Sample Category Title

Pivot (invalidation): 10940.00

Our preference Short positions below 10940.00 with targets at 10784.00 & 10710.00 in extension.

Alternative scenario Above 10940.00 look for further upside with 11000.00 & 11055.00 as targets.

Comment As Long as the resistance at 10940.00 is not surpassed, the risk of the break below 10784.00 remains high.

Daily Pivots: (S1) 1.1453; (P) 1.1467; (R1) 1.1484; More.....

Intraday bias in EUR/USD remains neutral but with 1.1422 minor support intact, further rise is expected. Rebound from 1.1215 is seen as correcting whole down trend from 1.2555. On the upside, above 1.1569 will extend the rebound through 1.1621 resistance to 38.2% retracement of 1.2555 to 1.1215 at 1.1727 next. On the downside, however, break of 1.1422 support will bring retest of 1.1214 low 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) 1.2813; (P) 1.2872; (R1) 1.2926; More....

GBP/USD's rebound from 1.2391 is still in progress and intraday bias stays on the upside. Such rebound is seen as correcting whole down trend from 1.4376. Further rally would be seen to 1.3174 resistance, which is close to 38.2% retracement of 1.4376 to 1.2391 at 1.3149. We'd expect strong resistance from there to limit upside, at least on first attempt. On the downside, break of 1.2709 minor support will argue that such rebound is completed and turn bias back to the downside for retesting 1.2391 low.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA. The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend from 2.1161 (2007 high). And this will now remain the preferred case as long as 1.3174 structural resistance holds. GBP/USD should target a test on 1.1946 first. Decisive break there will confirm our bearish view. However, sustained break of 1.3174 will invalidate this case and turn outlook bullish.

Daily Pivots: (S1) 0.9788; (P) 0.9820; (R1) 0.9840; More....

Intraday bias in USD/CHF remains neutral for the moment. As noted before, fall from 1.0128 is seen as correcting whole rise from 0.9186. Deeper fall is in favor. ON the downside, break of 0.9716 will target 0.9541 cluster support (61.8% retracement of 0.9186 to 1.0128 at 0.9546). Nevertheless, firm break of 0.9963 will suggest that the pull back is completed. Near term outlook will be turned bullish for 1.0128 .

In the bigger picture, current development suggests that rise from 0.9186 has possibly completed with three waves up to 1.0128 already. Decline from 1.0128 could either be correcting this move, or reversing the trend. As long as 0.9541 support holds, we'd slightly favor the former scenario, and expect another rise through 1.0128 at a later stage. However, sustained break of 0.9541 will confirm trend reversal and bring deeper fall back to 0.9186 low.

Daily Pivots: (S1) 107.91; (P) 108.24; (R1) 108.50; More..

USD/JPY is staying in range of 107.77/109.08 and intraday bias remains neutral first. Outlook is unchanged as we'd expect upside to be limited by 109.46 resistance to complete the rebound from 104.69 short term bottom. On the downside, below 107.77 will turn bias to the downside for retesting 104.69 low. However, sustained break of 109.46 will dampen our view and bring stronger rebound instead.

In the bigger picture, price actions from 125.85 (2015 high) are seen as a long term corrective pattern, no change in this view. Apparently, such corrective pattern is not completed yet. Fall from 114.54 is seen as part of the falling leg from 118.65 (2016 high). Break of 104.62 will target 100% projection of 118.65 to 104.62 from 114.54 at 100.51, which is close to 100 psychological level. But in that case, we'd expect strong support from 98.97 to contain downside to bring reversal. Also, this bearish case will remain the preferred one as long as 114.54 resistance holds.

After a sea of red across global equity markets on Monday following weak Chinese export data and disappointing Euro industrial production figures, Asian markets managed to rebound early Tuesday with futures also indicating a positive start to European and U.S. equities.

Despite the recovery today, risks remain to the downside especially if more data is received confirming that the global economy is heading into a synchronized global slowdown. That’s why it’s difficult to see positive momentum resuming for the remainder of the week.

From a macro perspective, the main encouraging news is the Fed has returned to being the market’s friend by being patient in considering further tightening in monetary policy, and valuations are much more reasonable than they were three to four months ago. However, these two factors may not be sufficient to fuel a sustainable bull rally.

