Sample Category Title

Pivot (invalidation): 1.1205

Our preference Long positions above 1.1205 with targets at 1.1230 & 1.1250 in extension.

Alternative scenario Below 1.1205 look for further downside with 1.1185 & 1.1175 as targets.

Comment The RSI is bullish and calls for further advance.

AUDUSD had an impressive start early on Wednesday, fully recovering the losses it made on Tuesday, but the technical indicators suggest a continuation of the recent neutral situation in the short term as the MACD has yet to enter positive territory and show strength above its red signal line. The RSI has pierced its 50 neutral mark once again, however with the indicator holding close to this threshold, significant gains are less likely to occur.

Further upside may initially retest the 61.8% Fibonacci of 0.7145 of the downleg from 0.7392 to 0.6745 before the 200-day moving average currently near 0.7200 comes into view. Breaking this line, the focus will shift straight to the 0.7294-0.7320 area where the price found strong support and resistance in previous sessions. Still, only a rally above the 0.7392 top would switch the neutral condition in the medium-term picture into a bullish one.

Alternatively, should the pair resume negative momentum, the base created around the 50% Fibonacci of 0.7069 could halt downside movements once again. If the bulls manage to overcome that obstacle, the next target could be detected between the two-month low of 0.7027 and the January 2’s closing price of 0.6980. Any steep downfall below the latter could confirm the start of a downtrend.

In brief, AUDUSD is holding a neutral bias in short-term, while in the medium-term picture, the pair is in a sideways move within the 0.7392-0.7000 territory.

WTI crude oil futures have been in a flying mode over the last four days, creating a new five-month high of 62.87 earlier on Wednesday. The price is heading higher after it found strong support at the one-and-a-half-year low of 42.50 last December. The short-term bias looks positive as the MACD keeps gaining ground above its trigger line, while the stochastic seems to be making its way up in the overbought territory.

If the bulls hold the control, price advances may stall initially near the 61.8% Fibonacci retracement level of the downleg from 76.90 to 42.50 around 63.73. Another positive extension above the latter level could find resistance at the 65.70 barrier, taken from the inside swing bottom on October 2018. More upside pressures could drive the commodity towards the next hurdle of 67.85.

If the price bounces off the 61.8% Fibonacci, it would return lower towards the 60.35 support and the 50.0% Fibonacci region of 59.70, which stands near the 20-day SMA. Even lower, the next stop could be around the 58.10 support level, while deeper losses could drive the price to touch the 40-day SMA currently at 57.40.

To conclude, the market is in an ascending tendency over the last three months, while oil prices are ready to surpass the 50-week SMA, creating a sharp upward trend.

EUR/USD declined heavily and broke the 1.1240 support area before finding buyers near 1.1180. USD/CHF remained in a positive zone and dips remain supported near 0.9965.

Important Takeaways for EUR/USD and USD/CHF

• The Euro faced a solid rise in selling pressure below the 1.1320 support against the US Dollar.
• There is a major declining channel in place with resistance near 1.1230 on the hourly chart of EUR/USD.
• USD/CHF climbed higher recently above the 0.9950 and 0.9980 resistance levels.
• There is a major bullish trend line formed with support at 0.9960 on the hourly chart.

EUR/USD Technical Analysis

The Euro started a significant downside move from well above the 1.1350 level against the US Dollar. The EUR/USD pair broke the 1.1320 and 1.1240 support levels to enter a major downtrend.

The decline was such that the pair even broke the 1.1220 support area and settled below the 50 hourly simple moving average. The pair traded as low as 1.1183 on FXOpen and it is currently correcting higher.

Buyers managed to push the price above the 50% Fib retracement level of the recent decline from the 1.1249 high to 1.1183 low. Moreover, there was a break above the 1.1210 resistance level and the 50 hourly simple moving average.

It is currently trading near the 61.8% Fib retracement level of the recent decline from the 1.1249 high to 1.1183 low. There is also a major declining channel in place with resistance near 1.1230 on the hourly chart of EUR/USD.

A break above the channel resistance near the 1.1225 and 1.1230 resistance levels may call for more upsides in the near term. On the upside, the next major resistance is near the 1.1250 level.

