Sample Category Title

Jacob Rees-Mogg, a high profile Brexiteer Conservative, said that the could back Prime Minister Theresa May's Brexit deal if there is a reasonably effective time limit on the Irish backstop.

Rees-Mogg told BBC ratio that "I can live with the de facto removal of the backstop.... I mean that if there is a clear date that says the backstop ends, and that is in the text of the treaty or equivalent of the text of the treaty".

But he also insisted that the time limit should be "a short date, not a long date, then that would remove the backstop in the lifetime of parliament and that would have a reasonable effect from my point of view."

The US Dollar had extended its decline against the Japanese Yen on Wednesday.

In general, the pair was heading for the support of the weekly S2 at the 110.23 level. That level should be reached during this trading session. If the S2 gets passed easily, the rate will head next to the weekly S3 at 110.00.

However, the simple moving averages would be left too far above the current rate, which would indicate that the rate is oversold.

On Wednesday, gold price ignored the 55 and 200-hour simple moving averages. The price fluctuated around them freely. Meanwhile, the resistance of the 100-hour SMA was still able to push the pair lower.

A decline of the commodity is still expected, as the previous support levels have moved above the price and begun to provide resistance.

Meanwhile, take into account that round price levels are providing psychological support. For example the most recent small scale surge was caused by the support of the 1,324.00 level.

EUR/USD

Current level - 1.1382

The pair has tested precisely 1.1400 resistance, but there are no signs of a reversal yet, so the bias remains positive, for a climb towards 1.1450. Crucial on the downside is 1.1320 and only a slide through that level will signal a reversal of the upmove since 1.1230 low.

USD/JPY

Current level - 110.36

My outlook remains bearish, for a test of 110.20 area and a violation of that zone will project a target at 109.10.

GBP/USD

Current level - 1.3252

The uptrend is intact after breaking through 1.3210 hurdle and there is a risk of a rise towards 1.3450 area. Initial minor support lies at 1.3210, followed by the major one at 1.3100.

Despite the Trump-Kim meeting taking the spotlight, it seems to have little effect on the USD until now. On the contrary the greenback showed signs of weakness after Fed Chairman Jerome Powell repeated the bank's intention to remain to patient on its monetary policy. It should be noted though that a correction started to take place in the Asian session today. Jerome Powell stated in his testimony before the US Senate that rising risks and recent soft data are not expected to threaten a solid growth for the US economy, but the Fed prefers to remain patient. Despite the Fed Chair not offering anything new, the reiteration alone of the Fed's intention to remain patient once again, seems to weigh on the USD. We could see the second part of Powell's testimony today, before the House of Representatives, also to weigh on the USD, albeit at a lesser extent, unless some fresh insights are presented. EUR/USD rose yesterday, testing the 1.1385 (R1) resistance line, though failed to clearly break it. We could see the pair maintaining a sideways movement, yet should the USD start weakening once again, we could see it breaking the 1.1385 (R1) resistance line and aim for the 1.1420 (R2) resistance level as the bulls would be taking over again. Should on the other hand the bears dictate the pair's direction we could see it aiming if not breaking the 1.1345 (S1) support line.

GBP rallies on no deal Brexit avoidance

The sterling rallied against the EUR and the USD yesterday, reaching new highs as no deal Brexit seems to be avoided. UK's PM Theresa May, offered lawmakers the chance to vote on delaying Brexit, hence strengthening the pound. Media reported that Theresa May, stated to lawmakers that they could vote on the 14th of March for a “short, limited extension”, should her Brexit deal be rejected on the 12th . Today the UK Parliament is to vote once again on Brexit, on a motion set by the government, yet the interest relies on the amendments which could be tabled. We expect volatility for the pound to be maintained until the voting by the UK Parliament and its outcome could drive the pound to either direction. Cable rallied yesterday reaching a new high, since September last year by testing the 1.3270 (R1) resistance line. We could see the pair remaining in a bearish market as technically the upward trendline, incepted since Friday remains intact. Should the pair find fresh buying orders along its path, we could see it breaking the 1.3270 (R1) resistance line and aim for the 1.3360 (R2) resistance hurdle. On the other hand, should cable come under the selling interest of the market, we could see it breaking the 1.3175 (S1) support line and aim for lower grounds.

