36, 115.55
Sup: 113.44, 113.23, 112.50, 111.97

Strong three-day pullback from 1.2671 peak was for now contained by sideways-moving daily Tenkan-sen at 1.2460.

Mild recovery was seen so far, with price action now above thinning daily cloud that is also twisting and expected to attract for fresh downside attempts.

Weakening near-term studies support scenario, as three consecutive long bearish daily candles weigh, however, sustained break below Tenkan-sen support is needed to confirm bearish

extension and open 1.2409 support (Fibo 38.2% of 1.1986/1.2671 ascend / converging daily 100/55SMA’s).

Highs of past two days at 1.2600 zone mark significant barrier that should limit extended corrective upticks.

Conversely, firm break above 1.2600 barrier would signal an end of corrective phase and turn near-term focus higher.

Res: 1.2517, 1.2543, 1.2600, 1.2622
Sup: 1.2486, 1.2460, 1.2426, 1.2409

The pair is trading within narrow 1.0680/1.0710 range in early Tuesday and holding above cracked daily Tenkan-sen (1.0680) for the fourth straight day.

Yesterday's strong downside rejection signals that downside attempts are short-lived for now, with upper boundary at 1.0710, being currently under pressure.

Near-term studies are in mixed mode, while daily bulls remain in play and keep upside in focus.

However, sustained break above 1.0710 barrier and yesterday's high at 1.0738 would signal renewed attack at 1.0773/93 resistances (24 Jan recovery high/falling 100SMA) , with further bullish acceleration seen towards key barrier at 1.0824 (daily cloud top).

Daily Tenkan-sen marks initial support at 1.0680, ahead of ascending 20SMA (currently at 1.0644) that contained yesterday's dip and continues to underpin.

Firm break here would soften near-term structure and risk fresh downside

Res: 1.0738, 1.0773, 1.0793, 1.0824
Sup: 1.0680, 1.0657, 1.0619, 1.0607

On the 4h EUR/USD chart we are tracking a corrective bounce from December lows, labeled as an expanded flat correction. It's a contra-trend movement in three waves which can be finished based on recent turn down from 1.0775 highs. In fact, we see an ending diagonal placed in wave C of 4) which is a reversal pattern so strong decline may follow, especially if we consider that rise from 1.0340 was slow, so now momentum may pick up and cause a strong fall into wave 5). If that's the case then current wave bounce can be subwave 2 with resistance seen at 1.0740.

EUR/USD, 4H

'…USD/CHF, doesn't appear to be in tandem with the others and that's the first thing to reconcile'. -Ian Copsey (based on investing.com)

Switzerland's KOF Economic Barometer dropped unexpectedly in the first month of 2017, official figures revealed on Monday. In a report, the KOF Economic Research Agency said its economic barometer, which aims to track the direction of the Swiss economy, came in at 101.7, the lowest reading in four months, in January, falling behind market analysts' expectations for 102.9 points. Meanwhile, the December figure was revised down to 102.1 points from the originally reported 102.2. The 2014 KOF Economic Barometer version is based on 219 economic indicators. In January, the largest negative contributions came from private consumption, the financial sector and hotel and restaurant industry. These negative contributions offset positive contributions in the manufacturing, construction and export sectors. Overall, business confidence in the Swiss economy averaged 100.68 between 1991 and 2017, hitting its all-time record highs of 118.20 in April 2010 and record lows of 69 in December 2008.

After the release, the Swiss Franc fell slightly against other major currencies, trading at 1.0687 against the Euro, 1.2542 against the British Pound, 0.9989 against the US Dollar and 117.97 against the Japanese Yen.

'The consumer has almost everything going for it. As the consumer goes, so goes our economy. We're setting up for another decent year in 2017'. -Ryan Sweet, Moody's Analytics Inc.

Consumer spending in the United Sates advanced more than expected last month as households boosted purchases of motor vehicles and services amid increasing wages.

On Monday, the Commerce Department reported consumer spending rose 0.5% in December, following the preceding month's 0.2% rise and surpassing a 0.4% increase forecast. The stronger than expected figure pointed to solid domestic demand that is expected to boost economic growth in early 2017. Data showed purchases of manufactured durable goods climbed 1.4% last month, while consumer spending on services jumped 0.4%. Meanwhile, personal income increased 0.3% month-over-month in December after rising 0.1% in the prior month. However, economists expected household income to climb 0.4%. Salaries and wages grew 0.4% in December after dropping 0.1% in November. For all of 2016, income climbed 3.5% after increasing 4.4% in 2015. Separately, the Commerce Department said the PCE Price Index advanced 0.2% in December, following November's 0.1% increase. During the twelve-month period ending December, the Index rose 1.6%, the largest increase since September 2014, up from the previous month's 1.4% rise. Excluding volatile items, the Core PCE Index grew 0.1% after being unchanged in November, in line with analysts' expectations.

