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Cable remain bid in early Thursday's trading and pressuring again 1.32 barrier after action in Wednesday failed to break higher. Britain's parliament passed a Brexit delay law on Wednesday that will give government an extra time to eventually find workable solution, but would also keep all scenarios, including elections, open. The pair holds in green for the fourth straight day, supported by improved sentiment, however, conflicting technical indicators (negative momentum/bullish MA's) lack clearer direction signal and keep near-term outlook in neutral mode. Bulls are supported by thick and rising daily cloud but need daily close above converged 20/30SMA's (1.3166) to generate bullish signal for extension towards next targets at 1.3226 (Fibo 61.8% of 1.3381/1.2977) and 1.3249 (base of thick weekly cloud). North-turning 10SMA marks initial support at 1.3141, which needs to hold and keep bulls intact. Break lower would soften near-term structure, while return and close below 55SMA (1.3088) would signal reversal.

Res: 1.3200, 1.3226, 1.3249, 1.3269
Sup: 1.3166, 1.3141, 1.3121, 1.3088

• Pound advances as UK Parliament blocks no-deal exit; all eyes on May-Corbyn talks
• Equities extend winning streak as trade optimism rides high
• ECB minutes the highlight on today’s calendar

Parliament blocks no-deal Brexit, pound advances

The Brexit process continues to dominate headlines. The House of Commons voted by the narrowest of margins (313-312) to force Theresa May to ask the EU for an extension beyond April 12. Lawmakers, not the government, will decide the length of the delay, subject to the EU’s approval. The pound advanced, as the probability of a no-deal outcome may have declined a little in the eyes of investors, though the magnitude of the move was smaller than what has become the norm on Brexit news.

For now, market attention remains on the May-Corbyn talks that will continue today. In particular, it will be interesting – and potentially beneficial for the pound – to see whether May finally shows some flexibility on the prospect of a permanent customs union. That would be anathema to several die-hard Brexiteers in her party, as it would prevent the UK from striking its own free trade deals with other nations, but it would solve the thorny issue of the Irish border, and likely provide her with enough votes to push the deal through. Even the DUP hinted it could be ‘open’ to a customs union yesterday.

Stocks extend winning streak as trade optimism lingers

US equity markets recorded modest gains, with the benchmark S&P 500 index (+0.21%) closing at a fresh six-month high. Meanwhile, the Nasdaq Composite (+0.60%) outperformed, rapidly approaching its all-time peak. Optimism that a trade deal is looming continues to ride high, with the latest reports suggesting that Washington will allow Beijing until 2025 to meet many of the agreed commitments. However, disagreements on intellectual property protection and the enforcement mechanism of a deal remain unsolved. Top-level negotiations will continue today in the American capital, and markets will likely take their cue from any remarks pointing to progress, or the lack thereof.

In the broader picture, while there may still be some more upside in store for risky assets if the two sides continue to play up the likelihood of a deal, it is becoming increasingly clear that investors have already priced in a positive outcome to a large extent. Stocks are now near all-time highs amid a barrage of optimistic trade headlines in recent months, with significant help from ‘cautious’ central banks as well, no doubt. The bottom line is that markets largely expect a deal already, which implies relatively limited upside in case one materializes, but perhaps significant downside if this narrative changes.

Coming up: ECB minutes and Fed-speak

The economic calendar is light on Thursday, with the most noteworthy release being the minutes from the latest ECB meeting, at 12:30 GMT. That was the gathering where the central bank ‘shocked’ markets by pushing back the timing of its first rate hike, on top of announcing new ultra-cheap loans for commercial banks. Hence, it’s reasonable to expect a relatively dovish tone in these minutes, underscoring policymakers’ concerns around growth. In any case, considering the upward revisions in the final Eurozone PMIs for March yesterday, investors may prefer to wait until next week’s ECB meeting before they draw clear conclusions on the outlook for policy, and by extent for the euro.

In the US, we will hear from three Fed officials: Williams (14:00 GMT), as well as Mester and Harker, both at 18:00 GMT.

In Canada, the Ivey PMI for March is due out.

The greenback weakened yesterday as hopes on a trade deal between the US and China fueled a risk on mood for the markets. US White House economic adviser Larry Kudlow stated yesterday that the US –Sino negotiations made “good headway” last week. He also stated that the two sides aim to bridge differences over talks which could extend beyond 3 days this week. It was also mentioned that China may be recognizing the intellectual property issues among other issues, the US had raised over the years, for the first time. US President Donald Trump could be meeting with Chinese Vice Premier Liu He in Washington later today, which could be one more signal that the two sides are close to a deal. Should there be further positive headlines reeling in from the negotiations, we could see the USD’s role as a safe have retreat even further. AUD/USD had some gains yesterday and during today’s Asian session, however remained mostly in check as it continuously tested the 0.7120 (R1) resistance line. If the good news regarding the US-Sino negotiations continue to reel in, we could see the pair trading in a bullish market today. Should the pair find fresh buying orders along its path, we could see the pair breaking the 0.7120 (R1) resistance line and aim for the 0.7190 (R2) resistance hurdle. Should on the other hand the pair come under the selling interest of the market, we could see it aiming if not breaking the 0.7065 (S1) support line.

Pound gains as UK Parliament tries to block a no deal Brexit.

