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The US Dollar appreciated about 85 base points against the Canadian Dollar on Monday. The currency pair breached a resistance cluster formed by a weekly pivot point and the 50– and 100-hour SMAs at 1.3183 during Monday's trading session.

A breakout occurred through the upper boundary of a medium-term descending channel at 1.3200 during the first half of today's trading session.

Given that a breakout had occurred, it is likely that the will target a resistance level at 1.3236 within this session.

However, it is important to note that the 200-hour simple moving average at 1.3219 could hinder such movement today.

The New Zealand Dollar appreciated about 48 base points against the US Dollar on Monday. The exchange rate breached a triangle-like formation pattern during the previous trading session.

The currency pair is currently testing the upper band of the triangle pattern at 0.6878.

Most likely, the NZD/USD exchange rate could edge lower towards a support cluster formed by the combination of the 50-, 100– and 200-hour SMAs near the 0.6849 area within this session.

Although, technical indicators suggest otherwise. Technical sentiment flash bullish signals today.

BoE MPC external member Gertjan Vlieghe reiterate his view that in case of no-deal Brexit, not all paths are equally likely. He said that "in the case of a no-deal scenario I judge that an easing or an extended pause in monetary policy is more likely to be the appropriate policy response than a tightening."

Also, BoE "will have to judge in real time how well inflation expectations remain anchored, and how households and businesses are reacting to the disruptions." And "even if the direction and scale of monetary policy changes are unknown beforehand, monetary policy will do what it needs to do to bring inflation back to target within a horizon that is consistent with our mandate."

Full report here.

WTI crude oil futures is retreating sharply after the pullback on the three-month high of 57.78 that was reached on February 22. The 20- simple moving average (SMA) is ready to create a bearish crossover with the 40-SMA in the 4-hour chart, as the price is moving towards the short-term rising trend line, taken from the lows on December 26.

In the short-term timeframe, the RSI indicator is pointing slightly up in the negative territory as well as the %K line of the stochastic oscillator is posting a bullish cross with the %D line in the oversold zone, supporting the view for a possible upside correction. However, the MACD oscillator is keeping its downside momentum below the trigger and zero lines.

In case of a successful penetration of the diagonal line, oil prices would switch the bullish bias to a more neutral one, resting at the 23.6% Fibonacci retracement level of the upward movement from 42.50 to 57.78 around 54.18. More downside extension could push the price until the 53.50 support, while even higher it could touch the 52.10 hurdle.

On the flipside, a bullish rally could find immediate resistance near 55.65, before re-touching the 20- and 40-SMAs currently at 56.50. More advances could drive WTI until the three-month high of 57.78.

Overall, the short-term bias is in a bullish correction mode after the rebound from the 18-month low.

The Euro stands at the front foot on Tuesday and holds at the upper side of week-long congestion, following bullish close after triple Doji on Monday and probe above 20/30SMA's pivots.

Tuesday's action holds above 20SMA (1.1352) and probes again above 30SMA (1.1362), clear break of which would generate bullish signal for extension towards barriers at 1.1381/91 (55/100 SMA's).

Broken Fibo barrier at 1.1341 (38.2% of 1.1514/1.1234) reinforced by rising 5SMA, offers solid support which needs to hold and keep bullish bias.

Only return below 10 SMA (1.1321) would sour the sentiment and turn near-term focus lower.

The single currency is helped by weaker dollar ahead of Fed Chairman Powell's testimony to a US Senate committee later today, as traders would look for signs whether the central bank feels comfortable with recently adopted more cautious stance on future rate hikes.

Res: 1.1367, 1.1374, 1.1381, 1.1391
Sup: 1.1352, 1.1341, 1.1321, 1.1300

In the annual report to the Treasury Select Committee, BoE Governor Mark Carney said UK growth "slowed sharply in late 2018 and appears to have remained weak in early 2019". The slowdown reflects both "softer activity abroad" and "greater effects from Brexit uncertainties". Brexit uncertainties is "creating a series of tensions for business, households and in financial markets". But that will only cause "short-term volatility in the economic data" and provide "less of a signal about the medium-term outlook".

Carney added that the " fundamentals of the UK economy are sound. The financial sector is resilient. Corporate balance sheets are strong. And the labour market is tight." If the economic conditions evolve in line with BoE projections, which are conditioned on a smooth Brexit, "limited and gradual rate rises are likely to be needed to return inflation sustainably to target."

Full report here.

Crude oil turned sharply lower as expected and now we can expect even more weakness towards 51-50 area to complete that big expanded flat correction. At the same time, a negative correlated market USDCAD bounced away from wave D of a big bearish triangle, which means that we may see now a bigger three-wave a-b-c recovery for the final wave E, where 1.3280 resistance area can be tested before another drop. So, once Crude oil completes a big expanded flat correction, this is when USDCAD may complete the big triangle.

Crude oil, 1h

USDCAD, 1h

The Australian dollar eased from new recovery high at 0.7184 in early Tuesday's trading, as risk appetite started to fade and bulls failed again to clearly break above pivotal 0.7174 barrier (50% retracement of 0.7295/0.7054 / daily Kijun-sen).

Easing on profit-taking after two-day rally so far looks as positioning for renewed attempts higher as bullish momentum continues to increase on daily chart and stochastic turned up and formed bull-cross.