On the downside, there is a decent support formed near the 1.1200-1.1210 zone. If there is a close below 1.1200, the pair might move back towards the 1.1180 and 1.1160 levels.

USD/CHF Technical Analysis

The US Dollar started a solid upward move from the 0.9900-0.9910 support area against the Swiss franc. The USD/CHF pair traded above the 0.9940 and 0.9950 resistance levels to move into a positive zone.

Buyers gained control and pushed the pair above the 0.9980 resistance and the 50 hourly simple moving average. The pair traded close the 1.0000 resistance and formed a high at 0.9999. Later, there was a downside correction below the 0.9985 support.

The pair broke the 23.6% Fib retracement level of the recent wave from the 0.9934 low to 0.9999 high. However, the 0.9875 support and the 50 hourly simple moving average is currently acting as a support.

The next key support is near the 0.9965 level. It coincides with the previous resistance zone and the 50% Fib retracement level of the recent wave from the 0.9934 low to 0.9999 high.

Therefore, if the pair corrects further, it is likely to find a strong buying interest near the 0.9965 support area in the coming sessions. Below 0.9965, the next key support is near the 0.9940 level.

On the upside, the main resistance is near the 1.0000 area, where sellers are likely to take a stand. An upside break above 1.0000 might call for more gains towards the 1.0025 and 1.0050 levels.

• Rates: US ADP and non-manufacturing ISM key for trading
  Monday's stronger than expected US manufacturing ISM and improving Chinese gauges stemmed recession fears at the start of the week. The jury is still out though. Today's US ADP employment report and services ISM are next key eco indicators. More strength will be needed to convince markets that the end of the cycle isn't near.
• Currencies: EUR/USD holding above the 1.1177/87 support, at least for now
  The dollar retained the benefit of the doubt. The US currency came close to key resistance, but the rally finally ran into resistance. Today's US eco data are expected solid, but we don't expect them to provide the trigger for further sustained USD gains. Sterling profited as markets see PM Mays cooperation with labour as raising the chance for a soft Brexit.

The Sunrise Headlines

• US equity markets printed mixed yesterday, finishing up from the lows of the day after. Asian equities are all moving higher this morning with gains up to 1% on strong Chinese PMI's and with US-Sino trade talks recommencing today.
• UK PM May turns to opposition/Labour leader Corbyn to break the Brexit deadlock, raising chances of a softer Brexit. She forfeits the strategy of keeping Brexit a Conservative party project, accepting this will never gather a majority.
• The US and China have resolved most of the issues standing in the way of a trade deal. The fate of the existing US duties and an enforcement mechanism will be discussed with Chinese VP Liu in Washington later today.
• China aims to ease restrictions on stock index futures, according to a top official at the China Securities Regulatory Commission. Up until now, foreign investors have to use proxies to participate in the Chinese futures market.
• IMF Managing Director Christine Lagarde says global growth has lost momentum since the start of the year, though a recession isn't likely in the near term. The IMF will publish an updated global growth forecast on April 9.
• China's services activity accelerated to a 14-month high in March. The Caixin Services PMI rose to 54.4 (vs. 51.1 in Feb.). The Composite PMI gauge, covering both manufacturing and services, rose to 52.9 (vs. 50.7 a month earlier).
• Today's eco calendar contains the ADP employment change and the ISM Non-Manufacturing Index for March in the US. The UK prints the Markit/CIPS UK Composite PMI (Mar). Fed's Bostic, George, Kashkari and Barker speak today

Currencies: EUR/USD Holding Above The 1.1177/87 Support, At Least For Now

EUR/USD 1.1187/77 support holds, at least for now

The dollar initially retained the benefit of the doubt yesterday. The tradeweighted dollar touched a ST top intraday and EUR/USD dropped briefly below 1.12. The move was mainly follow-through price action on recent trends. US durable orders were close to expectations and US-German interest rate differntials didn't widen much further. Later, the dollar ceded ground on headlines that UK PM May would try break the deadlock on Brexit by finding an agreement with Labour leader Corbyn. EUR/USD closed the session at 1.1204 (from 1.1213). USD/JPY also show no intraday dynamics at all (close at 111.32).