The Brexit vote will be the main risk event today as UK MPs decide on Prime Minister Theresa May’s withdrawal deal. The result of the vote may trigger big moves in the Sterling depending on the outcome.

The base case scenario is that there is high expectation of the bill being rejected by UK MPs, but the vote count will serve as guidance on what happens next. If she suffers a loss by a narrow margin, it may be positive news to Sterling, as May can head back to Brussels for more concessions which could be enough to pass the bill in a second “Plan B” vote. However, a loss by a wide margin will make it tricky for Sterling traders as the bill will be rejected due to different ambitions. Conservative MPs want concessions that are hard to get from Brussels, meanwhile, hardcore remainers want to reject the deal in the hope that they get a second referendum. This may lead to two extreme outcomes: either a hard Brexit or no Brexit at all. However, given all the uncertainty towards such a scenario, investors may sell the currency and assess the situation later, leading to high volatile moves in the Pound.

In the first week of the year, the prices of cryptocurrencies jumped as traders started betting on their revival. The rally led to the price of Bitcoin and Ethereum reaching highs of $4225 and $156, respectively. Then, last week, the prices started to drop and the two currencies reached lows of $3470 and $113. Yesterday, the prices jumped again, a sign that volatility is increasing. The combined market cap of the currencies tracked by Coin Market Cap is now $123 billion.

The currencies have always been volatile, which is a major reason why they have not been widely accepted. Retailers and other sellers are afraid of accepting a currency whose price can fluctuate by double digits within a day. As a result, the consensus among close cryptocurrency watchers is that unless the volatility is dealt with, the currencies will not have mainstream uses. This is why the recent movement from cryptocurrencies to stablecoins could change the industry.

Another way that cryptocurrencies could gain wide acceptance is through regulators. The Securities and Exchange Commission (SEC) will play an important role in this. A good way to start would be to accept ETFs that have been proposed. While the process will take a long time, there is a possibility that the regulator will accept them. In the past, it took years before the SEC allowed gold-backed ETFs.

The price of ETH has moved from last week’s low of 113.59 to a high of 130.5. The current price is above the short and medium-term EMAs while the RSI is trading slightly lower than the overbought level of 70. In the short term, the price could decline to test the previous lows of below 120.

GBPUSD is hovering around the two-month high of 1.2930 after it posted two consecutive green days, having broken above the 40-day simple moving average (SMA) and the descending trend line. This week the pair continues to attract buying interest, with the price climbing slightly above the 23.6% Fibonacci retracement level of the downleg from 1.4375 to 1.2390, around 1.2855.

The technical indicators are still positive in the short-term, with the MACD stretching further above its red trigger line and the RSI moving above the 50 level with strong momentum. Furthermore, the 20- and 40-SMAs are ready to record a bullish crossover in the daily timeframe.

If investors turn their eyes even higher, the pair could re-challenge the 1.3065 resistance, marked by the high on November 14. If bullish actions appear stronger, the market could find resistance at the 1.3145 barrier, which is the 38.2% Fibonacci region before touching the 1.3170 obstacle.

On the flipside, if cable slips back beneath the 23.6% Fibonacci and the 1.2815 support, this could open the door towards the 1.2710 support, which overlaps with the moving averages in the short-term. Moving lower, a violation of these levels would increase negative movement, hitting the 1.2475 support, registered on December 11.

Concluding, the near-risks look to be turning positive after the break above the diagonal line, however, in the long-term, the outlook would shift to bullish if the price action surpasses the 61.8% Fibonacci near 1.3600.

Rates: Italy eyes 15y syndicated bond sale
Risk sentiment is positive at the onset of trading following Chinese fiscal/monetary stimulus headlines. The Italian syndicated 15y bond sale will be closely watched and is a good proxy for sentiment. We expect good demand, lifting (risk) spirits further even if some investors probably stay side-lined ahead of tonight’s Brexit vote.

