Sample Category Title

Pivot (invalidation): 15.6200

Our preference Long positions above 15.6200 with targets at 15.7500 & 15.8600 in extension.

Alternative scenario Below 15.6200 look for further downside with 15.5400 & 15.4300 as targets.

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

Pivot (invalidation): 1306.00

Our preference Long positions above 1306.00 with targets at 1313.00 & 1317.00 in extension.

Alternative scenario Below 1306.00 look for further downside with 1303.00 & 1299.50 as targets.

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

Ethereum continues to trade close to the worst levels of 2019 on Friday, with the ETHUSD pair at risks of further heavy losses below the $100.00 level. The ETHUSD pair may decline towards the $92.00 support region is sellers can sustain price below the $100.00 level. The ADX indicator, which measures the strength of trading trends, shows that moves lower in the ETHUSD pair are weak.

The ETHUSD pair is bearish while trading below the $100.00 level, key support is found at the $92.00 and $78.00 levels.

If ETHUSD pair trades above the $110.00 level, key resistance is found at the $120.00 and $140.00 levels.

The British pound has recovered above the 1.2900 level against the US dollar after reports of positive developments between EU and UK officials during Brexit negotiations. The 1.3000 level is now key resistance, a sustained move above this key psychological level is likely to provoke a test of the 1.3055 level. The MACD indicator on the four-hour time frame is correcting higher, which should support further upside in the GBPUSD pair.

The GBPUSD pair is only bearish while trading below the 1.3000 level, key technical support is found at the 1.2890 and 1.2850 levels

If the GBPUSD pair trades above the 1.3000 level, key resistance is found at the 1.3055 and 1.3095 levels.

The euro remains under downside pressure against the US dollar on Friday, with the pair trading close to the worst levels of the week so far. The EURUSD pair has so far found interim support from the 1.1320 level, a technical break below the current weekly low should prompt a test of the 1.1300 support level. Technical indicators remain depressed on the four-hour time frame and show few signs of a bullish reversal at this stage.

The EURUSD pair is bearish while trading below the 1.1360 level, key technical support is found at the 1.1320 and 1.1300 levels.

If the EURUSD pair trades above the 1.1360 level, buyers may test towards the 1.1390 and 1.1410 resistance levels.

Yesterday, Wall Street had its worst day this year after Donald Trump said he would not meet China’s Xi Jinping before the March deadline. This raised chances that a deal between the two countries on trade will not be made. This year, the two countries have been holding meetings to iron out key issues on trade. However, reports show that no major progress has been made on the issues of intellectual property and forced technology transfer. If there is no deal between the two countries by March 1, the US will add more tariffs on Chinese goods.

The Australian dollar declined today after the RBA lowered the economic forecast for the year. This week, the Aussie has declined sharply even after the initial hawkish statement from the RBA. After the meeting, the central bank brought the possibility of a rate cut if the economic conditions weaken. The lowered guidance by RBA comes a day after the European Commission and the BOE lowered the guidance for the EU and UK respectively. A few weeks ago, the IMF lowered the global growth forecast as well.

The Japanese yen was little moved after the release of key numbers from the country. In December, household spending increased by 0.1%, which was better than the contraction of -0.6% in November. It was, however, lower than the expected 0.8%. On a MoM basis, spending declined by -0.1%. The adjusted current account for the country was 1.56 trillion yen, which was better than the expected 1.52 trillion yen. Wages increased slightly to 1.8% from the previously released 1.7%.

EUR/USD

The EUR/USD pair declined slightly in overnight trading and reached an intraday low of 1.1335. This was slightly higher than yesterday’s low of 1.1325. On the hourly chart, the pair is below the 25-day and 50-day EMAs. The RSI has flattened along the 43 level while the volume-adjusted RSI has risen to the 40 level. The pair could continue to decline especially after the reduced EU growth forecast.