Sunrise Market Commentary

• Rates: Positive bias core bonds
  Overnight, risk aversion dominates Asian markets after US President Trump fired the acting Attorney General. Risk sentiment on stock markets (more correction?) and evolutions on peripheral bond markets (significant spread widening of late) could overshadow eco data today and be positive for core bonds in an intraday perspective.
• Currencies: Global uncertainty dominates currency trading
  Yesterday, EUR/USD trading showed two faces. Finally, Trump-related uncertainty weighed more on the dollar than on the euro. Today, the eco data in Europe and in the US might come out strong, but global risk sentiment will continue to dominate USD trading. USD/JPY looks most vulnerable. The picture for EUR/USD is more balanced

The Sunrise Headlines

• US stock markets closed near opening losses, correcting 0.5%-1% lower. Overnight, risk aversion dominates Asian markets following Trump’s move to fire the US's top law officer for refusing to defend his immigration policy.
• The White House fired acting Attorney General Yates for telling government lawyers not to defend an executive order signed by President Trump suspending immigration from 7 countries out of concerns that terrorists might enter the US.
• The BoJ made no policy change, saying it would keep interest rates at -0.1%, cap 10-yr bond yields at roughly zero and buy government bonds at a pace of ¥80tn a year. The BoJ forecasts an era of surging economic growth (see FX).
• Greece will only receive more loans from the EMU if the IMF joins its latest aid programme, the head of the bloc's bailout fund said (ESM Regling), spelling out a condition thus far disregarded by Athens's creditors.
• A last-minute mega-deal from Microsoft ($17B) propelled what was already a record January for US investment-grade bond sales to one of the busiest months ever. Blue-chip companies have issued more than $170B of bonds so far.
• Chairman of the EBA, Enria, has called on Brussels policymakers to create an EU “bad bank” to buy billions of euros of toxic loans from lenders to break the vicious circle of falling profits, squeezed lending and weak economic growth.
• Republicans in Congress are moving this week to help President Trump roll back business regulations imposed by the Obama administration, with a focus on the oil, gas and mining industries.
• Today’s EMU eco calendar contains EMU Q4 GDP, unemployment rate and CPI inflation. In the US, focus turns to the Chicago PMI and consumer confidence

Currencies: Global Uncertainty Dominates Currency Trading

Trump-related uncertainty weighs on the dollar

On Monday, the dollar initially remained well bid even as risk sentiment turned negative. Euro weakness prevailed. The rise in intra-EMU credit spreads weighed on the euro. Later, US equities tumbled as US investors were also uncertain on the impact of the US immigration measures. This deepening risk-off sentiment finally also triggered USD selling. EUR/USD reversed the earlier losses and closed the session little changed at 1.0695 (from 1.0699). USD/JPY initially held up quite well but finally dropped below 114 to close the session at 113.77 (from 115.10).

This morning, several Asian markets are still closed. Those open lose ground (risk off). The BOJ kept its policy unchanged The Bank raised its growth forecasts, but the inflation forecast was left unchanged. The weakening of the yen since the November forecast is a positive for growth and for inflation. However, how much room is left for a weaker yen as US president Trump warns on the (global) strength of the dollar? Interesting to see the assessment of BOJ’s Kuroda at the press briefing later this morning. USD/JPY changes hands in the 113.35 area. EUR/USD is holding a tight range near 1.07.

Today, EMU Q4 GDP is expected to have increased by strong 0.5% Q/Q and a 1.7% Y/Y. we side with consensus. EMU headline inflation is expected to rise from 1.1% to 1.5% Y/Y. We see slight downside risks after yesterday’s German CPI release. The US, the Chicago PMI is expected to have increased to 55 from a 53.9. The trend is up, despite the fall in December. We put the risks on the upside of consensus. Consumer confidence is expected to have eased slightly from a 15- year high in December. We see few reasons why the index should decline and don’t exclude a further rise. So, he data in the US and Europe will probably be good. A combination of broad-based strong data a is often USD supportive. However, the market focus is shifting away from the eco data to the potential side-effects of the new Trump policy approach, which mean that core bond yield may decline in daily perspective. The jury is still out, but if confidence in the Trump reflation trade would fade, the environment might turn less USD supportive. USD/JPY is most vulnerable. The picture for EUR/USD is more balanced as several (political) issues are coming in the picture in EMU. In a day-today perspective, investors might turn more cautious on global risk and on the dollar. So, last week’s USD bottoming out process might stop. The EUR/USD 1.0775 resistance remains with reach and might come again under pressure