Overnight, sentiment on risk improved as US and China offficals were said to have resolved most of the pending issues in the trade dispute. The China Caixin PMI's also printed strong, easing market fears on Chinese growth. Asian equties show modest gains despite a mixed close in the US. The trade-weighted dollar eases further (97.20). EUR/USD regains some ground (1.1225 area). USD/JPY initially profited from the risk-on sentiment and higher US yields but struggles to maintain its upward bias (111.40 area).

Today, the final EMU services/composite PMI's will be published. In the US the ADP labour market report and the non-manufacturing ISM are scheduled for release. Markets will look out weather the EMU services sector can avoid the sharp downturn in manufacturing. ADP job growth is expected at a decent 175K. The US non-man. ISM is expected to ease slightly to 58 from a strong 59.7. We don't expect a big undershoot in US data, but the consensus estimate is putting the bar quite high.

The dollar came close to key resistance (DXY, EUR/USD) but a break didn't occur. Today's US data might confirm a healthy US economy, but we are not convinced they will provide the positive surprise needed to trigger further sustained USD gains. A constructive risk sentiment and positive headlines on trade might be a tentative euro supportive too. EUR/USD stays within reach of the 1.1187/77 support. We still aussme that a sustained EUR/USD decline will not be that evident/easy as we don't expect the Fed to leave its wait-and-see bias anytime soon.

After initially sterling weakness, the UK currency yesterday jumped higher on headlines that UK PM will try to hammer out a Brexit agreement in cooperation with the labour opposition. This is seen as raising the chances for a rather soft Brexit. However, May's strategy brings UK politics in uncharted territory. We don't preposition for further sustained sterling gains at this stage. Real signs of a solution are probably needed to push EUR/GBP below the 0.8480 support area.

EUR/USD: no break below key 1.1177/87 support (yet)

European equity markets are poised to open around half a percentage point higher on Wednesday, with the FTSE the notable underperformer after the pound rallied following Theresa May’s appeal to the opposition to help break the Brexit impasse.

Sterling higher as May reaches out to the opposition to break Brexit impasse

The next stage in the Brexit saga began on Tuesday evening as ay appealed to the opposition leader to engage in talks to break the impasse. It’s still not clear whether we’re seeing a genuine attempt to find a solution that can win the support of a majority of MPs or if this is more political games to alleviate the pressure on the government and make the opposition look uncooperative, or even obstructive, in their attempts to force an election. I guess we’ll see just how much both sides truly want to find a workable solution in the coming days.

Still, the move from May has resonated well in the markets, as she once again voiced her opposition to no-deal, something Parliament can actually agree with her on. A long extension now looks almost inevitable, although as ever in the Brexit process, if there’s one thing we can be confident about it’s that no one really knows what will happen next. Perhaps the fear of a soft Brexit will win over some remaining hard-liners and May will try her hand at one more vote on her deal. I wouldn’t put anything past her at this stage. We have one week to go until the emergency EU summit and a week is a very long time in Brexit.

US and China resume trade talks in Washington

Positive reports in regard to US-China trade talks, which are set to resume in Washington today, helped lift sentiment again overnight with markets building on optimism from earlier in the week that stemmed from some encouraging Chinese PMIs. The reports are not necessarily out of the blue and we’ve known this week’s talks are happening but on something so significant, investors want to be constantly reassured.

We’re being told that we’re 90% of the way there which is obviously encouraging but the final 10% - which apparently includes the enforcement mechanism and the removal of tariffs – could take some time to iron out. I think investors are happy to be patient here in the hope that the two sides get this right and put an end to a trade war that has clearly taken its toll on markets. This is a major headwind that investors will be very relieved to see resolved.

Bitcoin holding on to Tuesday’s gains

It was like the good old days in the crypto market on Tuesday, as traders in Europe and the US woke up to a more than 20% rally in bitcoin. Safe to say, it had become the forgotten instrument for a while as the very volatility it was known for slipped away and price consolidated around $4,000. In the absence of any real catalyst though, many are left to question whether there’s anything of substance behind the bounce or if it’s just a short squeeze.

