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Germany's leading economic institutes lowered economic growth forecasts for the country in 2019 sharply. GDP is projected to rise just 0.8%, down from Autumn 2018 forecasts of 1.9%. Nevertheless, for 2020, GDP is projected to grow 1.8%, unrevised.

In the press release, Oliver Holtemöller, head of the Department of Macroeconomics and Vice President of the Halle Institute for Economic Research (IWH) said that "the long-term upswing of the German economy has come to an end." Though, he noted that "we still consider the chance of a pronounced recession to be slight."

The statement also noted that "political risks have further clouded the global economic environment." Also, "if a no-deal Brexit occurs, economic growth this year and the next is likely to be significantly lower than indicated in this forecast."

The state was released by joint project group "Gemeinschaftsdiagnose": German Institute for Economic Research (DIW Berlin), Halle Institute for Economic Research (IWH) – Member of the Leibniz Association, ifo Institute – Leibniz Institute for Economic Research at the University of Munich in cooperation with the KOF Swiss Economic Institute at ETH Zurich, Kiel Institute for the World Economy (IfW), RWI – Leibniz Institute for Economic Research in cooperation with the Institute for Advanced Studies Vienna.

Full release here.

Daily Pivots: (S1) 146.08; (P) 146.63; (R1) 147.23; More...

GBP/JPY is staying in consolidation from 148.87 and intraday bias remains neutral at this point. As long as 143.72 support holds, further rise is in favor. On the upside, decisive break of 149.48 key resistance will carry larger bullish implication and target 156.58 resistance next. However. sustained break of 143.72 will indicate near term reversal, after rejection by 149.48 key resistance. In that case, intraday bias will be turned to the downside for 141.00 support first.

In the bigger picture, focus is now staying on 149.98 key resistance. Decisive break there should confirm that medium term fall from 156.59 (2018 high) has completed at 131.51 already. Rise from 131.51 is then seen as the third leg of the corrective pattern from 122.36 (2016 low). GBP/JPY should then target 156.59 and above. However, rejection by 149.98 will retain medium term bearishness and could extend the fall from 156.59 through 131.51 to 122.36.

Daily Pivots: (S1) 124.75; (P) 125.10; (R1) 125.59; More....

Intraday bias in EUR/JPY remains on the upside for the moment. Rebound from 123.65 is in progress and could extend to 126.78/127.50 resistance zone first. On the downside, however, break of 123.56 will resume the fall from 127.50 to 61.8% retracement of 118.62 to 127.50 at 122.01.

In the bigger picture, rebound from 118.62 might have completed earlier than expected at 127.50. EUR/JPY is held well inside medium term falling channel, and below 55 week EMA (now at 127.61). That is, the down trend from 137.49 (2018 high) might still be in progress. Break of 118.62 will target 109.03/114.84 long term support zone. On the upside, however, break of 127.50 will extend the rebound from 118.62 to 133.12 key resistance instead.

Daily Pivots: (S1) 0.8508; (P) 0.8533; (R1) 0.8563; More...

EUR/GBP is still bounded in consolidation from 0.8474/8722. Intraday bias remains neutral first. Near term outlook remains bearish as long as 0.8722 resistance holds. On the downside, break of 0.8474 will resume larger down trend for 0.8416 long term projection next. On the upside, though, break of 0.8722 will resume the rebound from 0.8474 to 0.8840 resistance first.

In the bigger picture, EUR/GBP is seen as staying in long term range pattern started at 0.9304 (2016 high). Current fall from 0.9305 (2017 high), is a falling leg inside the pattern. Such decline could extend to 100% projection of 0.9305 to 0.8620 from 0.9101 at 0.8416 and possibly below. But for now, we'd expect strong support around 0.8312 support to contain downside and bring rebound.

Daily Pivots: (S1) 1.5744; (P) 1.5812; (R1) 1.5863; More...

Intraday bias in EUR/AUD remains neutral first. Consolidation from 1.5721 might extend further with another rise. But upside should be limited by 1.6122 resistance to bring fall resumption eventually. On the downside, decisive break of 1.5271 will resume the fall from 1.6765 and target 1.5346 support next.

In the bigger picture, as long as 1.5346 support holds, outlook will remain bullish. Uptrend from 1.1602 (2012 low) is expected to resume sooner or later. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal, with bearish divergence condition in weekly MACD, and turn outlook bearish.

Daily Pivots: (S1) 1.3309; (P) 1.3332; (R1) 1.3367; More...

With 4 hour MACD crossed above signal line, intraday bias in USD/CAD is turned neutral again. On the downside, firm break of 1.3250 support will indicate completion of whole rebound from 1.3068. In that case, deeper fall would be seen back to 1.3068/3112 support zone. On the upside, break of 1.3467 will resume the rebound from 1.3068 and target a test on 1.3664 high.

