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GBPUSD (1.3149): The GBPUSD currency has been moving higher in a slightly parabolic pattern. This could trigger a downside breakout as the currency pair is seen consolidating into a rising wedge pattern. A downside breakout could push GBPUSD back to 1.3036 level of support. If the initial support fails, then we could expect a further decline down toward 1.2808. However, with the upside resistance target of 1.3205 yet to be reached, we expect the initial support to hold.

EURUSD (1.1670): The EURUSD closed bearish on Tuesday after price initially rallied to intraday highs of 1.1730. Price action is seen trading within the highs of 1.1730 and 1.1626 levels. The tight range is expected to push the currency pair toward a breakout eventually. The bias remains to the upside on a successful breakout above 1.1730. To the downside, besides the horizontal support level, the rising trend line is also likely to provide dynamic support.

The U.S. dollar was seen trading down on Tuesday. Fresh news about the U.S. slapping China with higher tariffs was met by China responding in the same. The markets were however to the reports.

Economic data on the day was sparse.

In New Zealand, the current account data showed that the deficit increased to 3.3% of the GDP for the quarter ending June. The deficit was higher than expected.

The Bank of Japan held the monetary policy meeting earlier today. As widely expected, the central bank left the interest rate and QE unchanged at today's meeting. The markets are currently expecting the BoJ Governor Kuroda to speak during the press conference.

The European trading session starts off with the inflation report from the UK. Economists forecast inflation to rise 2.4% on the year in August. This marks a slight deceleration from the 2.5% increase seen the month before. Core CPI is expected to also ease to 1.8% in August from 1.9% previously.

The NY trading session will see the U.S. building permits and housing starts data. Investors will be keen to see if the slowdown in the pending and existing home sales affected the housing starts and building permits report.

Global markets are attempting to power higher today as investors mostly brush away the latest escalation in tit-for-tat tariffs between the world's two largest economies. The Yuan is also benefiting after Premier Xi Jinping confirmed that Chinese authorities will not purposely devalue the Yuan in response to trade tensions.

The reassuring comments from the Chinese Premier will go a long way towards reassuring investor confidence in China. Not only will it help stabilize the Yuan, but it can also play a factor in helping currencies across the region, when factoring in how important China has become to the global economy.

There is also a sense of some relief across investors that the United States could be softening its stance after it imposed 10% tariffs on an additional $200 billion worth of Chinese goods, instead of the expected 25%. This has provided some quiet optimism that both sides will attempt to return to the negotiation table later down the line to resolve the prolonged trade tensions.

With China unable to stand toe-to-toe with the United States in the tit-for-tat tariff battle, there were initial concerns over the nation devaluing its currency to make exports more competitive, despite indications from the PBoC weeks ago that this was not an option on the table. These concerns have once again been wiped away after Premier Li Keqiang this morning stated that “A one-way devaluation will do more harm than good to China's economy”.

The Pound's fortunes this week remain tied to the outcome of the European Union summit. A scenario where there is a fresh breakthrough on Brexit talks could significantly boost buying sentiment towards the British Pound. Away from Brexit, investors will keep a close eye on the pending UK inflation reading which is expected to show CPI cooling to 2.4% in August. Although an upside surprise could support the Pound and expectations of further monetary tightening, Brexit developments may force the Bank of England to stand still. If economic conditions continue to improve and wage growth respects a positive trajectory, the central bank could be poised to act with higher UK interest rates after Britain divorces the European Union in March 2019.

In the currency markets, the Euro edged slightly higher during early trade amid Dollar weakness. The EURUSD has traded within a wide range for the past few weeks with support at 1.1550 and resistance at 1.1800. With quantitative easing in Europe coming to an end this year and the ECB unlikely to raise interest rates until summer 2019, the Euro seems to be on autopilot. All eyes will be on Mario Draghi in Berlin this afternoon, as he discusses the future of economic policy in the Euro Zone. The EURUSD has scope to appreciate towards 1.1730 if Draghi expresses optimism over the health of the European economy.

Elsewhere, Oil prices were steady on Wednesday morning despite an unexpected climb in U.S. Crude stockpiles stimulating oversupply concerns. Oil markets could turn volatile and unpredictable as investors tussle with the conflicting fundamental themes. While geopolitical risk factors in the form of looming U.S. sanctions on Iran have pushed prices higher, rising global oil supply and trade tensions have somewhat limited upside gains. In regards to the technical picture, WTI Crude could appreciate towards $70.76 in the near term if bulls can secure a daily close above $70.00.

Daily Pivots: (S1) 147.03; (P) 147.47; (R1) 148.16; More...

GBP/JPY's rally from 139.88 is still in progress and intraday bias stays on the upside. Current rise should target 149.50 resistance. Decisive break there will confirm our bullish view that decline from 156.59 has completed at 139.88. On the downside, below 146.24 minor support will turn intraday bias neutral and bring retreat. But further rally will remain in favor as long as 142.58 support holds.

