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Daily Pivots: (S1) 0.8419; (P) 0.8467; (R1) 0.8493; More...

EUR/GBP's break of 0.8455 indicates resumption of fall from 0.8851. Such decline is seen as the third leg of the corrective pattern from 0.9304. Intraday bias is back on the downside for 0.8303 support first. Break will confirm our view and target 0.8116 key cluster support level. On the upside, break of 0.8590 resistance is needed to indicate short term bottoming. Otherwise, outlook will stay cautiously bearish in case of recovery.

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).

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Key Points:

• Long-term trend line should remain in place.
• Parabolic SAR remains bullish.
• Consolidation now looks likely.

The Dollar-Yen should continue to consolidate moving forward which means further upsides could be on offer. Specifically, we have a bit of a loose pennant shaping up that should cap downside risk and a number of other technical readings are signalling that bullish momentum is tentatively returning.

As is shown below, the long-term uptrend seems to be intact and this is now forming the lower constraint of a pennant pattern. Confirming that this consolidation phase is beginning is the current ADX reading which has finally slid below 20 and, therefore, heralds an end to the recent slew of losses. As a result of this pattern takinghold, we should see buying pressure begin to build moving ahead and this could see the pair as high as the 115 handle once again.

Indeed, we are already seeing a number of technical readings come forward which support some near-term bullishness for the Dollar-Yen. Firstly, and probably most obviously, the 100 day moving average has been propping up the pair and doesn't look as though it is going relent anytime soon. Additionally, the parabolic SAR bias is bullish which will be helping to recruit buyers moving ahead.

One of the less obvious signals of ongoing bullishness is the MACD oscillator. Specifically, the signal line crossover that occurred as the pair challenged the 100 day EMA is indicative of a change in momentum. This would typically infer that we are in little danger of the recent downtrend firing up again which significantly increases upside potential.

As a result of all these technical readings, we should see the USDJPY ascend up to around the 115.16 level. Here, the 50.0% Fibonacci level will likely cap upsides and it could even encourage another reversal. However, it will pay to take another look at the technical bias as the pair approaches this point as we could instead see a breakout from the pennant and a subsequent uptrend.

Ultimately, we can't ignore the fundamental side of things and should keep half an eye on the economic news feed moving forward. The only real news items to be aware of are on the US side of the equation and, of these results, only the Unemployment Claims and the Final Michigan Consumer Sentiment figures are worth monitoring closely. However, do watch out for any bombshells that could be dropped in Lockhart's scheduled remarks, despite there only being a rather slim chance of him deviating from the Fed's script.

Daily Pivots: (S1) 1.3691; (P) 1.3752; (R1) 1.3785; More...

EUR/AUD's decline resumed by taking out 1.3722 and intraday bias is back on the downside. Bullish convergence condition is seen in 4 hour MACD. Also, price actions from 1.6587 are seen as a corrective move. Hence, we'd expect strong support from 1.3671 key level to contain downside and bring rebound. Break of 1.3900 resistance will indicate near term reversal and turn bias back to the upside for 1.4025 resistance and above.

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.

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EUR/USD

The greenback started the day with a strong footing, but pared gains and retreated from its daily highs following disappointing US data. Markit flash PMIs came in below previous month readings, with the services activity index down to 53.9 from 55.6 in January, whilst the manufacturing sector contracted to 54.3 from previous 55.0, both at fresh 2-month lows. The flash Composite PMI stands at 54.3. The positive momentum of the US currency that lasted until after US opening, was triggered by comments coming from FED's Harker, who said that he will back a March rate hike should he see additional evidence of rising inflation.

The common currency fell in spite of fresh evidence of an accelerating pace of economic recovery, undermined by political uncertainty. The EU composite PMI rose from 54.4 to 56.0 according to the Markit flash estimate for February, the highest since April 2011. Markit Services and Manufacturing indexes were well above market's expectations. Also, German's preliminary February Markit PMIs showed that the growth in the manufacturing sector expanded at the fastest rate in over three years, with the index up to 57 from previous 56.4. The services sector also grew at a solid pace, up to 54.4 from previous 53.4, leaving the Composite PMI at 56.1 from previous 54.8.

