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EUR/USD Bouncing lower.

EUR/USD has failed to hold above former resistance given at 1.0874 (08/12/2017 high). Hourly support is given at 1.0719 (21/03/2017 low). Stronger support can be found at 1.0493 (22/02/2017 low). Expected to show renewed bullish pressures.

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 Bearish consolidation.

GBP/USD has exited short-term uptrend channel. We consider that there are still rooms for further strength. Hourly resistance is located at 1.2615 (27/03/2017 high). Hourly support is given at 1.2324 (03/17/2017 low). Expected to show continued strength towards resistance at 1.2771 (05/10/2016 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 Bearish pressures are fading.

USD/JPY's bearish pressures are fadingHourly resistance can be located at 113.57 (16/03/2017 high) while support is given at 110.11 (27/03/2017 low).

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).

'Consumers' assessment of current business and labor market conditions improved considerably.' - Lynn Franco, The Conference Board

The Conference Board Consumer Confidence Index increased significantly despite experts' pessimistic forecasts. In March, it gained 8% and reached 125.6, which is the highest value since December 2000. Therefore, the number of consumers who evaluated business conditions as 'good' rose from 28.3% to 32.2%. Moreover, the number of consumers who believed that there was 'enough' job offers in the market also climbed from 26.9% to 31.7%. Accordingly, the number people who evaluated business conditions as 'bad' decreased from 13.4% to 12.9%. In addition, the number of people who were experiencing 'difficulties' finding a job slightly diminished from 19.9% to 19.5%. Altogether, this mean that consumers believe that the current economic conditions have improved and that they are ready to increase their spending and investments. This also suggests that people are more optimistic about the near-term economic situation. For instance, the number of consumers who suggested that business conditions would improve even more in the next six months soared from 23.9% to 27.1%. At the same time, the number of consumers who suggested that more jobs would be created in the next six months also nudged from 20.9% to 24.8%.

'It's sensible to wonder whether the dollar's recent slide is a sign that post-election euphoria is fading, but by one measure a decline was overdue before Election Day.' – Nir Kaissar, Bloomberg

Pair's Outlook

On Wednesday morning the common European currency traded flat against the US Dollar near the 1.0810 mark, and it was positioned to decline to the 1.0780 level. At the 1.0780 level was located the closest support to the currency exchange rate, as there the weekly PP was located at. Previously, during Tuesday's session, the pair failed to break the resistance put up by the 200-day SMA near the 1.0875 level. As a result the decline of the pair began, as it passed the weekly R1 and 38.20% Fibo, respectively, at 1.0841 and 1.0826. These levels of significance have begun to provide resistance on Wednesday.

Traders' Sentiment

Traders have not changed their opinion, as 63% of open positions remain short. Meanwhile, 51% of set up orders are to sell the Euro.

'According to our long-term fair value model G10 VALFex, the USD already looks quite overvalued vs SEK, EUR, JPY and GBP and that should limit any future gains.' – Credit Agricole (based on PoundSterlingLive)

Pair's Outlook

In the wake of formal beginning of Brexit the GBP/USD pair began sliding down, this was seen by yesterday's bearish development when the Pound lost more than 100 pips. Despite being supported by the weekly PP, the 55 and the 100-day SMAs, the Cable is likely to edge lower again. The 1.23 major level is expected to be the bottom floor for today's trading, even though technical indicators are giving bullish signals in the daily timeframe. Ultimately, the given pair has been consolidating between 1.1950 and 1.27 since October 2016, and this trading range still remains intact, with the Sterling headed towards the lower half, namely below the 1.23 mark.

Traders' Sentiment

Although not as strong as yesterday, but market sentiment remains bullish, now at 57%. The share of sell orders increased from 53 to 55%.

