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The USD/CAD is in strong uptrend as shown on yesterday Session Recap webinar. Current POC zone is 1.3420-50 and as long as 1.3385 stays strong we might see 1.3550 followed by 1.3600 and 1.3650. The POC (L3, inner trend line, order block, EMA89, narrow triangle breakout) should spike the pair to the upside on subsequent retests towards above mentioned levels. The MACD turned bullish again and no divergence is present so this trade setup is a continuation from yesterday successful USD/CAD setup shown on the webinar.

Increasing for the fourth consecutive month, the PPI for final demand increased 0.3 percent in February. The month's gain was led by services, however, solid price gains were recorded elsewhere.

Stronger-Than-Expected Headline Gain

Accounting for over 80 percent of the headline's gain, final demand services increased a solid 0.4 percent on the month. Final demand goods prices rose for the sixth consecutive month, up 0.3 percent, largely on higher energy prices.

Our preferred measure of core PPI, which excludes energy, food and trade services, also increased 0.3 percent, signaling some acceleration in the underlying trend of core inflation.

Pipeline Pressures Building

On balance, pipeline pressures continue to build. Intermediate processed goods increased for the sixth straight month, up 0.4 percent, with the gain tied to price gains outside of food and energy. Unprocessed intermediate goods slipped 0.2 percent, in part, on a 4.3 percent drop in energy materials prices.

In short, producer prices were stronger than expected, keeping a rising inflation outlook in 2017 as the base case.

Oil price fell on Tuesday, marking fresh extension of steep downtrend from $53.80 lower top that was paused on Monday, for brief consolidation. Renewed weakness comes on comments from OPEC about oil inventories that continued to rise, despite the global deal to cut supply. OPEC countries agreed to curb their production by 1.2 million barrels per day from Jan 1, while non-OPEC producers agreed to cut half. Strong bearish sentiment that was established of recent sharp fall that also took out psychological $50 support, after holding above it for three months, now threatens of further weakness. Today's acceleration is now firmly below $48.00 handle and pressuring next targets at $47.32/17 (Fibonacci 261.8% expansion of the wave C from $53.78, on which the price is currently riding/Fibo 61.8% of $42.19/$55.22 upleg). The wave could extend to its FE 300% at $46.38, possibly to $45.27 (Fibo 76.4% retracement) on strong bearish sentiment. Broken 200SMA ($48.71) that capped action on Monday/today, marks strong barrier and guards psychological $50.00 resistance (also daily cloud base), which is expected to limiti extended upticks.

Res: 48.71; 50.00; 50.82; 51.21

Sup: 47.32; 47.17; 46.38; 45.27

A strong sense of caution has gripped the financial markets on Tuesday with investors on standby ahead of an explosively volatile data-packed week. Asian shares were mostly mixed today amid the anxiety with the cautious trading mood exposing European markets to downside losses. With risk aversion set to heighten as uncertainty and political risk weigh on sentiment, Wall Street could be vulnerable to further losses this evening. The unnatural calm ahead of a string of major central bank policy meetings, imminent US rate increase, and Dutch elections continues to send ominous warnings of the storm that has yet to come this trading week.

Sterling tumbles towards 1.2100

The Sterling found itself under renewed selling pressure on Tuesday as concerns heightened over a potential second Scottish Referendum compounding to the Brexit uncertainty. Anxiety over Brexit has been a recurrent theme this quarter with sellers exploiting the uncertainty to limit gains on Sterling. With the threat of an independence vote for Scotland adding to the horrible Brexit mixture, one can understand why the buying sentiment towards Sterling remains frighteningly low. Although Parliament has passed the Brexit bill ultimately paving the way for the government to trigger Article 50, this does not change the bearish bias towards Sterling. The great unknowns over the impact Brexit may have on the UK economy could ensure that the Pound remains depressed for prolonged periods.

From a technical standpoint, the GBPUSD fulfils the prerequisites of a bearish trend on the daily chart as there have been consistently lower lows and lower highs. A breakdown and daily close below 1.2100 could entice sellers to send the GBPUSD to the psychological 1.200 support level.

Dollar bulls remainwide awake

The heightened speculations of a probable US interest rate increase this week has inspired Dollar bullish investors to send the Dollar Index towards 101.50 as of writing. Sentiment remains firmly bullish towards the Greenback with further gains expected as speculators bet on the Federal Reserve raising US interest rates repeatedly this year. Investors may direct their attention to the pending PPI report which could provide the Dollar a final welcome boost if the release exceeds estimates. From a technical standpoint, the Dollar bulls may be back in town with a breakout above 101.50 opening a path higher towards 102.00.

Currency spotlight - EURUSD

The Euro stumbled into this trading week noticeably depressed as political uncertainty in Europe haunts investor attraction towards the currency. Although last week's hawkish surprise from the ECB offered the Euro a lifeline, a strong Dollar coupled with anxiety ahead of the Dutch elections has slowly confiscated gains. Investors will be paying attention to how the Dutch elections play out this week with any signs of Eurosceptic parties gaining popularity pressuring the Euro further. Although the economic fundamentals of the Eurozone have displayed signs of stability, it is the persistent uncertainty and political risk that continues to weigh heavily on investor sentiment.