Bitcoin has found some resistance around $5,100 – previous support – but the real test will come around $6,000 which was a significant support zone throughout 2018, a break of which in November sparked the move back to almost $3,000.

Oil building momentum but runs into resistance

Oil prices appear to have found a little bullish momentum again in the last few days, with the rallies we’ve seen in equity markets clearly a major factor. Another reported inventory build from API on Tuesday may have taken some of the gloss off the rally, which should make today’s EIA number all the more interesting, but momentum still looks very much with the bulls.

That said, $70 may provide significant resistance for Brent, with WTI potentially finding similar issues around $63. Falling US oil rig numbers and stabilised output at 12.1 million barrels a day may provide a boost for oil bulls, with rising production here being one of the main drags on prices.

Gold stabilises below $1,300

A softer dollar over the last 24 has given some reprieve to gold, which slipped below $1,300 last Thursday as the greenback benefited from weakness across a variety of other currencies. The key area for gold remains around $1,280, which has offered significant support since the start of the year. There have been numerous supporting factors for the yellow metal, although with risk appetite returning and the dollar remaining strong it remains challenging for bulls.

Market movers today

In the UK, focus remains on Brexit after PM May's intervention yesterday evening. It would be positive for sentiment if May and Corbyn could find common ground but we still cannot rule out a no deal Brexit at this point, although we remain optimistic that the politicians want to go a long way to avoid that.

In Europe, retail sales in February are due out at 11:00 CEST. Given the weakness in Europe lately, it feels like every data release is important. Our base case is still that we should soon see improvement in Europe. In Norway, we get house price data.

In the US, we are looking forward to the release of the ISM non-manufacturing index for March, which is a better indicator of GDP growth than ISM manufacturing. Based on the ISM indices, US growth was decent in Q1. ADP employment is due out at 14:15 CEST. We also have plenty of Fed speakers today.

Selected market news

Global growth optimism continued in the European equity markets. However, noteworthy the European bond market remained supported throughout the day as Brexit fears dominated before PM Theresa May's Brexit intervention in the evening. Overnight risk appetite got a new boost with media (FT) reports that the US and China are about to finalise a trade deal and as Brexit news removed fears of an imminent hard Brexit. Asian equities are higher and 10Y Treasury yields are back 2.5%.

Yesterday, PM Theresa May said she wants to find common ground on Brexit with Labour leader Jeremy Corbyn, which is quite unusual in the UK given the old two-party system. A way forward could involve accepting a permanent customs union, something which Labour has advocated for a long time while May has objected (and the proposal was only three votes from reaching a majority in Monday's indicative vote), but it is definitely not without risk for May, as it may split her party in two. When analysing Brexit, it is important to remember that it is also about history - May probably would not want to be the prime minister getting the UK out of the EU without a deal, as it may have a long-lasting damaging impact on the UK, economically and politically. May, if her words can be trusted, finally decided country was above party. The hard Brexiteers are clearly upset and may even vote against the government in a no confidence vote if May finalises Brexit with Corbyn, so any agreement would involve Corbyn accepting no snap election until after the withdrawal. Any plan must also be built on the Withdrawal Agreement, which will upset the supporting party, the DUP. The Brexiteers and the DUP also have some thinking to do, as Brexiteers have to support May's deal to avoid a softer Brexit and the DUP risks losing power after May reached out to Corbyn.

For now, we stick to our view that we are heading for a long extension to at least year-end but we have to monitor the development over the next week, ahead of the EU summit on 10 April. May also said yesterday that she hoped the negotiations could be sorted out quickly (there is talk the government aims within the next three days) so the UK only needs the short extension to 22 May still. Overall, yesterday's development was positive, as it indicates the risk of a no deal Brexit remains low, but not negligible.

