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Daily Pivots: (S1) 0.8689; (P) 0.8737; (R1) 0.8766; More...

A temporary top is formed at 0.8786 in EUR/GBP with 4 hours MACD staying below signal line. Intraday bias is turned neutral for consolidations. Deeper retreat might be seen but downside should be contained by 38.2% retracement of 0.8402 to 0.8786 at 38.2% retracement of 0.8402 to 0.8786 at 0.8639 and bring another rise. Above 0.8786 will target 0.8851 resistance and above. However, price actions from 0.8303 are seen as the second leg of the corrective pattern from 0.9304. Hence, we'd expect strong resistance from 100% projection of 0.8303 to 0.8851 from 0.8402 at 0.8950 to limit upside.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

Daily Pivots: (S1) 1.4020; (P) 1.4102; (R1) 1.4148; More...

A temporary top is formed at 1.4183 in EUR/AUD and intraday bias is turned neutral first. Some consolidation would be seen but downside should be contained by 1.3874/4014 support zone and bring another rally. As noted before, we're favoring the case of medium term trend reversal defending key support level at 1.3671, on bullish convergence condition in daily MACD Above 1.4183 will turn bias back to the upside for 1.4289 resistance. Sustained break there will affirm our bullish view and target 1.4721 key resistance next.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. We'd expect strong support from 1.3671 key level 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 indicate completion of such correction and turn outlook bullish for retesting 1.6587 high. However, sustained break of 1.3671 will invalidate our bullish view and would turn focus back to 1.1602 long term bottom.

Daily Pivots: (S1) 1.0695; (P) 1.0760; (R1) 1.0793; More...

EUR/CHF spiked higher to 1.0823. However, it quickly retreated sharply since then. Intraday bias is turned neutral first. We're favoring the case of trend reversal, on bullish convergence condition in daily MACD, after defending 1.0620 key support level. That is, correction from 1.1198 could have completed. Above 1.0823 will target 1.0897 resistance next. However, break of 1.0689 support will dampen our view and turn focus back to 1.0629 low again.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Decisive break of 1.0897 resistance should confirm that it's completed. And in that case, larger up trend is resuming for another high above 1.1198. Meanwhile, sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485.

Daily Pivots: (S1) 0.7539; (P) 0.7565; (R1) 0.7598; More...

Intraday bias in AUD/USD remains neutral as the corrective rise from 0.7490 is still in progress. We'd expect recovery to be limited by 0.7631 resistance and bring fall resumption. As noted before, rise from 0.7150 has completed at 0.7740 already. Below 0.7490 will turn bias back to the downside and target 0.7144/7158 support zone. However, break of 0.7631 resistance will dampen our bearish view and turn bias back to the upside for 0.7740 instead.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seek to 55 month EMA (now at 0.8185) and above.

Daily Pivots: (S1) 1.3425; (P) 1.3450; (R1) 1.3471; More...

USD/CAD is staying in consolidation from 1.3534 and intraday bias remains neutral first. Deeper retreat cannot be ruled out. But we'd expect downside to be contained by 38.2% retracement of 1.3008 to 1.3534 at 1.3333 and bring another rally. Above 1.3534 will turn bias to the upside for retesting 1.3598 high next.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg, started from 1.2460 is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. Break of 1.2968 wold at least bring at retest of 1.2460 low. However, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Global Markets:

• Asian stock markets: Nikkei down 0.10 %, Shanghai Composite gained 0.10 %, Hang Seng and ASX 200 both declined 0.05 %
• Commodities: Gold at $1203 (-0.05 %), Silver at $16.98 (+0.05 %), WTI Oil at $48.45 (+0.10 %), Brent Oil at $51.40 (+0.10 %)
• Rates: US 10-year yield at 2.62, UK 10-year yield at 1.25, German 10-year yield at 0.47

News & Data:

• Australia ANZ Roy Morgan Weekly Consumer Confidence (12/Mar): 113.1 (prev 113.9)
• Australia NAB Business Conditions (Feb): 9 (prev 16)
• Australia NAB Business Confidence (Feb): 7 (prev 10)
• China Industrial Production (YtD) (YoY) (Feb): 6.30% (est 6.20%, prev 6.00%)
• China Retail Sales (YtD) (YoY) (Feb): 9.50% (est 10.60%, prev 10.90%)
• Sterling slips as Brexit talks get green light, stocks advance before Fed – RTRS
• Wall Street drifts with eyes on Fed; Intel drops – RTRS
• Dollar nudges up on U.S. yields, euro retreats from 1-month high – RTRS

Markets Update:

The markets are relatively quiet as traders are waiting for the Federal Reserve rate decision tomorrow. Most of the Asian stock markets are almost unchanged on the day. In the FX market, the Dollar is slightly stronger, but all major pairs consolidated in tight ranges overnight.

The market has almost fully priced in a rate hike by the Fed tomorrow, and it is unlikely that the central bank will disappoint. However, the question is whether the Dollar can continue to appreciate much further. A rate hike alone is unlikely to support the currency much, as it is already expected. Much will depend on the FOMC statement and the comments by Fed Chair Yellen.

EUR/USD traded in 1.0645-60 range in Asia. The pair briefly broke above 1.07 yesterday, but quickly reversed those gains. A major breakout seems unlikely ahead of the FOMC. USD/JPY has been bid again, although resistance above 115 has proved to be heavy. Important support now lies at 114 and 113.60.