Global context: EUR/USD touched a multi-year low (1.0341) early this month. After the Trump rally, plenty of good USD news was discounted while US/EMU rate differentials narrowed (correction), causing a dollar correction. Longerterm, the absolute interest rate support should provide a USD floor, if US data remain good and as long as there are no profound doubts on Trump’s pro-growth policy. The day-to-day USD momentum has become a bit more fragile. A return above EUR/USD 1.0874 would question the USD positive outlook. USD/JPY is trading well off the post-Trump highs (118.60/66). The rebound off the 112.57/53 reaction low was quite constructive, but is losing momentum. USD/JPY 111.16 (38% retracement of the 99.02/118.66 rally) is a tough support

EUR/USD: no clear trend as both USD and euro face factors of uncertainty

EUR/GBP

Risk-off sentiment weighs on Sterling

On Monday, EUR/GBP showed several intraday gyrations as was the case of EUR/USD. Sterling was sold early in the session. EUR/GBP dropped to an intraday low around 0.8490 in line with EUR/USD, but was squeezed during the US session. End of month EUR/GBP buying and a deepening risk-off sentiment were to blame. EUR/GBP finished the day at 0.8566. Cable was also hit hard even as the dollar declined against most majors. The pair closed the session at 1.2486 (from 1.2555).

Overnight, the GFK consumer confidence was reported stronger than expected at -5 (from -7). Today, the UK Money supply and lending data will be published. Lending data were rather good of late, but currency traders don’t give much weight to the data. The global context (risk-off?) will probably again set the tone for sterling trading. Yesterday, sterling initially didn’t know which way to go, but in the end, the global risk-off sentiment proved even more negative for sterling than for the dollar. Markets will also look forward to Thursday’s BoE meeting. Despite recent good eco data, the BoE probably will maintain a wait-and-see stance and give no indication on a rate hike. Sterling momentum was strong of late, but eased a bit at the end of last week. EUR/GBP 0.8579 and 0.8515 supports (50% and 62% retracement of the 0.8304/0.8854 rebound) were broken. The correction low comes in at 0.8451 and should provide strong support. Yesterday’s price action confirms this view. We still look to buy EUR/GBP on dips

EUR/GBP: 0.8450 support remains intact for now

Download entire Sunrise Market Commentary

A note on lower timeframe confirming price action…

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails – essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

EUR/USD

During the course of Monday's sessions, the single currency clocked highs of 1.0740 a few hours after the open and then rapidly turned course, falling sharply against its US counterpart throughout the London morning segment. Breaking below the 1.07 handle and a neighboring H4 trendline support extended from the low 1.0340, the pair attacked a H4 Quasimodo support at 1.0621 and once again, this time going into the US open, hit the brakes and changed course, driving prices back up to the 1.07 region by the closing bell.

Daily demand at 1.0589-1.0662 remains firm, but, as you can see, has so far be unable to lift the unit above the nearby daily resistance at 1.0710. This could have something to do with the fact that weekly action recently rebounded from a long-term weekly trendline resistance stretched from the low 0.8231.

Our suggestions: From our point of view, the EUR could potentially selloff from its current location. The 1.07 level, coupled with a H4 trendline resistance (1.0340) which is supported by weekly structure is sufficient enough to validate a sell, in our humble opinion. However, trading from this level does not come without risk given that the daily candles are presently bolstered by daily demand at 1.0589-1.0662. This does not mean we will not be looking to short here, all it means is that we're going to wait for additional confirmation in the form a H4 bear candle before we're confident enough to pull the trigger.

Data points to consider: ECB President Draghi speaks today at 8am. US CB Consumer confidence report at 3pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.07 region ([wait for a H4 bear candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle).

GBP/USD

The bearish pulse continues to beat in the GBP/USD market this morning. Sterling came under pressure shortly after Sunday's open, falling sharply from a H4 supply zone at 1.2611-1.2589. Several H4 tech supports were engulfed during this downward move, including the H4 demand at 1.2490-1.2531 which is currently being retested as supply. On the condition that this base holds firm, the next H4 support target on the horizon comes in at 1.2427: an interesting H4 level. It's interesting because not only does it fuse beautifully with a H4 AB=CD 161.8% Fib ext., the 1.24 handle and a H4 trendline support taken from the high 1.2432, but it also has additional backing from a daily support area chiseled in at 1.2510-1.2415.

