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The Euro maintains bullish tone and extends advance to hit fresh recovery high at 1.1361 on Tuesday, underpinned by strong gains last week, as well as better than expected German/EU ZEW data in (German Mar economic sentiment -3.6 vs -11 f/c/EU economic sentiment Mar -2.5 vs -15.1 f/c). Fresh advance of British pound adds to positive tone, as techs gain momentum and MA's turn to bullish setup. Fresh bulls pressure initial barrier at 1.1364 (converged 20/30SMA's) and eye other pivotal barrier at 1.1373 (50% retracement of 1.1569/1.1176), close above which would open way for probe through thickening daily cloud (currently spanned between 1.1400 and 1.1413) and possible test of key Fibo resistance at 1.1419 (61.8% retracement of 1.1569/1.1176). Overbought daily slow stochastic requires caution, with solid supports at 1.1330/26 (rising 5SMA/broken Fibo 38.2%) required to hold and keep bulls in play and guard pivotal support at 1.1317 (converged 20/30SMA's).

Res: 1.1364; 1.1373; 1.1400; 1.1419
Sup: 1.1348; 1.1326; 1.1317; 1.1291

Entering into US session, the forex markets remain rather directionless at this point. Sterling is lifted mildly by talks that EU is going to offer UK a conditional Brexit extension in the summit later this week. With that change in circumstance, Prime Minister Theresa May could bring her deal back to the Commons for another meaningful vote. But still, upside in the Pound is very limited as there is no clear path to what's next on Brexit.

Data from Europe are positive with unemployment rate in UK hitting 44-year low at 3.9%. Wage growth also maintained strongest pace German ZEW Economic Sentiment also showed significant improvement. But the data are largely ignored. WTI crude oil is extending recent rally to 59.80 so far and it's now sitting inside key resistance zone around 60. Oil price is giving Canadian Dollar a mild lift.

In Europe:

• FTSE is up 0.52%.
• DAX is up 0.89%.
• CAC is up 0.46%.
• German 10-year yield is up 0.010 at 0.98. It breached 0.1 handle to 0.101 earlier today.

Earlier in Asia:

• Nikkei dropped -0.08%.
• Hong Kong HSI rose 0.19%.
• China Shanghai SSE dropped -0.18%
• Singapore Strait Times rose 0.25%.
• Japan 10-year yield dropped -0.008 to -0.044.

The DAX has posted sharp gains in the Tuesday session. Currently, the DAX is at 11,759, up 0.88% on the day. The index is at its highest level since early October. Car maker shares are showing sharp gains, boosting the DAX on Tuesday. Daimler has soared 3.5%, while BMW and Volkswagen have both climbed 1.8%.

In economic news, German ZEW Economic Sentiment remained in negative territory, but improved to -3.6 points. This easily beat the estimate of -11.0 points. The eurozone event showed a similar trend, improving to -2.5 points. This beat the forecast and was the highest reading since May. On Tuesday, Germany releases PPI and the Federal Reserve issues its monthly rate statement.

With a dearth of fundamentals early in the week, for most of the week, investors will have plenty of time to analyze the Federal Reserve meeting on Wednesday. The Fed is widely expected to maintain the benchmark rate at a range between 2.25 – 2.50 percent. However, investors will have more on their mind than just interest rate levels. The Fed has been sending a dovish message to the markets, and this stance is expected to continue in the March rate statement. The Fed’s balance sheet will also be under scrutiny, with the policymakers expected to announce when they will stop reducing the $4 billion balance sheet. The Fed has been reducing assets by $50 billion a month, but there has been criticism that this tightening is choking economic growth. The Fed will also publish its new dot plot, which is used to convey its interest rate outlook.

The ECB is also in a dovish mode, as the economic slowdown continues to weigh on the eurozone. Inflation climbed slightly in February to 1.5% year-on-year, but remains well below the ECB target of 2 percent. Low inflation means there is no pressure on the bank to raise rates in the near future. At the March policy meeting, policymakers delayed a rate hike to 2020 at the earliest, and this sent the euro to lower levels. The bank also lowered its inflation forecast for 2019 to 1.2%, down from the previous forecast of 1.6%.

Gold prices were trading mixed on Monday but price quickly recovered towards the close of business. The gains come as the global risk sentiment remains mixed. Themes such as the Fed’s forward guidance and the outcome of the Brexit talks have kept risk appetite in check. This led to gold making modest gains, tracking higher yields in the U.S. bond markets.

Can XAUUSD Maintain the Momentum?

At the time of writing, XAUUSD is breaking past the 1306 level while forming a minor ascending triangle pattern. This comes as the precious metal advanced 0.13% on the day on Monday. The upside breakout, if successful, could send gold prices higher as they test the upper resistance level of 1320 – 1321 level. This would potentially mark a retest of the level which previously served as support.

The Japanese yen was trading modestly stronger against the USD on Monday rising 0.03%. USDJPY continued to retreat following a rally to a 3-month high of 112.12 earlier this month. Trade balance figures released on Monday showed that exports fell for the third consecutive month in February due to easing global demand for goods. Official data showed that exports fell 1.2% on the year, extending the 8,4% annualized decline in January.

Will USDJPY Turn Bearish?

