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The British pound is under technical selling pressure against the US dollar, despite much better than expected Retail Sales data from the United Kingdom economy. The GBPUSD pair is intraday bearish while trading below the 1.3190 level and may soon target the important 1.3100 level. Overall, Brexit uncertainty continues to drive trading action, with the UK set to leave the European Union in just over weeks time.

The GBPUSD pair is bearish while trading below the 1.3190 level, key technical support is found at the 1.3155 and 1.3100 levels

If the GBPUSD pair trades above the 1.3190 level, buyers may test towards the 1.3240 and 1.3300 resistance levels.

The US dollar is struggling to find a directional bias against Japanese yen currency, as buyers and sellers continue to battle for control of the risk-sensitive pair. The USDJPY pair has a slight intraday bearish bias, after an earlier failed attempt at the 109.88 level created a bearish lower daily high. Overall, a break from the 109.14 to 109.88 price range is needed to provoke technical selling.

The USDJPY pair is intraday bearish while trading below the 109.60 level, key technical support is found at the 109.14 and 108.90 levels.

If the USDJPY pair trades above the 109.60 level, buyers may test towards the 109.88 and 110.40 levels.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13506
Open: 1.14245
% chg. over the last day: +0.67
Day's range: 1.14000 – 1.14374
52 wk range: 1.1214 – 1.2557

Yesterday the USD weakened against the other world currencies due to the Federal Reserve' comments. The regulator left the key interest range at the previous levels of 2.25-2.50%. The Central Bank is worried about the growing risks in the world economy and doesn't want to increase the rates this year. The 10-year US Treasury bonds' yield fell to the 2018 minimums. Right now the currency pair is consolidating around 1.14000-1.14450 and can grow further. You should open positions from these levels.

At 14:30 (GMT+2:00) the Philadelfia Federal Reserve will publish an Industrial PMI.

The price fixed fixed above 50 MA and 200 MA which points to the power of the buyers.

The MACD histogram is in the positive zone but below the signal line which gives a weak signal to buy EUR/USD.

The Stochastic Oscillator is in the oversold zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.14000, 1.13600, 1.13350
Resistance levels: 1.14450, 1.15000

If the price fixes above 1.14450, expect further growth toward 1.15000.

Alternatively, the quotes can correct toward 1.13600-1.13400.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.32668
Open: 1.31922
% chg. over the last day: -0.49
Day's range: 1.31501 – 1.32271
52 wk range: 1.2438 – 1.4378

GBP is under pressure due to Brexit ambiguousness. Theresa May requested a delay in Brexit until June, 30. The Premier Minister of the Great Britain plans to have another vote on the current project. Earlier the Speaker of the House of Commons denied a second vote and requested for a deal to be presented in a new format.

The investors today are waitching the Bank of England meeting. The regulator is expected to keep the monetary policy parameters at the same levles. You should keep an eye on the comments made by its representatives. Right now the key support and resistance levels are 1.31500 and 1.32250, oyu should open positions from them.

The Economic News Feed for 21.03.2019:

Retail Sale Report (UK) – 11:30 (GMT+2:00);

Key Interest Rate Announcement (GB) – 14:00 (GMT+2:00);

The price fixed below 200 MA which points to the power of the sellers.

MACD is in the negative zone and keeps falling, which points to the bearish mood.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line which gives a signal to sell GBP/USD.

Trading recommendations

Support levels: 1.31500, 1.31000, 1.30550
Resistance levels: 1.32250, 1.33000, 1.33600

If the price fixes below 1.31500, expect the quotes to fall toward 1.31000-1.30600.

Alternatively, the quotes can grow toward 1.32600-1.32800.

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.33246
Open: 1.32963
% chg. over the last day: -0.24
Day's range: 1.32759 – 1.33145
52 wk range: 1.2248 – 1.3664

USD/CAD keeps trading in a long flat. There is no single trend. The local support and resistance levels are 1.32850 and 1.33150. The demand for the USD is weakened after the Federal Reserve meeting while CAD is supported by the bullish moods on the oil market. You should keep an eye on the reports from the US and open positions from the key levels.

The Economic News Feed for 21.03.2019 is calm.

