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At 09:30 GMT, UK Average Earnings excluding Bonus (3Mo/Yr) (Jan) is expected to come in at 2.6%, from 2.5% previously. Claimant Count Change (Feb) is expected at -5.0K, from a previous reading of -7.2K. ILO Unemployment Rate (3M) (Jan) is expected to be unchanged at 4.4%. Average Earnings including Bonus (3Mo/Yr) (Jan) is expected to be 2.6%, from 2.5% previously. Claimant Count Rate (Feb) was 2.3% previously. Public Sector Net Borrowing (Feb) is expected to be £0.00B, from £-11.62B prior. Wage growth is expected to tick up after stabilizing at 2.5% for the past three months. This is despite the fact that the unemployment rate is at multi-decade lows when wage growth would normally be higher as competition to attract workers takes hold. The BOE will study wage data for any indication of a pick up to see if they need to maintain their hawkish tone. GBP crosses may be influenced by this data release.

At 14:00 GMT, US Existing Home Sales (MoM) (Feb) is expected to be 5.40M, against 5.38M previously. After reaching a seven-year high in November, this data point has slipped lower over the last two months, signalling a little softness in the sector. USD crosses may be moved by this data, as analysts try to understand the impact on the economy.

At 18:00 GMT, the US Fed’s Monetary Policy Statement and Interest Rate Decision, which is expected to be raised to 1.75% from 1.5%, will be released. This hike in rates has been more or less priced into markets and marks the first in a series of expected increases in 2018. The FOMC Economic Projections will be released at the same time. It can be argued that these projections will be of greater importance, as traders look to quantify the pace of rate hikes ahead in the dot plot. The market is pricing in three hikes in 2018, with a slight bias for four that could strengthen the dollar position. At 18:30 GMT, the FOMC Press Conference will take place, as the new Chairman, Jerome Powell, addresses the audience. USD crosses may experience volatility during this time.

At 20:00 GMT, the Reserve Bank of New Zealand Interest Rate Decision is expected to be left unchanged at 1.75%. The Rate statement and the Monetary Policy Statement will be released at the same time. At 21:00 GMT, there will be a press conference discussing the rate decision and monetary policy statement. At the last meeting, the RBNZ forecasted lower GDP and signalled that lower inflation could warrant a rate cut. The NZD fell as a result. NZD could see a spike in volatility after this data is released and during the press conference, with NZD/USD particularly exposed due to central bank risk from the FED and the RBNZ.

ifo Institute forecasts German economy to grow 2.6% in 2018, then slow to 2.1% in 2019. It's head of f Economic Forecasting Timo Wollmershaeuser noted that the calculations "confirm figures from our December forecast.: However, "underlying forces have shifted somewhat."

In particular, forecast for household consumption expenditure was scaled by by 0.5% in 2018, because of lower than expected spending back in 2H 2017. Government spending forecast was raised by 0.5% in 2018, as new government policy will provide a stimulus. Export growth was revised up by 0.5% in 2018, thanks to upturn in Eurozone economy and US tax cuts.

Regarding risks, "the debate over the introduction and/or increase in tariffs on transatlantic trade and the appreciation of the euro are weakening sentiment among German companies." Also, the new coalition government is "disappointing in terms of reforming the tax and social security system." In particular, Wollmershaeuser said that was no response to US, France and UK tax cuts.

Euro got support from Bundesbank
Gold on the move again, this time to the upside
WTI still moving in a sideway market

Forex

The dollar continued to weaken following lingering concerns over a global trade war and uncertainty over US politics. It was down 0.5% versus the euro that found some grounding after comments from Bundesbank’s Weidmann that positive economic developments and inflation forecasts could allow the ECB to quickly end its bond purchases. Although the FOMC IR decision occurs this Wednesday, a .25% rate rise is basically already fully priced into the markets so investors will instead be watching for signs of hawkishness and will be eager to gauge whether Powell’s words lean to either three or four rates hike this year.

A softer dollar helped the Sterling move back above the $1.40, but to a greater extent, news that the UK and EU announced that they had agreed terms for a 21-month transition after Brexit provided ample fuel for traders longing cable.

Gold

Gold made sizeable gains today, up $4 to $1317/ounce. This fresh bull run comes amidst a softer greenback (DXY down 0.4%) and sinking equity markets with the S&P 500 down 1.9% providing fresh capital flows into Gold. Despite this recent move, price action remains choppy for the yellow metal as traders struggle to find a clear direction.

Oil

WTI Oil was a shade softer after rising sharply on Friday, however Brent did manage to secure some feeble gains. Bearish moves were seen in earlier sessions due to falling equities with the Dow Jones slipping 1.6%, and signs of rising supply with the US oil rig count rising back above 800. However, these factors were largely overshadowed by a softer dollar and tensions in the middle coupled with falling Venezuelan output presenting a risk to supply.

XAUUSD (1313.49):Gold price was bearish yesterday as price fell to 1307.48 level as noted in Tuesday's morning commentary. The support level is expected to hold in the near term but depending on the Fed's outcome there is a potential for gold prices to breakout below this level. The price action touching down to the support level of 1307.48 also marks a descending triangle technical pattern. If validated, we expect gold prices to fall toward 1288.90 and potentially ease lower to the 1282 - 1274 level of support that is pending a retest. To the upside, gold prices could maintain the range within the 1307.48 level and 1328.07 level of resistance.

GBPUSD (1.4015):The British pound was seen pausing its rally following Monday's news about the transitory Brexit deal. The weaker inflation data did not help the sterling much as price action was confined to Tuesday's range. Support at 1.3902 remains in play and we expect to see this level to be tested in the near term. The UK's labor market data will of course bring some volatility ahead of the Fed meeting. In the near term, GBPUSD is likely to maintain the range of 1.4060 - 1.3902 level ahead of the Bank of England meeting that is due on Thursday.

