Repeated upside rejection (112.75) of recovery leg from 112.60 (17 Feb trough) and subsequent easing that reversed the largest part of strong 112.60/113.75 recovery, weakened near-term structure. Daily studies are in neutral / bearish mode and require break out of 112.60/113.75 range for stronger direction signal. Firm break below 113.00 support would confirm bearish near-term stance, with loss of 112.60 pivot to complete daily Failure Swing pattern for fresh extension of pullback from 114.94, as 15 Feb bearish candle with long upper shadow continues to weigh. Conversely, close above daily Tenkan-sen (113.75) would signal further retracement of 114.94/112.60 downleg.

Res: 113.43, 113.75, 114.05, 114.39
Sup: 113.06, 112.89, 112.60, 112.37

Cable remains within near-term triangle following yesterday's unsuccessful probe above upper pivot (10SMA / triangle resistance line at 1.2465).

Near-term studies remain neutral, while dailies are mixed and show no direction signals for now.

However, yesterday's spike higher that was capped by next pivotal barrier at 1.2506 (descending 20SMA) could be seen as initial signal of fresh strength.

Minimum requirement for this scenario is close above 10SMA (1.2465) with renewed attempts through 20SMA to confirm fresh bullish action towards upper breakpoints at 1.2550/80.

Initial supports at 1.2420/10 zone (yesterday's low / triangle support line) guard lower pivots at 1.2400 (100SMA) and daily cloud top at 1.2380.

Res: 1.2465, 1.2496, 1.2521, 1.2550
Sup: 1.2420, 1.2412, 1.2400, 1.2379

The Euro holding around daily cloud base (currently at 1.0557), after yesterday’s break lower that extended below psychological 1.0500 support, but failed to close below daily cloud.

Daily close below pivotal supports at 1.0557/1.0525 (cloud base/Fibo 61.8% of 1.0339/1.0827) is needed to signal bearish continuation towards next target at 1.0454 (Fibo 76.4% /11 Jan spike low) that would expose key support at 1.0339 (03 Jan low, the lowest since 2003).

Firm bearish setup of daily studies is supportive, with former strong support, now resistance at 1.0590 (55SMA) reinforced by falling 10SMA that is attempting to form bearish cross, expected to cap corrective attempts.

Break back above 1.0600 pivot would sideline immediate bears and signal stronger bounce that would risk attack at upper breakpoints at 1.0660/75 (20SMA/former double upside rejection).

Res: 1.0572, 1.0590, 1.0631, 1.0660
Sup: 1.0525, 1.0492, 1.0454, 1.0400

On the updated chart of USDJPY, we can see a nice and strong bullish turn taking place from around the 111.60 level, where we labeled end of a complex correction. As such, recent recovery gives us an indication for a completed double zig-zag correction and a suggestion that higher levels will now follow while market stays above 111.60. At the moment we see price trading up from black wave 2, that seems to have found a base at the 61.8 Fibonacci ratio. That said more strength could already be in progress within black wave 3, that may target area above the 115.60 region.

USDJPY, 4H

EUR/USD

Current level - 10553

The downtrend has been reversed at 1.0493 low and the intraday outlook is positive, for a rebound towards 1.0602, en route to 1.0630 resistance area. Initial minor support lies at 1.0530.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 113.16

The intraday bias is neutral after yesterday's rebound above 112.80. Key resistance is projected at 114.00.

GBP/USD

Current level - 1.2445

Despite yesterday's slide below 1.2480 support, the overall outlook remains rather positive above 1.2380 key support, for another upswing beyond 1.2520 high.

