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Daily Pivots: (S1) 112.58; (P) 112.98; (R1) 113.71; More..

USD/JPY's breach of 113.24 minor resistance suggests that corrective fall from 114.20 has completed with three waves down to 112.23. Intraday bias is turned back to the upside for 114.03 resistance first. Break will target 114.54 key resistance next. On the downside, break of 112.23 will extend the consolidation from 114.54 with deeper fall. But after all, downside should be contained by 38.2% retracement of 104.62 to 114.54 at 110.75 to bring rebound. Larger rise from 104.62 is expected to resume later.

In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.76 support holds. However, decisive break of 109.76 will dampen this bullish view and turns outlook mixed again.

Daily Pivots: (S1) 0.9876; (P) 0.9895; (R1) 0.9923; More...

Intraday bias in USD/CHF remains on the downside for 0.9484 support first. Sustained break there will confirm near term reversal and target 61.8% retracement of 0.9541 to 1.0128 at 0.9765 and below. On the upside, above 0.9943 minor resistance will turn intraday bias neutral first. But break of 1.0008 resistance is needed to indicate short term bottoming. Otherwise, near term outlook will now remain bearish in case of recovery.

In the bigger picture, rise from 0.9541 could have topped at 1.0128. But as long as 0.9541 support holds, we'd still expect rise from 0.9186 to resume at a later stage. Break of 1.0128 will target 1.0342 key resistance. However, break of 0.9514 will pave the way back to 0.9186 low.

Daily Pivots: (S1) 1.1323; (P) 1.1383; (R1) 1.1416; More.....

EUR/USD's rebound was limited well below 1.1472 resistance and weakened again. But it's staying inside range of 1.1267/1472 after all. Intraday bias remains neutral first. On the downside, break of 1.1267 will target 1.1215 low first. Firm break there will resume larger down trend from 1.2555 for 1.1186 fibonacci level next. However, considering bullish convergence condition in daily MACD, firm break of 1.1472 will be suggest medium term bottoming and turn outlook bullish for 1.1814 resistance 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.

GBPUSD tumbled to a fresh 20-month low of 1.2505 on Monday, creating a strong negative move below the previous multi-month bottoms. The bearish outlook was confirmed by the lower low and the pair looks ready to maintain and possibly extend its sizeable recent losses in the next sessions.

The momentum indicators are endorsing this view, despite today’s weak upside opening. The MACD oscillator holds below the trigger and zero lines, strengthening its movement, while the stochastic oscillator returned lower again near its oversold zone.

If the market continues the downward tendency and plunge below the 20-month low, the next hurdle for traders to have in mind is the 1.2360 support area, taken from the trough on April 2017. More losses could lead the price until the 1.2100 psychological level, registered on March 2017.

Alternatively, in case of an upside correction, the price could once more challenge the 1.2590 resistance and the 1.2690 barrier, identified by the latest lows. Even higher, the 20- and 40-simple moving averages (SMAs) in the daily timeframe could attract greater attention – at 1.2770 and 1.2850 respectively. Furthermore, cable could meet another obstacle around the descending trend line, which stands around the 23.6% Fibonacci retracement level of the downleg from 1.4375 to 1.2505.

To sum up, GBPUSD recorded five consecutive red weeks looking negative in the short- and the long-term.

Litecoin continues to drift lower in early Tuesday trade, with the ninth largest cryptocurrency by market capitalization recently hitting a fresh 2018 trading low, at $21.90. The psychological $20.00 support level is now coming into focus, despite the RSI and MACD indicators being extremely oversold on the daily time frame. If buyers can create a bullish double-bottom, a short-term relief rally towards the $27.00 would then seem possible.

The LTCUSD pair is strongly bearish while trading below the $27.00 level, key support is found at the $21.90 and the $20.00 levels.

If the LTCUSD pair moves above the $25.00, buyers may test the $27.00 and $30.00 resistance levels.

The euro continues to drift lower against the greenback, as US dollar strength and ongoing Brexit concerns push the single currency lower. Yesterday’s strong technical rejection from the top-end of the triangle pattern is also weighing on the EURUSD pair. Further intraday losses towards the triangle bottom remain the most likely scenario while price continues to trade below the EURUSD weekly pivot point, at 1.1377.

The EURUSD pair is intraday bearish while trading below the 1.1377 level, key technical support is found at the 1.1300 and 1.1216 levels.

If the EURUSD pair moves above the 1.1377 level, buyers may test the 1.1400 and 1.1430 resistance levels.

The British pound has fallen to a twenty-month trading low against the US dollar after British PM Theresa May cancelled the Meaningful Brexit vote, creating further uncertainty for the UK economy. The GBPUSD pair has broken the neckline of a large head and shoulders pattern and remains heavily bearish while trading below the 1.2657 level. Bearish fundamentals and technicals are aligning, indicating further downside ahead for sterling.

The GBPUSD pair is strongly bearish while trading below the 1.2657 level, key technical support is found at the 1.2500 and 1.2380 levels.

If the GBPUSD pair trades above the 1.2600 level, key resistance is found at the 1.2657 and 1.2690 levels.

Sterling declined to almost a 20-month low overnight after Theresa May postponed the planned Brexit vote which was supposed to happen today. She did this because her proposal was unlikely to happen. Negotiations to address the key issues – such as the backstop – will now resume with the European Union. In response, Donald Tusk, the European Council President said that the region was ready to work with the UK on having a good deal. However, May will restart the negotiations at a place of weakness after failing to secure the required votes. Today, the Brexit debate will continue even as traders receive the employment numbers.