Currencies: sterling rebounds going into key Brexit vote
The dollar is losing a few ticks as sentiment on risk improves this morning. The enfolding debate on fiscal easing in Germany might become a euro positive over time. Sterling rebounds even as UK PM May is expected to be defeated in Parliament on her Brexit. Markets anticipate a delay of Brexit, but a less sterling friendly outcome is also possible

The Sunrise Headlines

• US stock markets have taken a step back yesterday as all indices noted losses between 0.25% and 1.0%. Asian equities edge higher this morning. Chinese indices slightly outperform on new fiscal/monetary stimulus headlines.
• China announced new supportive measures to help stabilize its slowing economy. It will cut taxes “on a larger scale”, especially for small businesses and the manufacturing sector, and confirmed more supportive measures for 2019.
• UK PM May is planning for a second vote on her Brexit deal as German Chancellor Angela Merkel suggested the EU could grant extra concessions if MP’s vote May’s current deal down tonight, as widely expected.
• Annegret Kramp-Karrenbauer, who succeeded Merkel as new leader of Germany’s Christian Democrats, called for tax cuts as Germany faces an economic slowdown after nine straight years of growth.
• Fed Vice Chairman Clarida reiterated the softer normalization approach of the US central bank. He left the possibility open to raise interest rates in 2019 fewer than the two times projected by the bank’s dot plot after the Dec. meeting.
• US Secretary of State Pompeo and a senior North Korean official are said to meet later this week The pair would discuss and finalize the details of a second summit between US President Trump and North Korean leader Kim Jong Un.
• Today’s economic calendar shows the Empire Manufacturing Business Survey (Jan) and producer inflation data (Dec). The UK Parliament votes on PM May’s Brexit proposal. Italy probably holds a 15y syndicated bond sale

Currencies: Sterling Rebounds Going Into Key Brexit Vote

USD slide to resume?

The dollar traded in consolidation modus yesterday. Global sentiment was risk-off as investors digested disappointing China and EMU data. Core yields initially declined and US/German interest rate differentials widened. However, the dollar failed to profit and the risk-off trade eased later. Ongoing uncertainty on the US shutdown maybe capped further USD gains, too. EUR/USD ended the day unchanged at 1.1469. USD/JPY closed at 108.16 (from 108.48). Investors see the glass again half full rather than half empty this morning. The rebound is supported by comments from Chinese policy makers as they indicate more monetary and fiscal easing to support the economy. Asian equities are showing solid gains with China and Korea outperforming. The yen weakens (USD/JPY in the 108.60 area). The dollar is ceding ground against most other majors. AUD/USD rebounded north of 0.72. EUR/USD is changing hands near 1.1475/80. The yuan is holding near it short-term peak (USD/CNY 6.75). Later today, EMU data are again second tier, but the evolving debate on fiscal easing in Germany is interesting. The jury is still out, but the issue is a potential euro supportive over time. In the US, December headline PPI is expected unchanged at 2.5%. The impact on the dollar will probably be limited as CPI is already available. On Friday and yesterday the USD decline halted, but the USD comeback was far from impressive. If risk sentiment improves again, the dollar decline (ex USD/JPY) might resume. Political event risk is an ambiguous factor for EUR/USD. Brexit chaos might weigh on the euro. The shutdown is a potential USD negative. We maintain the view that any USD rebound might be modest unless risk sentiment deteriorates sharply. The downside in EUR/USD looks rather well protected. EUR/USD 1.1621 (mid-Oct top) remains the next topside reference.

Last-minute efforts of UK PM May yesterday to convince MP’s to support her Brexit deal have apparently failed. Even so, sterling extended its recent rebound. At least part of the market sees a growing chance of the March 29 UK exit from the EU being delayed. This is causing a scaling back of sterling shorts. A big defeat of PM May in the vote might lead to general elections and might lead to a prolonged period of uncertainty. However, more sterling friendly outcomes ( new referendum, EU concessions, …) are also possible. For now, we avoid the binary sterling risk.

EUR/USD: dollar shows no clea trend. USD decline might resume if risk sentiment improves again.

Daily Pivots: (S1) 0.7174; (P) 0.7196; (R1) 0.7217; More...

Intraday bias in AUD/USD is turned neutral again with 4 hour MACD staying below signal line. On the downside, break of 0.7116 minor support will suggest completion of rebound from 0.6722. Intraday bias will then be turned back to the downside for retesting this low. On the upside, above 0.7235 will extend the rebound. But upside should be limited by 0.7393 resistance to bring reversal.

In the bigger picture, the failure to sustain below 0.6826 (2016 low) suggests that the long term down trend is not ready to resume yet. But prior rejection by 55 week EMA indicates underlying medium term bearishness in the pair. Outlook will also stay bearish as long as 0.7393 resistance holds. On the downside, sustained break of 0.6826 will target 0.6008 (2008 low).