Today's other economic highlights

During the European session today, we get the final reading of Eurozone's Consumer Confidence indicator for February. In the American session, we get from the US the goods trade balance for December, the factory orders growth rate also for December and the EIA crude oil inventories figure. The star of the day though should be Canada's inflation rates, which under certain circumstances could weaken the Loonie. Please note that ECB's Benoit Coeure and BuBa president Jens Weidman will be speaking today and do not forget that Fed's Chair Jerome Powell is to testify before the US House of Representatives today.

GBP/USD

Support: 1.3175 (S1), 1.3070 (S2), 1.2960 (S3)
Resistance: 1.3270 (R1), 1.3360 (R2), 1.3445 (R3)

EUR/USD H4

Support: 1.1345 (S1), 1.1300 (S2), 1.1260 (S3)
Resistance: 1.1385 (R1), 1.1420 (R2), 1.1460 (R3)

Gold retreated to meet its previous peak of 1,326 after hitting a 10-month high at 1,346 last week as the RSI pierced into overbought zone. With the indicator now pointing to the downside and towards its 50 neutral mark and the MACD weakening below its red signal line but above zero, the bias is seen as neutral in the short term.

Moving southwards, a key support is expected to be challenged at the bottom of the ascending channel near 1,317. A clear negative breakout of the upward pattern could shift attention to 1,300 where the 50-day moving average (MA) is currently placed. Below that, the bears would aim to drive the price below the 200-day MA (1,245) but before that they may take a break around January’s trough of 1,276.

Should bullish forces return, the middle line of the channel at 1,338 and the top at 1,346 would come on the radar. Yet only a decisive step out of the trading channel could boost positive sentiment, with resistance running next to 1,400.

In the bigger picture, the outlook is positive thanks to the higher highs and higher lows registered since early August. The bullish cross between the 50- and the 200-day MAs could be taken as a sign that the bullish sentiment is not near to end.

• Sterling rejoices as PM May signals potential Brexit delay
• Dollar retreats as Powell seems cautious on domestic issues too
• Canadian inflation data coming up, with oil prices also crucial for loonie

Pound explodes higher as May implicitly signals Brexit delay

The British pound was the star performer on Tuesday, gaining ground across the board to touch a new 5-month high versus the dollar after PM May watered down her Brexit stance, opening the door for an extension of the exit date. She pledged Parliament will soon vote on whether it supports a no-deal Brexit, and if there is no support for such an action, lawmakers can vote again to request an extension of Article 50 and delay the exit process.

This shift in May’s stance was likely seen as taking the threat of a no-deal exit off the table, since Parliament has made it abundantly clear it won’t sign off on such an action, effectively curbing the biggest tail risk surrounding the pound. This, at a time when the opposition leader – Jeremy Corbyn – started to throw his party’s weight behind a second referendum, which is likely the best-case outcome for sterling.

Overall, the outlook for the pound has started to brighten, though probably not enough to justify a healthy rally yet. As May herself pointed out yesterday, such an extension is a one-time trick, since getting a second one would need the UK to participate in the upcoming European elections. So, we could well be facing the same deadlock in a few months’ time, implying that lots of twists and turns likely remain before the pound gets the Brexit clarifications it needs to move higher in a sustainable and vigorous manner.

Dollar retreats as Powell highlights labor market slack, reiterates patience

The US currency pulled back yesterday alongside US Treasury yields, after Fed Chair Powell – testifying before the Senate – maintained the cautious tone he adopted lately. Besides reiterating that the Fed will likely remain of hold for a while amid global risks, he also spent a lot of time discussing labor market slack. He noted that the continued rise in the labor force participation rate is surprising, especially since it runs against long-term demographics. The implication was that the labor market may still be able to create more jobs without inflation coming into play, which diminishes the need for more rate hikes even further.

The takeaway for traders was that Powell sees both international and domestic reasons not to hike any further, which was enough to push the implied probability of a quarter-point rate cut by December to above 20%. While the message was loud and clear for both the currency and bond markets, US stocks were less certain, with the likes of the S&P 500 closing marginally lower – seemingly unable to shake off trade uncertainties.

Powell will testify today as well, this time before the House financial services Committee (17:00 GMT). Since his opening remarks will be identical, markets will focus on the subsequent Q&A session with lawmakers.

