Sample Category Title

Pivot (invalidation): 1.0035

Our preference Short positions below 1.0035 with targets at 0.9990 & 0.9970 in extension.

Alternative scenario Above 1.0035 look for further upside with 1.0060 & 1.0080 as targets.

Comment As Long as the resistance at 1.0035 is not surpassed, the risk of the break below 0.9990 remains high.

Pivot (invalidation): 110.65

Our preference Long positions above 110.65 with targets at 110.95 & 111.15 in extension.

Alternative scenario Below 110.65 look for further downside with 110.45 & 110.25 as targets.

Comment Technically the RSI is above its neutrality area at 50.

Pivot (invalidation): 1.3030

Our preference nLong positions above 1.3030 with targets at 1.3100 & 1.3155 in extension.

Alternative scenario Below 1.3030 look for further downside with 1.2990 & 1.2940 as targets.

Comment The break above 1.3030 is a positive signal that has opened a path to 1.3100.

Pivot (invalidation): 1.1330

Our preference Long positions above 1.1330 with targets at 1.1370 & 1.1400 in extension.

Alternative scenario Below 1.1330 look for further downside with 1.1315 & 1.1290 as targets.

Comment A support base at 1.1330 has formed and has allowed for a temporary stabilisation.

FTSE underperformer again as sterling re-finds some form

European equity markets are poised for a slightly higher open on Wednesday, with the FTSE looking like the underperformer once again as sterling marches higher.

The pound broke back above 1.30 against the dollar on Wednesday, registering more than 1% gains on the day in the process. There have been a variety of reasons touted for the gains on Tuesday, including Brexit optimism on reports that the Malthouse Compromise has been ditched and stronger jobs data.

Whatever the reason, it’s certainly looking more bullish than it did a few days ago and I’m sure a weaker greenback isn’t doing that any harm. Whether it can break beyond 1.32-1.33 region without something more significant on a deal with Brussels I’m not convinced.

Gold buoyed by US yuan demands

Gold took another big leap higher on Tuesday, buoyed by a softer dollar as speculation mounted that the US is demanding that China stops devaluing its currency to support exports. The issue of currency devaluation has long been a complaint of the Trump administration and the decline in the yuan as tariffs were imposed will not have eased those frustrations, even if some would argue it’s a natural response to them.

The last week or so has been very good for gold, gaining more than 3% and now testing $1,340 as it powers on. It’s not just the dollar moves which have been driving it on, in fact the dollar has been a hindrance for most of this month. The dovish shift by central banks across the globe is typically bullish for the yellow metal and we’re seeing that play out nicely.

WTI dragging its feet as traders eye inventory numbers

The weaker dollar is also giving oil a lift although in this case, we’ve run into strong technical resistance around $56 and WTI is struggling to break through. Brent is one step ahead – having broken through $65 late last week but is now being held back as its US cousin drags its feet.

With API and EIA oil inventories due in the next couple of days, and US oil rig data on Friday, there’s plenty of opportunities for something to provide the catalyst for the breakout, which could see the bulls gain significant momentum.

XAUUSD (1342.79): Gold prices posted strong gains on Tuesday as price action rallied strongly. In a follow through, the precious metal rose to a fresh 10-month high earlier today with the intraday gains briefly testing the 1346.62 level. This marks the price level that we were anticipating to the upside following the breakout from the bullish flag pattern. A firm retest should trigger around the 1346 - 1347 level. As long as these resistance levels, gold prices could be seen posting a correction in the near term. The previously held support at 1321.50 remains the key target to the downside.

USDJPY (110.76): The USDJPY attempted to recover from the declines previously. Price should rebound from the temporary low formed following the rally to highs of 111.12. If price recovers from the modest pullback, we could expect the USDJPY to test the 111.21 level which would mark the completion of the breakout from the ascending triangle pattern. Alternately, to the downside, if the previous lows at 110.25 are breached, then price action could push lower. The support at 109.74 will become the next downside target for the USDJPY currency pair.

EURUSD (1.1342): The EURUSD currency pair managed to break past the resistance area of 1.1327 - 1.1309 earlier today. Price action should consolidate and potentially revisit the breached resistance level where support could establish. If a rebound off this level happens, then the Euro currency could attempt to post strong gains targeting 1.1435. This marks a retest of the previously breached support level. Establishing resistance at this level could potentially keep the common currency consolidating around the current levels of support and resistance.

The U.S. Dollar extended the declines for the fourth consecutive session. The drops come ahead of the Fed minutes due today. The U.S and China trade talks resume ahead of the March deadline alongside discussions with the EU officials.

On the economic front, data from the Eurozone showed that the current account surplus fell to 16.2 billion Euro in December. This was well below the estimates of a decline to 21.4 billion from 22.6 billion Euro in November.

The German ZEW economic sentiment index showed an improvement in the sentiment. The index rose to -13.4 beating estimates of -14.1. The index rose to the highest level since the past 5-month period.

In the UK, the ILO labor market data showed that the economy added 14.2k jobs in the three months ending December. The unemployment rate held steady at 4.0% for the second consecutive time. However, the average earnings index increased just by 3.4% below estimates of a 3.5% increase.

Regarding Brexit, the UK PM May should resume negotiations with the EU counterparts. This comes ahead of the February 26/27 presentation of the deal to the UK parliament. Meanwhile, the EU Commission President Jean-Claude Juncker said Brexit could be delayed by the EU if the UK requests for the delay. He said that he does not rule out an extension to the Brexit deadline until May when the EU elections are done with.

Australia's quarterly wage price index data showed a 0.5% increase. Economists forecast a rise of 0.6% in the quarter ending December 2018. The data comes ahead of tomorrow's jobs report.

The European trading session ahead will see the German producer prices index coming out. PPI should fall by 0.2% on the month in January, slightly lesser compared to the 0.4% decline in December last year.

The economic calendar is quite sparse for the remainder of the session. The NY trading session will see the Fed's meeting minutes coming out. The meeting minutes come under careful scrutiny from investors which covers the January meeting where interest rates stayed unchanged.

Gold prices skyrocketed to a fresh ten-month high earlier today, reaching the 1346.61 level. Currently, it is set to complete the fifth consecutive green day after the rebound on the 23.6% Fibonacci retracement level of the upleg from 1160 to 1346.61, near 1302 and the steep ascending trend line, which has been holding since November 13.

Turning the attention to the technical indicators, the RSI seems to be overbought as it is flattening above the 70 level, suggesting a possible downward correction. However, the MACD oscillator is still strengthening its bullish bias, jumping above the trigger line in the positive zone.

Immediate resistance to further gains would likely come from the 1357 barrier, taken from the highs on April 2018. If there is a successful break above this area, further resistance could be met around the 1365 strong obstacle, which halted bullish movements in the preceding year. Higher up, the July 2016 top of 1375, would be the next target.

If, however, the strong upside momentum was to lose steam and the yellow metal reversed lower, support would initially come from the 1326 level. Slipping below this level could take prices towards the 20-day simple moving average (SMA) currently at 1314 and the diagonal line. Failure to hold above this region would switch the focus back to the downside and would increasingly turn to the 23.6% Fibonacci of 1302 before touching the 40-day SMA around 1300.

In the more medium-term picture, the price is extending gains, endorsing the bullish view following the upward reversal at the 19-month low of 1160 and is in progress to post the second straight positive week.