'The dollar fell while Treasuries advanced after minutes from the Federal Reserve's latest meeting showed officials confident they can raise rates gradually amid little threat that near-term inflation will accelerate.' - Jeremy Herron, Bloomberg

Pair's Outlook

The common European currency surged against the US Dollar on Thursday morning, as the currency exchange rate continued the late Wednesday's surge. The surge was initiated by the dovish FOMC meeting minutes, which caused the Greenback to fall all across the board. However, this occurred almost perfectly in the borders of a descending medium term channel, and the previous forecast of a decline of the currency pair is still in force. In fact, it is most likely that the pair will retreat once more to the weekly S1 at 1.0529 by the end of the day.

Traders' Sentiment

Traders have not changed the proportions of their open positions, as 54% of SWFX traders remain bullish on the Euro. Meanwhile, 58% of trader set up orders are to buy the Buck.

'There may well be a case to say investors are still looking for the weaker aspect of data and focusing on that - the Brexit trade is an easy one to hang on now, as is the euro political risk trade ... over the last couple of days.' – BMO Capital Markets (based on Business Recorder)

Pair's Outlook

The British Pound remained rather muted against the US Dollar during the last three days, with the tough support area circa 1.24 keeping the pair afloat. Even though there is some room for another leg down, same as yesterday, assuming the weekly pivot point at 1.2449 manages to hold the Cable—a positive development would not be a surprise. However, the main target, namely the resistance around 1.25, is unlikely to be breached due to lack of potential market movers. Meanwhile, technical indicators also keep giving bullish signals in the daily timeframe, unable to confirm the possibility of the positive outcome.

Traders' Sentiment

There are 57% of traders being long the Sterling today, whereas 53% of all pending orders are to sell the British currency.

The US dollar slid yesterday after the minutes from the latest FOMC policy meeting disappointed those who were looking for hints that a March hike is underway. Although Fed officials expressed confidence that a rate increase might be appropriate "fairly soon" if incoming information on the labor market and inflation was in line with or stronger than their current expectations, this was tempered by other comments that showed little concern about near-term inflation risks. Many Fed voters saw only a modest risk of inflation pressures increasing significantly and judged that the Fed would have "ample time" to respond if inflation emerged. On top of that, several members continued to be concerned about the downside risks to economic activity associated with further appreciation of the dollar. With regards to Trump's fiscal promises, policymakers noted that the uncertainty surrounding the subject should not deter the Committee form taking further steps in removing policy accommodation. Nevertheless, some were mindful that adjusting policy in anticipation to these policies might have different consequences than currently anticipated. All these points combined passed a different message to market participants than the one they got from Yellen's testimony last week. As such, the dollar weakened and the probability for a March action has ticked down. According to our model, which is based on the yields of the Fed funds futures, that probability is now 26% versus 28% yesterday.

Due to the fact that the meeting statement was relatively balanced, we did not expect this level of hesitation in these minutes. Nonetheless, the outcome confirms our assessment that the Committee has turned more dovish this year through the rotation of voting rights. As such, we stick to our guns that a March hike is unlikely and that the next increase in interest rates will probably take place in June. We would like to see some clarity around fiscal reform, some acceleration in wage growth, as well as an uptick in the core PCE price index rate, before we reconsider this view.

USD/JPY slid as soon as the minutes were out to challenge once again the 113.00 (S1) support territory. If USD-bears remain in charge today and manage to break that barrier, then we expect them to aim for our next support of 112.60 (S2), defined by the low of the 17th of February. However, although there is the possibility for further declines, the short-term path of the pair remains sideways. The rate has been oscillating between 111.60 and 115.50 since the 11th of January. We would like to see an escape from that range before we assume a forthcoming trending direction.

