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The DAX index is showing little movement in the Thursday session. Currently, the DAX is trading at 11,423, up 0.10% since the close on Wednesday. On the release front, the sole indicator is eurozone trade balance. The surplus dropped sharply to EUR 13.4 billion in September, down from EUR 16.6 billion in August. The weak reading was a result of a weakness in exports, which fell 1.0% in September, on an annualized basis. On Friday, the eurozone releases key CPI reports.

As the largest economy in the eurozone, Germany acts as a bellwether for the rest of the eurozone. Investors were in for a shock on Wednesday, on the news that the German economy contracted in the third quarter, for the first time since Q1 of 2015. German officials tried to put a brave spin on the numbers. Economic Minister Peter Altmaier said that a 0.2% decline “isn’t a catastrophe” and that the economy would rebound in the fourth quarter. The ministry blamed the contraction on weakness in the auto sector due to new pollution standards. However, it’s likely that the skid is also due to the global trade war, which has also resulted in U.S. tariffs on European products. Investor confidence remains very low, and that could be a harbinger of more trouble ahead in the fourth quarter. On Tuesday, the well-respected ZEW research institute said that investors did not expect a rapid recovery from the current weakness. German ZEW Economic Sentiment posted a second straight soft release for November, with a reading of -24.1 points. This points to deep pessimism on the part of institutional investors and analysts.

The crisis over the Italian budget continues, as Rome rejected a demand from the European Commission to revise its draft budget. The Italian government said it would stick to its deficit target of 2.4%, which is within EU fiscal rules. For its part, the EU argues that the deficit target could reach 3.1% in 2020, which would breach the rules. With the ball in the EU court, what happens next? The EU could respond with financial sanctions, known as an excessive deficit procedure, which would amount to billions of euros. As the third largest economy in the eurozone, Italy’s challenge to the EU could have repercussions for the entire bloc, as officials in Brussels scramble to respond to the salvo fired by Rome.

EURGBP eyes further upside pressure on bullish rally. This leaves immediate upside risk towards the 0.8850 level. A violation if seen will turn risk towards the 0.8900 level. Further up, resistance comes in at 0.8950 level followed by the 0.9000 level. Its daily RSI is bullish and pointing higher suggesting further strength. On the downside, support stands at the 0.8800 level where a violation will turn focus to the 0.8750 level. A break below here will aim at the 0.8700 level. On the upside, resistance resides at the 0.8650 level. All in all, EURGBP remains biased to the upside on further strength.

Sterling is without a doubt the biggest loser today. Prime Minister Theresa May's government is in chaos. In less than 24 hours after May seemed to have secured Cabinet support for her Brexit deal, four ministers resigned. The biggest impact came from resignation of Brexit Minister Dominic Raab, who complained that "no democratic nation has ever signed up to be bound by such an extensive regime, imposed externally without any democratic control over the laws to be applied, nor the ability to decide to exit the arrangement." It's also reported Senior Eurosceptic lawmaker Jacob Rees-Mogg is to submit a letter of no confidence later today. It's just the beginning for May, and the Pound. Btw, much weaker than expected UK retail sales data also weigh on Sterling too.

For now, Dollar is following as the second weakest together Euro. Meanwhile, Australian Dollar is the strongest one today as boosted by strong employment data, and hope of progress is US-China trade negotiation. New Zealand Dollar is trading as the second strongest. Yen is the third strongest. Focus will turn to a batch of data from the US, including retail sales, Empire State manufacturing, Philly Fed survey, import price, business inventories and jobless claims.

In other markets, major European indices are mixed at the time of writing:

• FTSE is up 0.06%
• DAX is down -0.05%
• CAC is down -0.39%
• German 10 year yield drops -0.0244 to 0.379
• Italian 10 year yield drops -0.023 to 3.481

Earlier in Asia

• Nikkei closed down -0.20% at 21803.62.
• Singapore Strait Times gained 0.37% to 3054.53
• Both Hong Kong and Chinese stocks gained on US-China trade talk progress
• Hong Kong HSI rose 1.75% to 26103.34
• China Shanghai SSE rose 1.36% to 2668.17

The price movement of the common European currency against the Japanese Yen has been guided by a junior ascending channel pattern. The currency pair tested the upper boundary of the channel at 129.25 during yesterday's session.

