Sample Category Title

Pivot (invalidation): 1.3065

Our preference Short positions below 1.3065 with targets at 1.3010 & 1.2980 in extension.

Alternative scenario Above 1.3065 look for further upside with 1.3100 & 1.3135 as targets.

Comment The upward potential is likely to be limited by the resistance at 1.3065.

Daily Pivots: (S1) 144.16; (P) 144.61; (R1) 145.09; More...

At this point, further rise is in favor in GBP/JPY. But we'd expect strong resistance from trend line (now at 146.64) to limit upside, at least on first attempt. On the downside, firm break of 141.00 support will suggest completion of the rebound and turn bias to the downside.

In the bigger picture, the strong rebound from 131.51 suggests that medium term fall from 156.59 (2018 high) has completed already. The corrective structure of such decline is turn argues that it's the second leg of the corrective pattern from 122.36 (2016 low). And this pattern is starting the third leg. On the upside, decisive break of 149.38 will pave the way to 156.59 resistance and above.

Pivot (invalidation): 1.1370

Our preference Short positions below 1.1370 with targets at 1.1325 & 1.1295 in extension.

Alternative scenario Above 1.1370 look for further upside with 1.1390 & 1.1410 as targets.

Comment As Long as the resistance at 1.1370 is not surpassed, the risk of the break below 1.1325 remains high.

Daily Pivots: (S1) 125.35; (P) 125.65; (R1) 125.96; More....

Intraday bias in EUR?JPY remains neutral at this point. On the downside, break of 123.78 support will suggests completion of rebound from 118.62 after rejection by 55 day EMA. Deeper fall would then be seen back to retest 118.62 low. However, decisive break of 125.95 will dampen our bearish view and target 129.25 resistance next.

In the bigger picture, medium term rebound from 109.03 (2016 low) has completed at 137.49 already, with corrective structure. Fall from 137.49 is likely still in progress. Decisive break of 118.62 will target 161.8% projection of 137.49 to 124.61 from 133.12 at 112.28, which is inside 109.03/114.84 support zone.

Pivot (invalidation): 11315.00

Our preference Long positions above 11315.00 with targets at 11490.00 & 11560.00 in extension.

Alternative scenario Below 11315.00 look for further downside with 11242.00 & 11180.00 as targets.

Comment The RSI is above its neutrality area at 50%.

Pivot (invalidation): 2763.00

Our preference Long positions above 2763.00 with targets at 2795.00 & 2810.00 in extension.

Alternative scenario Below 2763.00 look for further downside with 2750.00 & 2737.00 as targets.

Comment The RSI is bullish and calls for further upside.

Daily Pivots: (S1) 0.8669; (P) 0.8692; (R1) 0.8711; More...

At this point, further decline could still be seen in EUR/GBP towards 0.8617/20 key support zone. We'd look for strong support from there to bring rebound. On the upside, above 0.8762 minor resistance will turn bias back to the upside. Further break of 0.8440 will extend the rebound to 61.8% retracement of 0.9101 to 0.8617 at 0.8916 instead.

In the bigger picture, EUR/GBP is seen as staying in long term range pattern started at 0.9304 (2016 high). The medium term range is set between 0.8620 and 0.9101. Downside breakout of 0.8620 will pave the way back to 0.8312 support . Break of 0.9101 will bring retest of 0.9304/5 resistance.

USDJPY failed to hold gains above the 111 level last week but it refrained from crossing below the 50-day moving average (MA), following a sideway path instead. The pair is developing within the upper area of the ascending channel, while the MACD continues to improve above its red signal line and in positive territory, suggesting that the pair is more likely to hold higher in the short-term. The RSI keeps rising as well but with the indicator trending close to the overbought mark of 70, negative corrections cannot be excluded.

Should the market head northwards, the upper line of the channel which converges with the 200-day MA at 111.30 will be closely watched as any significant step above this area could unleash a stronger rally. If that’s the case resistance could next run towards 112.20, a previous support level, and then straight up to the 113 psychological level. Higher up, another important barrier may appear around 113.70.

On the downside, the 50% Fibonacci of 110.48 of the downleg from 114.54 to 106.45 has been halting downside movements this week and could appear restrictive once again If bearish forces resume. Lower down, a key support could be found at the crossroads of the 20- and the 50-day MAs at 110, while a bigger attention is expected to gather around 109.76 and the bottom of the channel. If the bears manage to drive the price decisively out of the channel and below the 38.2% Fibonacci of 109.53, it would be interesting to see whether the price can cross below 109, the bottom of the Ichimoku cloud, to retest the 23.6% Fibonacci of 108.34.

In the medium-term picture, the outlook remains negative as long as the market holds below 111.37. The bearish cross between the 50 and the 200-day MA, however, signals that things could turn worse before getting better in the medium-term.

Daily Pivots: (S1) 1.5806; (P) 1.5836; (R1) 1.5857; More....

EUR/AUD rebounds strongly today but stays inside range of 1.5721/6060. Intraday bias remains neutral first. On the upside, break of 1.6060 resistance should confirm that decline from 1.6765 has completed. Further rally should then be seen to retest 1.6765 high. On the downside, however, break of 1.5721 will extend the decline to 1.5346 support instead.

