Sample Category Title

Pivot (invalidation): 108.65

Our preference Long positions above 108.65 with targets at 109.05 & 109.20 in extension.

Alternative scenario Below 108.65 look for further downside with 108.50 & 108.30 as targets.

Comment The RSI lacks downward momentum.

Pivot (invalidation): 1.3120

Our preference Short positions below 1.3120 with targets at 1.3075 & 1.3055 in extension.

Alternative scenario Above 1.3120 look for further upside with 1.3160 & 1.3200 as targets.

Comment A break below 1.3075 would trigger a drop towards 1.3055.

Pivot (invalidation): 1.1475

Our preference Short positions below 1.1475 with targets at 1.1410 & 1.1390 in extension.

Alternative scenario Above 1.1475 look for further upside with 1.1495 & 1.1515 as targets.

Comment The RSI lacks upward momentum.

XAUUSD (1318.46): Gold prices advanced to intraday highs of 1326 before easing back. The gains came as gold prices maintained the bullish upside pressure. However, there was a quick reversal off this level as gold prices were seen extending modest declines. Given the fact that price action has stalled near the 1315 - 1321 level, we expect to see a correction to the downside. The lower support at 1280 is likely to be tested in the near term followed by a decline to 1233.50.

AUDUSD (0.7244): The Australian dollar advanced on Thursday as price action tested the resistance level of 0.7292. Price action closed with a doji on the 4-hour chart and closed bearish after that. We expect the declines to continue to push AUDUSD lower toward 0.7191 where support should establish. Forming support at this level could keep AUDUSD range bound within the current levels

EURUSD (1.1440): The EURUSD currency pair extended declines after briefly testing the highs of 1.1500. Overall price action remains range bound with the euro currency likely to reach the declines back toward the previously breached resistance level of 1.1397 to establish support.

The U.S. Dollar recovered from the losses on Thursday as price action pulled back. On the economic front, German retail sales fell 4.3% which was more than the forecasted 1.5% decline.

The Eurozone's fourth-quarter GDP report showed that the economy advanced by 0.2% on the period. Meanwhile, Italy's GDP contracted by 0.2%. Data from the U.S. showed that new home sales rose 657k on the month beating estimates of 569k for the period.

Japan's unemployment rate is at 2.4% which is better than the forecasts of 2.5%.

Swiss retail sales report is due at the start of the European trading session. Retail sales should rise by 0.1% for the year, following a 0.5% decline previously.

Manufacturing PMI from the Eurozone economies will come out later in the day. For the Eurozone, manufacturing PMI should see a headline print of 50.5. The Eurozone's inflation estimates later follow this.

Headline inflation should increase by 1.4% on the month, marking a slower pace compared to 1.6% in December. Core CPI could remain steady at 1.0% increase on the year in January.

The NY trading session will see the monthly payrolls report coming out. Average hourly earnings might rise by 0.3% on the month in January, marking a slower pace of increase compared to 0.4% increase previously.

The U.S. unemployment rate should keep steady at 3.9%, while the average employment change might see 165k added jobs. Later in the evening, the ISM will be releasing its manufacturing PMI report.

Manufacturing activity, as measured by ISM should remain steady at 54.1 while manufacturing prices might decrease to 54.4 from 54.9 previously.

• The top-level negotiations in Washington ended with very positive statements from both sides. We see this as a sign that enough progress has been made to make a deal.
• The next thing to look out for is high-level trade talks in Beijing in mid-February and a date for a Xi Jinping-Donald Trump meeting. Trump indicated they could even meet more than once to finalise a deal. We still see a 75% probability of a trade deal before the end of Q2, with a rising probability that it happens by the end of March.

Key takeaways from the meetings

The top-level negotiations in Washington were a key litmus test of the likelihood of reaching a deal. All the thorny issues were on the table and the negotiations kicked off in the midst of a further deterioration in the relationship as the US prosecuted the large Chinese telecoms company Huawei two days before the talks started. The first real bump in the road could easily have been reached.