'I think the optimism about 'Trumponomics,' against the failure to pass the Obamacare reform bill, is still dominating the dollar/yen market.' – Mizuho Securities (based on Reuters)

Pair's Outlook

After a two-week decline the USD/JPY currency pair managed to breach the descending channel's support line yesterday, also reacquiring the 111.00 mark. Nevertheless, the rally was stopped by the monthly S1, which could still cause bears to push the exchange rate lower today. Moreover, technical indicators remain in favour of the negative outcome and the Bollinger bands suggest a close in the red zone today is likely. The nearest support is the weekly S1 at 110.35, but a drop that low is doubtful, with the 110.60 level seen as the lowest intraday closing point.

Traders' Sentiment

Bullish traders' sentiment returned to its Monday's level of 72% (previously 71%). At the same time, the number of orders to acquire the Buck edged down from 66 to 63%.

'A resurgent U.S. dollar, along with higher U.S. yields and equities has taken the momentum out of the gold rally for now.' – Jeffrey Halley, OANDA (based on Reuters)

Pair's Outlook

After failing to score more gains on Tuesday the yellow metal declined, and the commodity price fell below the 1,250 mark, where it remained on Wednesday morning. Due to the fact that the bullion's price recently passed the support put up by the 50.00% Fibonacci retracement level, which is located at the 1,248.96 mark, the price is set to fall. The reason for that is the fact that the closest support level is located at the 1,240.87 level. At that level the weekly PP is residing. The pivot point is also supported by the lower trend line of a medium term ascending channel.

Traders' Sentiment

SWFX market sentiment remains neutral bearish, as 51% of open positions are short. Meanwhile, 64% of trader set up orders are to buy the yellow metal.

EUR/JPY - 119.93

Recent wave: wave v of (C) ended at 94.12 and major correction in wave A has ended at 149.79

Trend: Near term up

Original strategy:

Bought at 121.30, stopped at 120.80

Position: - Long at 121.30
Target: -
Stop: - 120.80

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Although the single currency edged higher again, lack of follow through buying and the subsequent retreat from 120.44 suggest further consolidation is in store, near term upside risk remains for the corrective bounce from 119.32 to extend gain to 120.60-70, however, as this move is viewed as retracement of recent decline, reckon upside would be limited to 121.15-20, bring retreat later. Only break of 121.84 resistance would revive bullishness and signal the fall from 122.89 has ended, bring further gain to 122.25-30 first.

On the downside, below 119.70 support would bring test of said support at 119.54 but break there is needed to signal the fall from 122.89 top has resumed and may extend weakness to 119.00, then 118.67 support but loss of momentum should prevent sharp fall below latter level and price should stay well above previous chart support at 118.25, risk from there is seen for a rebound later.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

PM Theresa May will finally today deliver a letter officially triggering article 50 and beginning at least two years of tough negotiations.

Speculation likely to continue as meaningful talks could take months to begin

There has been endless amounts of speculation over the last nine months about how the negotiations are going to proceed and what will and will not be discussed, something that is unfortunately likely to continue for a while yet. And while the triggering of article 50 officially begins two years of negotiations, we could actually be waiting months before any meaningful talks get underway.

GBPUSD off more than 1.5% in 24 hours as sterling shows continued sensitivity to Brexit

The pound has been very sensitive to this speculation since last June and we saw more evidence of this overnight after pictures emerged of May signing the letter invoking article 50 to be delivered to EU President Donald Tusk later today. Sterling had already gradually lost ground against the dollar throughout the session, having traded close to 1.26 in early European trade, but another bout of selling in illiquid trade took it below 1.24 shortly after the photos emerged.

Sterling to remain volatile as May appears before parliament around midday

The pound is likely to remain quite volatile throughout today's session, particularly around May's appearance at PMQs just after midday. May will appear in parliament to discuss the triggering of article 50 just as the letter is being delivered to Brussels and what she says today will likely play a big role in how the pound trades, with the FTSE and UK bonds also being sensitive to her comments. The FTSE has tended to benefit from the pounds fall, as we saw yesterday and are likely to see shortly after the open. Given the selling that we've seen over the last 24 hours, it is worth being prepared for a possible case of traders selling the news and buying the fact today. Of course, that will heavily depend on May's comments this afternoon.

