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Bitcoin has started the new trading month with a slight bullish bias, as the key $3,700 support level continues to be defended on moves lower. Indicators on the daily time frame are trending higher, although the recent upward momentum is weakening. BTCUSD buyers must now break above the cryptocurrencies former monthly highly in order to keep the short-term bullish momentum intact.

The BTCUSD pair remains bullish while trading above the $3,700 level, key technical resistance is now found at the $4,000 and $4,300 levels.

If the BTCUSD pair trades below the $3,700 level, key support is found at the $3,550 and $3,330 levels.

The Japanese yen declined sharply against the USD after the meeting between Donald Trump and Kim Jong Un ended without a deal. In a statement, the United States said that North Korea was asking for sanctions relief while not offering any meaningful concessions on nuclear weapons.

The meeting was the second one in two years. After the first meeting, North Korea committed to lead the ‘complete denuclearization’ of the peninsula but recent reports show that the country has been cheating.

In Japan, data released earlier today showed some positive developments. In February, the Tokyo CPI rose by an annualized rate of 0.6%, which was better than the expected 0.4%. The core CPI rose by 1.1%, which beat the consensus estimate of 1.0%. The capital spending in the fourth quarter rose by an annualized rate of 5.7%, which was better than the expected 4.5%. On the negative side, the unemployment rate rose to 2.5% from the previous 2.4%.

This week, a major concern among investors has been on the softening global economy. This was evidenced by the weak manufacturing and non-manufacturing PMI numbers from China. Earlier today, Caixin released the manufacturing PMI that beat the analysts’ forecast. The PMI increased to 49.9, which was better than the expected 48.5. While the improvement is welcome, it is still below 50. A PMI below 50 is usually an indication of contraction.

The euro softened in overnight trading as traders wait for important data from the European Union. The German manufacturing PMI is expected to be at 47.6 while the unemployment rate looks set to remain unchanged at 5.0%. For the EU bloc, the headline CPI for February is expected to have risen by 1.5%, which is higher than January’s 1.4%. The unemployment rate is expected to remain at 7.9%. In the United Kingdom, the manufacturing PMI is expected to stay unchanged at 52. In the United States, the ISM manufacturing PMI is expected to be at 55.5.

USD/JPY

The past two days have seen major movements in the USD/JPY pair. The pair has moved from a low of 110.34 to a high of 111.76, which was reached in overnight trading. On the hourly chart, the pair’s current price is above all the short and medium-term moving averages while the RSI has climbed to past the overbought level of 70. The momentum indicator is still above the 100 level but is moving down. While the pair will likely continue moving upwards, there is a likelihood that it will move lower first.

EUR/USD

The EUR/USD pair was little moved in the Asian session as traders waited for key data from the US and EU. The pair is now trading at 1.1373, which is still higher than the week’s open of 1.1340. On the four-hour chart, the price is above the short and medium-term EMA’s while the Aroon Oscillator is above the overbought level. The pair will likely continue moving higher although this will depend on the data from the EU and US.

AUD/USD

This week, the AUD/USD pair has been on a sharp downward trend. The pair has declined from a high of 0.7200 to the weekly low of 0.7085. This price is below the 21-day and 42-day EMA while the Parabolic SAR price is above the current price, which is an indication that the downtrend will continue. The 14-day RSI has remained slightly above the oversold level, as the signal line of the MACD moves higher. There is a likelihood that the pair will continue moving lower although traders should pay close attention to the important support of 0.7900.

Daily Pivots: (S1) 1.3140; (P) 1.3174; (R1) 1.3209; More...

Intraday bias in USD/CAD remains neutral for the moment. On the upside, break of 1.3242 support will turn bias back to the upside for 1.3340 resistance first. Break will confirm completion of decline from 1.3664. In that case, further rise should be seen back to 1.3664 resistance. On the downside, decisive break of 1.3068 low will firstly resume whole fall from 1.3664. Secondly, it will be a strong sign of medium term bearish reversal.

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 1.3099) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high). Firm break of the channel support should confirm reversal target 1.2061 low again.

Daily Pivots: (S1) 0.7067; (P) 0.7117; (R1) 0.7143; More...

Intraday bias in AUD/USD remains neutral at this point. On the downside, decisive break of 0.7054 support should confirm completion of rebound from 0.6722. Further decline should then be seen to 61.8% retracement of 0.6722 to 0.7295 at 0.6941 next. On the upside, though, break of 0.7206 will turn focus back to 0.7295 resistance instead.

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.