General Trend:

• FT: US and China continue to haggle on trade deal enforcement and implementation; have resolved most other issues (in line with prior reports)
• China Daily commentary: Prudence urged amid enthusiasm for the stock market
• Bank of Communications declines, China Social Security Fund plans to cut stake; Shanghai Banking index lags on session
• Japanese outperformers include Marine/Transportation, Securities, Electric Appliance and Machinery companies.
• Fast Retailing rises over 4% after monthly SSS
• Aussie iron ore miners continue to gain as Chinese prices hit record highs
• Australia has record trade surplus in Feb as imports decline
• Bank of Japan (BOJ) leaves daily bond buying amounts unchanged, despite some analysts speculating that it could cut purchases
• Japan expected to sell 30-yr JGBs on Thursday
• China Vice Premier Liu He is expected to resume trade talks with US officials in Washington today (April 3rd)

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened %
• (AU) Australia Govt 2019/20 budget: forecasts budget surplus of A$7.1B in 2019-2020; Cuts FY19/20 GDP growth forecast from 3.00% to 2.75% (after the close yesterday)
• (AU) Australia Feb Final PMI Services: 49.3 v 49.8 prelim; PMI Composite: 49.5 v 50.0 prelim
• (AU) Australia sees 2019/20 gross bond issuance at ~A$58.0B vs ~A$54B for the current year; to add new issuance for June 2031 and May 2032
• (AU) RBC Capital says risks are still skewed toward RBA rate cuts after recent government budget - US financial press
• (AU) Australia Feb Trade Balance (A$): 4.8B v 3.7Be (record); Exports M/M: 0% v +5% prior; Imports M/M: -1% v +3% prior
• (AU) AUSTRALIA FEB RETAIL SALES M/M: 0.8% V 0.3%E (fastest rise since Nov 2017)
• (NZ) New Zealand Fin Min Robertson: Global slowdown is a risk to the economy

Japan

• Nikkei 225 opened +0.3%
• 9983.JP To raise pay for Spring 2020 hires by 20% - Japan press
• 7203.JP Reportedly plans to grant royalty-free access to its hybrid-vehicle technology patents to maintain sector's viability against pure electric vehicles – Nikkei
• (JP) Japan pushing China on protection of intellectual property as part of trade talks that are currently ongoing - Nikkei
• (JP) Japan said to be concerned that US trade talks will focus on car exports - UK Press
• (JP) Japan Mar PMI Services: 52.0 v 52.3 prior; PMI Composite: 50.4 v 50.7 prior
• (JP) BoJ Dep Gov Wakatabe: inflation has been subdued globally

Korea

• Kospi opened flat
• (KR) South Korea Mar Foreign Reserves: $405.3B v $404.7B prior
• (KR) South Korea Finance Min Hong: Extra budget unlikely to reach KRW9.0T - Local press
• (KR) Bank of Korea (BOK) sells KRW3.0T in 2-yr Monetary Stabilization Bonds (MSB); avg yield 1.74% v 1.85% prior

China/Hong Kong

• Hang Seng opened +0.5%; Shanghai Composite opened -0.6%
• (CN) CHINA MAR CAIXIN PMI SERVICES: 54.4 V 52.3E (highest since Jan 2018); PMI COMPOSITE: 52.9 V 50.7 PRIOR
• (CN) China Daily commentary: Prudence urged amid enthusiasm for the stock market; some of the optimism related to the equity markets is linked to the new technology board in China which is expected to be launched in June at the earliest
• 600104.CN Reports FY18 (CNY) Net 36.0B v 36.5Be, Rev 902.2B v 922.7Be; total auto sales 7.05M, +1.7% y/y v 7.26M guided
• (CN) China expected to limit crude steel production capacity in Hebei and Tianjin - China Daily
• (CN) US State Dept Spokesperson: Will not send high-level officials to China Silk-Road summit in April
• (US) US and China continue to haggle on trade deal enforcement and implementation; have resolved most other issues – FT
• (CN) China PBoC Open Market Operation (OMO): Skips for 11th consecutive session: Net: CNY0 v CNY0 prior
• (CN) China PBoC sets yuan reference rate: 6.7194 v 6.7161 prior
• (CN) Former PBoC Official: More reserve ratio rate (RRR) cuts create risk for asset bubbles
• (CN) Fitch comments on banks in China: Has negative outlook for the sector, expects net profit growth to be in the single digits in the medium term
• (CN) Woman with China passports arrested at Trump’s Mar-a-Lago resort; the individual was said to have had malware – US Press
• (CN) China Ministry of Foreign Affairs Official Wang: Premier Li to visit Europe April 8-12th (Monday-Friday)

