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XAUUSD (1329.02): Gold traded subdued on Monday after price action posted strong declines off the highs near 1346.62 previously. With the support at 1321.27 holding the drops, for now, we expect to see some consolidation taking place. At the same time, as long as the support holds, the bias remains to the upside for a solid retest of the resistance level. On the 4-hour chart, gold prices have posted a modest correction before reversing course again. However, the current price action is looking to show a bearish flag pattern that could be forming. If the support at 1321.27 gives way, this could validate the bearish momentum in gold and signal a move to the downside. The next main support comes at the round number support of 1300 followed by a step to 1280.

USDJPY (110.83): The USDJPY posted some modest gains as price finally tested the upside target at 111.21 albeit rather briefly. Price posted a strong reversal off this resistance level with the past few sessions on the 4-hour chart pushing lower. With the upside target on a test, the USDJPY could potentially seek to retest the lower support at 109.74. A retest of this support will, however, keep the bias intact. The USDJPY trades flat currently within the said range.

EURUSD (1.1357): The EURUSD currency pair remains firm, trading above the 1.1327 level of support. Price action has repeatedly been attempting to test the upside, but price action has been rejected. This has led to a minor resistance level forming at 1.1365. A breakout above this level is required for the EURUSD to continue the gains to the upside. The next main target should be at 1.1435. To the downside, the support area looks strong enough to hold the declines for the moment. However, if the euro breaks down lower, we anticipate a retest of 1.1256 level.

Economic data on Monday was relatively sparse on the day. The Bank of England Governor, Mark Carney gave a scheduled speech. Most of his speech highlighted the markets post- Brexit.

The British PM May was seen delaying the Brexit vote, and the next voting is expected to happen on March 12. Meanwhile, two British lawmakers have pushed for a vote to postpone the Brexit deadline of March 29th. Some lawmakers said that if PM May cannot get a Brexit deal approved by March 13th, they would force her to extend the deadline.

Mixed data from the US

From the United States, the final wholesale inventories rose by 1.1% on the month which was above expectations of a 0.3% increase. President Trump raised the market optimism by noting that the U.S. was close to agreeing on a deal with China. The markets await more news on this.

President Trump's tweet to OPEC that the world could not take on higher oil prices sent oil prices plummeting on the day. WTI Crude oil fell over 2.86% on the day following this.

Earlier today, the Bank of Japan's core inflation data came out. Data showed that while economists forecasted a 0.6% increase, core inflation rose by 0.5%. This follows the previous month's 0.4% increase in inflation.

The European trading session will see the UK's inflation report hearing coming out. The NY trading session will start off with Canada's corporate profits due. Data from the U.S. will cover the building permits data which should see building permits rise at a slower pace of 1.29 million. Housing starts should increase by 1.25 million.

The Conference Board's consumer confidence report is out later, and confidence should rise to 124.3 on the index, up from 120.2.

The Fed Chair Jerome Powell is due to give his testimony later in the evening, followed by the Richmond Fed's manufacturing index due later in the evening.

• Rates: Powell to confirm Fed's U-turn; confirm end of BS run-off by the end of the year?
  Fed Chair Powell testifies before the US Senate banking panel. He is expected to confirm the US central banks' hasty U-turn made between December and now. He could confirm the Fed's desire to end the balance sheet run-off by the end of the year while remaining in assessment mode to see where the economy's going. We hold a tentative positive bias for bonds.
• Currencies: EUR/USD holding near 1.1370 resistance. More USD weakness to come?
  EUR/USD profited from a mild risk-on due to easing trade tensions yesterday. Today, the focus for USD trading turns to the US with the consumer confidence release and Fed Powell's testimony before the Senate. Powell confirming a soft approach on the balance sheet roll-off might weigh on the dollar. EUR/GBP is near key support as chances for a Brexit delay are rising

The Sunrise Headlines

• US equity markets posted rather limited gains (up to 0.36% (Nasdaq)) after president Trump delayed the Chinese tariff deadline. Asian equities are losing ground this morning with China reversing earlier gains.
• UK PM May is said to consider a Brexit delay to prevent the UK from leaving the EU without a deal next month. She will hold a Cabinet meeting today and then reveal the conclusions in an announcement to Parliament afterwards.
• US vice-president Mike Pence urged Latin American countries to intensify their efforts to isolate Venezuela's sitting president Maduro, after a weekend of chaos. He said the US would impose more financial sanctions in the next days.
• The US House votes on a resolution to revoke President Trump's declaration of national emergency to build the wall on the Mexican border. It will likely pass the Democrat-controlled House and then move to the (Rep.-controlled) Senate.
• World trade rose 3.3% in 2018, down from the 4.7% rise in 2017, according to a Dutch research group. Imports to and exports from China plummeted at the end of the year, a sign that the trade war is cooling global economic growth.
• Iranian Foreign Minister Javad Zarif unexpectedly resigned his post yesterday, as his engagement with the West was failing. Zarif, the architect of the 2015 nuclear deal, was known to favour engagement rather than confrontation.
• Today's eco calendar contains the Conf. Board Consumer Confidence (Feb) in the US. ECB's Coeuré and Lane speak today. BOE chief Carney and Fed chief Powell address their governments. Spain offers new 15-yr bonds.