The indicators do not provide precise signals, the price is testing 50 MA.

The MACD histogram is in the negative zone but above the signal line which gives a weak signal to sell USD/CAD.

The Stochastic Oscillator is in the overbought zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.32850, 1.32600
Resistance levels: 1.33150, 1.33450, 1.33650

If the price fixes below 1.32850, expect the quotes to fall toward 1.32600-1.32300.

Alternatively, the quotes can grow toward 1.33400-1.33600.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 111.398
Open: 110.615
% chg. over the last day: -0.65
Day's range: 110.299 – 110.747
52 wk range: 104.56 – 114.56

USD/JPY is currently in an aggressive selloff. During the last two days, the quotes fell by 100 points and updated the key minimums. The demand for the USD is weakened after the Federal Reserve statements. The regulator will not change its opinion on not raising the key interest rates this year. The JPY is additionally supported by the ambiguousness around Brexit. Right now the local support and resistance are 110.350 and 110.600. The trading instrument has a tendency to descend further.

The Economic News Feed for 21.03.2019 is calm.

The price fixed below 50 MA and 200 MA which points to the power of the buyers.

The MACD histogram is in the negative zone and below the signal line which gives a strong signal to sell USD/JPY.

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line which points to the bullish mood.

Trading recommendations

Support levels: 110.350, 110.000
Resistance levels: 110.600, 110.750, 110.900

If the price fixes below the local support 110.350, expect the quotes to fall toward 110.000-109.800.

Alternatively. the quotes can grow toward 110.800-111.000.

Yesterday, the US dollar weakened significantly against a basket of major currencies after the Fed meeting. As expected, the regulator left the interest rate range at 2.25-2.50%. However, investor sentiment has worsened after it became known that the Fed would not raise interest rates in 2019 due to a slowdown in economic growth, and announced the completion of a program of balance sheet reduction in September. The dollar index (#DX) closed the trading session in the negative zone (-0.39%).

Financial market participants are still focused on the British pound. British Prime Minister Theresa May announced that she was not going to organize a second referendum on the Brexit issue. The position of the British is clear for her, so she does not see the point in a repeat vote. It also became known that the Prime Minister asked the EU to delay Brexit until June 30, although the exit process should have taken place on March 29.

However, the European Commission stands either for holding Brexit until May 23, 2019 or for a long-term delay of the procedure. The EU says that May 23 should be a deadline, since right after this the elections to the European Parliament will start, in which London should no longer participate. It should be recalled that earlier the Speaker of the House of Commons, John Bercow, rejected the Brexit revote. The official said that the deal should be presented in a fundamentally new form.

Today, investors are focused on meetings of the Swiss National Bank and the Bank of England. It is expected that regulators will keep the key marks of monetary policy unchanged. We recommend paying attention to the comments by representatives of Central Banks.

The "black gold" prices have updated annual highs. At the moment, futures for the WTI crude oil are testing the mark of $60.00 per barrel.

Market Indicators

• Yesterday, there was a variety of trends in the US stock market: #SPY (-0.30%), #DIA (-0.61%), #QQQ (+0.40%).
• The 10-year US government bonds yield fell significantly. Currently, the indicator is at the level of 2.51-2.52%.

The news feed on 21.03.2019:

• Swiss National Bank interest rate decision at 10:30 (GMT+2:00);
• Report on retail sales in the UK at 11:30 (GMT+2:00);
• Bank of England interest rate decision at 14:00 (GMT+2:00);
• Philadelphia Fed manufacturing index at 14:30 (GMT+2:00).

The US dollar index is paring some losses from yesterday above the 23.6% Fibonacci retracement level of the upleg from 88.10 to 97.65 and closer to the 200-day simple moving average (SMA). On Wednesday, the price dropped below the rising trend line, which had been holding since March 2018, giving negative trend signals for the near future.

However, the short-term bias is tilted to the upside as the RSI indicator is turning marginally higher below its 50 level, while the stochastic oscillator is sloping up after posting a bullish crossover within the %K and %D lines in the oversold zone below 20.