Scottish referendum may also be addressed after Edinburgh voted in favour on Tuesday

May could also address the Scottish parliaments vote on Tuesday to hold a second referendum, which came just one day before the UK triggered its own departure from the EU. May has not been very receptive to the idea previously and I would expect more of the same talk today. While again expected, this was likely another contributor to the pounds decline yesterday and it could be sensitive to it again today.

AUD/USD – 0.7654

Recent wave: Wave 5 ended at 1.1081 and major correction has commenced for fall to 0.7000 and then towards 0.6500-10

Trend: Near term up

Original strategy :

Bought at 0.7645, Target: 0.7800, Stop: 0.7585

Position: - Long at 0.7645
Target:  - 0.7800
Stop: - 0.7585

New strategy :

Hold long entered at 0.7645, Target: 0.7800, Stop: 0.7585

Position: - Long at 0.7645
Target:  - 0.7800
Stop:- 0.7585

As aussie has rebounded after falling to 0.7587, retaining our bullishness and consolidation with upside bias remains for gain to resistance at 0.7685, break there would signal low is formed there and suggest the retreat from 0.7750 (last week’s high) has ended, then retest of this level would follow, above this resistance would extend gain to 0.7778 (last year’s high), however, break there is needed to retain bullishness and extend headway to 0.7840-50 but price should falter below 0.7900.

In view of this, we are holding on to our long position entered at 0.7645. Only below 0.7585 would abort and signal top is formed instead, then further choppy trading would take place and risk is seen for pullback to 0.7530-40 but indicated support at 0.7491 should remain intact.

On the 4-hour chart, the move from 0.8066 is the wave 5 with i: 0.8860, ii: 0.8315, wave iii is an extended move ended at 1.0183, iv: 0.9706 and wave v has ended at 1.1081 (also the top of entire wave 5). The subsequent selloff is the major correction which is unfolding as ABC-X-ABC and 2nd A leg has ended at 0.8848, followed by a-b-c wave B which ended at 0.9758, hence, 2nd C wave is now in progress and indicated downside target at 0.7000 and 0.6950 had been met, so further fall to 0.6710-20 cannot be ruled out.

Tuesday evening, March 28, the Scottish parliament has voted by 69 to 59, in favour of holding a second independence referendum. GBP/USD has slumped more than 220 points since Tuesday, from a psychological level at 1.2600, to 1.2376, breaking the support level at 1.2500. The bulls are currently attempting to recover the significant support level at 1.2400.

Scottish First Minister, Nicola Sturgeon and her SNP Party won the first round of the battle, helped by the support from the Green party. The proposal will be delivered to the UK parliament for voting. However, UK Prime Minister Theresa May has stated not long ago that the UK government will not approve the referendum during the 2-year Brexit negotiation process with the EU.

UK Prime Minister Theresa May, will trigger Article 50 of the Lisbon treaty today, March 29, starting the 2-year Brexit negotiation process with the EU. Theresa May will formally notify the EU Council President, Donald Tusk. Tusk is expected to present draft Brexit guidelines to the European Union's 27 member states, within 48 hours of the UK triggering Article 50. The member states are expected to hold a Brexit summit on April 29.

Brexit process uncertainties and a second Scottish referendum turmoil pose downward pressure on GBP and GBP crosses. The UK's economic prospects are still vague.

Although Trump's healthcare bill failure hit USD and US equities on Monday, US consumer confidence for March, released on Tuesday, soared to its highest level since 2000. The figure cushioned USD and pushed US equities up from a 6-week low. From the perspective of economic data, the US economy remains solid at present. US Q4 GDP final reading will be released this Friday March 31, with better-than-expected readings likely providing further support to USD.

It will take an extended period to see the concrete impacts caused by Trump's administration on the US economy, after more actions are put on the table, although it doesn't seem to be optimistic.

Today US pending home sales (Feb), will be released at 15:00 BST. It will be followed by the US EIA crude oil inventory at 15:30 BST. Oil prices have rebounded since March 27, helped by OPEC's 6-month output extension consideration.