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Daily Pivots: (S1) 1.5682; (P) 1.5721; (R1) 1.5748; More...

EUR/AUD's rise from 1.5254 resumed after brief consolidations. Intraday bias is back on the upside. Outlook is unchanged that corrective fall from 1.5976 has completed at 1.5254. Further rally is expected to retest 1.5976 high. On the downside, however, break of1.5690 support will delay the bullish case and extend the corrective pattern from 1.5976 with another falling leg.

In the bigger picture, it's still early to confirm if rise from 1.4281 represents bullish trend reversal. But as long as 1.5271 support holds, such rally is in favor to continue. Break of 1.5976 will target 1.6434 key resistance next. On the other hand, firm break of 1.5271 will retain medium term bearishness instead.

Daily Pivots: (S1) 0.9938; (P) 0.9963; (R1) 0.9979; More....

EUR/CHF's break of 4 hour 55 EMA suggests that rebound from 0.9844 has completed at 1.0040. Corrective pattern from 1.0095 is extending with another falling leg. Intraday bias is back on the downside for 0.9844 support. But downside should be contained by 0.9832 to bring rebound. On the upside, above 1.0040 will bring retest of 1.0095 high.

In the bigger picture, with 0.9832 support intact, rise from 0.9407 (2022 low) is still expected to continue. Break of 1.0095 and sustained trading above 55 week EMA (now at 1.0021) will be a medium term bullish signal, and bring further rally to 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484). However, firm break of 0.9832 support will revive medium term bearishness and bring retest of 0.9407 low instead.

Daily Pivots: (S1) 1.0602; (P) 1.0621; (R1) 1.0652; More...

Intraday bias in EUR/USD stays neutral at this point. Fall from 1.1032 could still extend lower. But strong support is expected from 38.2% retracement of 0.9534 to 1.1032 at 1.0463 to bring rebound. Break of 1.0690 will turn bias back to the upside for 1.0803 resistance first. However, sustained break of 1.0463 will carry larger bearish implication and bring deeper decline.

In the bigger picture, as long as 1.0482 support holds, rise from 0.9534 (2022 low) should continue to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. However, sustained break of 1.0482 will bring deeper fall to 61.8% retracement of 0.9534 to 1.1032 at 1.0106, even as a corrective pull back.

Daily Pivots: (S1) 1.1975; (P) 1.2012; (R1) 1.2082; More...

Intraday bias in GBP/USD stays neutral at this point. On the downside, break of 1.1914 will resume the decline from 1.2446, as the third leg of the corrective pattern from 1.2445, for 1.1840 support and possibly below. On the upside, break of 1.2142 resistance will turn bias back to the upside for further rebound to 1.2269 and above.

In the bigger picture, as long as 1.1840 support holds, rise from 1.0351 medium term bottom (2022 low) should still continue to 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. However, decisive break of 1.1840 will complete a double top pattern (1.2445, 1.2446) after rejection by 55 week EMA (now at 1.2243). Deeper decline should be seen back to 38.2% retracement of 1.0351 to 1.2445 at 1.1645.

Daily Pivots: (S1) 135.45; (P) 136.12; (R1) 136.50; More...

Intraday bias in USD/JPY remains neutral at this point. On the downside, break of 135.24 support will indicate short term topping, after rejection by 38.2% retracement of 151.93 to 127.20 at 136.64. Intraday bias will be turned back to the downside for 55 day EMA (now at 133.96) first. Sustained break of 55 day EMA will indicate that whole rebound from 127.20 has completed. On the upside, however, sustained break of 136.64 will indicate that fall from 151.93 has completed, and bring further rally to 61.8% retracement at 142.48.

In the bigger picture, focus remains on 38.2% retracement of 151.93 to 127.20 at 136.64. Sustained break there will indicate that price actions from 151.93 medium term are merely a corrective pattern. Such development will maintain long term bullishness. Rejection by 136.64 will, on the other hand, extend the fall from 151.93 to 61.8% retracement of 102.58 to 151.93 at 121.43 at a later stage.

Daily Pivots: (S1) 0.9336; (P) 0.9384; (R1) 0.9408; More...

USD/CHF's break of 0.9340 support indicate short term topping at 0.9439, on bearish divergence condition in 4 hour MACD. More importantly, the corrective rebound from 0.9058 could have completed ahead of 38.2% retracement of 1.0146 to 0.9058 at 0.9474. Intraday bias is back on the downside for 0.9289 resistance turned support first. Decisive break there will bring retest of 0.9058 low. For now, risk will stay on the downside as long as 0.9439 resistance holds, in case of recovery.

In the bigger picture, decline from 1.0146 is seen as part of a long term sideway pattern. As long as 38.2% retracement of 1.0146 to 0.9058 at 0.9474 holds, another fall is in favor through 0.9058. However, sustained trading above 0.9474 will indicate that the medium term trend has reversed, and open up further rally to 61.8% retracement at 0.9730 and above.

Swiss Franc climbed against major currencies following the release of stronger-than-expected inflation data, which is expected to bolster the case for SNB to raise interest rates by 50bps during their upcoming meeting this month. Euro also gained ground, supported by hawkish comments from ECB officials, while Dollar trailed behind.