In the bigger picture, as long as 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) holds, the decline from 156.69 is seen as corrective move. That is, rise from 122.36 (2016 low), is still expected to extend higher through 156.69. However, sustained break of 139.29/47 should confirm medium term reversal and turn outlook bearish.

Daily Pivots: (S1) 130.42; (P) 130.96; (R1) 131.63; More....

Intraday bias in EUR/JPY remains on the upside. Current rise from 124.89 should target 131.97 resistance and then key fibonacci resistance at 132.56. On the downside, break of 130.09 minor support will turn intraday bias neutral again. But outlook stays cautiously bullish as long as 127.85 support holds.

In the bigger picture, as long as 124.08 key resistance turned support, larger up trend from 109.03 (2016 low) remains in favor to continue. Decisive break of 61.8% retracement of 137.49 to 124.61 at 132.56 will pave the way to retest 137.49 high. However, firm break of 124.08 will argue that whole rise from 109.03 (2016 low) has completed at 137.49. Deeper decline would be seen to 61.8% retracement of 109.03 to 137.49 at 119.90 next.

Daily Pivots: (S1) 0.8859; (P) 0.8884; (R1) 0.8900; More...

EUR/GBP's decline from 0.9097 extends lower even though down side momentum is a bit unconvincing. As long as 0.8935 resistance holds, deeper fall is expected to 61.8% retracement of 0.8620 to 0.9097 at 0.8802. But downside could be contained there and bring rebound. On the upside, break of 0.8935 resistance will indicate short term bottoming and bring stronger rebound.

In the bigger picture, EUR/GBP is staying in long term range pattern from 0.9304 (2016 high). At this point, there is no clear sign of range break out yet. And more corrective trading would continue. On the upside, in case of another rise, we'd stay cautious on strong resistance from 0.9304/5 to limit upside in case of further rally. Meanwhile, if there is another medium term decline, strong support will likely be seen from 0.8303 to contain downside.

Daily Pivots: (S1) 1.6101; (P) 1.6218; (R1) 1.6279; More....

EUR/AUD's consolidation pattern from 1.6353 extends with another fall leg. Intraday bias is mildly on the downside for 38.2% retracement of 1.5601 to 1.6353 at 1.6066. But downside should be contained well above 1.5886 cluster support (61.8% retracement at 1.5888) to bring rise resumption. On the upside, break of 1.6353 will resume larger up trend to 1.6587 key resistance level.

In the bigger picture, up trend from 1.3624 (2017 low) is still in progress. Further rise should be seen to retest 1.6587 (2015 high). Decisive break there will resume the long term rally and target 1.7488 fibonacci level. On the downside, break of 1.5601 support is need to be the first sign of medium term reversal. Otherwise, outlook will remain bullish in case of deep pull back.

Daily Pivots: (S1) 1.1230; (P) 1.1246; (R1) 1.1271; More...

EUR/CHF recovers notably today but stays below 1.1342 minor resistance. Intraday bias remains neutral first. Even in case of another fall, we'd continue to expect strong support from key support zone of 1.1154/98 to bring strong rebound. On the upside, above 1.1342 will target 1.1452 resistance first. Break should confirm that whole decline from 1.2004 has completed and target 1.1713 resistance next. However, sustained break of 1.1154/98 will carry larger bearish implications.

In the bigger picture, for now, the price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by support zone of 1.1198 (2016 high) and 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to complete it and bring rebound. This cluster level is in proximity to long term channel support (now at 1.1207) too. A break of 1.2 key resistance is still expected in the medium term long term. However, sustained break of the mentioned support zone will mark reversal of the long term trend. In that case, 1.0629 key support will be back into focus.

South Korean President Moon Jae-in had a rather successful summit, the third one this year, with North Korean Leader Kim Jong-Un. Speaking at a joint news conference in Pyongyang after the meeting, hey pledged to turn Korean peninsula into "land of peace without nuclear weapons and nuclear threats" and take "prompt steps" toward the goal.

Kim added that "the world is going to see how this divided nation is going to bring about a new future on its own". Meanwhile, Moon said "the era of no war has started," and "today the North and South decided to remove all threats that can cause war from the entire Korean peninsula."

According to Moon, Kim also "expressed its readiness" on permanent dismantlement of its main nuclear facilities in Yongbyon. However, correspondingly measures have to be taken by the US.

Trump, as cheerleader on the sideline, tweeted "Kim Jong Un has agreed to allow Nuclear inspections, subject to final negotiations, and to permanently dismantle a test site and launch pad in the presence of international experts. In the meantime there will be no Rocket or Nuclear testing." But again, there was no well deserved credit given to Moon.