The 94.85 – 94.60 support zone could be a trigger point for bearish actions if the index manages to slip below the 23.6% Fibonacci level. If the price continues to drop, support could next come somewhere around the 38.2% Fibonacci of 94.00, confirming the neutral to bearish view below the diagonal line.
On the other side, if the indicators continue to improve, the index could jump above the 200-day SMA and the 95.70 resistance level to reach the 50-day SMA currently at 96.12. A sharp bullish move could also hit the 22-month high of 97.65.

In the medium term, the dollar index seems to bearish to neutral and only a jump above the 97.65 could change the outlook to bullish. On the other side, a drop beneath the 38.2% Fibonacci could switch the recent view to strongly negative.

• Fed chief Powell signaled prolonged Fed pause citing global risks and muted inflation; announced updates to their balance sheet policy
• Norway Central bank raises its Deposit Rate (as expected) and maintained its forward guidance of another hike seen later this year
• SNB keeps policy unchanged as expected and again lowers its inflation outlook
• Various Far East Central banks keep policy steady (Indonesia, Philippines and Taiwan)

Asia:

• Australia Feb Employment saw its 7th straight month of growth but missed expectations: +4.6K v +15.0Ke; Unemployment Rate hits lowest level since June 2011 (4.9% v 5.0%e)
• New Zealand Q4 GDP Q/Q: 0.6% v 0.6%e; Y/Y: 2.3% v 2.5%e (annual pace matched slowest growth since 2015)

Europe:

• EU's Tusk confirmed receipt of letter from PM May; Short Brexit extension would be possible but extension was conditional on UK House of Commons approving the Brexit plan. Question remained on the duration of the Article 50 extension; June 30th extension proposed by PM May has its merits. At this time did not foresee extra EU leaders summit but did not exclude calling leaders back for an extra summit
• EU official stated that the letter from PM May today was not what EU bloc was expecting; letter came too late to make a full decision by Thursday's Leader Summit - UK official: govt may plan new 'meaningful vote' on Brexit deal for next week, suggesting Tues or Weds as potential dates
• PM May ruled out new general election during meeting just held with Brexiteer ERG group. UK would not leave EU on time on March 2th as previously expected but was not ready to delay Brexit any further than June 30th. Not leaving EU would be breach of public trust. To work night and day to get Tory and DUP party support

Americas:

• FOMC left interest rates unchanged between 2.25-2.50% (as expected) in an unanimous vote; saw no rate hikes this year and one in 2020 as economic growth slowed and inflation has declined. Balance sheet runoff taper to start in May and finish end of Sept
• Fed's Powell post rate decision press conference noted that US economy was strong and intended to use our policy to keep it there. Reiterated Fed would remain patient which meant there was no need to rush to judgment; might be some time before the outlook called for a policy change
• Brazil Central Bank (BCB) left the Selic Target Rate unchanged at 6.50% (as expected)

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.2% at 380.2, FTSE +0.3% at 7314, DAX -0.3% at 11570, CAC-40 +0.06% at 5,385.82, IBEX-35 -0.53% at 9,355.90, FTSE MIB +0.31% at 21,395.50, SMI -0.25% at 9,440.00, S&P 500 Futures -0.08%]
• Market Focal Points/Key Themes: European Indices trade mixed this morning with the FTSE100 outperforming as Cable retreats below 1.32. The Dax continues to under perform following sharp losses seen yesterday. US Index futures trade little changed following the dovish hold by the FOMC yesterday. On the corporate front shares of Next trades lower after a slight miss in earnings, outlook was affirmed; IG Group declines on a decline in Q3 Revenues, while Koenig & Bauer, Basler, Wynstay and Renishaw are among other names declining on earnings. Game Digital, Enquest and Vienna Insurance among the names rising on earnings. In other news Stallergenes rises over 40% after its to be acquired by Ares Life Sciences for €730M; Wirecard declines on a report the COO was are of transaction in fraud investigation by Singapore. Looking ahead notable earners include Canagra Brands, Darden Restaurants, Lands End, GIII Apparel and Actuant among others.