However, the two days rounded up with positive statements from both sides and with US President Trump indicating that he will meet Chinese President Xi in ‘the near future' to seal a deal. It is evident that both sides are keen to make a deal and agree that the conflict regarding Huawei should be kept on a separate track. The two days have not changed our expectation that a trade deal will be struck by the end of Q2 – and it is increasingly likely that a deal could be done by March.

Below are some of the key points from the two days of talks.

• Trump wants a deal sealed at a meeting with Xi in the near future. In a tweet yesterday, Trump made it clear a deal would not be signed before a meeting between Trump and Xi. Later he indicated Trump and Xi could meet more than once to finalise the deal. They could meet at end-February when Trump is scheduling a meeting with North Korean leader Kim Jong-Un and again in March to sign the final deal.
• Both sides sent out positive statements on the two days of talks. The White House issued a statement striking a very positive tone saying the US ‘appreciates the preparation, diligence and professionalism shown throughout these meetings by Vice- Premier Liu He and his team' and ‘the two sides showed a helpful willingness to engage on all major issues'. On the Chinese side, a statement on the state media Xinhua said ‘the talks marked a significant step in the implementation of the important consensus reached...in Buenos Aires, on 1 December'.
• Trump's meeting with the Chinese delegation shows the seriousness of talks. When Liu He went to Washington to talk trade in March 2018, he left the US capital without meeting Trump. Two months later negotiations broke down and he launched the trade war. This time it was different. Trump hosted a meeting in the oval office with both sides of the trade talks, which shows his full commitment to the current talks.
• Both sides agree the Huawei case is a separate track. The US earlier this week filed charges against Huawei for breaking US sanctions and stealing technology from a US company. It caused a lot of anxiety that it would hurt the talks. However, it was again clear that both sides agree that the Huawei case should be kept on a separate track and it did not seem to interfere with the trade negotiations. It is another testament to how much both sides want to make a deal in our view.

According to the statement on Xinhua, the two parts have made a timetable and roadmap for next-step consultations. The next key thing to look out for is a possible date for a meeting between Trump and Xi. When this is announced, we believe it will be a clear sign that both sides are convinced a trade deal will be made, as it would be a major loss of face if the two Presidents met without signing such a deal. It may not come until after further trade talks in China, though. US Treasury Secretary Stephen Mnuchin and US Trade Representative Robert Lighthizer are scheduled to lead a delegation to Beijing in mid-February for further talks

Daily Pivots: (S1) 1.1417; (P) 1.1466; (R1) 1.1496; More.....

Intraday bias in EUR/USD is turned neutral with 4 hour MACD crossed below signal line. Another rise is mildly in favor with 1.1407 minor support intact. Rise from 1.1289 is seen as another rising leg in the correction pattern from 1.1215. Above 1.1514 will target 1.1569 resistance and above. On the downside, break of 1.1407 minor support will turn bias back to the downside for 1.1289 support instead.

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) 1.3086; (P) 1.3123; (R1) 1.3148; More....

Intraday bias in GBP/USD stays neutral and outlook is unchanged. On the downside, break of 1.3012 minor support will suggest rejection by 1.3174 key resistance, and turn bias to the downside for 1.2814 support. On the upside, sustained break of 1.3174 key resistance will argue that whole decline from 1.4376 has completed at 1.2391. In such case, further rise should then be seen to 61.8% retracement of 1.4376 to 1.2391 at 1.3618.

In the bigger picture, rise from 1.1946 (2016 low) to 1.4376 (2018 high) is seen as a corrective move. Similarly, fall from 1.4376 to 1.2391 also displace a corrective structure. Current development suggests that rise from 1.2391 is the third leg of the corrective pattern from 1.1946 and could extend beyond 1.4376 high. Firm break of 61.8% retracement of 1.4376 to 1.2391 at 1.3618 will affirm this case. On the downside, break of 55 day EMA (now at 1.2865) will turn focus back to 1.2391 low instead.