Upcoming Events:

• 07:00 GMT – German CPI
• 10:00 GMT – German ZEW Economic Sentiment
• 10:00 GMT – Euro Zone Industrial Production
• 10:00 GMT – Euro Zone ZEW Economic Sentiment
• 12:30 GMT – US PPI
• 21:45 GMT – New Zealand Current Account

Short term Elliottwave view in FTSE suggests that the instrument is showing a 5 swing sequence from 2/1 low (7087.67) favoring more upside. From 2/1 low, the Index is rallying as a double three Elliottwave structure where Minute wave ((w)) ended at 7329.56 and Minute wave ((x)) ended at 7192.45. Index has since broken above 7329.56, suggesting the next leg higher in Minute wave ((y)) has started. The subdivision of Minute wave ((y)) is also in a double three Elliottwave structure where Minutte wave (w) ended at 7394.6 and Minutte wave (x) ended at 7262.95. Up from there, rally is unfolding as a zigzag Elliottwave structure where Subminutte wave a ended at 7373 and Subminutte wave b ended at 7342.02. Near term, while pullbacks stay above 7262.95, and more importantly above 7192.45, expect Index to extend higher. We don’t like selling the Index.

FTSE 1 Hour Chart

Key Points:

• Reversal likely as the 100 day EMA is applying downward pressure.
• Stochastics trending towards overbought.
• Consolidation phase could end shortly.

The EUR looks poised to have another near-term slip in the wings as its latest attempt at pushing through the 100 day EMA seems to have been met with failure. However, there could be a silver lining for the bulls out there as the medium-term consolidation phase could be only a week or so away from ending, the result of which will likely be a rally to the long-term trend line.

First and foremost, we need to confirm just how likely a reversal and subsequent downtrend is for the EUR. From a technical perspective, such an outcome looks all but assured given a number of factors. For one, the 100 day EMA is once again making its presence felt and is supplying some notable dynamic resistance. Moreover, stochastics are trending towards overbought which will only add to resistance moving forward.

Aside from the EMA and stochastic biases, evidence for a reversal comes from the chart pattern that has developed over the past few months. Specifically, a fairly robust pennant seems to be forming up which should help to encourage the pair to drift lower in the coming sessions. This decline should come to an end around the 1.0550 handle before the downside constraint of the pennant kicks in and lends support to the Euro.

However, all is not lost for the bulls out there who may have been disheartened by the pair’s inability to move above that 100 day EMA. More precisely, at its current trajectory, the EUR’s consolidation phase is fast running out of wiggle room which should mean a breakout is on the horizon. As a result, there is likely only going to be one or maybe two reversals before the pair moves into a rather strong uptrend.

Ultimately, this uptrend will most probably be constrained by the long-term trend line which should limit gains to around the 1.0750 handle. However, by this point, we will have price action above the 100 day moving average which could help to see a long-term uptrend begin. If this occurs, the Euro will be well positioned to return to the price ranges seen early last year, much to the delight of the EUR bulls.

Daily Pivots: (S1) 1.0631; (P) 1.0672 (R1) 1.0694; More.....

A temporary top is formed at 1.0713 in EUR/USD with 4 hour MACD crossed below signal line. Intraday bias is turned neutral first. At this point, we're still favoring the bullish case. That is, whole rise from 1.0339 low is in progress and resuming. Above 1.0713 will target 1.0828 and above. However, since it's seen as a corrective move, we'd expect upside to be limited by 100% projection of 1.0339 to 1.0828 from 1.0494 at 1.0983. The larger down trend is expected to resume later. On the downside, break of prior resistance at 1.0630 will turn bias back to the downside for retesting 1.0494 low.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115.

FOMC is highly likely to raise its policy rate, by +25 bps, to a range to 0.75-1% in March. With a March rate hike a done-deal, the market focus turns to the future monetary policy stance. We expect two more hikes, one in June and one in September, this year. Given the recent improvements in employment and inflation, the market has begun talking about four rate hikes in 2018. For now, we stick to three, as suggested in December's dot plot. The market is currently pricing in three 25-bps hikes this year and two for 2018. The Fed's updated Summary of Economic Projections (SEP) would be released with fan charts added for the first time.

Fed's monetary policy decision is data-dependent. Recent economic developments have indicated that the Fed is on right path to achieve its dual mandate. US non-farm payrolls came in stronger than expected, adding +235K in February, compared with consensus of +193K and the upwardly revised +238K in January. The average monthly gain over the past 6 months stands at +194K and the average over the past year is +197K. The unemployment rate slipped -0.1 percentage point to 4.7% as the participation rate added+0.1 percentage point to 63%. Average earnings rose +0.2%, compared with forecast of +0.3%. January's inflation surprised to the upside. Headline CPI accelerated to +0.6% m/m from +0.3% in December. This also marked that largest monthly gain since 2013. Undoubtedly, the +4% jump in energy CPI (+1.2% in December) was the key drive. Yet, the core CPI also strengthened, rising an above-trend 0.3% m/m. On a year-ago basis, headline CPI accelerated to 2.5% from +2.1% in December, while the core reading improved to +2.3% from +2.1% previously.

There have been rising hopes of four rate hikes in 2018, compared with three suggested in the December dot plot. Recall that in December 2016, FOMC's median estimate in dot plot showed a Fed funds rate of 1.375% in 2017, 2.125% in 2018 and 2.875% in 2019. Indeed, it is not impossible for the median dot plot to signal four hikes next year. Only two participants, who were at the median last time, are needed to raise their forecasts by +25 bps to lift the median to 2.375%. For 2019, only one participant is needed to lift the median to 3%. Note, however, that the market is currently pricing in only two rate hikes for 2018.

We believe policymakers would have more discussions on balance sheet adjustment over the course of this year, culminating to announcement of plans to reduce the balance sheet in 4Q17. Yet, the policy statement in March would likely maintain the reference that 'the Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions'.

FOMC would add new fan charts to the SEP. While these are intended to display uncertainty around economic projections, we doubt they would provide more new information about the economic and monetary policy outlooks