Equities

• Consumer discretionary: Next [NXT.UK] -3.3% (earnings), Ted Baker [TED.UK] -2% (earnings)
• Consumer staples: Wynstay [WYN.UK] -22% (Profit warning)
• Materials: HeidelbergCement [HEI.DE] -1.5% (earnings)
• Financials: IG Group [IGG.UK] -7% (earnings)
• Healthcare: Stallergenes Greer [STAGR.FR] +40% (earnings; to be acquired)
• Industrials: Skanska [SKAB.CH] -3% (profit warning), Koenig & Bauer [SKB.DE] -5% (earnings)
• Technology: Renishaw [RSW.UK] -6% (trading update; outlook cut), Basler [BSL.DE] -12% (Guidance)

Speakers

• SNB Policy Statement reiterated the Swiss franc was highly valued, and the situation on the FX market was still fragile. Reiterated prepared to intervene in markets if needed. Measures kept its attractiveness of Swiss Franc investments low and reduce upward pressure on the currency. Data pointed to moderately positive growth momentum. New baseline scenario for global economy was a small downward revision to growth outlook for advance economies in H1 of 2019 . Saw risks in residential investment property market
• Norway Central Bank (Norges) Policy Statement noted that the decision to raise rates by 25bps was unanimous and reiterated view that next rate hike was seen in H2 2019. Upturn in domestic economy might prove more pronounced than envisioned; price and wage inflation might be higher than anticipated
• Norway Central Bank (Norges) Gov Olsen post rate decision press conference noted that the risks and outlook pointed to a gradual rate rise with new path forecasting a rate of 1.75% by 2022. The prospects that economic upswing would continue in country but growth among trading partners have slowed . Reiterated that SEK currency (Krona) weaker than expected
• ECB Economic Bulletin noted that the March decisions were aimed to lift inflation towards target. ECB data point to sizable moderation in growth momentum and underlying Euro-Area inflation continued to be muted
• UK Foreign Min Hunt: Expressing extreme frustration with Brexit process; Choice is Brexit deal or extreme unpredictability. Options were limited if deal did not pass next week. PM May would not accept a Brexit delay beyond Jun 30th
• German Chancellor Merkel stated in her Parliament ahead of the EU Leader Summit that positive discussion on Brexit delay was possible
• Indonesia Central Bank Policy Statement noted that interest rates were consistent with efforts to reduce current account deficit and maintain asset attractiveness for foreign investors. It would take more accomodative policy to support consumption and increase liquidity through monetary operation. Indonesia raised its liquidity guidance from 80-92% to 84-94%
• Indonesia Central Bank Gov Warjiyo commented ahead of rate decision that global economy was slowing down; monetary policy in advance economies was not as tight as initially thought
• Philippines Central Bank Policy Statement noted that the prevailing monetary settings were appropriate and it would ensure that policy stance was consistent with mandate. CPI was manageable and saw a downward trajectory continuing in both 2019 and 2020. Inflation to settle within the 2-4% target range in both 2019 and 2020 with outlook tilted to the downside in 2020
• Philippines Central Bank Dep Gov Guinigundo: RRR cut is a live issue, always on table. Board agreed of need to get timing right
• Taiwan Central Bank (CBC) Policy Statement noted that the decision to keep policy steady was unanimous and would continue with its accommodative monetary policy. Inflation outlook remained stable and growth mild. To watch for impact of economic slowdown from China
• China Ministry of Commerce (MOFCOM) stated that exports had good momentum in March and noted that spring festivals was a factor in Jan and Feb trade data (**Reminder: On Mar 7th China trade balance saw its smallest surplus in a year ($4.1B v $26.2Be) with both exports and imports registering their largest declines since 2016)

Currencies/Fixed Income

• Fed chief Powell reaffirmed its dovish policy stance; signaled prolonged Fed pause citing global risks and muted inflation. The USD was softer on Wednesday after the decision as 10-year Treasury yield hit its lowest level since January 2018
• The greenback fought its way back during the EU session to regain about 0.2% of its post-Fed losses
• GBP was softer towards 1-week lows as no-deal risk flared up again after PM May confirmed that she sought a Bexit delay until end of Jun so that her Parliament could vote for a third time on her Brexit deal. PM May was heading to Brussels later today to try to agree on a Brexit extension with EU Leaders. EUR/NOK was broadly lower after Norway Central bank raised its Deposit Rate (as expected) and maintained its forward guidance of another hike seen later this year. Cross testing below 9.5950 as the Norges was more hawkish than expected its if rate path