In the bigger picture, as long as 1.5346 support holds, outlook will remain bullish. Uptrend from 1.1602 (2012 low) is expected to resume sooner or later. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal, with bearish divergence condition in weekly MACD, and turn outlook bearish.

• Rates: Fed wants to end BS run-off later this year
  FOMC Minutes revealed that most participants want to end the balance sheet run-off by the end of the year. We expect communication on the subject at the March 20 Fed meeting. Core bonds lose ground overnight on rumours of significant progress in US-Sino trade talks. We’d be cautious to join the risk rally. EMU PMI’s are expect to bottom out in February.
• Currencies: Dollar stays in wait-and-see modus despite positive headlines on trade
  The dollar showed no clear trend yesterday. The Fed minutes didn’t change the broader picture for the US currency. Today, the eco calendar is well filled. Will EMU PMI’s bottom and provide some downside protection for the euro? Or will US data again disappoint? For now the consequences of (US-Sino) trade talks for the USD or the euro are still unclear.

The Sunrise Headlines

• US equities posted modest gains yesterday. Asian equity markets are trading mixed as China/US progress lifted sentiment at first but China’s central bank signalling not being ready to cut rates weighed on sentiment afterwards.
• The US and China are working on multiple pacts, covering topics from agriculture to intellectual property, that would form the basis of a final trade deal and (temporarily) avert higher tariffs on Chinese imports on March 1.
• US President Trump threatened to impose tariffs on EU car import again, if the US can’t reach a trade deal with the EU. The threat follows a report by the Commerce Dept. that investigated the national-security risks of auto imports.
• The Australian dollar erased earlier gains on strong labour data (+39.1k jobs in January) following a report that one of China’s main ports had banned imports of Australian coal. AUD/USD dropped below 0.71.
• Japan’s Manufacturing PMI dropped from 50.3 to 48.5 in January, the lowest reading since June 2016. Both production output (from 49.4 to 47) and new orders fell, suggesting Japan’s underlying business conditions remain poor.
• Rating agency Fitch said it might cut the UK’s sovereign rating as it sees mounting risks of a no-deal Brexit. Meanwhile, PM May reports constructive talks on a solution for the Irish backstop with EU Commission leader Juncker.
• Today’s eco calendar contains EMU PMI’s, US weekly jobless claims, Philly Fed Business sentiment and durable goods orders. The ECB releases the January meeting minutes, while Praet speaks. France and Spain sell bonds

Currencies: Dollar Stays In Wait-And-See Modus Despite Positive Headlines On Trade

EUR/USD little changed despite progress on trade

The dollar showed no clear trend yesterday. EUR/USD (close 1.1338) and the trade-weighted USD (DXY close at 96.45) finished little changed. USD/JPY (close 110.85) gained modest ground, mainly on yen weakness after soft comments from BOJ’s Kuroda. The Fed Minutes showed Powell and Co will be patient as they try to find out whether further rate hikes are needed. The balance sheet roll-off will likely end this year. The USD lost ground before the release of the minutes, but rebounded afterward. Some investors maybe hoped for hints on possible rate cuts, but this sign didn’t come, preventing further USD losses. Overnight, Asian equities are (modestly) supported by headlines that the US and China are making good progress on a trade deal (MOU’s, a list of products that China will buy to reduce the trade deficit ….). The valuation of the yuan is rumoured to be part of a deal. The yuan strengthens further (USD/CNY 6.70 area). The yen reversed earlier strength as the Japan manufacturing PMI fell into contraction territory. EUR/USD is little changed. The Aussie dollar initially gained on strong labour market data. However, the Aussie dollar nosedived later on an analyst call for rate cuts. Finally, headlines on a Chinese port blocking Austrian coal imports pushed AUD/USD back to the 0.71 area. The calendar is well filled today. EMU February PMI’s are expected to stabilize near recent low levels. Are there finally signs that the worst may be over? US data include the Philly Fed business outlook, durable goods orders and existing home sales. USD traders might be alert for more signs of US eco softness after last week’s poor sales & production data. Headlines on the Sino-US trade talks are a tentative euro positive, but it is counterbalanced by uncertainty on US import tariffs on autos. EUR/USD rebounded off last week lows after some poor US data but sentiment on the euro remains fragile. Of late, we assumed progress on trade issues and better EMU data are needed for a more protracted EUR/USD comeback. There are hopeful signs on trade, but the jury is still out. EUR/USD 1.1216 marks the Nov low. EUR/USD 1.1287 is 61% retracement (2016 low/2018 top).

Sterling maintained most of Tuesday’s gains yesterday. EUR/GBP hovered near the 0.87 pivot. The pair is still trading in that area even as Fitch put the UK AA credit rating on negative watch due to the potential negative impact of Brexit. Some headlines suggest progress on the backstop has been made after yesterday’s meeting between PM May and EU’s Juncker was labelled ‘constructive’. Of late, markets tended to be positioned for a scenario that a no-deal Brexit could be avoided. EUR/GBP 0.8621/17 is key MT support

EUR/USD little changed as impact from trade talks is still unclear