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The Federal Reserve released the meeting minutes yesterday from its latest policy meeting. The U.S. dollar pared losses after the minutes did not show any further dovish message from the central bank. Economic data was sparse.

The British pound posted gains as the meeting between the EU and the UK happened in an attempt to renegotiate the Brexit terms.

The markets got off a busy start today with the release of Australia’s employment report. Data showed that unemployment kept steady at 5.0% while the monthly employment change saw a change of 39.1k jobs. Economists forecast that the unemployment rate would hold steady at 5.0% while the employment change for the month would see 15.2k jobs being added.

The European trading session will see the final inflation figures from Germany and France coming out. Germany’s CPI should decrease by 0.8% on the month, unchanged from the flash estimates, while French inflation might fall by 0.5%.

Flash manufacturing and services PMI for the Eurozone should see manufacturing activity ease to 50.3 while services activity should recover to 51.5 from 51.2 previously.

The ECB will release its meeting minutes later in the day.

The NY trading session will see the U.S. durable goods orders report which should rise 0.8% on the month. Core durable goods orders should increase by 0.2%.

The Philly Fed manufacturing index should ease to 15.6 from 17.0 in January. Later in the day, the existing home sales report will be coming out. Data might show 5.01M compared to 4.99M from the previous month.

The BoC governor Poloz will speak later in the evening

Will the Federal Reserve raise interest rates at all in 2019? This was a question even Fed officials were unable to answer, asthe minutes from the FOMC’s January policy meetinghave revealed.

Investors were left with more unanswered questions after the Federal Reserve minutes signalled that officials were unsure if rate hikes were needed this year. Although Fed members acknowledged the resilience of the labour market, growth was seen to be “stepping down” in 2019 with muted inflation pressures still a cause for concern. With rising external risks in the form of Brexit and decelerating growth in China &Europe, the Fed is likely to maintain a ‘cautious’ and ‘patient’ approach to monetary policy. The fact that officials are waiting to access “the possibilities of a sharper-than-expected slowdown in global economic growth” suggests that rates may remain at their current levels for an extended period of time.

The dovish minutes may fuel speculation over a possible rate cut in the distant future, given the unfavourable global macroeconomic conditions and health of the US economy. It is worth noting that there has been a barrage of disappointing economic data from the United States, while fading fiscal stimulus and political risk in Washington are simply rubbing salt into the wound. With the Fed being heavily data dependent, the Dollar is likely to remain highly sensitive to economic reports moving forward.

One key takeaway from the minutes was how almost all officials wanted to stop reducing the balance sheet this year. All in all, the Federal Reserve’s patience on rate hikes will make life harder for King Dollar in the medium to longer term. In regards to the technical picture, the Dollar Index has the potential to challenge 96.00 if bears are able to send prices back below 96.48.

Currency spotlight – GBPUSD

It is shaping up to be another wildly unpredictable and volatile trading week for the British Pound thanks to Brexit noise and chaos in the House of Commons.

With market pessimism over Theresa May’s trip to Brussels concluding without any breakthrough in Brexit talks, appetite for the Pound is likely to be seen taking another dive in the near-term. However, we see the Pound appreciating in the medium-term as expectations mount thatthe government will extend Article 50 to prevent a no-deal Brexit. Taking a look at the technical picture, the GBPUSD is currently trading around 1.3044as of writing. Although the currency pair has staged an impressive rebound on the daily charts, bears could still make a return below the psychological 1.3000 level.

Pivot (invalidation): 56.60

Our preference Long positions above 56.60 with targets at 58.00 & 58.40 in extension.

Alternative scenario Below 56.60 look for further downside with 56.10 & 55.65 as targets.

Comment The RSI advocates for further upside.

Pivot (invalidation): 16.1000

Our preference Short positions below 16.1000 with targets at 15.9400 & 15.8400 in extension.

Alternative scenario Above 16.1000 look for further upside with 16.1400 & 16.2100 as targets.

Comment The RSI advocates for further decline.

Pivot (invalidation): 1346.50

Our preference Short positions below 1346.50 with targets at 1336.50 & 1330.00 in extension.

Alternative scenario Above 1346.50 look for further upside with 1350.00 & 1354.00 as targets.

Comment The RSI advocates for further downside

Pivot (invalidation): 5.3410

Our preference Short positions below 5.3410 with targets at 5.3000 & 5.2775 in extension.

Alternative scenario Above 5.3410 look for further upside with 5.3630 & 5.3870 as targets.

Comment The RSI is bearish and calls for further downside.

Pivot (invalidation): 0.7145

Our preference Long positions above 0.7145 with targets at 0.7185 & 0.7210 in extension.

Alternative scenario Below 0.7145 look for further downside with 0.7125 & 0.7100 as targets.

Comment Intraday technical indicators are mixed and call for caution.

Pivot (invalidation): 1.3200

Our preference Short positions below 1.3200 with targets at 1.3145 & 1.3120 in extension.

Alternative scenario Above 1.3200 look for further upside with 1.3235 & 1.3260 as targets.

Comment The RSI lacks upward momentum.

Pivot (invalidation): 0.9990

Our preference Long positions above 0.9990 with targets at 1.0020 & 1.0035 in extension.

Alternative scenario Below 0.9990 look for further downside with 0.9980 & 0.9970 as targets.

Comment Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Pivot (invalidation): 110.60

Our preference Long positions above 110.60 with targets at 110.95 & 111.15 in extension.

Alternative scenario Below 110.60 look for further downside with 110.45 & 110.25 as targets.

Comment A support base at 110.60 has formed and has allowed for a temporary stabilisation.