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The Greenback traded sideways movement against the Canadian Dollar on Tuesday. The USD/CAD currency pair was moving within the upper and the lower boundary of a horizontal channel.

The exchange rate was trading near the bottom border of the horizontal channel at 1.3248 during the middle of Wednesday's trading session and could be set for a breakout.

Technical indicators demonstrate that there could be a downside breakout within this session.

However, a support level formed by the lower boundary of a medium-term ascending channel at 1.3240 could provide support for the pair.

The Zealand Dollar depreciated about 40 base points against the US Dollar on Tuesday.

Wednesday's trading session began with bullish sentiment, and by the middle of the day, the exchange rate has gained about 0.51% of its values.

The currency pair is currently testing a support level set by the 50-hour simple moving average at 0.6839.

If the support level holds, the upside momentum could continue within this session. However, if the pair passes the 50-hour SMA, the next target will be at 0.6819.

Gold’s rally got some extra fuel early on Wednesday, with the price jumping to an 8 ½ -month high of 1,315.

In the technical picture, the MACD seems to be resuming upside momentum above its red signal line, a positive sign that the bulls may continue to drive the market even if downside corrections cannot be ruled out in the very short-term as both the Stochastics and the RSI are fluctuating in overbought area. Trend signals are also encouraging, with the price deviating above the 20-day simple moving average (MA) which is positively sloped above the longer-term 50- and 200-day MAs.

Additional gains may find immediate resistance around 1,325, while slightly higher the 1,341 barrier could act as resistance as it did in the first months of 2018. Even higher, the focus could shift to 1,356 before the 1,365.89 peak comes into view.

In case bears take control over the situation, a crucial support is expected to appear between 1,300-1,290, where the 20-day MA is also located. A return below that zone could add more pressure, with the price potentially stopping next near the 1,276 mark and then around the 50-day MA which currently stands at 1,263. Should the bears beat the latter, a bigger sell-off would likely start below the 200-day MA at 1,246.

In the medium-term picture, the market is strongly bullish thanks to the rebound on the 1,242 level on December 20. The clear golden cross between 50- and the 200-day MAs supports prospects for an extension of the impressive uptrend.

Cable is consolidating above 200SMA in early Wednesday's trading, following 0.7% fall on Tuesday after UK lawmakers voted down an amendment to extend the deadline for Britain to leave EU.

Pullback from last Friday's multi-week high at 1.3217 found ground at broken 200SMA (1.3057) despite soured sentiment on UK parliament's negative vote that increases risk of the divorce without deal.

Bullish setup of daily MA's (which formed multiple bull-crosses and converging 10/200SMA's on track to form golden-cross) and strong bullish momentum, continue to underpin near-term action.

Ability to hold above 200SMA would maintain bullish bias for retest of 1.3217 peak and possible extension of larger uptrend December's low at 1.2476.

Negative scenario on sustained break below 200SMA would open way for further easing and expose supports at 1.3000 (psychological) and 1.2904 (100SMA).

Fed's decision on conclusion of two-day policy meeting, is expected to be the key market driver today.

With the central bank widely expected to stay on hold, focus will be on the rhetoric of chief Powell.

The Fed would come with more dovish tone regarding further tightening this year, due to strong signals of global growth slowdown that could boost the risk appetite as Fed interest rates remain unchanged and continue to support dollar.

Post-Fed rally of the greenback, which was in defense and positioned for rebound, could be seen as likely scenario that would have negative impact on sterling.

Res: 1.3118, 1.3199, 1.3217, 1.3257
Sup: 1.3057, 1.3036, 1.3000, 1.2904

We do not care if we are hit by Armageddon, this was the message from the U.K.’s Parliament last night. One of the most dangerous scenarios, a no-deal Brexit scenario is still alive and as a result of this traders sold off the British Pound. The currency which crossed above the 1.32 mark against the dollar in the last few days, dropped like a rock. There was nearly a 100 pip move (it fell from 1.3167 to 1.3055) last night on the back of the parliament's decision.

The overnight volatility for sterling also jumped.

Theresa May begged MPs to vote against her Brexit deal, a deal which she stitched together in more than 18 months. May asked the parliament to support her by not choosing the option of delaying the Brexit. The prime minister assured them that she will renegotiate the most contentious part of the deal- the Irish backstop. It is under these hopes that the MPs decided to back her this time. She has promised to bring a new deal back to the parliament by February 13 and they are ready to ship her to Brussels to achieve this.

For investors, this is no short of disaster because the EU has already made it clear to her that they are in no mood of negotiating this part of the deal. Theresa May had a reality test of her deal and suffered a historic loss in the parliament on January 15, the EU made it clear "they are not open renegotiations" and this opens the door wide open for economic chaos for both parties.

Having said this, Donald Tusk, EU president has indicated that non-binding declaration on future relations could be up for debate but for that to happen, the prime minister needs to be mindful of moving her red lines. These red lines are defined in two ways; free movement of labour or be part of the EU's customs union.

This saga of renegotiation of the deal has created a lot of uncertainty and the fact is that there is more to come to. Firstly, she needs to discuss and convenience the EU that this is the only deal that they have now and then with the amendments made, she needs to put this back in front of the parliament and wait for their approval. This will be in the shape of another vote taking place. It isn't going to be easy especially when her own party is already divided and many aren’t ready to throw their full weight behind her vision.