The EUR/USD pair settled around 1.0550 after trading as low as 1.0525, below the 1.0565 Fibonacci resistance, as the level stands for the 23.6% retracement of the post-US election slump, and seems poised to extend its decline according to technical readings, given that in the 4 hours chart, the price is far below a bearish 20 SMA, whilst technical indicators have barely bounced from oversold readings. The pair has bounced twice from the 1.0520 region, reinforcing the strength of the static support, and therefore anticipating a strong bearish extension, once the level gives up.

Support levels: 1.0520 1.0470 1.0440

Resistance levels: 1.0565 1.0600 1.0635

USD/JPY

The USD/JPY pair closed the day marginally higher at 113.53, retreating from a daily high of 113.77, following the release of tepid US Markit PMIs, down to fresh 2-month lows. The figures were not enough to trigger concerns about US economic health, but given the underlying political uncertainty seems unlikely the safe-haven currency could ease much. US Treasury yields recovered some ground, with the 10-year note benchmark up to 2.458% intraday, before retreating back to the 2.42%, further limiting chances of a rally in the pair. In the data front, the Japanese flash Manufacturing PMI expanded to 53.5 in February from 52.7 in January, the highest reading in almost three years. The 4 hours chart shows that the pair stalled its recovery below a bearish 200 SMA, currently at 113.85 the immediate resistance, whilst technical indicators have lost upward momentum within positive territory, but are still far from confirming a downward move. The pair has met buying interest on retracements towards 113.40, now the immediate support, with a break below the level favoring a downward extension towards 112.50.

Support levels: 113.40 113.00 112.50

Resistance levels: 113.85 114.10 114.50

GBP/USD

The GBP/USD pair fell to a daily low of 1.2401 on the back of dollar's broad strength, but trimmed all of its daily loses and closed the day flat around 1.2460. Data coming from the UK showed that public sector net borrowing (excluding public sector banks) decreased by £13.6 billion to £49.3 billion in the current financial year-to-date (April 2016 to January 2017), compared with the same period in the previous financial year, being this is the lowest year-to-date borrowing since the financial year-to-date ending January 2008. Public sector net borrowing (excluding public sector banks) was in surplus by £9.4 billion in January 2017, a £0.3 billion larger surplus than in January 2016; this is the highest January surplus since 2000. Also, BOE´s Governor Carney testified before the Treasury Committee this morning, reiterating that the Bank is open to move rates one way or the other, if deemed appropriate. The technical picture maintains the neutral stance seen on previous updates, although lower highs, well below the 1.2540 region, increase the bearish potential. In the 4 hours chart, the price keeps moving back and forth around a horizontal 20 SMA while technical indicators barely entered positive territory before turning flat. At this point, the pair needs to break below 1.2345, February low, or above the mentioned 1.2540, the 23.6% retracement of its latest bullish run, to gain some directional traction.

Support levels: 1.2430 1.2380 1.2345

Resistance levels: 1.2480 1.2530 1.2565

GOLD

Spot gold trimmed its early losses and settled at $1,246.64 a troy ounce, as soft US data offset concerns of a soon-to-come US rate hike. The commodity fell down to 1,226.09 at the beginning of the day, weighed by FED's Harker comments, pledging for a March rate hike if inflation keeps rising, but recovered in the US afternoon, as investors wait for the FOMC Minutes to offer some hints on the pace of US rate hikes. As it is the case for the JPY, investors are reluctant to unwind their long positions in safe-haven assets. From a technical point of view, the daily chart shows that the price bounced sharply from a bullish 20 DMA, whilst the 100 DMA keeps losing downward strength, now consolidating around the 38.2% retracement of the post-US election decline. In the same chart, the Momentum indicator has lost its bearish strength, turning flat above its 100 level, whilst the RSI indicator consolidates around 62, keeping the downside well limited. In the 4 hours chart, the price is a few cents below a directionless 20 SMA, whilst technical indicators have bounced within negative territory, now aiming to enter positive territory, overall maintaining a neutral stance.