Canadian inflation figures and weekly crude inventories coming up

The key release on the economic calendar today will be the CPI figures for January out of Canada. Headline inflation is forecast to have cooled, though that may be owed mainly to the pullback in energy prices. Data aside, the bigger driver for the loonie moving forward will likely be how oil prices perform. Note that the correlation between the Canadian currency and crude prices has returned with a vengeance in recent months, after being dormant for most of 2018.

In this respect, oil prices are still reeling from President Trump’s latest verbal attack against OPEC, and the weekly EIA inventory data due today at 15:30 GMT could be the next focal point.

Markets remain under moderate pressure, despite the Fed comments. Powell’s semi-annual speech in Congress reinforced expectations that the US Central Bank is ready to show more patience in the face of a slowing economy. In fact, it was a further softening of the central bank’s rhetoric, which put pressure on the dollar.

As a result, the USDX declined on Tuesday evening to a three-week low, and the EURUSD crossed the 1.1400 level at one point. Particularly noticeable was the strengthening of the British pound, which rose against the dollar to 1.3280, to the September highs area, receiving additional support due to speculation around a possible Brexit date postponement.

However, it is worth noting that the Fed’s softness was not enough to fuel the stock markets growth. At the end of the day, key US indices turned to a decline. The S&P 500 returned to the lows of the beginning of the week, quickly offsetting its initial optimism.

The U.S. market dynamic indicates the need to maintain a cautious position. We are witnessing increased stocks sales by the close of the New York trading session, which often indicates careful profit-taking by professionals after a two-month rally. At the end of last year, we already saw a similar trend, when stocks were rapidly selling at the end of the day, which led to a worse end of the year for American indices in many decades.

As for the dollar, the demand for it has grown along with the pressure on stocks. At the moment, EURUSD is losing 0.3%, trading at 1.1370. Meanwhile, the Japanese yen is gaining momentum, including against the dollar, which reflects an increase of demand for safe-haven assets amid growing market participants anxiety. In addition to the demand for safety, the dollar is reinforced by the confidence that other large central banks will also soften their rhetoric after the Fed.

At the moment, it is too early to talk about the risks of large-scale sale-off on the stock markets. A more pragmatic approach shows that we are dealing with the desire of players to take profits after a two-month rally, which occurred despite growing signs of the economic slowdown.

The pair holds in red for the second day and extends pullback after repeated failure at 111 zone and rejection under pivotal 200SMA barrier.

Tuesday's bearish outside day and fading risk sentiment on India-Pakistan tension, add to negative signals and threatening of reversal.

Fresh safe-haven demand boosts yen and could help pair's break through strong supports at 110.30/00 zone (20/55/30 SMA's/weekly cloud top) which could generate stronger reversal signal.

South-heading daily momentum/RSI and Stochastic support scenario, as firm break below 110 handle would open way towards thin daily cloud (spanned between 109.40 and 109.02).

Reversing converged 5/10SMA's offer solid resistance at 110.68 which should limit the upside and keep fresh bears in play, however, ability to hold above 110 zone would keep the pair in in extended range-trading.

Res: 110.68, 111.07, 111.23, 111.30
Sup: 110.30, 110.00, 109.40, 109.02

Cable stands at the front foot in early Wednesday's trading and consolidates under new 2019 high at 1.3287, posted after Tuesday's 1.1% rally (the biggest one-day gains since 1 Nov).

Overnight's easing was brief and stayed above broken former high (1.3217), keeping strong bullish stance intact.

Optimism on sidelined no-deal scenario and signals of delayed Brexit keep pound well supported for now.

Bulls penetrated thick weekly cloud and eye barriers at 1.3297 (20 Sep high) and 1.3315 (FE 100% of the third wave of five-wave cycle from 1.2772 (14 Feb low), break of which is needed to validate wave principles and expose targets at 1.3387/97 (Fibo 50% of larger 1.4376/1.2397 fall/FE 123.6% of wave C from 1.2968 trough).

Bullish daily/weekly studies support scenario (formation of triple golden cross of 10/20/30 SMA's over 200SMA adds to positive signals), but consolidative/corrective action could be anticipated on overbought conditions on daily chart. Former high and converged 55/100WMA's mark strong supports at 1.3200/40 zone, which are expected to ideally contain and guard rising 5SMA (1.3143). Rising 10SMA (1.3043) marks pivotal support, violation of which would sideline bulls.

Res: 1.3297, 1.3315, 1.3397, 1.3448
Sup: 1.3240, 1.3200, 1.3143, 1.3112