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In the minutes of December 19/20 BoJ monetary policy meeting, most members shared that "although it would take time to achieve the 2 percent price stability target, it was appropriate to persistently continue with the powerful easing under the current guideline for market operations as the momentum toward achieving 2 percent inflation was being maintained".

Regarding Japan's economic outlook, members "concurred that it was likely to continue its moderate expansion". And they "shared the recognition that domestic demand was likely to follow an uptrend". However, one member warned that "exports, including those to China, had been weak as a whole". Another member pointed to "increasing number of firms held cautious views, mainly against the background of the prolonged US-China trade friction".

On prices, members shared the recognition that "CPI continued to show relatively weak developments compared to the economic expansion and the labor market tightening". But most agreed that CPI was "likely to increase gradually toward 2 percent".

Full minutes here.

The Sun reported that UK Prime Minister has privately told the Cabinet that she will rule out no-deal Brexit. That came under influence of Remainer ministers and the under the worry that hard Brexit would cost UK lost of jobs. But for now, she won't do it publicly, as it could remove a key bargaining chip with EU.

Bob Sanguinetti, chief executive of the UK Chamber of Shipping, warned that "in the absence of a viable alternative to the Withdrawal Agreement, we continue to be heading for a no-deal scenario which is damaging, disruptive and chaotic to business, to manufacturers and consumers". And he urged to "put aside party politics and in the moment of need that we find ourselves in, we need to look at the bigger picture and look at what is best for the country".

Separately, Brexiteer Boris Johnson wrote in Telegraph on Sunday, saying May is seeking legally binding change to the Irish backstop fro the EU. However, Ireland has already make it clear they won't accept any change to the current backstop agreement.

May's plan B will be voted in the Commons tomorrow, along with amendments.

Trump reiterated his pledge for the border wall on Sunday and tweeted that "Does anybody really think I won't build the WALL? Done more in first two years than any President!" He also told WSJ that another government shut down is "certainly an option", as well as declaring national emergency.

On Friday, Trump conceded to Democrat's demand and agreed to a deal to end the partial government shutdown without the border wall. The Congress now has until February 15 for bipartisan negotiations on border-security plan. But Trump said ""I personally think it's less than 50-50" of making a border security deal.

GBP/USD rallied recently and broke the 1.3150 resistance zone. EUR/GBP declined heavily and traded below the 0.8700 support to move into a bearish zone.

Important Takeaways for GBP/USD and EUR/GBP

• The British Pound gained a lot of traction recently and traded above 1.3150 and 1.3200.
• There was a break above a major ascending channel with resistance at 1.3155 on the hourly chart of GBP/USD.
• EUR/GBP fell sharply and traded below the 0.8720 and 0.8700 support levels.
• There are two bearish trend lines in place with resistance near the 0.8660 and 0.8670 levels on the hourly chart.

GBP/USD Technical Analysis

The British Pound started a major uptrend from well below the 1.2800 pivot level against the US Dollar. The GBP/USD pair traded higher and broke the 1.3000 and 1.3100 resistance levels to move into a bullish zone.

The recent rise was sold as the pair broke the 1.3150 and 1.3200 resistance levels, and settled above the 50 hourly simple moving average. A new monthly high was formed at 1.3217 on FXOpen and the pair is clearly placed in a solid uptrend.

During the climb, there was a break above a major ascending channel with resistance at 1.3155 on the hourly chart of GBP/USD. The pair is currently correcting lower towards an initial support near the 23.6% Fib retracement level of the last wave from the 1.3061 low to 1.3217 high.

However, there are many supports on the downside near the 1.3175 and 1.3150 levels. Moreover, the broken channel resistance may now act as a solid support near 1.3160.

Besides, the 50% Fib retracement level of the last wave from the 1.3061 low to 1.3217 high is near the 1.3140 to act as a barrier for sellers. Therefore, if there is a downside correction, the pair is likely to find a lot of buying interest near 1.3160 or 1.3150.

Overall, GBP/USD remains well supported on dips if there is a downside extension towards 1.3140 level. On the upside, the main hurdles for buyers are near 1.3220 and 1.3250.

EUR/GBP Technical Analysis

The Euro started a major downward move from well above 0.8860 against the British Pound. The EUR/GBP pair declined below the 0.8750 and 0.8700 support levels to enter a downtrend.

The pair even broke the 0.8650 support and settled below the 50 hourly simple moving average. A low was formed at 0.8617 and later the pair corrected higher. It climbed above the 23.6% Fib retracement level of the recent decline from the 0.8724 high to 0.8617 low.

However, the upside move was protected by the 0.8680 level and the 50 hourly SMA. Moreover, there was no close above the 50% Fib retracement level of the recent decline from the 0.8724 high to 0.8617 low.

The pair is currently under pressure and it seems to be facing a lot hurdle near two bearish trend lines with resistance near the 0.8660 and 0.8670 levels on the hourly chart.