AUD/USD

The AUD/USD pair declined sharply after the RBA lowered the economic forecast. The pair reached a low of 0.7057, which was the lowest level since January 10. On the daily chart, the pair is along the upper line of the equidistance channel shown below. This price is also slightly below the 25-day and 50-day EMA. There is a likelihood that the pair will continue moving lower to test the important support of 0.7000.

USD/JPY

This year, the USD/JPY pair has been in consolidation mode, with the price remaining within a narrow channel. The pair is now trading at 109.77. On the daily chart, this price is along the 25-day EMA and below the 50-day and 100-day EMAs while the RSI has been largely unmoved at the 47 level. This consolidation could lead to a sharp movement in either direction in the coming few days.

USDCAD has maintained bullish momentum for the fifth consecutive trading day, reaching two-week highs at 1.3328 on Friday. In the short-term, the RSI is signaling further improvement as the indicator is rising above its 50 neutral mark. Yet with the fast stochastics rising towards the overbought threshold of 80, downside corrections cannot be ruled out.

An extension above today’s high of 1.3328 would shift attention towards the previous peak of 1.3373 as any violation at this point would break the downward trend started at the end of December. If that’s the case, the pair could increase gains towards the 23.6% Fibonacci of 1.3454 of the upleg from 1.2781 to 1.3663. Higher, the bulls could retest the 1.36 round level before moving up to the 1.3663 top.

On the downside, the congested area between 1.3280 and the 50% Fibonacci of 1.3222 could act as support ahead of the 1.3170 barrier. Moving lower, a drop below the 200-day simple moving average which currently lays along the 61.8% Fibonacci of 1.3118 and more importantly below the 1.3067 trough could bring further losses, with the price probably stopping next near the 78.6% Fibonacci of 1.2970.

In the medium-term, USDCAD continues to hold a neutral outlook as long as it holds within the 1.3663-1.30 region

Rates: German 10-yr yield sets new correction low
The German 10-yr yield lost final support at 0.15% yesterday. A close below today suggests a return to 0% or even lower. There’s no reason to expect a sudden amelioration in risk sentiment today, suggesting core bonds will remain underpinned while peripherals may face more selling pressure. The eco/event calendar is empty.

Currencies: Dollar continues to outperform as global uncertainty rises again.
More negative headlines on the EMU economy reinforced the established EUR/USD downtrend yesterday. Today, sentiment on risk will dominate trading. With trade tensions back on the radar, the euro will probably stay in the defensive. Sterling is holding relatively strong as the BoE confirms (albeit limited) further policy tightening if a no-deal Brexit can be avoided

The Sunrise Headlines

• US equity markets lost ground yesterday amid new concerns over international trade. Asian equities are edging lower as well with Japanese indices underperforming. Chinese bourses are still closed
• US Trade Rep. Kudlow sounded pessimistic on the US-China trade talks saying that a deal is not nearby, while US President Trump won’t meet with Chinese president Xi Jinping before the March 1 deadline. He might do so later.
• President Trump is said to sign an executive order that bans Chinese telecom equipment from the US wireless networks and will react with sanctions against western countries that do allow it, highlighting the grim mood of the trade talks.
• UK PM May and EU officials agreed to continue negotiations by the end of this month as the EU still resists to alter the Brexit deal. PM May travels to Dublin today to have talks with Irish PM Varadkar in discussions over the Irish backstop.
• St. Louis Fed chief Bullard (FOMC voting member) said US economic growth will be “considerably” slower this year and warned for inflation being too low rather than too high. He also urged caution in reducing the balance sheet.
• France recalled its ambassador to Italy as it is “meddling” in its domestic affairs. The response comes after verbal attacks of Italian populist politicians in the direction of the French government/leadership.
• Today’s economic calendar is empty in the US and contains secondary data in Germany, France and Italy. Norway prints it fourth quarter GDP results. Fed’s Daly (non-voter) is scheduled to speak