The only grumble we have here is that weekly price is currently selling off from a weekly Quasimodo resistance level at 1.2673, and shows that the next support on tap is 1.2329: the 2017 yearly opening level which converges with the daily demand seen BELOW the current daily support area! Therefore, a bounce is all that should be expected from the above noted H4 supports.

Our suggestions: Supposing that price strikes the 1.24/1.2440 region today (the yellow box), our desk has noted that a buy would only be considered valid if, and only if, a reasonably sized H4 bull candle takes shape from here. The first take-profit target will likely be the 1.25 neighborhood, which is also where we'd strongly advise traders to reduce risk to breakeven.

Data points to consider: US CB Consumer confidence report at 3pm GMT.

Levels to watch/live orders:

• Buys: 1.24/1.2440 region ([wait for a H4 bull candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

AUD/USD

In recent sessions, we can see that the commodity-linked currency continued to cling to the H4 channel support drawn from the low 0.7449, bidding price to a high of 0.7567 on the day. While H4 structure indicates room to move higher today, at least until the 0.76 boundary/November's opening base at 0.7606, it may be worth noting that the daily candles remain lurking within the walls of a daily supply area coming in at 0.7581-0.7551. On the flip side to this, nonetheless, weekly price happens to agree with the H4 chart, as the candles are currently seen buoyed by the top edge of a weekly support area penciled in at 0.7524-0.7450.

Our suggestions: Based on the above points, an intraday long from the current H4 channel support could be an option, targeting 0.76/0.7606. Lower-timeframe confirmation would be required before we'd consider this trade valid (see the top of this report for more info on confirmation), but unfortunately is absent for now. Therefore, our team will not be considering longs from this region at this time.

In addition to the above, attempting to hold longs beyond 0.7606/0.76 would be a little too risky for our liking, hence only considering the above long an intraday setup, unless of course we happen to see the daily candles CLOSE above daily supply at 0.7581-0.7551.

Data points to consider: US CB Consumer confidence report at 3pm GMT.

Levels to watch/live orders:

• Buys: A long from the current H4 channel support is only considered valid on the basis that a lower-timeframe confirming buy signal is seen (stop loss: dependent on where one confirms this line).
• Sells: Flat (stop loss: N/A).

USD/JPY

US President Trump's decision to halt some immigration revived demand for the safe-haven yen yesterday. Following an upward rejection of December's opening level at 114.68 going into the London session, the USD/JPY collapsed, wiping out the 114 psychological handle and clocking lows of 113.44 on the day.

As we write, the weekly candles are seen hovering mid-range between weekly resistance at 116.08 and a weekly support area formed at 111.44-110.10. Meanwhile, down on the daily timeframe, price recently sold off from daily supply at 115.62-114.60 and looks to be on course to test daily demand at 111.35-112.37, shadowed closely by a daily broken Quasimodo line at 110.58.

Our suggestions: Right now, we do not see much room for maneuver. Yes, the 114 handle could be retested as resistance today, but this base lacks any noteworthy confluence, in our opinion. Similarly, the H4 support at 113.25 also has little to offer regarding converging structure.

The only area that really jumps out to us this morning is the H4 demand at 112.05-112.37. With the understanding that this H4 demand base has the backing of not only the current daily demand, but also the weekly support area as well, there's a fair chance that price will respond from here. While this may be true, traders still need to be prepared for the possibility of a fakeout through this zone, as price may want to drive deeper into the above noted higher-timeframe areas before rallying higher. With that being the case, waiting for at least a H4 bull candle to form may be the better path to take.

Data points to consider: US CB Consumer confidence report at 3pm GMT. Bank of Japan's monetary policy decision. There is no change expected at this meeting, but traders will be closely focusing on the tone of the central bank, while looking for clues to future policy actions.

Levels to watch/live orders:

• Buys: 112.05-112.37 ([a reasonably sized H4 bull candle will need to be seen from here before a trade can be executed] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

USD/CAD

The value of the USD/CAD weakened amid yesterday's trading following a spike to highs of 1.3169. H4 candle action, as you can see, whipsawed through the H4 mid-way resistance at 1.3150 and tapped the upper area of a H4 supply zone coming in at 1.3171-1.3155. This – coupled with a H4 AB=CD approach (see black arrows) that terminated around the 1.3161 mark, was, technically speaking, clearly enough to send the market lower.

