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During the previous trading session, the British Pound traded sideways to stay at 1.2900 as it was expected. On Tuesday morning, the rate was located below the monthly pivot point at the 1.2914 mark.

In regards to the near-term future, most likely, the currency exchange rate will be supported by the 200-hour simple moving average to break the resistance of the monthly pivot point at 1.2924. In this case, the rate will end the trading session at the 1.2950 level.

Moreover, the during today's UK Average Earnings Index release at 9:30 GMT, the British Pound depreciated against the US Dollar by 12 pips or 0.09% to push the rate towards the 200-hour simple moving average at the 1.2914 mark

German ZEW Economic Sentiment rose to -13.4 in February, up from -15 and beat expectation of -13.7. Despite the improvement, the data stayed negative and well below long-term average of 22.4. Current Situation index, however, dropped to 15, down from 27.6 and missed expectation of 21. Eurozone ZEW Economic Sentiment also rose to -16.6, up from -20.9 and beat expectation of -18.2. Eurozone Current Situation index dropped -8.3 to -3.

"At the moment, we do not expect a rapid recovery of the slowing German economy. The economic situation in Germany has been weak, especially in the manufacturing sector. The figures for industrial production have once again seen a decrease, incoming orders are stagnant and foreign trade currently provides no fresh impulses. All of this is reflected in the fact that the assessment of the current situation has experienced a considerable decline. For the next six months, the financial market experts in our survey do not expect any improvement," comments ZEW President Professor Achim Wambach.

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Yesterday, the US financial markets were closed due to the holiday. Trading on currency majors was calm. The US dollar index (#DX) kept the current levels and closed the session unchanged (0.00%). It became known that a coalition of 16 US states sued over President Donald Trump due to his decision to declare a national emergency in order to receive funds for the construction of a wall along the border between the US and Mexico. The White House has not commented on the lawsuit. Investors expect the further course of events.

The Australian dollar is under pressure after the publication of the RBA monetary policy minutes. The regulator is concerned about "substantial uncertainty" in the economy. The Central Bank is ready to treat an issue of interest rates decline if the risks to economic stability will continue to grow.

Financial market participants expect new information regarding trade negotiations between the US and China, as well as the Brexit process. Today, investors will assess economic data from the UK and the Eurozone. The European Securities and Market Authority (ESMA) has announced its intention to provide temporary licenses for financial institutions in the UK in case of "tough" Brexit. This will allow the EU customers to trade on the London Stock Exchange, which reduces the risk of financial instability.

The "black gold" prices became stable after a significant increase last week. At the moment, futures for the WTI crude oil are testing $56.60 per barrel.

Market Indicators

• Yesterday, the US stock market was closed due to the holiday.
• The 10-year US government bonds yield is at 2.66-2.67%.

The news feed on 19.02.2019:

• Reports on the UK labor market at 11:30 (GMT+2:00);
• German ZEW economic sentiment at 12:00 (GMT+2:00).

XAUUSD (1323.56): Gold has advanced gains for the third consecutive daily session, as price tested intraday highs of 1326 before easing back. With the resistance level at 1321.27 being cleared, the current retracement could see a retest of the breached resistance level. Forming support at 132127 could signal a potential rebound to this upside. This would also validate the bullish flag pattern on the daily chart. The upside is at 1347 which remains the next main target. If gold prices fail to hold the support at 1321.27, then we could expect to see the downside prevailing with a correction toward the 1300 level of support.

USDJPY (110.64): The USDJPY has remained muted as price action is trading within the range of 111.21 and 109.74. With no clear breakout from this range, we expect price action to be consolidating within this level. The breached resistance at 109.78 remains a key level of interest in case of the downside. Establishing support here could keep the bias to the upside. Meanwhile, with the target level of 111.21 not being tested yet, there is the potential that the currency pair will maintain the upside momentum.

EURUSD (1.1294): The EURUSD currency pair advanced on Monday to test the previously established resistance level at 1.1327. Price action was seen easing back after testing this level. While the currency pair remains range-bound within 1.1327 and 1.1256, a breakout from this level could trigger the next direction in the trend. The bias remains to the upside at the moment. However, if the euro slips further, we could expect to see price retesting the lower support at 1.1256. To the upside, a breakout above 1.1327 could signal further gains that could test the next main resistance at 1.1437.

UK average weekly earnings including bonus grew 3.4% 3moy in December, unchanged from prior month and missed expectation of 3.5% 3moy. Weekly earnings excluding bonus rose 3.4% 3moy, up from 3.3% 3moy and matched expectations. Unemployment rate was unchanged at 4.0% staying at the lowest since 1970s. Also released, jobless claims rose 14.2k in January, above expectation of 12.3k. Claimant count rate was unchanged at 2.8%.

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The markets were trading muted on Monday with the U.S. market closed on account of a bank holiday. The USD index was seen easing back on the day, extending the declines for the third consecutive session.

In the early Asian session, the Reserve Bank of Australia released the monetary policy meeting minutes. The day ahead will see the Swiss trade balance figures coming out. Forecasts show a modest increase to 2.24 billion. The eurozone's current balance figures will follow.

The UK will be reporting on its labor market data today. The average earnings index is expected to rise slightly higher to 3.5%, up from 3.4% previously. The unemployment rate is expected to remain steady at 4.0%.

Germany's ZEW economic sentiment index is due later and is expected to show the index easing to -14.1 from -15.0 previously.

The overnight session will see the producer prices index data for the fourth quarter coming out of New Zealand.

The common European currency has depreciated about 50 base points against the Japanese Yen since yesterday's trading session. The currency pair tested the lower boundary of a junior ascending channel pattern during the Asian session on Tuesday.

After hitting the 200-hour simple moving average at 124.81, the EUR/JPY exchange rate began to gain strength.

As for the near future, it is likely that the currency exchange rate will aim at a swing high of 125.47.

However, a resistance level formed by the upper boundary of a dominant descending channel at 125.26 could hinder such movement today.

The Australian Dollar depreciated about 51 base points against the US Dollar on Monday. The decline was stopped by a support level formed by the monthly pivot point at 0.7104.

The AUD/USD currency pair tested a resistance cluster formed by the 100-hour simple moving average and the weekly PP at 0.7118 during the middle of Tuesday's trading session.

Everything being equal, it is likely that the currency exchange rate will edge lower towards the lower boundary of an ascending channel pattern at 0.7083 during the following trading session.

However, the 200-hour SMA at 0.7104 could provide support for the pair today.