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The GBP/USD bullish bounce and breakout above the resistance trend lines (dotted red)is creating a continuation of the uptrend. Price is now close to testing the previous tops (red), which could soon complete a wave 5 (green) pattern.However, in the meantime, price could keep pushing for more higher high before running out of steam

The GBP/USD breakout might have completed a wave 3 (grey) pattern. The current pullback could be a bearish retracement within wave 4 (grey). The Fibonacci levels of wave 4 could act as potential support levels whereas a break above resistance (orange) could indicate that bullish continuation.

USD/JPY

The USD/JPY is struggling to break above the Fibonacci resistance zone.A break above these shallow 38.2-50% Fib levels makes such a wave 4 unlikely whereas a bearish break below support (blue) could indicate a continuation of the downtrend.

The USD/JPY is building a corrective pattern between support and resistance trend lines.

Market movers today

Today's most important release is the US CPI release at 14:30 CET. We estimate the core index rose 0.2% m/m in March, implying an increase in the CPI core inflation rate to 2.1% from 1.8% due to base effects (the CPI core index dropped 0.1% m/m in March 2017 due to, among other things, wireless telephone services).

Also, we get the FOMC minutes tonight at 20:00 CET. We will look for comments on a possible regime shift to price level targeting and comments on the increasing Libor/OIS spread.

In the UK, the NIESR GDP estimate for Q1 18 is due out at 13:00. Based on the PMIs, GDP growth likely fell to 0.3% q/q in Q1 18 from 0.4% q/q in Q4 17.

In Sweden, the Prospera's monthly money market inflation survey is released this morning, see page 2.

Selected market news

Yesterday, we saw a quite volatile trading session in the afternoon. While there were no data releases driving the market, comments from Austrian central bank governor Ewald Nowotny sent rates higher and EUR stronger. Nowotny commented in a Reuters interview that in his view the ECB could hike the deposit rate before moving the main interest rate . He also commented on a first rate hike being 20bp. Unprecedented, an ECB spokesperson stressed that the comments were Nowotny's own view. ECB spokespeople never comment on views shared by the individual governing council members, so that in itself was striking. Regarding the size and timing of the first hike, we have previously discussed what we expect goes into the ECB's decision making process, see ECB Research: 10bp, 20bp or ...? ECB in uncharted waters , 20 March 2018.

Following the escalation of the US-China trade dispute on Friday, we have seen multiple signs that support the picture that it is part of negotiations to reach a deal rather than Trump taking China into a trade war. We thus still expect the endgame to be a deal between the US and China and that the situation will be resolved without a trade war . Last night Trump tweeted: 'Very thankful for President Xi of China's kind words on tariffs and automobile barriers...also, his enlightenment on intellectual property and technology transfers. We will make great progress together!', which is a sign of consolidation, see Flash Comment: Encouraging signs in the US-China trade conflict , 10 April 2018.

The oil price reached a new year high yesterday on broad based support from the weaker USD, better risk sentiment in markets and bullish comments from Saudi Arabia targeting a higher oil price in the future.

Gold short term Elliott Wave view suggests that the yellow metal is in a sideways move, typical characteristic of a triangle Elliott Wave structure. A triangle is a sideways range structure with ABCDE label. In the case of Gold, decline from 1/25/2018 peak ($1366.06) ended in Minor wave A at $1302.6. Minor wave B bounce ended at $1356.83. Minor wave C is currently in progress and while bounces stay below $1356.83, the metal is expected to extend lower.

Internal of Minor wave C is unfolding as a double three Elliott Wave structure where Minute wave ((w)) ended at $1321.1, Minute wave ((x)) ended at $1348.4, and Minute wave ((y)) of C is in progress towards $1303.97 - $1312.44 before the metal turns higher and resume the consolidation. Near term, expect Minutte wave (b) bounce to end at $1342.91 - $1346.74 area before the metal turns lower in 3 waves at least. Due to the sideways range, we prefer to stay on the sidelines waiting for break above $1366.06 or below $1302.6. The current view suggests that Gold is in a bullish triangle, thus it's best to wait for a break above $1366.06 to signal the end of the triangle before looking to buy dips in 3, 7, or 11 swing.

Gold (XAUUSD) Elliott Wave 1 Hour Chart

For the 24 hours to 23:00 GMT, the AUD rose 0.91% against the USD and closed at 0.7766.

LME Copper prices rose 1.8% or $121.0/MT to $6888.0/MT. Aluminium prices rose 2.8% or $58.5/MT to $2171.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7752, with the AUD trading 0.18% lower against the USD from yesterday's close.

Data released overnight revealed that Australia's Westpac consumer confidence index declined 0.6% on a monthly basis, to a level of 102.4 in April. In the previous month, the index had recorded a reading of 103.0.

Elsewhere in China, Australia's largest trading partner, the consumer price index (CPI) advanced 2.1% on an annual basis in March, underscoring market expectations for a gain of 2.6%. The CPI had registered a rise of 2.9% in the prior month. Further, the nation's producer price index (PPI) grew 3.1% on a yearly basis in March, rising at its weakest pace in 17 months. The PPI had registered a rise of 3.7% in the prior month, while markets were anticipating for a gain of 3.3%.