Economic Data

• (ID) Indonesia Central Bank (BI) left its 7-DayReverse Repo Rate unchanged at 6.00% (as expected)
• (NL) Netherlands Mar Consumer Confidence Index: -4 v -2 prior
• (NL) Netherlands Feb Unemployment Rate: 3.4% v 3.6% prior
• (NL) Netherlands Jan Consumer Spending Y/Y: 0.9% v 2.5% prior
• (NL) Netherlands Feb House Price Index M/: -0.1% v +1.8% prior; Y/Y: 7.5% v 8.7% prior
• (DK) Denmark Mar Consumer Confidence Indicator: 3.8 v 3.5e
• 04:00 (CH) Swiss Feb M3 Money Supply Y/Y: No est v 3.4% prior
• (PH) Philippines Central Bank (BSP) left its Overnight Borrowing Rate unchanged at 4.75% (as expected)
• (TW) Taiwan Feb M2 money Supply Y/Y: 2.9% v 3.1% prior; M1 money Supply Y/Y: 6.0% v 6.6% prior
• (TW) Taiwan Central Bank (CBC) left its Benchmark Interest Rate unchanged at 1.375% (as expected)
• (CH) SNB Interest Rate Decision: left its Sight Deposit Interest Rate unchanged at -0.75% (as expected) maintained its 3-Month Libor between -1.25% to -0.25% range
• (HK) Hong Kong Feb CPI Composite Y/Y: 2.1% v 2.0%e
• (NO) Norway Central Bank (Norges) raised Deposit Rates by 25bps to 1.00% (as expected); maintained forward guidance of gradual rate hikes
• (PL) Poland Feb Retail Sales M/M: -3.1% v -2.9%e; Y/Y: 6.5% v 7.0%e; Real Retail Sales Y/Y: 5.6% v 5.4%e
• (PL) Poland Feb Construction Output Y/Y: 15.1% v 4.7%e
• (ES) Spain Jan Trade Balance: -€4.5B v -€3.3B prior
• (UK) Feb Public Finances (PSNCR): +£0.6B v -£25.4B prior; Net Borrowing: -£0.7B v -£0.8Be; Central Government NCR: -£1.7B v -£25.8B prior; PSNB (ex-Banking Groups): £0.2B v £0.4
• (UK) Feb Retail Sales (Ex Auto/Fuel) M/M: +0.% v -0.4%e ; Y/Y: % v 3.5%e
• (UK) Feb Retail Sales (Includes Auto/Fuel) M/M: % v -0.4%e; Y/Y: % v 3.3%e
• (SL) Sri Lanka Feb National CPI (NCPI) Y/Y: 2.4% v 1.2% prior

Fixed Income Issuance

• (ES) Spain Debt Agency (Tesoro) sold total €3.48B vs. €3.0-4.0B indicated range in 2021, 2029 and 2040 bonds
• Sold €1.64B in 0.05% Oct 2021 SPGB; Avg yield: -0.182% v -0.124% prior, Bid-to-cover: 2.06x v 3.25x prior
• Sold €1.23B in 1.45% Apr 2029 SPGB; Avg Yield: 1.100% v 1.222% prior, bid-to-cover: 1.55x v 1.19x prior
• Sold €610M in 4.9% July 2040 SPGB; Avg yield: 1.947% v 2.167% prior, bid-to-cover: 1.80x v 1.26x prior
• (FR) France Debt Agency (AFT) sold total €8.991B v €8.0-9.0B indicated range in 2022, 2024 and 2025 bonds
• Sold €1.997B in 0.00% Feb 2022 Oat; Avg Yield: -0.38% v -0.34% prior; Bid-to-cover: 5.14x v 2.67x prior (Feb 21st 2019)
• Sold €2.339B in 2.25% May 2022 Oat; Avg Yield: -0.38% v -0.29% prior; Bid-to-cover: 2.87x v 2.95x prior (Feb 21st 2019)
• Sold €2.996B in 0.00% Mar 2024 Oat; Avg Yield: -0.17% v -0.09% prior; Bid-to-cover: 2.48x v 2.50x prior (Feb 21st 2019)
• Sold €1.659B in 1.00% Nov 2025 Oat; Avg Yield: -0.02% v +0.39% prior; Bid-to-cover: 2.88x v 1.81x prior (Oct 18th 2018)
• (SE) Sweden sold total SEK500M vs. SEK500M indicated in 2027 and 2032 I/L Bonds