Currencies: Dollar Continues To Outperform As Global Uncertainty Rises Again

USD ouperfroms as global uncertainty rises again

Poor German production data and the EC sharply cutting the EMU 2019 growth forecast reinforced the EUR/USD downtrend yesterday. The pair touched a correction low in the 1.1325 area. The declined slowed later as US (equity) markets finally also suffered from uncertainty on global growth. Comments from White House officials that president Trump is unlikely to meet Chinese president XI Jinping before the March 1 ‘tariffs deadline’ was a further negative for US equities but was neutral for the EUR/USD balance. EUR/USD closed at 1.1341 (from 1.1361). USD/JPY settled again below the 110 mark as sentiment on risk turned negative, but yen gains remained modest. The pair closed at 109.82.

This morning, Asian indices are joining the setback in the US, Japan again underperforms. The dollar (DXY 96.60) is holding near the recent recovery top. The yen again hardly profits from the risk-off (USD/JPY 109.75 area). EUR/USD struggles to avoid more losses (1.1340 area). The Aussie dollar (AUD/USD below 0.71) stays under pressure. The RBA cut its growth forecasts as the potential impact of declining house prices on consumer spending is becoming an ever growing source of uncertainty.

There are few important data. Global risk sentiment/US-China trade issues are again coming to the forefront for global FX trading. Recent price action suggests that the dollar is best equipped to resist a new flaring up of global uncertainty. In this respect, keep an eye at the trade-weighted dollar (DXY) a break above the 96.67 neckline could add to the short-term USD positive momentum. The jury is still out but risks for a break are building. Last week, the post-Fed EUR/USD rebound halted very soon, mainly on poor EMU data. The USD started a gradual, but protracted rebound. The day-to-day momentum is USD supportive & euro-cautious. EUR/USD 1.1290/67 is next support ahead of the 1.1218 Nov low. After recent news/decline, quite some euro negative news should already be discounted. That said, for now there is no trigger in sight to reverse the USD-positive/euro negative momentum.

Sterling rebounded yesterday even as the BoE cut its growth forecasts. Sterling bulls took comfort from the BoE indicating (limited) further policy tightening remains likely in case a no-deal Brexit can be avoided. Later, the GBP rally halted as comments from Brussels indicated that the Brexit stalemate persists. With no data on the agenda, EUR/GBP trading might turn more technical in nature today. Yesterday’s price action suggests that sterling can avoid further losses above EUR/GBP 0.8820, if high profile negative headlines on Brexit can be avoided

USD (trade-weighted) nears 96.67 resistance

Daily Pivots: (S1) 1.1319; (P) 1.1344; (R1) 1.1363; More.....

EUR/USD's fall from 1.1514 is in progress and intraday bias remains on the downside for 1.1289 support. Firm break there will argue that corrective pattern from 1.1251 has completed. And, in that case, larger decline from 1.2555 is ready to resume through 1.1251 low. On the upside, above 1.1380 minor resistance would probably extend the correction pattern with another rise towards 1.1569 resistance.

In the bigger picture, as long as 1.1814 resistance holds, down trend down trend from 1.2555 medium term top is still in progress and should target 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. However, break of 1.1814 will confirm completion of such down trend and turn medium term outlook bullish.

Daily Pivots: (S1) 1.2871; (P) 1.2933; (R1) 1.3014; More....

Intraday bias in GBP/USD remains neutral for the moment. Risk stays on the downside as long as 1.3217 resistance holds. As noted before, rebound from 1.2391 has completed at 1.3217, after rejection by 1.3174 key resistance. Firm break of 1.2814 will bring retest of 1.2391 low.

In the bigger picture, the rejection by 1.3174 key resistance revived the original view on GBP/USD. That is, decline from 1.4376 is possibly resuming long term down trend from 2.1161 (2007 high). Firm break of 1.2391 will solidify this bearish case and target 1.1946 (2016 low). However, decisive break of 1.3174 will invalidate this bearish case again and turn outlook bullish.