However, weekly demand at 1.3006-1.3115 is still very much in the picture, albeit struggling somewhat at the moment. In addition to this, we can also see that there's a nearby daily demand coming in at 1.3006-1.3041 (located around the lower edge of the above noted weekly demand) that happens to fuse with a daily trendline support taken from the low 1.2654.

Our suggestions: With yesterday's downward move aggressively whipsawing through the 1.31 handle, the level appears to be on the verge of giving way. With this, the next notable area below comes in at 1.3029: a H4 Quasimodo support level which happens to be positioned within the two aforementioned higher-timeframe demands. Although the H4 Quasimodo level boasts attractive confluence, we must take into account that price is also nearing the 1.30 mark – a level which is likely watched by the majority of the market. Does this mean we should ignore longs from the H4 Quasimodo formation? No! What it does mean though is that in order to buy from this H4 base, one might (to be on the safe side) want to consider setting stops beyond the 1.30 level as this will likely give the trade room to breathe, since this number is also located just beneath the above noted higher-timeframe demands.

Since we can find no logical area for stop-loss placement beyond 1.30 we'll wait for H4 candle confirmation, before deciding whether or not to buy from here.

Data points to consider: US CB Consumer confidence report at 3pm. Canadian GDP data set for release at 1.30pm along with the BoC Gov. Poloz speaking at around 10.30pm GMT.

Levels to watch/live orders:

• Buys: 1.3029 region ([a reasonably sized H4 bull candle will need to be seen from here before a trade can be executed] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

USD/CHF

For those who read our previous report on the Swissy pair you may recall that our team highlighted the H4 mid-range Quasimodo support level at 0.9948 as a place to consider entering long from. As we can see, the level has so far held firm and is likely to promote further buying in this market today at least up until the underside of the H4 range at 0.9972, followed by parity (1.0000).

Our reasoning behind our confidence in this level, as we mentioned in yesterday's report, simply comes down to the fact that it's positioned nearby the weekly support coming in at 0.9943. Well done to any of our readers who managed to lock in a position from here.

Our suggestions: Other than the H4 level 0.9948, there's not much else to hang our hat on at the moment. With that being the case, unless price retests the above noted H4 level for a second time today (entering long may be possible with the backing of a lower-timeframe buy signal – see the top of this report), we'll remain on the sidelines.

Data points to consider: US CB Consumer confidence report at 3pm GMT.

Levels to watch/live orders:

• Buys: 0.9948 region ([wait for a lower-timeframe confirming setup to form before looking to execute a trade] stop loss: dependent on where one confirms this area).
• Sells: Flat (stop loss: N/A).

DOW 30

On the back of lower oil prices and US President Trump's decision to halt some immigration, US equities fell sharply yesterday. Price blitzed its way through the 20000 mark, as well as the H4 support at 19989 (now acting resistance) and also daily support at 19964, which, as you can see, is currently being retested as resistance. Apart from the H4 trendline support taken from the high 19995, there's very little seen standing in the way of price retesting January's opening level at 19769, which happens to be located a few points above daily support at 19747.

Our suggestions: Unfortunately, we are unable to pin down a lower-timeframe confirming sell setup from the current daily resistance line. Therefore, at least for our desk, we will not be participating in selling from this zone.

Data points to consider: US CB Consumer confidence report at 3pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

GOLD

The US dollar struck the 101.00 level yesterday (see the US dollar index), but was unable to sustain gains beyond this point. This selling pressure bolstered the yellow metal yesterday and lifted price up to a H4 resistance zone coming in at 1198.4-1203.8.

Now, selling from this angle is considered to be a risky play in our book. Not only are the daily candles seen extending higher, following Friday's buying tail that pierced through the lower edge of a daily support area at 1197.4-1187.7, but weekly action is also looking as though it may retest the underside of a weekly trendline resistance taken from the low 1130.1, which is positioned just above this H4 area!

Our suggestions: With the above notes taken on board, our team has no intention in selling from the current H4 resistance area today. We will, however, be watching the H4 candle action should price strike the above noted weekly trendline resistance, as this could provide a nice base in which to short from. Failing this, the next area of interest is the daily supply area at 1220.9-1212.0 that holds a H4 Quasimodo resistance at 1217.5 and converging H4 trendline resistance extended from the low 1187.7 within its boundaries.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch the weekly trendline resistance. Should a H4 bear candle form off this line, this is a valid short signal, with stops placed above the trigger candle. 1217.5 region ([this could be an area, dependent on the time of day, one may consider trading without the need for additional confirmation] stop loss: beyond the daily supply at 1220.9-1212.0).