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Cable was slightly higher in early trading on Tuesday, consolidating above new three-week low at 1.2844, posted after Monday's 0.57% fall, driven by signs of UK economy's slowdown on downbeat UK Q$ GDP data.

Surge and close well below former pivotal supports at 1.29 zone generated bearish signal.

Broken 100SMA (1.2890) caps today's action, maintaining bearish bias as Monday's long bearish daily candle weighs.

Rising bearish momentum adds to negative outlook, however, oversold stochastic may signal extended consolidation ahead of next significant supports at 1.2807 (50% retracement of 1.2397/1.3217 / 55SMA) and 1.2786 (daily cloud top).

Focus turns towards UK PM May's address to lawmakers, in attempt to convince them to back her divorce plan and force the EU to accept changes to the deal, to avoid disorderly Brexit, which looks for now as likely scenario.

The BoE Governor Carney is also due to speak later today, with downbeat comments expected in the markets.

Sterling could accelerate towards 1.27 zone (Fibo 61.8% of 1.2397/1.3217) on negative response from lawmakers and dovish stance from Carney that would further sour already negative sentiment.

Broken 1.29 zone now marks solid resistance which is expected to ideally cap and keep bears intact.

Only stronger bullish acceleration and close above 20SMA (1.2996) and 200SMA (1.3023) would neutralize bears.

Res: 1.2890, 1.2915, 1.2942, 1.2996
Sup: 1.2832, 1.2807, 1.2786, 1.2710

Tomorrow during the Asian session (01:00, GMT), RBNZ is to release its interest rate decision and is expected to remain on hold at +1.75%. Currently NZD OIS imply a probability of 91.03% for the bank to remain on hold as mentioned. Given the fact that RBNZ has a dual mandate (over inflation and unemployment), there seems to be little to be optimistic about as unemployment has recently risen (Q4: 4.3%) and inflation remained below the bank's median target of inflation. Also the growing global trading uncertainty, coupled with a slowdown in Chinese growth could push RBNZ to join the dovish chorus of other central banks. Analysts point out that the bank could revise downwards its forecasts in the monetary statement which is due out at the same time. Should dovish elements prevail in the accompanying statement or the following press conference we could see the Kiwi weakening. NZD/USD maintained a rather sideways motion yesterday testing the 0.6725 (S1) support line. If we see a more dovish tone prevailing in the RBNZ's interest rate decision, we could see the pair trading in a bearish market over the next two sessions as the Kiwi side of the pair could weaken. Should the bears dictate the pair's direction, we could see it breaking the 0.6725 (S1) support line and aim for the 0.6675 (S2) support level. Should the bulls take over, we could see the pair aiming if not breaking the 0.6780 (R1) resistance line.

Pound weakens on UK's slowing economy and Brexit uncertainty

The pound weakened against the USD yesterday, as financial data showed an accelerating slowdown of economic growth in the UK for the last quarter of 2018. Analysts are pointing towards the monthly data showing a contraction of the UK economy and also mention that such numbers matched with Brexit uncertainty paint a rather gloomy picture of UK future. On the political front, Theresa May has rejected the idea of the UK remaining under EU customs rule and fears are growing that Theresa May could be risking a hard Brexit. The British PM is to address the UK parliament today and could be asking for more time to renegotiate with the EU. We maintain the view that without an end to uncertainty, the pound is likely to continue to trade in a bearish market. Cable dropped yesterday aiming for the 1.2830 (S1) support line as it ultimately obeyed the downward trend line's command. We maintain a bearish sentiment for the pair as the downward trendline continues to dictate the pair's direction. It should be noted that in the 4 hour chart the pair's RSI is near the reading of 30, implying a rather overcrowded short position. If the pair remains under the selling interest of the market, we could see the pair breaking the 1.2830 (S1) support line and aim for the 1.2710 (S2) support level. On the flip side, if the market favors the pair's long positions, we could see cable breaking the prementioned downward trendline and aiming if not breaking the 1.2960 (R1) resistance level.

Today's other economic highlights

In today's American session we get form the US the Jolts Job Openings number for December and the US API weekly crude oil inventories figure. As for speakers, BoE governor Mark Carney and Fed Chair Jerome Powell speak. Also please note that ECB president Mario Draghi will be joining the Eurogroup meeting today and the OPEC monthly report is due out.

NZD/USD H4

Support: 0.6725 (S1), 0.6675 (S2), 0.6630 (S3)
Resistance: 0.6780 (R1), 0.6825 (R2), 0.6860 (R3)

GBP/USD H4

Support: 1.2830 (S1), 1.2710 (S2), 1.2610 (S3)
Resistance: 1.2960 (R1), 1.3070 (R2), 1.3175 (R3)

GBPUSD is currently challenging the 40-simple moving average (SMA) in the daily timeframe after the aggressive selling interest from the three-and-a-half month high of 1.3217 on January 25. The price is also hovering around the 23.6% Fibonacci retracement level of the downward movement from 1.4375 to the 21-month low of 1.2390.

The short-term bias remains neutral to bearish, as confirmed by the technical indicators. The RSI indicator is flattening around the 50 level, while the MACD oscillator is slipping in the positive zone below the red trigger line. Furthermore, the %K line of the stochastic oscillator recorded a bearish crossover again in the oversold zone, suggesting negative movement in the near term.

In the wake of more downward pressures, the market could meet immediate support at the 1.2815 level, taken from the inside swing high on December 31. A successful close below this level could see a retest of the previous bottom of 1.2660, while in case of steeper declines, cable could breach this trough, diving to 1.2475.