General Trend:

• Japanese real estate companies gain, heavily weighted Nikkei components (Fast Retailing, Softbank) also advance
• Financials outperform in China
• MSCI to raise inclusion factor of China A-shares in its indexes to 20% from 5% currently through a 3 step process (as speculated)
• Japan Q4 Capex data suggests upward revision to GDP (financial press)
• Australia Feb House Prices have 17th straight m/m decline (CoreLogic)
• New Zealand terms of trade hurt by lower dairy prices
• South Korea Feb exports have largest drop in ~3-years, chip exports -24.8% y/y
• China annual meeting of parliament is due next week, National People’s Congress (NPC) to meet on March 5th (Tues) to discuss economic and political policies

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.3%
• (AU) Australia Feb Commodity Index: 129.7 v 124.5 prior; Y/Y: 9.1% v 6.9% prior [led by higher iron ore, LNG and alumina prices]
• (AU) Australia Feb CoreLogic House Price M/M: -0.9% v -1.2% prior (17th straight decline); Y/Y: -6.3% v -5.6% prior
• (NZ) New Zealand Q4 Terms of Trade q/q: -3% v -1.0%e
• (NZ) New Zealand Feb ANZ Consumer Confidence: 120.8 v 121.7 prior
• (NZ) New Zealand Jan Building Permits m/m: +16.5% v +5.1% prior

China/Hong Kong

• Shanghai Composite opened +0.5%, Hang Seng +0.3%
• (CN) CHINA FEB CAIXIN MANUFACTURING PMI: 49.9 V 48.5E (3rd consecutive contraction)
• (CN) MSCI to raise inclusion factor of China A-shares in its indexes to 20% from 5% currently through a 3 step process (as speculated)
• WTO rules against China; China's Farm subsidies exceed WTO limits
• (CN) China PBOC Open Market Operation (OMO): Skips OMO v skipped prior; Net: CNY40B drain v CNY0B prior
• (CN) China PBoC sets Yuan Reference Rate: 6.6957 v 6.6901 prior
• (CN) China online lender Dianrong said to plan to cut 2,000 jobs - US financial press
• (HK) Macau Feb Gaming Rev (MOP) 25.4B v 24.9B prior; +4.4% y/y v 4.8%e

Japan

• Nikkei 225 opened +0.5%
• (JP) JAPAN Q4 CAPITAL SPENDING (CAPEX) Y/Y: 5.7% V 4.5%E; CAPITAL SPENDING EX-SOFTWARE: 5.5% V 3.3%E
• (JP) JAPAN JAN JOBLESS RATE: 2.5% V 2.4%E
• (JP) Japan Feb Tokyo CPI Y/Y: 0.6% v 0.4%e; CPI Ex-Fresh Food (Core): 1.1% v 1.0%e
• (JP) Bank of Japan (BOJ) announces Bond purchases for month of Mar (amends the 5-10 year range higher but reduces frequency; 1st change in program in 3 months)

Korea

• Kospi closed for holiday
• (KR) SOUTH KOREA FEB TRADE BALANCE: $3.1B V $3.3BE
• (KR) South Korea Finance Ministry: Result of Hanoi (Vietnam) summit could increase volatility in financial markets, impact of summit on local markets were 'limited'
• (KR) South Korea President Moon approval rating rises to 49% v 45% prior (highest since Dec) - Gallup Poll

North America

• (US) Fed Chair Powell: Reiterates FOMC will be 'patient' as it determines future rate moves
• (US) Fed’s Mester (hawk, non-voter): Does not initially comment on monetary policy nor economic outlook

Levels as of 12:45 ET

• Nikkei 225, +1.1%, ASX 200 +0.4%, Hang Seng +0.2%; Shanghai Composite +0.1%; Kospi closed
• Equity Futures: S&P500 +0.4%; Nasdaq100 +0.5%, Dax +0.4%; FTSE100 +0.3%
• EUR 1.1377-1.1362 ; JPY 111.77-111.32 ; AUD 0.7110-0.7084 ;NZD 0.6823-0.6803
• Gold -0.1% at $1,314/oz; Crude Oil +0.4% at $57.42/brl; Copper flat at $2.944/lb

Daily Pivots: (S1) 1.1346; (P) 1.1383; (R1) 1.1407; More.....

A temporary top is in place at 1.1419 in EUR/USD and intraday bias is turned neutral for some consolidations first. As long as 1.1316 support holds, another rise is still in favor. Current rally is seen as another leg in the consolidation pattern from 1.1215. Break of 1.1419 will target 1.1514 resistance and above. On the downside, though, break of 1.1316 minor support will argue that the rebound is completed. Intraday bias will be turned back to the downside for 1.1215 low.

In the bigger picture, as long as 1.1814 resistance holds, down trend down trend from 1.2555 medium term top is still in progress and should target 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. However, break of 1.1814 will confirm completion of such down trend and turn medium term outlook bullish.

Market movers today

In the US, the ISM manufacturing is due out this afternoon, which is expected to fall slightly.

In the euro area, we get preliminary HICP inflation for February. From the country HICP figures yesterday, we still expect euro area HICP to come in at 1.5% y/y (up from 1.4% in January, mainly on the back of higher energy prices, but also higher unprocessed food prices). There is downside risk to our expectation for core at 1.1% y/y, as French and Italian service price inflation decelerated, while that of Germany held steady.

In the euro area, we also get the unemployment rate for January. In December, it was 7.9%.

In the UK, we expect PMI manufacturing to have declined to 51.0 in February. This is still higher than the equivalent euro area index due to stockpiling (Brexit preparations).