The fact is that for businesses, governments are going round in circles and there is no immediate solution on the horizon which can make them comfortable in making the most important choices for their businesses. There is still so much to do and the clock is ticking, both EU and UK parliaments have their own red lines defined and no one is ready to move them and this will result in the UK tumbling out of the EU.

The outcome of that scenario would be highly devastating for the British people who will face a currency which is highly likely to lose another 20% of its value, a serious risk of recession, house prices could be crushed. The reality is that certain companies have already decided to leave the UK and some are pilling stocks of medicine and manufacturing components just to keep up with the demand in the time being.

• Fed decides; Powell's remarks on the balance sheet may be crucial
• Pound slides as Brexit uncertainty seems set to remain elevated
• US-China trade talks commence; plethora of earnings and data also due

FOMC meeting – emphasis on Powell's balance sheet remarks

The main event today will be the Fed policy decision at 1900 GMT, which will be followed by a press conference from Chairman Powell – as will every meeting from now on. No change in policy is expected, and since there won't be any updated forecasts either, market focus will fall almost entirely on Powell's remarks. The Fed became sensitive to market concerns lately, with even the most hawkish of policymakers joining what seemed like a coordinated effort to signal that rate increases are on hold for now, while the Committee evaluates several risks.

Powell will likely echo this message today, reiterating that the Fed will be “patient”. More importantly, investors will look for any hints on whether the central bank is indeed thinking about halting the reduction of its balance sheet. This process can be seen as the reverse of QE, with the Fed shrinking its portfolio instead of expanding it. While chief Powell is unlikely to go as far as actually announce a pause in the portfolio unwinding, he could well hint this would be a sensible option if the economy slows further, which may in itself be enough to drag the dollar lower and propel stocks higher.

Sterling slides as Brexit stays in limbo; more uncertainty in store

The pound underperformed on Tuesday amid another hectic day in British politics that ultimately produced little of real substance. UK lawmakers approved the Brady amendment, which calls for the Irish backstop to be replaced with “alternative arrangements”, the definition of which remains unclear. In short, this provides Theresa May with a mandate to go back to the EU to renegotiate the backstop, with Parliament signaling that it could accept the overall deal if that part becomes more palatable.

Alas, taking a step back here, the EU has consistently denied any renegotiation on the backstop. Even if the bloc accepts to discuss the subject, it's far from clear that it has any incentive to make concessions on the most delicate issue without the UK altering its own positions; that isn't how such negotiations work. Not to mention that PM May will have a time window of a few weeks to secure legally-binding compromises that couldn't be obtained in years. Hence, uncertainty is set to remain elevated, with a further correction lower in sterling not to be ruled out in the immediate term as headlines pointing to limited progress in the talks hit the wires.

Stocks look to pivotal trade talks and a flurry of earnings

US stock markets closed mixed yesterday, though futures tracking the major indices are pointing to a modestly higher open today, following encouraging earnings from Apple. It will be another packed day on the earnings front, with AT&T and Boeing announcing their results before the US market open. Microsoft, Facebook, and Tesla will release their own reports after Wall Street's closing bell.

Separately, today marks the start of another round of pivotal trade negotiations between the US and China. These will be top-level talks, so any signals from the relevant officials could shape market sentiment. Forced technology transfer and intellectual property protection will likely dominate the agenda, as that is where the biggest disagreements lie.

Elsewhere, the aussie is outperforming today following stronger-than-expected inflation data out of Australia overnight, while gold is extending its latest gains, trading near $1315/ounce.

Coming up: Germany's inflation and US ADP employment figures

Besides the Fed meeting, the trade talks, and the plethora of earnings, there's also some key economic data on the schedule today. In Europe, Germany's preliminary inflation figures for January will be in focus, while in the US, the ADP employment change comes ahead of Friday's all-important payrolls numbers. US GDP data, originally scheduled for today, will be delayed owing to the government shutdown.

EUR/USD

Current level - 1.1431

My outlook here is counter-trend, for a reversal below 1.1490 and slide towards 1.1390, en route to 1.1330.

USD/JPY

Current level - 109.27

Despite the slow pace, the bias remains positive above 109.10, for a rise towards 110.20 area. Minor intraday resistance  lies at 109.50.

GBP/USD

Current level - 1.3082

The slide below 1.3135 support signals a reversal of the whole rise since 1.2830 low and the outlook is bearish, for a dip to 1.3000, en route to 1.2930. Initial intraday resistance lies at 1.3135.

Crude oil made a bearish reversal recently, down from 54.83 level, giving us an idea that a possible top had been found for a five-wave recovery, and that price can now be unfolding corrective wave B. In such case, be aware of weaker prices in an A)-B)-C) manner for wave B, with possible support near the 50.50/47.50 region. On the alternate scenario we labelled a top for wave 3) in place, with price now unfolding corrective wave 4). In both cases more upside is expected.

Crude oil, 4h

Pivot (invalidation): 53.05

Our preference Long positions above 53.05 with targets at 53.95 & 54.50 in extension.

Alternative scenario Below 53.05 look for further downside with 52.60 & 52.20 as targets.

Comment The RSI is bullish and calls for further advance.

Pivot (invalidation): 15.7900

Our preference Long positions above 15.7900 with targets at 16.0500 & 16.1900 in extension.

Alternative scenario Below 15.7900 look for further downside with 15.6900 & 15.5800 as targets.

Comment The RSI shows upside momentum.