On the flipside, a move to the upside above the 23.6% Fibonacci of 1.2855 could find resistance near the 20-SMA currently near the 1.3000 strong psychological level. If the price increases positive momentum above this area, the 38.2% Fibonacci of 1.3145 could be the next level in focus.

Summarizing, in the medium-term, GBPUSD seems to be neutral over the last six months as it failed to post a sharp upward movement above the 61.8% Fibonacci.

• Dollar soars as ‘there is no alternative'; Fed's Powell speaks at 17:45 GMT
• News US government shutdown may be avoided support risk sentiment
• RBNZ meets overnight; may strike a cautious tone, but is unlikely to be as dovish as market pricing implies

Dollar rips higher, but can the bulls stay in control?

The greenback shined for yet another session, continuing its unrelenting rally for an eighth day in a row versus a basket of major currencies, without much in the way of news flow behind the move. Traders seem to be having second thoughts about the likelihood of a US-China trade deal this month, and in their search for a hedge are turning to world's reserve currency, which has been the safe haven of choice throughout the trade dispute. Beyond that, the dollar's latest gains also seem owed to investors staying away from other major currencies, most notably the euro and pound amid European growth concerns and Brexit uncertainties respectively. In other words, the US – and by extent its currency – remain a ‘decent house in a bad neighborhood'.

Can this rally continue? A lot will likely depend on what signals come out of the trade talks later this week, though admittedly, the speed and magnitude of the latest gains suggest some cause for caution in the immediate term. Today, the greenback will likely take its cue from Fed Chairman Powell, who will deliver remarks at 17:45 GMT. He has clearly shifted to a more dovish stance, and it will be interesting to see whether more “cautious” rhetoric can erode some of the dollar's recent appeal.

Risk appetite buoyed by news US shutdown may be averted

After closing little changed on Monday, US stock markets seem set to open notably higher today, according to futures. Asian indices are also in the green for the most part, while the traditional safe haven, the Japanese yen, is the worst performer in the G10 FX sphere today.

The catalyst for these moves were likely headlines overnight that Republicans and Democrats reached a “tentative deal” to avert another government shutdown, which was set to commence on Friday. Some remarks by the US President – who was speaking at a rally in Texas – that “we are going to make great deals on trade”, likely helped as well.

In equity markets, the earnings season continues with Activision Blizzard and Under Armour being among notable names releasing their quarterly results today.

RBNZ may appear dovish, but not as much as markets expect

The Reserve Bank of New Zealand (RBNZ) will announce its policy decision during the early Asian session on Wednesday, at 01:00 GMT. No change in policy is expected, and in the wake of some recent disappointing employment data, investors seem to expect policymakers to strike a much more dovish tone. Admittedly, New Zealand's economy is losing steam, and given also a plethora of external risks, it wouldn't be a surprise to see the central bank actually cut rates later in 2019.

Having said that, a quarter-point rate cut this year is now priced in with an 86% probability, which implies markets believe this is practically a done deal. So, while the RBNZ may indeed strike a more cautious tone and keep a rate cut firmly on the table, it will likely retain some optionality, and may thus find it difficult to live up to the market's overly dovish expectations. To be clear, given just how dovish market pricing is, anything short of a clear signal that rates may be cut soon could elicit a positive reaction in the kiwi, reminiscent of a “buy the news” move.

In the bigger picture, though, the outlook for the currency remains bleak overall.

Pivot (invalidation): 52.20

Our preference Long positions above 52.20 with targets at 53.40 & 53.90 in extension.

Alternative scenario Below 52.20 look for further downside with 51.70 & 51.30 as targets.

Comment The RSI advocates for further upside.

Pivot (invalidation): 15.7700

Our preference Short positions below 15.7700 with targets at 15.6600 & 15.6200 in extension.

Alternative scenario Above 15.7700 look for further upside with 15.8300 & 15.8700 as targets.

Comment The RSI is mixed with a bearish bias.

Pivot (invalidation): 1310.50

Our preference Short positions below 1310.50 with targets at 1305.50 & 1303.50 in extension.

Alternative scenario Above 1310.50 look for further upside with 1312.50 & 1315.50 as targets.

Comment The RSI advocates for further decline.

Daily Pivots: (S1) 1.1280; (P) 1.1350; (R1) 1.1390; More...

With 4 hour MACD crossed above signal line, intraday bias in EUR/CHF is turned neutral first. On the downside, break of 1.1310 will target 1.1259 and possibly below. But we'd continue to expect strong support from 1.1154/98 to contain downside and bring rebound. On the upside, break of 1.1376 minor resistance will indicate that the pull back from 1.1444 has completed. Intraday bias will be turned back to the upside for retesting 1.1444.

In the bigger picture, price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by 1.1154/98 support zone to complete it and bring rebound. Decisive break of 1.1501 (38.2% retracement of 1.2004 to 1.1173 at 1.1490) will confirm completion of the correction, on bullish convergence condition in daily MACD. Further rise should be seen to 61.8% retracement at 1.1687 and above next.

Pivot (invalidation): 2719.00

Our preference Short positions below 2719.00 with targets at 2695.00 & 2682.00 in extension.

Alternative scenario Above 2719.00 look for further upside with 2731.00 & 2740.00 as targets.

Comment The RSI is bearish and calls for further downside.

Pivot (invalidation): 10905.00

Our preference Long positions above 10905.00 with targets at 11057.00 & 11150.00 in extension.

Alternative scenario Below 10905.00 look for further downside with 10850.00 & 10770.00 as targets.

Comment The RSI is around its neutrality area at 50%