Support levels: 1,233.90 1,226.10 1,216.60

Resistance levels: 1,244.60 1,255.10 1,261.60

WTI CRUDE

Crude oil prices jumped to their highest levels since early January, with WTI futures printing $55.00 a barrel, to close around 54.53. Oil prices jumped after the OPEC reaffirmed its commitment to keep output cuts, and even do better than the 92% compliance achieved on January. US stockpiles reports will suffer a delay, with API reporting on Wednesday and the EIA on Thursday after the US holiday on Monday. The daily chart for the commodity shows that the price is firmly above an anyway horizontal 20 DMA, whilst the Momentum indicator holds flat around its 100 level, as WTI settled at the higher end of its latest range. The RSI indicator gained upward strength, currently around 58, enough at least to limit the downside this Wednesday. In the 4 hours chart, the price is well above a bullish 20 SMA, whilst technical indicators have retreated modestly within positive territory.

Support levels: 54.00 53.40 53.00

Resistance levels: 55.20 55.70 56.30

DJIA

Wall Street resumed its rally to record highs after Monday's holiday, with the three major indexes closing once again at all-time highs. The Dow Jones Industrial Average added 118 points or 0.57 %, to close at 20,742.11, up for eighth straight session, whilst the S&P finished at 2,365-38, up by 14 points or 0.60%. The Nasdaq Composite settled at 5,865.95 up by 0.47%. Within the Dow, Wal-Mart was the best performer, up 3.12% after the company reported fiscal earnings in Q4, and same-store sales that beat expectations. Caterpillar on the other hand, topped losers' list, down 0.74%. The DJIA traded as high as 20,757, and the daily chart shows that technical indicators have resumed their advances within extreme overbought readings, with the RSI now heading north at fresh monthly highs above 80. In the same chart, the 20 SMA has accelerated its advance, but remains well below the current level, reflecting the strength of the ongoing advance. Shorter term, and according to the 4 hours chart, a bullish 20 SMA provided intraday support at the beginning of the day, currently at 20,638, whilst technical indicators have turned flat in overbought territory, as the index was unable to surpass the early high.

Support levels: 20,692 20,638 20,588

Resistance levels: 20,757 20,800 20,845

FTSE 100

The FTSE 100 closed at 7,274.83, down 25 points or 0.34%, dragged lower by HSBC, as the lender bank reported a net loss of $4.22 billion for the fourth quarter of 2016. HSBC was the second worse performer, down 5.91% after Mediclinic International that shed 8.94%. Rolls Royce Holdings was the best performer, up 9.98%, followed by Antofagasta that added 3.76%. Adding pressure on the Footsie was the Pound that remained strong above the 1.2400 level against the greenback. The index seems to have entered a consolidative stage, and the daily chart shows that the index is still above a bullish 20 SMA, but technical indicators are losing upward strength, retreating within positive territory. Friday's low at 7,253 is the key, as the bearish potential will probably be limited as long as it holds above it. In the 4 hours chart, the index has settled below a horizontal 20 SMA, whilst technical indicators have turned flat around their mid-lines, confirming the neutral stance.

Support levels: 7,253 7,212 7,162

Resistance levels: 7,306 7,354 7,390

DAX

European equities benchmarks closed higher, with the German DAX adding 141 points or 1.18% to close at 11,967.49, its highest since April 2015, as much stronger-than-expected PMI growth figures boosted local confidence. Siemens was the best performer, up 2.78%, followed by Adidas that added 2.31%. Banks underperformed, with Commerzbank ending the day 0.42% lower as the sector was affected by the horrid earnings report of HSBC. From a technical point of view, the index maintains a clearly bullish stance, as in the daily chart, it rallied further above a now bullish 20 SMA, whilst technical indicators have extended their advances within positive territory, with the RSI now entering overbought territory. In the 4 hours chart, the index bounced sharply after testing a strongly bullish 20 SMA, whilst technical indicators maintain strong bullish slopes, despite being in overbought territory, in line with further gains, particularly on a break above 11,987 the intraday high.

Support levels: 11,782 11,730 11,694

Resistance levels: 11,848 11,891 11,930

Daily Pivots: (S1) 141.12; (P) 141.49; (R1) 142.14; More...

