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The CAD/JPY has formed a T-89 pattern at W L3/ D H3 support so we might see a further upside continuation. T-89 is my proprietary pattern that marks the rejection off the important EMA.

POC zone 82.45-55 might see a bounce for the CAD/JPY towards 82.66 that is the first resistance. However, a close above will initiate a new wave of buyers and possible short sellers will cover providing bulls with additional momentum. Higher timeframes are also suggesting continuation to the upside. Next targets are 82.75 and 82.90. Ideally the pair should stay above 82.20 for the bulls to remain in control.

Washington the place to be

All eyes will be on Washington on Wednesday, with high-level trade talks getting under way between the US and China, and the Federal Reserve announcing its latest monetary policy decision.

Deteriorating Sino-US trade relations and an overly keen Federal Reserve were two of the most prominent causes of the sell-off in the final quarter of last year so it's no surprise that so much attention will be on these events today. Markets have bounced back from the fourth quarter plunge but they're still yet to fully recover and so confidence remains very sensitive to developments in both areas.

Trade talks appeared to be moving along smoothly until last week, after which rumours of a cancelled meeting, reports of a deal being "miles and miles" away and the US decision to charge Huawei have given a different impression. There will be hopes on both sides that any differences that have arisen can be ironed out during this visit, with the 90 day deadline now being a little over a month away.

Fed still has work to do with yield curve still inverted

The Fed has made significant strides in settling investors, worried about interest rates rising too quickly and the economic ramifications of an overly aggressive tightening policy. They're not out of the woods yet though and much will depend on how they manage the upcoming months. Questions around quantitative tightening are expected to arise today, when Chairman Jerome Powell holds his press conference. The US yield curve remains inverted which will continue to unsettle investors concerned about potential recession risks.

Dollar soft ahead of meetings, supporting gold

A more dovish Fed and/or progress in the trade talks could weigh on the US dollar at a time when it's already coming under pressure. The greenback has shown some resilience considering just how significant a shift we've already seen from the central bank and the progress seen between Washington and Beijing but there is room for it to come under pressure again.

The drop in the dollar since mid-December has been a major driving force behind gold performing so well, rising above $1,300 finally last week and building on that in recent days. Softness in the dollar ahead of the meetings in Washington is lifting gold again today, with $1,320 offering the next test for the yellow metal.

Oil rally stalled but risk appetite could return

The rally in oil has stalled over the last few weeks, with WTI and Brent having gained around 25% from the lows in late December. This has coincided with a similar pause in the equity market rally over the last couple of weeks which suggests the momentum from a bump in risk appetite has petered out. This could continue in the coming weeks but WTI and Brent face a big test of resistance around $65 and $55, respectively, a break of which could be very bullish.

AUDUSD threatens further strength with eyes on 0.7234 zone. On the upside, resistance lies at the 1.7250 level. A cut through here will turn focus to the 0.7300 level and then the 0.7350 level. A violation will set the stage for a retarget of the 0.7400 level. Support resides at the 0.7150 level where a breach will aim at the 0.7100 level. Below here will set the stage for a run at the 0.7050 level with a cut through here targeting further downside pressure towards the 0.7000 level. On the whole, AUDUSD faces further upside threats.

Fundamental Analysis

Apple announced its earning last night and blamed China for any ground it lost. There is no doubt that China has been a major player in Apple’s flagship product- iPhone. The economic slowdown in the country and the ongoing trade war aren’t making things any better. The company announced $5 billion of revenue loss as its sales fell 27% during the holiday quarter. However, investors were pleasantly surprised about the services revenue for the company which came very strong and reached an all-time high of $10.9 billion. The company’s revenue from Mac and Wearables, home and accessories also came strong, it grew 9% and 33% respectively.

Technical Analysis

Speaking from a technical perspective, the price has broken its downward channel which confirmed that the downtrend is no longer in play. The price has jumped above the 50-day moving average (shown in green) which further strengthens the above statement. However, in order for us to have the final confirmation, the price needs to move the 100-day moving average and only that will start a strong uptrend for the price.

The support and resistance are shown by the horizontal green and red lines respectively.

The US dollar slightly strengthened against a basket of major currencies during yesterday's trading session. The US dollar index (#DX) closed in the positive zone (+0.10%). Financial market participants expect the Fed interest rate decision, as well as signals on the further development of trade relations between the US and China. It is expected that the regulator will keep the key marks of monetary policy at the same level. It should be recalled that earlier the Central Bank signaled a slowdown in raising interest rates in the current year. We recommend paying attention to the comments by the Fed representatives.

Last night the UK Parliament voted on the Brexit deal. Several amendments were proposed. We would like to mention some of them. So, the House of Commons voted against the amendment to postpone Brexit for up to 9 months if EU and Great Britain don't close a deal. Also, members of the House of Commons voted for the amendment to prevent Brexit without an agreement with the EU. Thus, a British Labour Party politician, Yvette Cooper, proposes to adopt a bill, according to which British Prime Minister, Theresa May, will be obliged to delay Brexit if members of the British parliament do not close a deal with the EU until February 26.

Also yesterday, the US consumer confidence index was published, which counted to 120.2 in January and turned out to be worse than the forecasted value of 124.7. The figure for December was also revised downward from 128.1 to 126.6. This index allows assessing the sentiment of the US consumers relative to current economic conditions. Today, during the Asian trading session, optimistic data on inflation have been published in Australia, which supported Ozzie.

