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For the 24 hours to 23:00 GMT, Crude Oil rose 0.93% against the USD and closed at USD48.76 per barrel, amid optimism over US-China trade talks and on support from OPEC production cuts. Adding to the positive sentiment, a report revealed that Saudi Arabia is planning to reduce its crude exports to around 7.1 million barrels per day (bpd) by the end of January.

In the Asian session, at GMT0400, the pair is trading at 48.61, with oil trading 0.31% lower against the USD from yesterday's close.

The pair is expected to find support at 48.02, and a fall through could take it to the next support level of 47.42. The pair is expected to find its first resistance at 49.50, and a rise through could take it to the next resistance level of 50.38.

Crude oil is trading between its 20 Hr and 50 Hr moving averages.

Daily Pivots: (S1) 1.3256; (P) 1.3323; (R1) 1.3368; More...

USD/CAD's decline from 1.3664 extends to as low as 1.3303 so far, and broke mentioned 38.2% retracement of 1.2781 to 1.3664 at 1.3327, which is close to 55 day EMA (now at 1.3324). Intraday bias stays on the downside and further fall would now be seen to 61.8% retracement at 1.3118. Break there will put key channel support (now at 1.2993) into focus. On the upside, above 1.3369 minor resistance will turn intraday neutral first. But even in case of recovery, risk will now stay on the downside as long as 1.3664 resistance holds.

In the bigger picture, the medium term rise from 1.2061 (2017 low) might continue further. But the structure of such rise is not clearly impulsive so far. Hence, we'd stay cautious on strong resistance from 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 and 1.3793 resistance to limit upside, and bring medium term topping. But in any case, medium term outlook will stay bullish as long as channel support (now at 1.2993) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high).

Daily Pivots: (S1) 0.7123; (P) 0.7137; (R1) 0.7163; More...

With 0.7025 minor support intact, AUD/USD's rebound from 0.6722 might still extend higher. But upside should be limited below 0.7393 resistance. On the downside, break of 0.7025 minor support will turn bias back to the downside for retesting 0.6722 low. Overall, larger down trend from 0.8135 is expected to resume later after consolidation completes.

In the bigger picture, the failure to sustain below 0.6826 (2016 low) suggests that the long term down trend is now 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).

Daily Pivots: (S1) 107.82; (P) 108.21; (R1) 108.90; More..

No change in USD/JPY's outlook. Rebound from 104.69 could extend higher. But upside will likely be limited by 109.46 minor resistance. On the downside, below 106.74 minor support will turn bias to the downside for 104.62 low. Overall, larger downtrend from 118.65 (2016 high) is expected to resume finally through 104.62 after current consolidation from 104.69 completes.

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.

Daily Pivots: (S1) 0.9763; (P) 0.9822; (R1) 0.9856; More...

Outlook in USD/CHF is unchanged. The corrective fall from 1.0128 is still progress and might extend lower. But downside should be contained by 0.9765/8 cluster support (61.8% retracement of 0.9541 to 1.0128 at 0.9765, 38.2% retracement of 0.9186 to 1.0128 at 0.9768) to bring rebound. On the upside, break of 0.9920 minor resistance will suggest that such correction has completed and turn bias to the upside for retesting 1.0128 resistance. However, sustained break of 0.9765/8 will bring deeper fall back to 0.9541 support next.

In the bigger picture, while the fall from 1.0128 was slightly deeper than expected, the structure suggests it's a corrective move. As long as 0.9765/8 cluster support (61.8% retracement of 0.9541 to 1.0128 at 0.9765, 38.2% retracement of 0.9186 to 1.0128 at 0.9768) holds, we'd expect up trend from 0.9541 and 0.9186 to resume later through 1.0128. However firm break of 0.9765/8 will argue that the trend has reversed. Further break of 0.9541 support will confirm this bearish scenario and bring deeper fall back to 0.9186 low.

Daily Pivots: (S1) 1.2726; (P) 1.2756; (R1) 1.2806; More....

No change in GBP/USD's outlook. Rebound from 1.2391 might extend higher. But still, near term outlook remains bearish as long as 1.2814 resistance holds. On the downside, below 1.2615 minor support will turn bias to the downside for retesting 1.2391 first. Break will extend the down trend from 1.4376 and target 61.8% projection of 1.4376 to 1.2661 from 1.3174 at 1.2114 next. However, firm break of 1.2814 resistance will be an early sign of trend reversal and bring stronger rebound back to 1.3174 resistance next.