The EUR/JPY currency pair breached the lower boundary of the channel pattern at 128.36 during the middle of Thursday's trading session.

Given that a breakout had occurred, the currency exchange rate is likely to continue its decline towards the monthly support level at 127.71 during the following trading session.

During Wednesday's trading session, the European Single Currency surged to 1.1340 level to end the trading session at the 1.1311 mark. During Thursday morning hours, the currency exchange rate was resisted by the 200-hour simple moving average to trade at the 1.1323 mark.

In regards to the near-term future, most likely, the currency exchange rate will move sideways between the 200-hour and the 100-hour SMAs at the 1.1300 level.

On the other side, today's US Retail Sales data release at 13:30 GMT may push the rate to break the 200-hour SMA to trade near the monthly PP at 1.1413 or move the rate downwards to trade near the 61.80% Fibo at the 1.1203 mark.

During Wednesday's trading session, the currency exchange rate met the upper boundary of the descending medium pattern line to end the trading day at the1.2980 mark. During Thursday morning hours, the British pound slumped by 228 pips or 1.75% to trade at the 1.2805 mark. The slump was resulted by the Brexit uncertainty news at the UK Government.

In regards to the near-term future, most likely, the British Pound will meet the bottom boundary of the descending medium pattern line at the 1.2750 mark to trade at 1.2700 level during Thursday's trading session.

On the other side, the British Pound could bounce off the medium pattern line at 1.2750 to recover itself to trade near the weekly S2 at the 1.2820 mark.

The Australian Dollar appreciated about 66 base points against the US Dollar on Wednesday. The currency pair breached both the 200-hour SMA and the weekly PP near 0.7238 during the previous session.

However, after the exchange rate pierced the upper boundary of a triangle pattern at 0.7294 during the first part of today's session, the pair began to decline.

Currently, the rate is moving towards a support cluster formed by the 200-hour simple moving average and the weekly pivot point at 0.7238.

If this support cluster holds, the AUD/USD currency exchange rate will aim for a re-testes of the upper border of the triangle pattern today.

During Wednesday's trading session, the currency exchange rate passed through the supports of the most technical indicators to end the trading session at the 113.50 mark. During Thursday's morning, the US Dollar resisted by the 200-hour simple moving average to trade at the 113.40 mark.

In regards to the near-term future, most likely, the US Dollar will keep depreciating towards the weekly S1 at the 113.16 mark due to a lack of technical indicators which could prevent the downward movement.

On the other side, today's US Retail Sales data release at 13:30 GMT may turn the rate to surge upwards to the monthly pivot point at the 113.62 mark.

The US Dollar traded sideways against the Canadian Dollar on Wednesday trading session. The currency pair was moving within the range of 1.3260 and 1.3200 during the previous session. The exchange rate breached the lower boundary an ascending channel and the 100-hour simple moving average at 1.3228 during the afternoon hours session on Thursday. Given that a breakout had occurred, the USD/CAD currency exchange rate is likely to continue its decline within this session and could aim at a support cluster formed by the 200-hour SMA and the weekly PP at 1.3157 today.

During Wednesday's trading session, the yellow metal broke the resistances of the 55-hour and the 100-hour SMAs to end the trading session at the 1,209.52 mark. On Thursday morning, the gold was trading at the 1,211.18 mark between the monthly pivot point and the 50.00% Fibonacci retracement level.

In regards to the near-term future, the gold will trade sideways to stay at the 1,210.00 level. Besides, the 200-hour simple moving average should resist the yellow metal during the trading session on Thursday.

However, the yellow metal could depreciate against the US Dollar during today's US Retail Sales data release at 13:30 GMT to push the gold the trade at 1,220.00 level.