The bullish sentiment is prevailing in the "black gold" market. At the moment, futures for the WTI crude oil are testing the mark of $53.40 per barrel. At 17:30 (GMT+2:00), a report on crude oil inventories will be published in the US.

Market Indicators

• Yesterday, there was a variety of trends in the US stock market: #SPY (-0.13%), #DIA (+0.25%), #QQQ (-0.94%).
• The 10-year US government bonds yield has continued to decline. Currently, the indicator is at the level of 2.71-2.72%.

Economic Data from the US on 30.01.2019:

• ADP nonfarm employment change at 15:15 (GMT+2:00);
• GDP data at 15:30 (GMT+2:00);
• Pending home sales at 17:00 (GMT+2:00);
• Fed interest rate decision at 21:00 (GMT+2:00).

We don’t see how GBP can maintain its strength. Too much uncertainty: GBP/USD is currently trading at 1.3112, approaching 1.3065 short-term. UK Prime Minister Theresa May says she’ll return to Brussels to convince the European Council to remove the Northern Ireland backstop. Yeah, right.

Parliament agreed with her not to rule out leaving the EU without a formal deal. Ironically, the agreement contains no clear guidelines as how to avoid a hard Brexit. At the same time, it limits May’s rhetoric that the House of Commons is causing a no-deal Brexit by not supporting its Withdrawal Agreement. Still, a few minutes after the Commons’ votes, European Council President Donald Tusk repeated that concessions on the existing divorce are impossible. This risk of no deal does not seem to stop GBP traders buying long positions.

The key question remains: why would UK MPs require May to go back to Brussels if the odds are clear? As the Council won’t accept any amendments, it will probably accept a conditional extension of the March deadline constrained by a second referendum or general elections, or it will force certain UK MPs to vote for remaining within the EU customs union. Time is running short to the mid-February deadline.

Inversion is coming

2019 started with a cautious outlook. Outside the US-China trade tensions, worries centred on the effect of the US Federal Reserve tightening. Normalization came when risk appetite was shaky and valuations for stocks and bond were elevated. Now markets have rebounded in reaction to dovish Fed comments of a “pause” in interest rate hikes. The shift in tone drove a steep rally. Volatility remains elevated yet risk appetite has continued.

There are plenty of reasons for investors to remain cautious in 2019. The best indicator of US economic recession is in the red zone. It’s likely that peak in 10-year Treasury bond yields for this hiking cycle was reached in October at 3.25%. At this duration, yields are likely to trade in a range of about 2.50% to 3.00% in H1 2019. The problem is the erosion of the US economic outlook. Inflation expectations have been grinding lower as fiscal stimulus fades and trade tensions increase. Markets expect inflation to remain near 2.00%. This suggests a gap of 80 basis points between expectations and 10-year-treasury yields. Inflation would need a massive surge in growth to push yields meaningfully higher. Yet the Fed has pushed up short-term interest rates when yields are falling. The spread between 3-month Treasury bill yields and 10-year Treasury bond yields has flattened significantly, suggesting eventual inversion. There is really concern that if the Fed proceeds to hike rates 25-50bp in 2019, the effect on short end will move higher than long-term rates.

On Wednesday morning, the currency exchange rate was located between the monthly pivot point and the weekly R1 at the 1.1428. Besides, the 55-hour simple moving average supported the rate during morning hours.

In regards to the near-term future, most likely, the European Single Currency will break the resistance levels of the weekly R1 at 1.1454 and the 50.00% Fibo at the 1.1462 mark.

It is expected that the European Single Currency will appreciate against the US Dollar during today's US FOMC Meeting Minutes and Federal Funds Rate release at 19:00 GMT to trade at the 1.1460 level.

During Wednesday's morning hours, the currency exchange rate was located between the 100-hour and the 200-hour simple moving averages at the 1.3107 mark.

In regards to the near-term future, most likely, the rate will be trading sideways to stay between the 50.00% Fibonacci retracement level at 1.3163 and the monthly R2 at the 1.3057 mark.

However, the 55-hour and the 100-hour simple moving averages could retrace the British Pound to depreciate against the US Dollar to push the rate pass through the support level of the monthly R2 to the 1.3000 level.

During Wednesday's morning hours, the currency exchange rate was supported by the 55-hour simple moving average at the 109.36 mark.

In regards to the near-term future, most likely, the rate will be retraced by the weekly S1 at 109.14 to trade at the 109.20 level for the rest of the trading session.

Moreover, the 55-hour simple moving average could resist the currency exchange rate to push the rate to pass through the support level of the weekly S1 at 109.14 to trade at the 109.00 level.

During Wednesday's morning hours, the previously drawn pattern was broken. Due to the fact, the chart was fully reviewed!

In regards to the near-term future, most likely, the gold will be trading sideways to stay at the 1,315.00 level during the day. Besides, the 55-hour simple moving average will try to catch up the rate to give additional support at next trading sessions.

On the other hand, the yellow metal could depreciate against the US Dollar to the 1,305.00 level during today's US FOMC Meeting Minutes and Federal Funds Rate release at 19:00 GMT. Watch out for the news!