Other Asia

• Asia Development Bank (ADB): Developing Asia growth to soften, inflation to remain subdued; primary risk US/China trade dispute; Sees developing Asia 2019 GDP at 5.7% (prior 5.8%); 2020 at 5.6%

North America

• (US) Pres Trump reportedly told Fed Chair Powell 'I guess I'm stuck with you' – press
• (MX) Mexico Foreign Min Ebrard: US govt has told Mexico that it is so far not going to shut the border
• (US) Fed Nominee Moore: Believe in a stable dollar
• Faulty Boeing 737 Max sensor found in Lion Air crash was traced back to a US repair shop - financial press
• (US) President Trump: Canada knocks the hell out of US on trade, not happy

Europe

• (UK) Mar BRC Shop Price Index Y/Y: 0.9% v 0.7% prior (highest level since Mar 2013)
• (UK) Northern Ireland's DUP statement: PM May's handling of the Brexit negotiations have been lamentable; we remain consistent in judging all Brexit outcomes against our clear unionist principles
• (UK) EU said to be preparing to offer a long delay on Brexit to January or April of 2020 with strict conditions - FT

Levels as of 1:20 ET

• Nikkei 225, +0.9%, ASX 200 +0.7%, Hang Seng +1.1%; Shanghai Composite +0.5%; Kospi +0.9%
• Equity Futures: S&P500 +0.4%; Nasdaq100 %, Dax +0.5%; FTSE100 +0.1%
• EUR 1.1227-1.1199 ; JPY 111.53-111.20 ; AUD 0.7105-0.7053 ;NZD 0.6776-0.6743
• Gold +0.1% at $1,296/oz; Crude Oil +0.3% at $62.77/brl; Copper +0.5% at $2.924/lb

Cycle from Dec 26, 2018 low in S&P 500 (SPX) remains in progress as an impulse Elliott Wave structure. In the 1 hour chart below, we can see wave (4) of this impulsive move ended at 2722.27. The Index has resumed higher in wave (5) with subdivision also as an impulse of lesser degree. Up from 2722.27, wave 1 ended at 2852.42 and wave 2 ended at 2785.02.

Wave 1 subdivides as an impulse where wave ((i)) ended at 2736.25 and wave ((ii)) ended at 2723.02. Up from there, wave ((iii)) ended at 2821.24, wave ((iv)) ended at 2803.46, and wave ((v)) of 1 ended at 2852.42. Wave 2 pullback unfolded as double three Elliott Wave structure where wave ((w)) ended at 2802.13, wave ((x)) ended at 2823.28, and wave ((y)) of 2 ended at 2785.02. Wave 3 rally is currently in progress as an impulse. Near term, while dips stay above 2784.94, expect Index to extend higher. We don’t like selling the proposed pullback.

1 Hour SPX Elliott Wave Chart

For the 24 hours to 23:00 GMT, the EUR marginally declined against the USD and closed at 1.1204.

In economic news, the Euro-zone's producer price index (PPI) advanced 3.0% on a yearly basis in February, compared to a revised rise of 2.9% in the prior month. Market participants had envisaged the PPI to register a gain of 3.1%.

In the US, data indicated that the US durable goods orders retreated 1.6% on a monthly basis in February, amid steep fall in local aircraft orders and less than market consensus for a fall of 1.8%. In the prior month, durable goods orders had recorded a revised rise of 0.1%.

In the Asian session, at GMT0300, the pair is trading at 1.1221, with the EUR trading 0.15% higher against the USD from yesterday's close.

The pair is expected to find support at 1.1194, and a fall through could take it to the next support level of 1.1168. The pair is expected to find its first resistance at 1.1237, and a rise through could take it to the next resistance level of 1.1254.

Looking forward, traders would await the Euro-zone's retail sales for February along with the Markit services PMI for March, set to release across the euro bloc. Later in the day, the US ADP employment change, the Markit services PMI and the ISM services PMI, all for March followed by the MBA mortgage applications, will garner significant amount of investors' attention.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.