Therefore, as long as the EUR/GBP pair is trading below the 0.8670 level and the 50 hourly SMA, it remains at a risk of more losses. An initial support is at 0.8635, followed by the 0.8610 level.

STOCKS

• This week is crucial. It will decide whether Resistances at 25000 (on the Dow)and 11300 (on the DAX) will hold or break.
• As hoped for, the Resistance at 25000 is holding on the Dow (24737.20, +183.96, +0.75%) despite a good rally on Friday. However, contrary to our expectation that Resistance at 11300 will hold, the DAX (11281.79, +151.61, +1.36%) saw a strong rise to a high of 11321.62 on Friday.
• In Asia, the Resistance at 21000 on the Nikkei (20708, -65, -0.31%) is holding so far today. The Shanghai (2619, +0.68%) trades strong again today, but the crucial Resistance at 2660 (21-MA on the Weekly chart) is holding as of now.
• The Sensex (36025, -169.56, -0.47%) and Nifty (10780.55, -69.24, -0.64%) succumbed to profit-taking on Friday and might dip further towards 35600 and 10670 respectively, which are Supports for the uptrend from October-2018.

COMMODITIES

• Unexpected and sharp weakness in US Dollar has boosted a sharp rise in the precious metals and Copper. Crude prices remain stable.
• Brent (61.42) and WTI (53.38) are slightly lower. Very narrow and stable movement is being seen just now. Immediate resistances are holding near 64 and 56 respectively. We could possibly see some dip in the Crude prices before a sharp break on the upside.
• Gold (1301.60) and Silver (15.78) rose up sharply on sharp weakness in the US Dollar contrary to our expectation of a fall towards 1270/60 and 15 respectively. The sharp rise breaking above 1300 could be an indication of further upside for Gold probably towards 1310/20 or higher while Silver could rise towards 16.0-16.50. Our expectation of strength in the US Dollar has been proved wrong and hence the strong near term bearish sentiment for the commodities could be negated just now.
• Copper (2.7145) has broken above 2.70 but we have to see whether the rise sustains.2.75 is an immediate resistance on the upside and could hold, pushing the Copper prices back towards 2.65.

FOREX

• US Government shutdown and the US-China meeting due this week is weighing negatively on the US Dollar just now and we could see some more of weakness over the next few sessions. Major currencies and EM currencies could strengthen a bit during this period.
• Dollar Index (95.77) came off sharply from 96.68. While the index trades lower, it could test support near 95 before bouncing back from there again. For the near term the negative sentiment could prevail with the government shutdown and the upcoming US-China meeting due this week.
• Euro (1.1413) also tested 1.1290 on the downside but bounced back from there sharply on dollar weakness. A re-attempt to test 1.15 or higher could be seen now.
• Dollar Yen (109.32) is trading slightly lower. 110 is holding well for now and the pair could remain stable for the near term within 108-110 region. Longer term view is bullish for USDJPY.
• Pound (1.3192) is up sharply and could head towards previous highs of 1.3250-1.33 seen in Sep-Oct’18. A corrective dip from 1.33 is a possibility for the medium term.
• Aussie (0.7194) is up sharply contrary to our expectation of a fall towards 0.70-0.69. Immediate resistance is seen near 0.7250 which if holds could push back the currency to 0.7150. Immediate view is bullish.
• USD-CNY (6.7359) has come off sharply making fresh lows in the current down move that started from Nov’18. While the US Dollar could see some more weakness in the near term, Yuan strength could continue for now.
• Dollar-Rupee (70.94) is likely to strengthen today as major currencies have strengthened on Dollar Weakness. A test of 70.70 could be a possibility.

INTEREST RATES

• The German-US 2Yr Spread (-3.16%) has 200-day MA Support near -3.25% while the German-US 10Yr Spread (-2.57%) broke below earlier support at -2.52% and is now testing the 200-day Support near current level. If these hold, we may see a bit of a bounce in both, which could be Euro-positive. As it is, the Euro (1.141) rose back strongly from 1.1300 on Friday.
• The 10Yr GOI (7.5455%) remains below 7.59% for now. Let us see if it manages to break below 7.55% or not. But, that might not be easy while the Brent (61.42) trades above 61 and 60.

Key Highlights

• The Euro declined heavily, tested the 1.1300 support, and later recovered against the US Dollar.
• There was a break above a connecting bearish trend line with resistance at 1.1380 on the 4-hours chart of EUR/USD.
• The German IFO business sentiment index in Jan 2019 declined from 101.0 to 99.1.
• Today in the US, the Dallas Fed National Activity Index for Jan 2019 will be released, which could decline from 0.22 to 0.21.

EURUSD Technical Analysis

This past week, the Euro was under a lot of pressure as it declined below the 1.1420 support level against the US Dollar. The EUR/USD pair even broke the 1.1350 and 1.1320 support levels.