Currencies: EUR/USD Holding Near 1.1370 Resistance. More USD Weakness To Come?

EUR/USD holding near recent correction top

Global markets traded with a risk-on bias testerday, as president Trump delayed the deadline for raising import tariffs on Chinese goods. Optimism in Europe and the US was more modest compared to their Asian/Chinese counterparts. The guarded reaction also prevented EUR/USD to break important technical levels. EUR/USD came within reach of last week's top in the 1.1370 area, but a real test/break didn't occur. A modest risk-on, higher US yields and the BOJ keeping the option open for more easing propelled USD/JPY. The pair closed at 111.06. This morning, Asian investors turned more cautious, pondering the consequences from the ‘truce' in the US-China trade conflict. The Indian rupee declined on regional tensions, but the move was said to be ‘blocked' by central bank action. USD/JPY reversed most off yesterday's rally as global optimism is easing and as US yields are declining ahead of Fed Powell testimony before Congress this afternoon. EUR/USD is holding rather strong (1.1360 area.) Today, US housing data are probably of second tier importance for (USD) trading. Consumer confidence (conference board) will get more attention. A rise from 120.2 to 124.9 is expected. Of late, US data turned more mixed. The jury is still out, but the dollar might be (slightly) more sensitive to a downside surprise than to an upward surprise. However, the focus for (USD) trading will be on Fed Powell's testimony before the Senate. The Fed chairman will probably maintain its wait-and-see approach on interest rates. A ‘soft' tone on the normalisation of the balance sheet might is in theory USD negative. Last week, EUR/USD rebounded off recent lows euro, but with no strong momentum. An easing of the risk rally might slow the EUR/USD rebound. However, today's USD specific news (consumer confidence and Powell's assessment on the Fed balance sheet) might also weigh on the dollar. Any EUR/USD rebound will probably develop a slow pace as long as EMU data remain unconvincing. Still a break beyond 1.1370 might open the way for further gains in the 1.12/1.15 ST consolidation pattern.

There were plenty of rumours yesterday that the UK and the EU might be preparing for a delay of the March 29 Brexit. Sterling stayed well bid. EUR/GBP closed at 0.8672. Overnight a Bloomberg report indicated that UK PM May is considering a Brexit delay if no deal will be reached next month. At the same time, Labour is opening the dollar for a new referendum. Risks for a no deal scenario are apparently declining. This is supporting sterling. However, longerterm it might cement a status of uncertainty. Despite current sterling positive trend, we are cautious to anticipate a sustained break beyond the EUR/GBP 0.8620/00 support.

EUR/USD holding near 1.1370 resistance. More USD weakness to come?

The German stock index DAX 30 has broken above the previous high but the angle of the price action remains shallow. Price will need a bullish breakout above the resistance trend line (red) to confirm a potential wave 3 (green). Ps. do not forget to check out our upcoming 3x Forex seminars on trading in Europe!

The DAX 30 could also find potential support at the confluence of trend lines (green/blue) for a bullish bounce. A bullish continuation could aim for the Fibonacci targets of wave C vs A at around 12,000-12,500. A break below this zone could however indicate a failed bullish breakout and a deeper bearish retracement (orange arrow).

The DAX 30 seems to be building a bullish ABC (blue) zigzag correction but a downtrend could occur if price manages to break below the key support trend line (blue). A bullish break above the resistance trend line (orange) could confirm the wave C (blue) pattern towards the 61.8% Fibonacci retracement level of wave X vs W.

Pivot (invalidation): 55.90

Our preference Short positions below 55.90 with targets at 54.75 & 54.20 in extension.

Alternative scenario Above 55.90 look for further upside with 56.35 & 57.00 as targets.

Comment The RSI is mixed to bearish.

Pivot (invalidation): 16.0000

Our preference Short positions below 16.0000 with targets at 15.8200 & 15.7600 in extension.

Alternative scenario Above 16.0000 look for further upside with 16.0500 & 16.1000 as targets.

Comment As Long as 16.0000 is resistance, expect a return to 15.8200.

Pivot (invalidation): 1333.00

Our preference Short positions below 1333.00 with targets at 1326.00 & 1322.50 in extension.

Alternative scenario Above 1333.00 look for further upside with 1336.00 & 1340.00 as targets.

Comment As Long as 1333.00 is resistance, look for choppy price action with a bearish bias.

Pivot (invalidation): 2815.00

Our preference Short positions below 2815.00 with targets at 2777.00 & 2763.00 in extension.

Alternative scenario Above 2815.00 look for further upside with 2831.00 & 2844.00 as targets.

Comment The RSI is bearish and calls for further downside.