Looking Ahead

• (IT) China President Xi Jinping is due to visit Italy and meet with PM Conte on the Belt and Road initiative.
• (IT) Italy Debt Agency (Tesoro) announces details for upcoming CTA and BTPei auction for Tuesday, Mar 26th
• (UR) Ukraine Q4 Final GDP Q/Q: No est v 1.1% prelim; Y/Y: 3.4%e v 3.4% prelim
• (AR) Argentina Mar Consumer Confidence Index: No est v 36.04 prior
• 05:50 (FR) France Debt Agency (AFT) to sell €1.5-2.5B in new 0.10% Mar 2029 Inflation linked bond (Oatei
• 06:30 (PL) Poland switch auction
• 06:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills; Avg Yield: % v 0.37% prior; bid-to-cover: x v 3.44x prior (Mar 7th 2019)
• 07:45 (US) Daily Libor Fixing
• 08:00 (UK) Bank of England Bank (BOE) Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.75%
• 08:30 (US) Mar Philadelphia Fed Business Outlook: +4.8e v -4.1 prior
• 08:30 (US) Initial Jobless Claims: 225Ke v 229K prior; Continuing Claims: 1.77Me v 1.776M prior
• 08:30 (CA) Canada Jan Wholesale Trade Sales M/M: 0.6%e v 0.3% prior
• 08:30 (US) Weekly USDA Net Export Sales
• 09:00 (PL) Poland Central Bank (NBP) Mar Minutes
• 09:00 (RU) Russia Gold and Forex Reserve w/e Mar 15th: No est v $479.3B prior
• 09:00 (UK) Baltic Dry Bulk Index
• 09:30 (BR) Brazil Feb Tax Collections (BRL): 109.5Be v 160.4B prior
• 10:00 (US) Feb Leading Index: +0.1%e v -0.1% prior
• 10:00 (MX) Mexico Q4 Aggregate Supply and Demand: 2.5%e v 3.6% prior
• 10:30 (US) Weekly EIA Natural Gas Storage Inventories
• 11:00 (EU) Euro Zone Mar Advance Consumer Confidence: -7.1e v -7.4 prior
• 11:00 (US) Treasury announcement for upcoming 2-year, 5-year and 7-year issuance
• 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
• 13:00 (US) Treasury to sell 10-Year TIPS Reopening
• 15:00 (AR) Argentina Q4 GDP Q/Q: No est v -0.7% prior; Y/Y: -6.4%e v -3.5% prior
• 15:00 (AR) Argentina Q4 Unemployment Rate: No est v 9.0% prior

SNB left target range for the three-month Libor unchanged at between -1.25% and -0.25%, and maintained a dovish tone. Apart from pledging to intervene the “highly valued” Swiss franc, the central bank downgraded its inflation forecasts. However, this appears to have added limited selling pressure to franc, as both the Fed and ECB sounded more dovish in the meetings earlier this month.

At the policy statement, SNB continued to shows concerns over the exchange rate. It suggested that, although the franc has “depreciated slightly on a trade-weighted basis”, it remains “highly valued” and the forex market continues to be “fragile”. The members reiterated the pledge to curb the upward pressure of the franc, via maintaining “negative interest rate” and intervention to the currency market.

Another key issue to watch is inflation, which has stayed weak over the past years. Headline CPI, at +0.6% in February, has been in a downtrend after peaking at 1.2% in July 2018. While the decline in energy prices in the second half of last year can be a reason for the weakness, core CPI has not shown signs of improvement. At the March meeting, SNB revised lower the inflation forecast to +0.3% for this year, from +0.5% projected in December. Inflation is expected to improve to +0.6% (December: +1%) in 2020 and then to +1.2% in 2021. These forecasts are based on the assumption that interest rate would stay the same over the forecast horizon.