Technical traders may observe how the EURUSD reacts below 1.0650 which could act as a dynamic resistance for a sharp depreciation back towards 1.0500.

Commodity spotlight - Gold

Gold remains at the mercy of US rate hike expectations with the prospects of an imminent interest rate increase this week quelling investor attraction towards the zero-yielding metal. Prices are under pressure on the daily chart and a strengthening Dollar should encourage bears to install fresh rounds of selling throughout this week. There is a likelihood that Gold bears will challenge $1190 when the heavily anticipated rate increase becomes a reality. From a technical standpoint, weakness below $1200 could spark a selloff towards $1190.

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

EUR/USD's break of 1.0630 support mixed up the near term outlook mildly and intraday bias stays is turned back to the downside for retesting 1.0494 low. Overall price actions from 1.0339 are seen as a corrective pattern. Break of 1.0494 will revive that case that such correction is completed. And in such case, deeper decline should be seen to retest 1.0339. Meanwhile, above 1.0713 will turn bias back to the upside for 1.0828 and above to extend the correction from 1.0339.

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.

EUR/GBP - 0.8760

 
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.

Trend: Near term down

Original strategy  :

Buy at 0.8660, Target: 0.8760, Stop: 0.8620

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.8660, Target: 0.8760, Stop: 0.8620

Position : -

Target :  -

Stop : -

 
Although the single currency has rebounded again today, as long as last week’s high at 0.8788 holds, further consolidation below this level would be seen and pullback to 0.8690-00 cannot be ruled out, however, reckon downside would be limited to 0.8655-60 and bring another rise later, break of said resistance at 0.8788 would extend the rise from 0.8403 low to 0.8800, however, loss of near term upward momentum should prevent sharp move beyond 0.8825-30 and price should falter well below 0.8850.

In view of this, would not chase this rise here and we are looking to buy euro on subsequent pullback as 0.8655-60 should limit downside. Below 0.8620-25 would defer and suggest top is possibly formed, risk test of 0.8600 but support at 0.8547 should remain intact. 

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

USD/CAD - 1.3486

 
Recent wave: Only wave v of c has ended at 0.9407 and wave C of major A-B-C correction is underway for headway to 1.4700

Trend:  Near term up

 
Original strategy       :

Buy at 1.3350, Target: 1.3550, Stop: 1.3290

Position: -

Target:  -

Stop: -

 
New strategy             :

Buy at 1.3350, Target: 1.3550, Stop: 1.3290

Position: -

Target:  -

Stop:-

Although the greenback recovered after finding support at 1.3421, as long as last week’s high at 1.3535 holds, further consolidation is in store and risk another another corrective fall to 1.3421 cannot be ruled out, however, reckon downside would be limited to 1.3390-00 and reckon 1.3350-55 (38.2% Fibonacci retracement of 1.3056-1.3535) would limit downside and bring another rise later, above said resistance at 1.3535 would extend recent upmove for further gain to 1.3570-75 and possibly towards 1.3600 but near term overbought condition should prevent sharp move beyond 1.3640-50, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy on further pullback as 1.3350 should limit downside. Only below 1.3295-00 (50% Fibonacci retracement of 1.3056-1.3535) would signal top is formed, risk correction to 1.3250-60 but price should stay well above indicated previous resistance at 1.3212 (now support), bring another rise later.

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

Daily Pivots: (S1) 1.0049; (P) 1.0083; (R1) 1.0105; More.....

USD/CHF's consolidation from 1.0169 is still in progress and intraday bias remains neutral for the moment. Overall, another rise remains mildly in favor with 1.0008 minor support intact. Above 1.0169 will turn bias to the upside and target a test on 1.0342 resistance. Based on neutral medium term outlook, we'd be cautious on topping below 1.0342. On the downside, break of 1.0008, however, will indicate completion of the rebound from 0.9860. And intraday bias will be turned back to the downside for 0.9860.

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.

Daily Pivots: (S1) 114.59; (P) 114.75; (R1) 115.04; More...

USD/JPY is still staying in consolidation below 115.49 temporary top and intraday bias remains neutral for the moment. In case of deeper retreat, downside should be contained above 113.60 support and bring rise resumption. As noted before, corrective decline from 118.65 should have completed with a a double bottom pattern (111.58, 111.68). Above 115.49 should turn bias to the upside and pave the way for a test on 118.65. Decisive break there will extend whole rise from 98.97 and target 125.85 high next. On the downside, however, break of 113.60 will invalidate our view and turn bias back to the downside for 111.58/68 support zone instead.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

USD/CHF - 1.0090

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite yesterday’s marginal fall to 1.0060, lack of follow through selling on break of previous support at 1.0065 and current rebound suggest further consolidation above yesterday’s low would be seen and gain to 1.0110-20 cannot be ruled out, however, a break of resistance at 1.0142 is needed to signal the retreat from 1.0171 (last week’s high) has ended, bring another rise towards this level later.

On the downside, below said support at 1.0060 would signal the fall from 1.0171 top is still in progress and may bring further fall to 1.0035-40 but support at 1.0009 should remain intact, bring rebound later. As near term outlook is still mixed, would be prudent to stand aside in the meantime.