Conversely, Australian Dollar is trading as the worst performer,weighed down by China's 5% growth target for the year, which is the lowest rate in decades. Despite expectations of a 25bps interest rate hike by the RBA in the upcoming Asian session, Aussie is facing pressure from the cautious outlook on China's economy. Meanwhile, the New Zealand Dollar and Sterling are also trading lower.

Technically, USD/CHF has broken 0.9340 support to confirm short term topping at 0.9439. Focus will turn to 135.24 support in USD/JPY. Break of the level should indicate short term topping at 137.09. If that happens, the chance for a near term reversal in Dollar will growth. Further break of 1.0690 resistance in EUR/USD could trigger deeper selloff in the greenback.

In Europe, at the time of writing, FTSE is down -0.54%. DAX is up 0.44%. CAC is up 0.33%. Germany 10-year yield is down -0.0649 at 2.655. Earlier in Asia, Japan 10-year JGB yield dropped -0.0020 to 0.504. Nikkei rose 1.11%. Hong Kong HSI rose 0.17%. China Shanghai SSE dropped -0.19%. Singapore Strait Times rose 0.23%.

ECB Lane: Appropriate to raise interest rates further beyond March

ECB Chief Economist Philip Lane indicated that it's "appropriate" to raise interest rates further beyond March meeting. But the "exact calibration" will depend on the upcoming macroeconomic projections and incoming data on inflation and the monetary transmission mechanism.

Lane said in a speech, "the current information on underlying inflation pressures suggests that it will be appropriate to raise rates further beyond our March meeting".

"By bringing the key policy rates to a sufficiently restrictive level and fostering a period of below-trend growth through the dampening of demand, we will counter-act above-target medium-term inflation pressures and also ensure that the prolonged phase of above-target inflation does not become embedded through a de-anchoring of inflation expectations," he explained.

ECB Holzmann calls for four more 50bps hikes

ECB Governing council member Robert Holzmann said he would like to have 50bps rates hikes in all of the March, May, June and July meetings.

"I expect it to take a very long time for inflation to come down," the Austrian central bank Governor told Handelsblatt. "My hope is that within the next 12 months we will have reached the peak of interest rates."

"If we want to get inflation back to two percent in the foreseeable future, we have to be restrictive," Holzmann said, arguing that only a 4% deposit rate will start restricting growth.

Eurozone Sentix dropped to -11.3, stagnation could turn into renewed recession worries

Eurozone Sentix Investor Confidence index dropped from -8 to -11.1, much worst than expectation of an improvement to -5.6.

Current Situation index rose from -10.0 to -9.3, hitting the highest level since June 2022. But that means the economy is "currently in a stagnation phase at best".

Expectations index dropped notably from -6.0 to -13.0. "Over the next six months, investors expect the Eurozone economy to deteriorate."

Sentix added, "this stagnation phase could soon turn into renewed recession worries if the negative economic expectations materialise."

Eurozone retail sales volume rose 0.3% mom in Feb

Eurozone retail sales volume rose 0.3% mom in February, well below expectation of 1.0% mom. Volume of retail trade increased by 1.8% for food, drinks and tobacco and by 0.8% for non-food products, while it decreased by -1.5% for automotive fuels.

EU retail sales volume rose 0.3% mom. Among Member States for which data are available, the highest monthly increases in the total retail trade volume were registered in the Netherlands (+4.9%), Luxembourg (+4.6%) and Slovenia (+4.1%). The largest decreases were observed in Austria (-9.8%), Slovakia (-1.4%) and Hungary (-0.6%).

UK PMI construction rose to 54.6, returned to growth with increasing optimism

UK PMI Construction rose sharply from 48.4 to 54.6 in February, well above expectation of 48.5. It's also the first expansion reading in three months, and highest since May 2022. S&P Global also noted greater commercial work helped to offset drop in housing activity. Input cost inflation was the lowest since November 2020.

The construction sector returned to growth as commercial work and civil engineering output increased, offsetting a continued weakness in the housing market. Firms attributed the growth to improving global economic conditions and increased client confidence in the commercial segment. Construction companies are increasingly optimistic about the year ahead and expect business to expand, helped by softer inflationary pressures and fewer supplier delays.

Swiss CPI accelerated to 3.4% yoy in Feb, core rose to 2.4% yoy

Swiss CPI rose 0.7% mom in February, above expectation of 0.4% mom. Core CPI (excluding fresh and seasonal products, energy and fuel), rose 0.8% mom. Prices of domestic products rose 0.6% mom. Imported products rose 1.1% mom.

Compared with the same month a year ago, CPI accelerated to 3.4% yoy, up from January's 3.3% yoy, well above expectation of slowing to 2.9% yoy. Core CPI accelerated to 2.4% yoy, up from 2.2% yoy. Domestic prices accelerated to 2.9% yoy, up from 2.6% yoy. Imported prices slowed to 4.9% yoy, down from 5.2% yoy.