Extended dips need to hold above rising 10SMA (0.7130) to keep alive hopes for fresh advance.

Conversely, return and close below 10SMA would weaken near-term structure and risk further easing.

Res: 0.7162, 0.7184, 0.7203, 0.7238
Sup: 0.7142, 0.7130, 0.7111, 0.7082

Sterling jumped against the USD, on reports that UK's PM considers delaying the March 29 deadline for UK's exit from the EU. The report stated that Theresa May would allow her cabinet to discuss such a scenario on Tuesday and announce its conclusions in Parliament later the same day. Analysts point out that delaying Brexit for a few months, does not resolve the issue and may increase the chances of a hard Brexit. At the same time Labour leader Jeremy Corbyn, finally agreed to back a second EU referendum, polarizing the situation even further. Should Theresa May announce the possibility of delaying Brexit in the UK Parliament today, we could see the pound rising even further as Brexit risks would be temporarily delayed. Cable jumped yesterday and during today's Asian session, clearing from the 1.3070 (S1) support line and aiming for the 1.3175 (R1) resistance level. If Brexit headlines continue to back the pound, we could see the pair trading in a bullish market, yet at the same time cable could prove sensitive to any financial releases for the USD as well as Jerome Powell's testimony. Should the pair find fresh buying orders along its path, we could see it breaking the 1.3175 (R1) resistance line and aim for the 1.3270 (R2) resistance hurdle. Should on the other hand the pair come under the selling interest of the market, we could see it breaking the 1.3070 (S1) support line and aim for the 1.2960 (S2) support level.

CAD weakens on dropping oil prices

The Loonie weakened yesterday against the USD, as oil prices marked a considerable drop. Oil prices slipped as US President Trump, called on OPEC to ease its efforts to boost the market and to keep oil prices steady. Analysts said that the Trump's warning, may carry more weight this time as US legislators seem to be considering a law that would make OPEC subject to antitrust laws in the US according to Reuters. On the other hand analysts point out that US sanctions for Iran and Venezuela, provide a floor for oil prices, which is difficult to break. We could see further volatility for the CAD, as it seems to remain oil driven and important financial releases are expected in the week both for oil as well as the CAD. USD/CAD rose yesterday, breaking the 1.3145 (S1) resistance line (now turned to support) and aiming for the 1.3215 (R1) resistance line. We could see the pair continue to trade in a bullish market, especially should oil prices continue to drop. If the bulls maintain control of the pair's direction, we could see the pair breaking the 1.3215 (R1) resistance line and aim for the 1.3290 (R2) resistance hurdle. Should on the other hand the bears take over, we could see the pair breaking the 1.3145 (S1) support line and aim for lower grounds.

Today's other economic highlights

During the European session today, we get Germany's Gfk Consumer Sentiment indicator for March. In the American session we get from the US the number of building permits for December, the CB consumer sentiment indicator for February and the API weekly crude oil inventories figure. Just before tomorrow's Asian session, we get New Zealand's trade data for January. Please note that ECB's Yves Mersch will be speaking today, yet the market's focus is expected to zoom in on Fed Chair Jerome Powell's testimony before the US senate in the late American session. Powell is given a chance to ease the worries of the market, while on the flip side, he may maintain a dovish tone which could weaken the USD.

GBP/USD

Support: 1.3070 (S1), 1.2960 (S2), 1.2830 (S3)
Resistance: 1.3175 (R1), 1.3270 (R2), 1.3360 (R3)

USD/CAD H4

Support: 1.3145 (S1), 1.3060 (S2), 1.2975 (S3)
Resistance: 1.3215 (R1), 1.3290 (R2), 1.3360 (R3)

Demand for risky assets has resumed. The US and China are moving towards a trade agreement. Donald Trump postponed the increase in duties on Chinese imports and said that he could soon sign an agreement with Chinese President, Xi Jinping, to end the trade dispute if their countries could overcome the remaining controversies. Trump also said that the negotiators are "very, very close" to the deal. The dollar index (#DX) closed the trading session in red (-0.10%).

The political uncertainty concerning Brexit remains. The British pound has updated monthly highs after reports that Theresa May wants to postpone the Brexit, scheduled for March 29. Today, investors are focused on the speech by Fed Chairman, Jerome Powell, to the US Congress. The official will evaluate the current state of the economy and the monetary policy of the country. We also recommend paying attention to economic releases from the US.

The "black gold" prices are consolidating after a sharp collapse the day before. Yesterday, the fall in futures for the WTI crude oil exceeded 3%. Donald Trump once again criticized the activities of OPEC. At the moment, oil quotes are testing the mark of $55.35 per barrel. At 23:30 (GMT+2:00), a report on the API weekly crude oil stock will be published.

Market Indicators

• Yesterday, the bullish sentiment was observed in the US stock market: #SPY (+0.14%), #DIA (+0.28%), #QQQ (+0.36%).
• The 10-year US government bonds yield is at 2.65-2.66%.

The news feed on 26.02.2019:

• Inflation report hearings in the UK at 12:00 (GMT+2:00);
• Statistics on the real estate market in the US at 15:30 (GMT+2:00);
• CB consumer confidence index in the US at 17:00 (GMT+2:00);
• Speech by Fed Chairman Jerome Powell at 17:00 (GMT+2:00).