Japanese stocks declined to a 20-month low after the volatile Wall Street session. Yesterday, US stocks declined sharply before closing in the green. At the same time, the S&P volatility index rose to a multi-month high, a sign that volatility was increasing in the market. The same sell-off happened in Australia, Hong Kong, Shanghai, and Seoul. The economic data to watch from Japan will be the machine tool orders and the assessment of big manufacturers’ performance.

The price of crude oil declined in overnight trading as traders continued worrying that the cuts announced by OPEC will not go far enough to rebalance the market. The implication of this is that producers will continue overproducing and flooding the market with oil. Traders are also starting to worry about the increased production from the United States. Early this year, the country passed Saudi Arabia and Russia to become the biggest oil producer. Last week, data from the EIA showed that the country had become a net oil exporter for the first time in decades.

EUR/USD

The EUR/USD pair declined sharply in overnight trading after Theresa May abandoned the Brexit vote yesterday. The pair dropped to an intraday low of 1.1350. In the Asian session, it recovered a bit to a high of 1.1370. Today, traders will receive the ZEW sentiment data from Germany. The current price is below the 25-day and 50-day EMA while the Average True Range has declined sharply as shown below. The RSI has moved slightly higher to the current 40. In the short term, the price will likely continue moving up before continuing the downward trend.

XTI/USD

After rising sharply yesterday, the price of crude oil declined in overnight trading as traders continued their worry about supply. The XTI/USD pair declined to 50.75. On the four-hour chart, the pair’s price was below the 50-day and 25-day EMA while the RSI has moved to a low of 43. This is lower than the 60 level it was before. The pair’s price will likely continue to wait for inventory data, which will be released later today.

GBP/USD

The GBP/USD pair declined sharply overnight after Theresa May cancelled the planned vote for Brexit. The pair reached an intraday low of 1.2505. The price is below the 25-day and 50-day EMA. The Relative Vigor Index declined sharply while the RSI is trading below the oversold level of 30. The pair’s volatility will likely continue as traders watch the latest developments on Brexit.

Market movers today

In the UK, there will be no vote on PM Theresa May's Brexit deal today after May decided to postpone the vote, see below and Brexit Monitor: Brexit clash postponed to January, at the earliest , 10 December 2018 . Parliament will hold a three-hour emergency debate on Tuesday on May's decision to defer the vote.

In Germany, we will get ZEW expectations in December. The index is at the lowest level since 2012.

The UK jobs report for October is due and the US is due to release the small business optimism from NFIB for November.

Norway is due to release the monthly GDP estimate for October ahead of the Norges Bank meeting on Thursday, where we expect no changes to the policy rate but a confirmation that it is on track to deliver a hike in March (see page 2).

Selected market news

US stock markets staged a late rebound last night, pulled higher by a rally in tech stocks. Chinese stocks are also slightly higher overnight. Apple faced further headwinds yesterday as a Chinese court ruled in favour of Qualcomm in a case about intellectual property rights.

US Treasury Secretary Stephen Mnuchin and China's economic tsar Liu He yesterday discussed the next stage in the trade talks on a phone call. It shows the two countries are progressing with trade talks despite the arrest of Huawei's CFO in Canada, which has sparked significant protests in Beijing. Both sides have indicated they want to keep the trade talk on a separate track from the clashes on the tech front. The bail hearing in Canada on Huawei's CFO was adjourned to Tuesday.

In the UK, Theresa May's decision to postpone the Brexit vote sent GBP sharply lower , In reality, it does not change much for our expectation, as she was expected to lose the vote anyway. The EU reacted coolly to the decision, with European Council President Donald Tusk saying that the EU was ready to discuss how to smooth ratification, but that neither the withdrawal agreement nor the Irish backstop would be renegotiated.

Oil prices dropped back to USD60 per barrel yesterday on doubts on whether the production cuts by OPEC and Russia would be enough to head off a glut in the market and worries over weaker-than-expected Chinese imports data.

Yesterday, India's central bank governor Urjit Patel resigned after only a little more than two years in the seat. The resignation comes after a rift between the government and the central bank as the former has pushed for more capital to be transferred to the government. The rift has weakened the confidence in India's economic governance and the INR took a beating on the news.

For the 24 hours to 23:00 GMT, the EUR declined 0.70% against the USD and closed at 1.1355.

On macro front, the Euro-zone's Sentix investor confidence index sharply fell to a level of -0.3 in December, hitting its lowest level in four years, amid several ongoing political upheaval. In the previous month, the index recorded a level of 8.8, while market participants had anticipated for a decline to a level of 8.3.

Separately, Germany's seasonally adjusted trade surplus narrowed to €17.3 billion in October, compared to a surplus of €17.7 billion in the prior month.

In the US, data showed that the US JOLTs job openings rose to a level of 7079.0K in October, following a revised reading of 6960.0K in the preceding month.

In the Asian session, at GMT0400, the pair is trading at 1.1365, with the EUR trading 0.09% higher against the USD from yesterday's close.

The pair is expected to find support at 1.1331, and a fall through could take it to the next support level of 1.1296. The pair is expected to find its first resistance at 1.1420, and a rise through could take it to the next resistance level of 1.1474.

Moving ahead, traders would keep an eye on the Euro-zone's ZEW economic sentiment index for December along with Germany's ZEW survey indices for December, set to release in a few hours. Later in the day, the US NFIB small business optimism index and the producer price index, both for November, will keep traders on their toes.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.