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.

Daily Pivots: (S1) 1.1356; (P) 1.1387; (R1) 1.1430; More.....

EUR/USD retreats mildly today as it faced some resistance from 1.1496. And intraday bias remains neutral for now. At this point, price actions from 1.1215 are still viewed as a corrective pattern. Thus, downside breakout is favored. On the downside, break of 1.1307 minor support will turn bias back to the downside for 1.1215 low. Break will resume down trend from 1.2555 to 1.1186 key fibonacci level. Nevertheless, sustained break of 1.1499 resistance will suggest near term reversal and bring stronger rebound back to 1.1621 resistance first.

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.

Dollar trades generally higher in Asian session today, rebound from near term support levels against Euro and Swiss Franc. The greenback is also seen losing some downside momentum against Sterling and Australian Dollar. Recovery in US treasury yields help and there is also some optimism on the result of US-China trade talks. Nevertheless, Canadian Dollar is even stronger for now, ahead of BoC rate decision on Wednesday. While BoC is generally expected to hold interest rate unchanged at 1.75%, it's not a total consensus. There is risk of an hawkish outcome from he central bank

In Asian markets, Nikkei is currently trading up 1.03%. But momentum is weak elsewhere as Hong Kong HSI is just up 0.27%. Singapore Strait Times is up 0.22%. China Shanghai SSE is even down -0.20%. Nevertheless, Japan 10 year JGB yield turns positive today, currently up 0.0214 at 0.007. It was at as low as -0.045 last week. It's a positive development.

Overnight, DOW closed up 0.42% at 23531.35. S&P 500 gained 0.70% while NASDAQ rose 1.26%. DOW is still limited by 23713.93 fibonacci level. S&P 500 is held by equivalent level at 2537.61. Also NASDAQ is kept relatively far below equivalent level at 6932.44. The post-Christmas rebounds are viewed as nothing more than a corrective rise for now.

Development in the bond markets was positive though. Yield curve has flattened in the inverted range, from 1-year (2.600), 2-year (2.541), 3-year (2.525) to 5 year (2.539). Also, they're now back above federal funds rate target of 2.25-2.50%.

Technically, EUR/USD is held in range below 1.1499 resistance and eventual downside break out is still in favor. USD/CHF also recovered after testing 0.9789 temporary low. GBP/USD is held below 1.2814 resistance and thus, keeping near term outlook bearish. USD/CAD's break of 55 day EMA now suggests that, at least, the decline from 1.3664 is going deeper towards 1.3118 fibonacci level. Yen crosses are now close to important resistance level and we'll see if the rebounds could extend.

US Ross: Very good chance to get a reasonable settlement that China can live with

US Commerce Secretary Wilbur Ross expressed his optimism on US-China trade negotiation in a CNBC interview yesterday. He said "there's a very good chance that we will get a reasonable settlement that China can live with, that we can live with and that addresses all of the key issues. And to me those are immediate trade. That's probably the easiest one to solve,"

Regarding the slowdown in China, Ross said it's a "big problem in their context of having a very big need to create millions of millions of jobs to hold down social unrest coming out of the little villages". And that could create a "real social problem. But he added, regarding the slowdown, he is "not happy nor guilty. We expected this would happen." But, "what has changed is China now understands how independent they are on us."

US delegation is having the second day of trade talks in Beijing today.

EU mulling reassurances to help UK PM May get Brexit deal approved

Reuters reported, with unnamed sources, that the EU is considering ways to help UK Prime Minister Theresa May to secure support from the parliament for the Brexit agreement. The Irish backstop is the key issue in focus. It's politically a solution to avoid a hard Irish border that is not intended to be triggered. Even if it's triggered, the backstop would be temporary. However, legally, UK is not allowed to quit the backstop unilaterally. EU officials are said to be considering the reassurances needed. One resolution is a commitment by EU to have a UK-EU free trade agreement in place by the end of 2021. That would help avoid triggering the backstop.