EURUSD (1.2262):The euro currency gave up the gains from Tuesday. A modestly stronger U.S. dollar and some weak data from the Eurozone added to the declines. The German ZEW economic sentiment fell to an 18-month low for March. However, current conditions index was seen to have remained broadly stable. From a technical perspective, expect to see some volatility in the EURUSD today heading to the Fed meeting. Following the reversal near the resistance zone of 1.2363 - 1.2333 level, we expect the common currency to maintain the range, touching down to the lower support at 1.2179. A close below 1.2179 will expose the euro toward the next lower support at 1.2090 - 1.2070 level.

The U.S. dollar was seen pushing higher on the day reversing the gains from Monday's declines. Investors were seen bracing for the Fed meeting due later in the day. Although the markets have fully discounted a 25 basis point rate hike, the Fed's dot plot and economic projections will play a key role in shaping the sentiment in the USD going forward. For the moment, the markets are expecting Fed officials to play it safe with three rate hikes this year.

Ahead of the Fed meeting, the UK's jobs data will be on the line. The three month average earnings index is forecast to rise 2.6%, slightly accelerating from 2.5% seen before. The UK's unemployment rate is expected to remain unchanged at 4.4%.

Economic data from Tuesday included the annual inflation data from the UK. According to official reports, the UK's headline inflation rate was seen slowing to a pace of 2.7% which was more than expected and inflation was seen easing from January's print of 3.0%. Core inflation rate also slipped to rise just 2.4% down from 2.7% previously. The data builds up to this Thursday's BoE meeting where the odds of a hawkish signal from the Bank of England have increased.

Investors across all asset classes are cautiously awaiting the key risk event of the week; the Federal Reserve's monetary policy decision.

Markets are almost certain that the Fed will be raising interest rates by 25 basis points later today, suggesting that a rate hike has been already priced in. Instead, the focus will be on the accompanying statement, economic forecast, the dot plot and the Q&A session with Fed Chair, Jerome Powell.

Economic forecasts are likely to be revised after President Trump signed the $1.5 trillion tax bill into law last December. This should be reflected in the GDP growth forecasts for 2018 and 2019, but the magnitude of change is a hard guess. Similarly, inflation and unemployment estimates are likely to see upgrades from December's projections. However, the key question remains - how does such a change impact monetary policy tightening in the next two years?

The answer to this question will be mirrored in the dot plot chart, and it is here where most market participants are divided which makes trading the Fed a tricky one. The latest dot plot, released in December's meeting, shows three rate rises in 2018, followed by another two in 2019, and reaching a range of 3-3.35% by 2020. An upward shift in the dots, whether in the short or long term, will have implications for the markets, and especially for the dollar, which has been in a downtrend since late 2016.

If the dot plot shows policymakers supporting four rate hikes in 2018 instead of three, the dollar could surge by 1-2% against its counterparts. What could be more supportive, is the lifting of long-term projections of interest rates which currently stand at 2.8%. This will likely lead to a break of the 3% benchmark on the 10-year bond yields. A steep move in bond yields should be closely monitored given that a lot of investors point to 3% as the critical level for equity markets. It is where corporate financing costs start looking expensive and will attract stocks bears to come on board.

The opposite case scenario is no change in interest rate projections and the Fed sticking to the previous statement: "near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely." Recent economic data supports such an assessment, especially in view of the fact that home and retail sales disappointed recently, and of course, the Fed will be taking the risk of trade war into consideration. Under such scenarios, expect the dollar to continue falling in the short run.

Currency pair EUR/USD

The EUR/USD bearish correction continued lowerand pushed below the 61.8% Fibonacci support level of wave 2 vs 1 (purple).Price might now retest deeper Fibonacci levels but a break below the bottom of wave 1 at 1.2155 invalidates wave 2. The FOMC statement and interest rate decision is expected to impact the US Dollar.

The EUR/USD bearish momentum is probably a wave 3 (orange) and the current pullback could therefore be a wave 4 (orange).

Currency pair GBP/USD

The GBP/USD uptrend is building a bearish correction. A break above the key resistance (red) trend line could spark the continuation of wave 5 (blue) within wave C (purple).

The GBP/USD could still be in a potential wave 4 (gold) correction although price did retrace to a deeper 61.8% Fib than usual. A break above the resistances (red) trend line could spark a continuation within wave 5 (orange) but a break below the Fib makes this wave pattern unlikely.

Currency pair USD/JPY

The USD/JPY was unable to break above the resistance trend line (red) of the larger triangle pattern. Price needs to break the support or resistance before a larger breakout is possible.

The USD/JPY did break above the resistance (dotted orange) trend line but no momentum entered the market and price action remains corrective. A bullish breakout is needed before a wave 3 (green) is possible. A break below support makes this wave pattern less likely.

The euro has given back its hard-earned weekly trading gains against the U.S dollar, as the greenback strengthens on expectations that the FED will hike U.S interest rates 0.25 percent later today. The EURUSD pair has moved a fresh March trading low in early Wednesday trading, with price-action falling towards the 1.2239 support level. Traders and investors are likely to remain focused on the U.S Federal Reserve policy meeting later today, where new Jerome Powell will deliver his first press conference as FED Chair.

The EURUSD pair is intraday bearish whilst trading below the 1.2278 level, key technical support is currently found at the 1.2205 and 1.2160 levels.

If the EURUSD pair falls moves above the 1.2278 resistance level, buyers will likely test towards the 1.2305 and 1.2334 levels.