The Euro eases from six-week high at 1.1448, posted after strong bullish acceleration on Wednesday.

The pair advanced 0.66% on Wednesday (the biggest one-day rally since 25 Jan) after Fed surprised markets with its ultra-dovish stance and smashed the US dollar.

Traders took profit from four-day rally which accelerated on Wednesday, pushing the price lower.

Wednesday’s rally generated several bullish signals on break above important technical barriers, surging through converged 55/100SMA’s, daily cloud and closed above Fibo 61.8% of 1.1569/1.1176 fall at 1.1420.

Current easing could be seen as positioning for fresh upside, with extended dips expected to find ground above broken 55/100SMA barrier, now reverted to support and reinforced by bull-cross with 5SMA, to keep bulls in play.

Repeated close above Fibo barrier at 1.1420 is needed to confirm bullish stance and open way for extension towards 200SMA (1.1481).

Res: 1.1420, 1.1448, 1.1477, 1.1500
Sup: 1.1392, 1.1366, 1.1344, 1.1328

EUR/USD has steadied on Thursday, after strong gains on Wednesday. Currently, the pair is trading at 1.1404, down 0.08% on the day. On the release front, there are no German or eurozone indicators. In the U.S., the Philly Fed Manufacturing Index is expected to rebound with a gain of 4.6, after a rare decline in January. Unemployment claims are projected to dip to 226 thousand. On Friday, Germany and the eurozone release services and manufacturing PMI reports.

The Federal Reserve has been sending out a steady dose of dovish messages since the start of the year, but the sharply dovish stance at the Wednesday policy meeting was a surprise. The Fed’s rate outlook (dot plot), which is released each quarter, showed that a majority of FOMC members expect no rate hikes in 2019. This was in sharp contrast to the previous quarter’s forecast, in which the FOMC projected two hikes this year.

The rate statement was downright pessimistic, stating that economic activity “has slowed”. Policy makers singled out slower growth in household spending and business investment and noted that inflation has decreased due to lower energy prices. The Fed also announced that it would stop reducing its balance sheet by $50 billion a month. This move is a loosening of policy and is intended to stimulate the economy. The new Fed forecast projects GDP growth of 2.1%, down from 2.3% in December.

European leaders meet in Brussels on Thursday, where Prime Minister May will request an extension for Brexit. The Europeans are exasperated by turmoil surrounding Brexit and the inability of the British government to pass the withdrawal agreement in parliament. Jean-Claude Juncker, the President of the European Commission, said on Wednesday that the E.U. would not provide May with an answer immediately, but would meet for consultations next week. The clock is ticking, with Britain scheduled to leave the E.U. on March 29.

Cable accelerated lower in early European trading on Thursday, maintaining negative near-term tone and pressuring previous day's spike low at 1.3146.

Brexit uncertainty continues to weigh and offset positive impact from Wednesday's surprise from Fed, which presented ultra-dovish stance, signaling no rate hike in 2019 and lowering GDP forecast for this year.

Pound's advance after announcement that sent US dollar lower was short-lived, keeping in play bearish near-term bias.

Fresh weakness probes again below converged 10/20SMA's (1.3200/1.3189) following Wednesday's false break.

Brexit drama remains key driver, as concerns about no-deal Brexit are back to the table, while PM May's request for short Brexit extension faced obstacles from some EU members, which said that extension is too short to be able to make some substantial changes in existing plan

Bears eye supports at 1.3120/02 (Fibo 61.8% of 1.2960/1.3381 / 30SMA), but negative scenario requires confirmation on daily close below 10/20SMA's).

Solid UK retail sales (retail sales y/y Feb 4.0% vs 3.1% f/c / core Feb 3.8% vs 3.3%) boosted pound and pause bears, however, recovery might be limited on overall bearish sentiment.

Release of BoE MPC's last policy meeting are also in focus, with expectations that policymakers voted 9-0 to keep rate unchanged.

Res: 1.3200, 1.3227, 1.3272, 1.3310
Sup: 1.3146, 1.3120, 1.3102, 1.3059