Separately, there are rumors that UK and EU officials are discussing the possibility of extending the Article 50 withdrawal notice, if the Brexit deal cannot be approved by the parliament by March 29 Brexit date. But the Prime Minister office reiterated to Telegraph that "The PM has always said that we would be leaving the EU on 29 March 2019, and we would not extend Article 50."

Debate on the Brexit agreement will resume in Commons this Wednesday. A meaningful vote is scheduled for Tuesday, January 15.

On the data front

Australia trade surplus narrowed slightly to AUD 1.93B in November, and missed expectation of AUD 2.18B. Import rose 1.7% while exports rose 1.4%. Swiss unemployment rate, German industrial production and Eurozone confidence indicators will be featured in European session. Later in the day, Canada and US will release trade balance.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1356; (P) 1.1387; (R1) 1.1430; More.....

EUR/USD retreats mildly today as it faced some resistance from 1.1496. And intraday bias remains neutral for now. At this point, price actions from 1.1215 are still viewed as a corrective pattern. Thus, downside breakout is favored. On the downside, break of 1.1307 minor support will turn bias back to the downside for 1.1215 low. Break will resume down trend from 1.2555 to 1.1186 key fibonacci level. Nevertheless, sustained break of 1.1499 resistance will suggest near term reversal and bring stronger rebound back to 1.1621 resistance first.

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.

Economic Indicators Update

US Commerce Secretary Wilbur Ross expressed his optimism on US-China trade negotiation in a CNBC interview. He said "there's a very good chance that we will get a reasonable settlement that China can live with, that we can live with and that addresses all of the key issues. And to me those are immediate trade. That's probably the easiest one to solve,"

Regarding the slowdown in China, Ross said it's a "big problem in their context of having a very big need to create millions of millions of jobs to hold down social unrest coming out of the little villages". And that could create a "real social problem. But he added, regarding the slowdown, he is "not happy nor guilty. We expected this would happen." But, "what has changed is China now understands how independent they are on us."

US delegation is having the second day of trade talks in Beijing today.

Key Highlights

• The British Pound broke the key 1.2680 and 1.2720 resistances against the US Dollar.
• There was a break above a short term bearish trend line at 1.2740 on the 4-hours chart of GBP/USD.
• The US ISM Non-Manufacturing Index in Dec 2018 declined from 60.7 to 57.6.
• Today in the US, the Trade Balance figure for Nov 2018 will be released, which is forecasted to post a deficit of $54.0B.

GBPUSD Technical Analysis

After a massive decline, the British Pound recovered nicely from the 1.2400 support against the US Dollar. The GBP/USD pair jumped above the 1.2600, 1.2680 and 1.2720 resistance levels.

Looking at the 4-hours chart, the pair reversed almost all its losses and traded above the 1.2720 resistance levels. There was a proper close above the 1.2700 handle, 100 simple moving average (red, 4-hours), and the 200 SMA (green, 4-hours).

The pair even broke the 61.8% Fib retracement level of the last decline from the 1.2814 high to 1.2391 low. Recently, there was a break above a short term bearish trend line at 1.2740.

Overall, the pair is back in a positive zone above the 1.2720 level and the 76.4% Fib retracement level of the last decline from the 1.2814 high to 1.2391 low. Therefore, there are high chances of more gains above the 1.2800 and 1.2810 levels in the near term.

On the other hand, if there is a downside correction, the previous resistance near 1.2720 and the 200 SMA are likely to act as strong supports.

Recently in the US, the ISM Non-Manufacturing Index for Dec 2018 was released by the Institute for Supply Management (ISM). The market was looking for a decline from the last reading of 60.7 to 59.0.

However, the result was even disappointing as the decline in the ISM Non-Manufacturing Index was more than 2 points and the index dropped to 57.6.

Both EUR/USD and GBP/USD gained traction this week and it seems like there could be more upsides in the coming sessions.

Economic Releases to Watch Today

• Euro Zone Consumer Confidence Dec 2018 – Forecast -6.2, versus -6.2 previous.
• Euro Zone Services Sentiment Dec 2018 – Forecast 12.2, versus 13.3 previous.
• US Trade Balance Nov 2018 – Forecast $-54.0B, versus $-55.5B previous.
• US Consumer Credit Change Nov 2018 – Forecast $18.00B, versus $25.38B previous.