The pair is expected to find support at 0.7719, and a fall through could take it to the next support level of 0.7686. The pair is expected to find its first resistance at 0.7777, and a rise through could take it to the next resistance level of 0.7802.

Looking ahead, Australia's consumer inflation expectation for April, set to release overnight, will be on investors' radar.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the EUR rose 0.29% against the USD and closed at 1.2358, after hawkish comments from the European Central Bank (ECB) policymaker, Ewald Nowotny reinvigorated hopes that the central bank will soon wind down its massive monetary policy programme.

In economic news, industrial production in France rebounded 1.2% MoM in February, falling short of market expectations for a rise of 1.4%. Industrial production had recorded a revised drop of 1.8% in the prior month. On the contrary, Italy's seasonally adjusted industrial production registered an unexpected drop of 0.5% on a monthly basis in February, compared to a revised fall of 1.8% in the prior month, while markets were expecting for a gain of 0.8%.

Macroeconomic data released in the US indicated that the NFIB small business optimism index eased more-than-anticipated to a level of 104.7 in March, compared to a level of 107.6 in the prior month. Markets were anticipating the index to fall to a level of 107.0.

Other data indicated that the nation's producer price index (PPI) rose 0.3% on a monthly basis in March, beating market consensus for an advance of 0.1%. The PPI had registered a gain of 0.2% in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.2358, with the EUR trading flat against the USD from yesterday's close.

The pair is expected to find support at 1.2315, and a fall through could take it to the next support level of 1.2271. The pair is expected to find its first resistance at 1.2390, and a rise through could take it to the next resistance level of 1.2421.

Moving ahead, investors would keep a close watch on a speech by the European Central Bank (ECB) President, Mario Draghi, slated to release in a few hours. Later in the day, the US consumer price inflation data and monthly budget statement, both for March, will garner a lot of market attention. Also, minutes of the FOMC's March meeting, due to release later today, will be eyed by traders.

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

For the 24 hours to 23:00 GMT, the GBP rose 0.27% against the USD and closed at 1.4169, after the Bank of England’s (BoE) policymaker, Ian McCafferty stated that the central bank should not prolong next interest rate hike, citing the possibility of faster wage growth and the recent strength in the global economy.

In the Asian session, at GMT0300, the pair is trading at 1.4177, with the GBP trading 0.06% higher against the USD from yesterday’s close.

The pair is expected to find support at 1.4138, and a fall through could take it to the next support level of 1.4098. The pair is expected to find its first resistance at 1.4200, and a rise through could take it to the next resistance level of 1.4222.

Looking ahead, market participants would direct their attention to Britain’s trade balance, industrial and manufacturing production data, all for February, scheduled to release in a few hours. Investors would also eye the release of NIESR GDP estimate for the three months to March, due later today.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.45% against the JPY and closed at 107.21.

On the macro front, Japan's flash machine tool orders rose 28.1% YoY in March, after recording an increase of 39.5% in the prior month.

In the Asian session, at GMT0300, the pair is trading at 107.13, with the USD trading 0.07% lower against the JPY from yesterday's close.

Overnight data indicated that Japan's machinery orders unexpectedly advanced 2.1% MoM in February, confounding market expectations for a drop of 2.5%. In the previous month, machinery orders had recorded a rise of 8.2%.

The pair is expected to find support at 106.83, and a fall through could take it to the next support level of 106.52. The pair is expected to find its first resistance at 107.42, and a rise through could take it to the next resistance level of 107.70.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.08% against the CHF and closed at 0.9569.

In the Asian session, at GMT0300, the pair is trading at 0.9569, with the USD trading flat against the CHF from yesterday’s close.

The pair is expected to find support at 0.9542, and a fall through could take it to the next support level of 0.9516. The pair is expected to find its first resistance at 0.9588, and a rise through could take it to the next resistance level of 0.9608.

Amid no macroeconomic releases in Switzerland today, traders would look forward to global macroeconomic events for further direction.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.85% against the CAD and closed at 1.2598.

In economic news, Canada’s seasonally adjusted housing starts declined less-than-expected to a level of 225.2K in March, from a revised level of 231.0K in the prior month, while market participants had envisaged for a fall to a level of 216.8K. Moreover, the nation’s building permits retreated 2.6% MoM in February, more than market expectations for a drop of 1.3%. In the prior month, building permits had advanced by a revised 5.2%.

In the Asian session, at GMT0300, the pair is trading at 1.2605, with the USD trading 0.06% higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.2563, and a fall through could take it to the next support level of 1.2520. The pair is expected to find its first resistance at 1.2674, and a rise through could take it to the next resistance level of 1.2742.

Ahead in the day, investors would focus on Canada’s new housing price index for February.

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

For the 24 hours to 23:00 GMT, Gold rose 0.30% against the USD and closed at USD1343.10 per ounce, amid heightened geopolitical tensions and weakness in the greenback.

In the Asian session, at GMT0300, the pair is trading at 1343.60, with gold trading slightly higher against the USD from yesterday’s close.

The pair is expected to find support at 1336.47, and a fall through could take it to the next support level of 1329.33. The pair is expected to find its first resistance at 1348.47, and a rise through could take it to the next resistance level of 1353.33.

The yellow metal is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.