The USDJPY currency pair was trading subdued on Monday with price action closing within a small range but bearish. This marks a second consecutive day of declines in the currency pair. A bearish follow through today could signal a move to the downside. Given that prices failed near the resistance level of 111.40, the USDJPY could extend the declines lower to the 109.84 level at the very least in the near term

The common currency invalidated the double top pattern that was formed by last Friday’s close with the currency pair rising 0.10% on the day. The breakout to the upside came against a weaker greenback. Data from the eurozone was quiet with only the release of the monthly report from the German Bundesbank. The report painted a bleak picture as officials acknowledged a weaker pace of growth in the first quarter of the year.

Will The Euro Advance Gains?

The upside breakout from 1.1329 resistance could eventually push the common currency to test the multi-month falling trend line which is likely to act as dynamic resistance around the 1.1400 level. The overall price action in the EURUSD remains quite choppy. The recent gains have shown a sharp recovery as price rose at the same pace of declines as before.

Cable holds firmer tone on Tuesday and probes above 1.33 barrier, which capped the action in past two days.

Fresh advance retraced Monday's weakness (dip to daily low at 1.3184 was contained by rising 10SMA) after PM May's attempts to force another vote on her plan was struck down for procedural reasons.

Brexit drama continues, with scenario of 29 Mar exit without a deal, returning to play that would reduce PM May's space for maneuver in attempts to ask the EU for a short extension of 29 Mar deadline.

Bullish signal for sterling came from solid UK labor data on Tuesday (Avg earnings Jan 3.4% vs 3.2% f/c/New jobs in 3-mths to Mar 222K vs 120K f/c/Unemployment Jan 3.9% vs 4.0% f/c/prev) that could help those advocating BoE rate hike later this year).

Overall bullish daily techs (MA's in full bullish setup and momentum attempts to turn higher from the midline) could help fresh advance.

Break and close above 1.33 handle is needed for bullish signal for extension towards key barriers at 1.3381/86 (new 2019 high, posted on 13 Mar/50% retracement of 1.4376/1.2397 fall). Bullish bias is expected to dominate while the price holds above rising 10SMA (currently at 1.3192).

Res: 1.3310, 1.3330, 1.3349, 1.3386
Sup: 1.3279, 1.3243, 1.3192, 1.3176

EUR/USD is steady in Tuesday trade. Currently, the pair is trading at 1.1356, up 0.15% on the day. On Monday, the pair climbed to a 2-week high, as the positive momentum continues. On the fundamental calendar, German ZEW Economic Sentiment remained in negative territory, but improved to -3.6 points. This easily beat the estimate of -11.0 points. The eurozone event showed a similar trend, improving to -2.5 points. This beat the forecast and was the highest reading since May. For a second straight day, there are no major U.S. events. On Tuesday, Germany releases PPI and the Federal Reserve issues its monthly rate statement.

The Federal Reserve holds its monthly meeting on Wednesday, and is virtually certain to hold the benchmark rate at a range between 2.25 – 2.50 percent. However, investors will have more on their mind then than interest rate levels. The Fed has been sending a dovish message to the markets, and this stance is expected to continue in the March rate statement. The Fed’s balance sheet will also be under scrutiny, with the policymakers expected to announce when they will stop reducing the $4 billion balance sheet. The Fed has been reducing assets by $50 billion a month, but there has been criticism that this tightening is choking economic growth. The Fed will also publish its new dot plot, which is used to convey its interest rate outlook.

The ECB is also in a dovish mode, as the economic slowdown continues to weigh on the eurozone. Inflation climbed slightly in February to 1.5% year-on-year, but remains well below the ECB target of 2 percent. Low inflation means there is no pressure on the bank to raise rates in the near future. At the March policy meeting, policymakers delayed a rate hike to 2020 at the earliest, and this sent the euro to lower levels. The bank also cut its inflation forecast for 2019 to 1.2%, down from the previous forecast of 1.6%.

The Brexit chaos in the UK drew some strong reactions from EU. Germany's Europe Minister Michael Roth warned that "our patience as the European Union is being sorely tested at the moment." He added "I can only call once again on our British partners in London to make concrete proposals at last on why they want an extension."

French EU affairs minister Nathalie Loiseau also complained that "this uncertainty is unacceptable". She added: "We need an initiative, we need something new because if it's an extension to remain in the same deadlock... How do we get out of this deadlock? - this is a question for the British authorities." Also, "Grant an extension - what for? Time is not a solution, it's a method. If there is an objective and a strategy and it has to come from London."

Separately, ITV political editor Robert Preston reported tat EU leaders are unlikely to grant a Brexit delay this week. Instead, they will request clarify from UK Prime Minister Theresa May on what the delay is for.

The EUR/NZD has formed a bullish breakout pattern that has broken above the trend line. A rejection from the POC zone could target higher levels.

1.6535-50 is the zone where we might see a bounce. The first target is 1.6562 followed by 1.6588 and 1.6602. However only a break above 1.6605 might lead the price towards 1.6640. As long as 1.6490 holds the price bulls should be safe. The EUR/NZD is more volatile pair than the EUR/USD so stops should be higher. If the price continues to ascend an emerging ascending scallop pattern may appear.