French politics still on the spotlight

Yesterday, Veteran French centrist Francois Bayrou announced that he will not run for President and offered his support to the independent candidate Emmanuel Macron. According to the polls, Bayrou's support was only 5%, but his withdrawal gives Macron a significant boost towards victory. EUR/USD spiked higher on the news, after it hit support near the 1.0500 (S1) territory, got another boost later in the day from the Fed minutes, and stopped near the 1.0570 (R1) line. Anything that reduces, or at least not increases, the possibility of Le Pen becoming President is seen as positive for the common currency. The combination of that and the disappointment from the Fed minutes may keep EUR/USD supported for a while. A break above 1.0570 (R1) is possible to challenge our next resistance of 1.0600 (R2). Nevertheless, we don't expect any further recovery to develop into a strong bull run, given that we still have a long way to go before any election outcome is certain. A fresh poll showed that Marine Le Pen has increased her lead in the first round, which proves that Europe's political risks have nothing but diminished. However, the common currency did not react to that poll, as the far right leader is still expected to lose by a large margin in the runoff. With this uncertainty still in place, we expect euro-bears to take charge again soon and drive the battle in EUR/USD back down for another test near 1.0500 (S1). However, we recall that one of our favorite proxies to play further weakness in the common currency is EUR/JPY, given that the yen may enjoy some safe haven flows in case uncertainty mounts further.

Overnight, Australia's capital expenditure index for Q4 tumbled 2.1% qoq, much more than the expected 1.0% qoq slide. The Aussie slid on the release, but that doesn't change our outlook with regards to the currency. The RBA's intention to remain on hold in the foreseeable future combined with the surge in iron ore in past months are likely to keep the AUD supported. As we noted yesterday, we believe that EUR/AUD is one of the better proxies for exploiting any further Aussie gains, considering that the political risks in Eurozone could keep the euro on the back foot in coming months.

As for today's events

During the European day, we have a relatively light calendar in terms of economic releases. From Germany, we get the final GDP figures for Q4 as well as the Gfk consumer sentiment index for March, though neither of these indicators is usually a major market mover.

In Norway, the oil investment expectations survey for Q1 is due to be released, though no forecast is available for the figure. Considering the nation's heavy reliance on oil exports, this number will be closely watched. We see the case for oil investment expectations to have risen from the previous quarter, given that oil prices have remained elevated in recent months, following the OPEC consensus. Something like that may bring NOK under renewed buying interest.

From the US, we get initial jobless claims for the week ended 17th of February. The forecast is for the figure to have ticked up, something that would bring the 4-week average down.

We have two speakers scheduled on Thursday: ECB Executive Board member Peter Praet and Atlanta Fed President Dennis Lockhart.

'The topside remains capped by the 55 day ma at 114.96. We view the recent low at 111.59 as an interim low. Between these two limits the market is sidelined.' – Commerzbank (based on FXStreet)

Pair's Outlook

The FOMC Minutes barely affected the markets yesterday, as no clear clue concerning a future interest rate hike was provided. As a result, the US Dollar closed with a 33-pip loss against the Japanese Yen, retaining its position above 113.00. Technical indicators keep giving mixed signals in the daily timeframe, but the weekly ones now are giving distinctly bullish, implying the USD/JPY pair could soon break out from its consolidation trend. However, in order to fully achieve this goal the Greenback is required to stabilise above the 115.00 major level, meaning the tough resistance, formed by the weekly R1, the monthly PP, the Bollinger band and the 55-day SMA, needs to be overcome.

Traders' Sentiment

Today 53% of all open positions are long (previously 52%). The share of purchase orders also edged higher, namely from 63 to 65%.

'Gold continues to tread water post the Federal Open Market Committee minutes, probably the highlight of a very light data week.' – Jeffrey Halley, OANDA (based on Reuters)

Pair's Outlook

The yellow metal remains near the 1,235 mark, and near that level the bullion has been fluctuating for the past six consecutive trading sessions. However, the flat trading is consistent with the forecasts, as the bullion continued to be squeezed in a medium term triangle pattern. A breakout to the upside is expected in the upcoming trading sessions, and it is most likely to occur at the start of next week. In such case it is highly likely that the metal's price would reach the 1,250 mark.

Traders' Sentiment

SWFX traders remain bullish on the metal, as 56% of open positions are long on Thursday. In addition, 62% of trader set up orders are to buy the metal.