In the bigger picture, structure of the medium term rise from 1.2061 (2017 low) to 1.3664 is not clearly impulsive. Hence, we'd stay cautious on strong resistance from 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 and 1.3793 resistance to limit upside, and bring medium term topping. But in any case, medium term outlook will stay bullish as long as channel support (now at 1.3210) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high). However, firm break of the channel support should confirm reversal and target 1.2061 low again.

Daily Pivots: (S1) 0.7067; (P) 0.7099; (R1) 0.7143; More...

Intraday bias in AUD/USD remains neutral at this point. On the downside, firm break of 0.7056 minor support will turn bias to the downside for 0.7003 first. Break will resume the whole decline from 0.7295. On the upside, break of 0.7168 will resume the rise from 0.7003 and turn bias to the upside for 0.7295 resistance. Break will extend the whole rebound from 0.6722 to 0.7393 key resistance level.

In the bigger picture, as long as 0.7393 resistance holds, we'd treat fall from 0.8135 as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

European markets are trading lower due to the dreadful economic reading out of Germany. The factory order data plunged during the month of February, it fell 4.2 percent m/m while the estimates were for a 0.3 percent increase. The European Central bank really needs to wake up, it needs to start paying attention to these feeble economic reading.

Economic Numbers and Markets

There is clearly a disconnect between the EU economic readings and the performance of the main European benchmark indices or maybe this is more of a Goldilocks scenario, but I doubt that. Nonetheless, it is certainly very concerning because, to me, it seems like traders are only chasing the rally and not paying any courtesy to the economic numbers.

Germany is the economic engine of the eurozone and the manufacturing PMI numbers released on Monday showed that the reading of 44.1, a level which confirms that the economy is shrinking. Today’s factory order number also echoed this message. But when you look at the overall performance of the DAX index, it is up 13.22 percent year to date and the STOXX 600 is also up 15.18 percent year to date. This shows that traders are becoming greedy.

Thank You Parliament - Relief Rally In Play

Over in the UK, parliament decided that it is about time to make some sensible choice and take the no deal scenario off the table. Thus, Hard Brexit was ruled out by parliament last night and this ignited a small rally for Sterling. The currency is up 0.09 percent and trading above the critical level of 1.31 against the dollar.

Given the fact that we are looking at a strong possibility of long delay in Brexit, an important factor which can also provide a tailwind for the sterling rally is the speculation around the possibility of an interest rate hike by the Bank of England. This is because the only thing which was stopping the bank from raising the interest rate was Brexit and if there is a long delay in Brexit, the bank may actually pull the trigger on this.

Aussie-Sterling To Drop Further

Aussie equity markets sank today as Asian markets failed to provide them with any direction. The optimism around the Aussie retail sales data (which supported the markets yesterday) failed to keep the markets higher. The AUD/GBP took a hit because of the strength in Sterling and this was primarily due to the ongoing confidence that a no deal Brexit deal is off the table. However, the move wasn’t substantial because Brexit minister over in the UK has said that the possibility of the accident taking place has augmented after no deal Brexit vote, because there isn’t enough time to sign the deal. I do not necessarily agree with it, and still, maintain the stance the move toward the 0.53 mark is likely.

Daily Pivots: (S1) 1.1204; (P) 1.1230; (R1) 1.1258; More.....

Intraday bias in EUR/USD remains neutral first. More consolidation could be seen above 1.1183 temporary low. But further decline is still in favor as long as 1.1273 minor resistance holds. Sustained break of 1.1176 low will resume whole decline from 1.2555. On the upside, however, break of 1.1273 support turned resistance will confirm short term bottoming. Intraday bias will be turned back to the upside for 1.1448 resistance instead.

In the bigger picture, medium term weakness was revived as the weak rebound from 1.1176 was rejected well below 55 week EMA and failed to sustain above 55 day EMA. Focus is back on 1.1176 low, with 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. Decisive break there will resume whole down trend from 1.2555. Such decline target 1.0339 low next. On the upside, firm break of 1.1569 resistance is needed to be the first sign of medium term bottoming. Otherwise, downside breakout will be in favor.

Daily Pivots: (S1) 1.3121; (P) 1.3158; (R1) 1.3195; More....

GBP/USD is still bounded in consolidation from 1.3381 and intraday bias remains neutral first. On the upside, firm break of 1.3381 will target 61.8% retracement of 1.4376 to 1.2391 at 1.3618 next. However, on the downside, firm break of 1.2960 will indicate that rebound from 1.2391 has completed earlier than expected. Deeper fall would then be seen to 1.2773 support for confirmation.

In the bigger picture, medium term decline from 1.4376 (2018 high) should have completed at 1.2391. Rise from 1.2391 is seen as the third leg of the corrective pattern from 1.1946 (2016 low). Further rise could be seen through 1.4376 in medium term. On the downside, though, break of 1.2773 support will dampen this view. Focus will be turned back to 1.2391 low and break will resume the fall from 1.4376 to 1.1946.