Looking at the 4-hours chart, the pair dipped below the 1.1300 support and formed a new yearly low at 1.1289. Later, there was a strong buying interest emerged near the 1.1300 level, resulting in a decent upward move.

The pair bounced back above 1.1350 and broke the 38.2% Fib retracement level of the last decline from the 1.1569 high to 1.1289 low. Moreover, there was a break above a connecting bearish trend line with resistance at 1.1380.

The pair tested the 1.1420 resistance (the previous support) and the 100 simple moving average (red, 4-hours). Besides, the 50% Fib retracement level of the last decline from the 1.1569 high to 1.1289 low is at 1.1429.

Therefore, a clear break above the 1.1420-1.1430 area is must for further upsides this week. If not, there could be a fresh decline towards the 1.1350 support. More importantly, if sellers take back control, the pair may slide towards the 1.1320 or 1.1300 support.

Fundamentally, the German IFO business sentiment index for Jan 2019 was released by the CESifo Group. The market was looking for a decline from the last reading of 101.0 to 100.6.

The actual result was lower than the forecast as there was a decline to 99.1 in the German IFO business sentiment index. Additionally, the IFO Current Assessment declined from the last revised reading of 104.9 to 104.3. The report added:

Companies assessed their current business situation slightly less favourably. Their business expectations also deteriorated sharply and turned pessimistic for the first time since December 2012. The German economy is experiencing a downturn.

Overall, the 1.1420-1.1430 resistance area is crucial for EUR/USD. If there is a successful break and close above 1.1430, the pair may recover further in the coming sessions.

Economic Releases to Watch Today

• Euro Zone Private loans (YoY) Dec 2018 – Forecast +3.4%, versus 3.3% previous.
• Dallas Fed National Activity Index for Jan 2019 – Forecast 0.21, versus 0.22 previous.

Wall Street rallies as shutdown ends

Friday’s announcement that the longest ever US government shutdown would end, at least temporarily, supported stock markets as the economic drag dwindles. China officials head to Washington ahead of trade negotiations later this week. Australia markets are closed for a public holiday.

US30USD Daily Chart

President Trump agreed to reopen the US government for three weeks on Friday, though the issue of funding for the Mexico wall still remain. The US30 index hit the highest since December 12 last Friday

The index is nearing the convergence of the 200- and 100-day moving averages at 24,270 and 24,983, respectively

Despite the climb-down on the shutdown, Trump’s State of the Union address is unlikely to go ahead tomorrow. House Speaker Pelosi said she will work with Trump to find a new date.

DE30EUR Daily Chart

The Germany30 index advanced to the highest in almost eight weeks on Friday, led by positive sentiment in Asia. Gains were tempered a tad by another set of weak German data, this time the IFO surveys for January

The 100-day moving average at 11,426 could be the next resistance hurdle for the index to overcome

January's German IFO readings came in below forecast on Friday, with the expectations index slumping to 94.2, the weakest since 2012. The data empasised the ECB’s call that downside risks to the economy have increased.

CN50USD Daily Chart

Chinese shares posted their biggest one-day gain in a week on Friday amid hopes that the less-aggressive stance on the government shutdown could filter through in to trade negotiations and promote a deal

The China50 index hit the highest since December 5 on Friday, and is approaching the 200-day moving average at 11,463, which has held since April 13

Lower level Chinese official head to Washington to carry on trade discussions ahead of the “big guns' meeting on January 30-31.

GOLD faces further bull pressure towards region 1,309.29 following its strong rally on Friday. On the downside, support comes in at the 1,290.00 level where a break will turn attention to the 1,280.00 level. Further down, a cut through here will open the door for a move lower towards the 1,270.00 level. Below here if seen could trigger further downside pressure targeting the 1,260.00 level. Conversely, resistance resides at the 1,307.00 level where a break will aim at the 1,320.00 level. A turn above there will expose the 1,330.00 level. Further out, resistance stands at the 1,340.00 level. All in all, GOLD looks to move further higher on correction.

EURUSD recovery threats remain with eyes on 1.1489 zone as the pair rallied strongly on Friday to close higher. Support comes in at the 1.1350 where a violation will aim at the 1.1300 level. A break below here will target the 1.1250 level. Further down, support lies at the 1.1200. On the upside, resistance resides at 1.1450 level with a break through there opening the door for further upside towards the 1.1500 level. Further up, resistance comes in at the 1.1550 level where a violation will expose the 1.1600 level. All in all, EURUSD continues to threaten further upside pressure.

USDCHF remains vulnerable below key resistance at 1.0007 zone. Resistance stands at the 1.0050 level as the next upside target. A break of here will clear the way for more gain towards the 1.0100 level. Above here, resistance comes in at the 1.0150 level and then the 1.0200 level. Its daily RSI is bearish and pointing lower suggesting more weakness. On the downside, support is seen at the 0.9900 level. A turn below there will set the stage for more decline towards the 0.9850 level. And then the 0.9800 level. All in all, USDCHF faces further downside pressure on price pullback.