The GBP strengthened somewhat yesterday as Theresa May tried to work out a common direction about Brexit with opposition leader Jeremy Corbyn. On other news the UK Parliament voted for a legislation which would force Theresa May to ask for a Brexit delay to prevent UK crashing out of the EU. However it should be noted that despite both efforts pointing towards an agreed Brexit, they still have to bear fruits and for the time being do not lift the uncertainty surrounding Brexit. Despite both news strengthening the pound, it made little gains, hence we expect it to continue to be under pressure, as Brexit uncertainty is being maintained. Cable made some gains yesterday and tested repeatedly the 1.3175 (R1) resistance line. We could see the pair trading in a bullish market today, should there be any further positive headlines regarding Brexit. Should the bulls dictate the pair’s direction, we could see it breaking the 1.3175 (R1) resistance line and aim for the 1.3265 (R2) resistance level. On the other hand, should the bears take over, we could see the pair aiming if not breaking the 1.3070 (S1) support line.

Other economic highlights, today and early tomorrow

In today’s European session, we get Germany’s industrial orders growth rate for February and later on the ECB will be publishing the account of its last monetary meeting early March, in which the central bank had a clear dovish turn. In the American session we get Canada’s Ivey PMI for March, while in the tomorrow’s Asian session we get Japan’s household spending growth rate for February. As for speakers please note that Cleveland Fed President Mester and Philadelphia Fed President Harker, will be speaking today.

AUD/USD H4

Support: 0.7065 (S1), 0.7005 (S2), 0.6950 (S3)
Resistance: 0.7120 (R1), 0.7190 (R2), 0.7245 (R3)

GBP/USD H4

Support: 1.3070 (S1), 1.2970 (S2), 1.2875 (S3)
Resistance: 1.3175 (R1), 1.3265 (R2), 1.3350 (R3)

10 year US note turned nicely to the downside this week, clearly in five waves, so higher yields may send US stocks even higher, but new leg of a rise on stocks may occur after an a-b-c correction is completed. For now, looks like a-b-c is at the beginning of a pullback, so in the mean time, stocks may get some pullback towards Sundays gap, like presented on DJIA. If that’s the case then wave E on AUDJPY is still probable.

10 Year US Notes, 1h

DJIA, 4h

AUDJPY, 4h

Gold prices were down 0.37% on the day on Wednesday. The declines in the gold prices were modest as investors remain on the sidelines ahead of this week's official payrolls report. On Wednesday, the ADP payrolls report disappointed, with the private sector adding just 129k jobs compared to a revised 197k jobs in February. The March payrolls saw the smallest pace of increase since September 2017.

Can Gold Breakout from the Wedge Pattern?

XAUUSD continues to maintain its holding pattern ahead of tomorrow's payroll report. With prices firmly supported near the 1287 – 1284 level, XAUUSD is consolidating into a descending wedge pattern. Price is currently attempting to break out from this pattern. Gold prices are likely to extend the gains to 1301.50 and then to 1305. Resistance is very likely to form at this level. Further gains can be seen only on a continuation above this level.

The sterling extended gains for a third consecutive session, posting gains of 0.22% on the day.

The British Prime minister May will be holding talks with the leader of the opposition, Jeremy Corbyn. The UK has nine days left to chalk out a Brexit deal. Investors now expect to see the UK leave the EU with an acceptable deal in hand.

Will the GBP/USD Continue to Extend Gains?

After rising for the past three consecutive sessions, the currency pair is quite likely to maintain the upside momentum. Price action has stalled near the minor resistance of 1.3171 level. A breakout above this level could push the cable to test the previously established highs of 1.3312. To the downside, GBP/USD has to close below 1.3117 to invalidate the upside bias.

The common currency rebounded off Wednesday's lows as it gained 0.25% on the day. The latest retail sales report rose 0.4% on the month in February, beating estimates of a 0.2% increase. Data from Eurostat showed an increase in non-food products contributing to the gains. Final services PMI for March saw an increase in the index from 52.7 in the previous month to 53.4.

Has the EUR/USD Carved a Bottom?

The euro initially slipped to four-week lows but managed to rebound rather quickly. Price action is seen stalling near the previous highs of 1.1246. A breakout above this level is needed for price action to continue toward 1.3300. In the near term, watch for a dip toward 1.2177 where the euro could be forming a right shoulder in the evolving head and shoulders pattern that may trigger the upside bias.

Pivot (invalidation): 62.70

Our preference Short positions below 62.70 with targets at 62.05 & 61.60 in extension.

Alternative scenario Above 62.70 look for further upside with 63.00 & 63.35 as targets.

Comment The RSI lacks upward momentum.

Pivot (invalidation): 15.1900

Our preference Short positions below 15.1900 with targets at 15.0200 & 14.9400 in extension.

Alternative scenario Above 15.1900 look for further upside with 15.2500 & 15.3300 as targets.

Comment As Long as 15.1900 is resistance, look for choppy price action with a bearish bias.

Pivot (invalidation): 1294.50

Our preference Short positions below 1294.50 with targets at 1288.00 & 1285.00 in extension.

Alternative scenario Above 1294.50 look for further upside with 1297.00 & 1300.00 as targets.

Comment As Long as 1294.50 is resistance, look for choppy price action with a bearish bias.