GBP/JPY is trading in range of 138.53/142.79 and intraday bias stays neutral for the moment. Overall, price actions from 148.42 are seen as a corrective pattern. Below 138.53 will bring deeper fall, possibly through 136.44 support. But strong support could be seen at 50% retracement of 122.36 to 148.42 at 135.39 to bring rebound. Above 142.79 will turn bias back to the upside for 144.77 and above.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern. Main focus is on 38.2% retracement of 195.86 to 122.36 at 150.42. Rejection from there will turn the cross into medium term sideway pattern with a test on 122.36 low next. Though, sustained break of 150.42 will extend the rebound towards 61.8% retracement at 167.78.

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Daily Pivots: (S1) 119.45; (P) 119.88; (R1) 120.20; More...

EUR/JPY is still bounded in range of 119.32/121.32. Intraday bias remains neutral at this point. On the downside, below 119.32 will extend the corrective fall from 124.08. In that case, we'd expect strong support from 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39) to contain downside and bring rebound. On the upside, break of 121.32 minor resistance should revive the case that such correction is completed. And, intraday bias would then be turned back to the upside for 123.30/124.08 resistance zone.

In the bigger picture, price actions from 109.20 medium term bottom are seen as part of a medium term corrective pattern from 149.76. There is prospect of another rise towards 126.09 key resistance level before completion. But even in that case, we'd expect strong resistance between 126.09 and 141.04 to limit upside, at least on first attempt. Nonetheless, decisive break of 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39) will argue that rise from 109.20 is completed and turn outlook bearish for 61.8% retracement at 114.88 and below.

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Daily Pivots: (S1) 1.0630; (P) 1.0639; (R1) 1.0646; More...

Range trading continues in EUR/CHF and outlook is unchanged. Intraday bias stays neutral first. With 1.0706 resistance intact,deeper decline is expected. Firm break of 1.0620 key support level will extend the larger decline from 1.1198 to 1.0485 fibonacci level. However, break of 1.0706 resistance will indicate short term bottoming and turn bias back to the upside. Further break of 1.0749 resistance will raise the chance of medium reversal.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Such correction is still in progress. Sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485. On the upside, break of 1.0897 resistance is needed to confirm completion of such fall. Otherwise, outlook will stay bearish.

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Daily Pivots: (S1) 1.0502; (P) 1.0558 (R1) 1.0591; More.....

EUR/USD is staying above 1.0520 temporary low and intraday bias remains neutral for the moment. With 1.0713 minor resistance intact, we're holding on to our bearish view. That is, corrective rise from 1.0339 has completed at 1.0828 already. Below 1.0520 will target 1.0339 first. Break will extend the larger down trend to parity. However, above 1.0713 will dampen our view and turn focus back to 1.0828 instead.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

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Daily Pivots: (S1) 1.2422; (P) 1.2451; (R1) 1.2502; More...

Intraday bias in GBP/USD remains neutral for the moment as it's staying in range of 1.2346/2705. Price actions from 1.1946 are viewed as a consolidation pattern, with rise from 1.1986 as the third leg. In case of another rise, we'd expect upside to be limited by 1.2774 to bring larger down trend resumption. On the downside, below 1.2346 will revive the case that such consolidation is completed at 1.2705 already. In that case, intraday bias will turn back to the downside for retesting 1.1946 low.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

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Daily Pivots: (S1) 1.0044; (P) 1.0075; (R1) 1.0127; More.....

USD/CHF's upside is still limited below 1.0118 resistance and intraday bias remains neutral. Near term outlook stays cautiously bullish as long as 0.9929 minor support holds. Fall from 1.0342 could have finished at 0.9860 already. Above 1.0118 will turn bias back to the upside for retesting 1.0342. However, break of 0.9929 will likely extend the decline from 1.0342 through 0.9860 low.

In the bigger picture, prior rejection from 1.0327 resistance argues that USD/CHF is staying in a medium term sideway pattern. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of another fall, we'd expect strong support from 0.9443/9548 support zone. Meanwhile firm break of 1.0342 will target 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

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