The data should reinforce the case for SNB to maintain its tightening pace and raise interest rates by 50bps to 1.50% on March 23. While some analysts expect a slowdown to 25bps in June, SNB may continue to tighten at the current speed if inflation remains high.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9336; (P) 0.9384; (R1) 0.9408; More...

USD/CHF's break of 0.9340 support indicate short term topping at 0.9439, on bearish divergence condition in 4 hour MACD. More importantly, the corrective rebound from 0.9058 could have completed ahead of 38.2% retracement of 1.0146 to 0.9058 at 0.9474. Intraday bias is back on the downside for 0.9289 resistance turned support first. Decisive break there will bring retest of 0.9058 low. For now, risk will stay on the downside as long as 0.9439 resistance holds, in case of recovery.

In the bigger picture, decline from 1.0146 is seen as part of a long term sideway pattern. As long as 38.2% retracement of 1.0146 to 0.9058 at 0.9474 holds, another fall is in favor through 0.9058. However, sustained trading above 0.9474 will indicate that the medium term trend has reversed, and open up further rally to 61.8% retracement at 0.9730 and above.

Economic Indicators Update

ECB Governing council member Robert Holzmann said he would like to have 50bps rates hikes in all of the March, May, June and July meetings.

"I expect it to take a very long time for inflation to come down," the Austrian central bank Governor told Handelsblatt. "My hope is that within the next 12 months we will have reached the peak of interest rates."

"If we want to get inflation back to two percent in the foreseeable future, we have to be restrictive," Holzmann said, arguing that only a 4% deposit rate will start restricting growth.

The Canadian dollar is coming off a relatively quiet week but that could change as there a host of key releases this week. Ivey PMI kicks things off later today, followed by the Bank of Canada rate decision on Wednesday and the February employment report on Friday.

Canada’s Ivey PMI recorded a massive rebound in January, climbing from 33.4 all the way to 60.1 points. A reading above 50.0 points to expansion. The reading is expected to remain strong in February, with an estimate of 57.7 points.

Canada’s economy ended 2022 in an unimpressive fashion, posting a growth rate of 0.0% y/y in the fourth quarter, compared to 2.3% in Q3. This was much lower than the market estimate of 1.5% and the Bank of Canada’s projection of 1.3%. On a monthly basis, December GDP contracted by 0.1%, down from 0.0% in November and below the estimate of 0.0%.

BoC expected to pause

The Bank of Canada meets on Tuesday and is widely expected to hold rates at 4.50%. A non-move would be significant, as the BoC hasn’t taken a pause since the current rate-tightening cycle began in January 2023. Governor Macklem has signalled to the markets that he wants to take a pause in tightening, and the weak GDP report will support the BoC easing off the rate pedal as the economy shows signs of slowing. The steep hike in rates has pushed inflation lower, as it fell to 5.9% in January, down from 6.3% a month earlier.

What will the BoC do after tomorrow’s rate decision? The BoC would love to pause rates throughout the year, but Macklem has made clear that a pause is dependent on supportive data. There is also the complication that the Federal Reserve is likely to continue hiking several more times this year, and the BoC does not want to fall too far out of sync with rate levels in the US.

In the US, this week’s key events are Fed Chair Powell’s semi-annual testimony before Congress and the nonfarm payroll report, both of which could move the US dollar. If Powell provides any hints about further rate hikes, the US dollar could respond with gains.

Nonfarm payrolls was red-hot in January with 517,000 new jobs, but this is expected to be a one-time bump, with the estimate for February standing at 200,000. The surprisingly resilient labour market has the Fed concerned about wage pressures, and a strong wage growth release could raise market expectations of higher rates.

USD/CAD Technical

• 1.3701 and 1.3784 are the next resistance lines
• 1.3571 is a weak support line, followed by 1.3478

Australian dollar dips on Monday, dragged lower by weaker Chinese yuan, but remains within a congestion which extends into sixth straight day.

Traders await RBA’s policy meeting (due early on Tuesday) for fresh signals, as the central bank is widely expected to raise interest rates by 25 basis points to 3.60% (the highest since Jan 2012).

More important signal for Aussie is expectation that the RBA will hike again in the second quarter and push the interest rate higher than initially estimated.

The central bank’s action should offer fresh support to the currency, although, the US Federal Reserve is also seen remaining on extended policy tightening path, with more aggressive action not ruled out that would offer stronger support to the greenback and limit gains of its Australian counterpart.

Bearish daily studies (rising negative momentum / MA’s back to full bearish setup) keep Aussie under pressure for renewed attack at recent range floor (0.6694) and extension towards 0.6663/29 (50% retracement of 0.6170/0.7157 ascend / Dec 20 low).

Converging 100/10DMA’s (0.6752/62 respectively) are about to form a bear-cross and mark initial resistance, guarding more significant range top / broken Fibo 38.2% (0.6783) and 200DMA (0.6788).

Firm break of these barriers is needed to sideline downside risk and open way for stronger recovery.

Res: 0.6762; 0.6788; 0.6843; 0.6878.
Sup: 0.6694; 0.6663; 0.6629; 0.6584.