In Sweden and Norway, we get PMI manufacturing for February this morning. In Norway, we get employment data as well.

Selected market news

Chinese PMI manufacturing from Caixin for February surprised to the upside and gave the clearest sign so far that a bottom is forming in the Chinese business cycle. The index jumped 1.6 points from 48.3 to 49.9 and the new orders index increased from 47.3 to 50.2. It follows the official PMI manufacturing yesterday, which also showed a decent rise in new orders despite a decline in the overall index. We continue to look for a gradual recovery for the rest of 2019 on the back of stimulus and a trade deal with the US. Thus, it seems that the recent fiscal expansion and monetary easing has had positive effects on the Chinese economy. Asian markets are up 0.5-1.0% on the back of the strong news out of China, while Japan is helped on by a significantly weaker Yen (the Yen is down 2.5% YTD, and has erased most of its December gains).

US sources close to the US-China trade negotiations told Bloomberg that negotiators are targeting a Trump-Xi summit already in mid-March, where a trade deal could be signed. This backs comments from President Trump and White House economic advisor Larry Kudlow, saying on Thursday that a deal with China is edging ever closer.

US equities closed the day 0.3% lower despite stronger-than-expected GDP figures (although the personal consumption component did disappoint somewhat) as well as a much stronger-than-expected Chicago PMI (actual: 64.7, expected: 57.5). The large print was in part down to an increase of 15 points in the 'new-orders' sub-index. Equities did initially rally on the news, but fell back late in the trading session. The 10Y US treasury yield rose 3bp during the day.

Daily Pivots: (S1) 1.3237; (P) 1.3279; (R1) 1.3303; More....

Intraday bias in GBP/USD remains neutral for consolidation below 1.3350 temporary top. Downside of retreat should be contained by 1.3109 resistance turned support to bring rise resumption. ON the upside, break of 1.3350 will will target 61.8% retracement of 1.4376 to 1.2391 at 1.3618 next. Sustained break will pave the way to 1.4376. However, break of 1.3109 will turn focus back to 1.2773 near term support.

In the bigger picture, medium term decline from 1.4376 (2018 high) should have completed at 1.2391. Rise from 1.2391 is now 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 turn focus back to 1.2391 low and then 1.1946.

Daily Pivots: (S1) 0.9932; (P) 0.9974; (R1) 1.0023; More...

A temporary low is formed at 0.9926 with current recovery. Intraday bias is turned neutral first. Another fall is mildly in favor as long as 1.0014 minor resistance holds. On the downside, break of 0.9926 will resume the decline from 1.0098 to 61.8% retracement of 0.9716 to 1.0098 at 0.9862. We'd look for bottoming signal again below there. On the upside, break of 1.0014 minor resistance will suggests that the pull back from 1.0098 has completed. In this case, intraday bias will be turned back to the upside for 1.0098/0128 resistance zone.

In the bigger picture, USD/CHF drew strong support from medium term trend line and rebounded. That suggests rise from 0.9186 is still in progress. Further break of 1.0128 will confirm up trend resumption and target 1.0342 key resistance. Nevertheless, break of 0.9716 will dampen this bullish view and at least bring deeper fall to 0.9541 key support.

For the 24 hours to 23:00 GMT, the EUR slightly declined against the USD and closed at 1.1371.

The US dollar rose against a basket of currencies yesterday, following stronger than expected US fourth quarter gross domestic product (GDP) data.

In economic news, Germany's preliminary consumer price index (CPI) advanced 1.6% on an annual basis in February, higher than market consensus for a gain of 1.5%. In the prior month, the CPI had recorded a rise of 1.4%.

In the US, data indicated that the US preliminary annualised GDP climbed more than expected by 2.6% on a quarterly basis in 4Q 2018, compared to a rise of 3.4% in the previous quarter. Market participants had anticipated the GDP to advance 2.2%. Moreover, the nation's Chicago Fed Purchasing Managers' Index jumped to a level of 64.7 in February, surpassing market expectations for an advance to a level of 57.5. The index had registered a level of 56.7 in the previous month.

Meanwhile, the number of Americans filling for jobless claims climbed to a level of 225.0K on a weekly basis in the week ended 23 February 2019, compared to a level of 216.0K in the prior week. Market participants had envisaged initial jobless claims to advance to a level of 220.0K.

In the Asian session, at GMT0400, the pair is trading at 1.1370, with the EUR trading a tad lower against the USD from yesterday's close.

The pair is expected to find support at 1.1347, and a fall through could take it to the next support level of 1.1323. The pair is expected to find its first resistance at 1.1407, and a rise through could take it to the next resistance level of 1.1443.

Going forward, traders would keep an eye on the Euro-zone's unemployment rate for January and the CPI for February along with Germany's retail sales for January and unemployment rate for February, set to release in a few hours. Also, the Markit manufacturing PMI for February, slated to release across the euro-bloc, will keep traders on their toes. Later in the day, the US manufacturing PMI and the US ISM manufacturing PMI and the Michigan sentiment index, all for February, along with US personal income and personal spending, both for December, will garner significant amount of investors' attention.

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