Sample Category Title

The British pound continues to trade above the 1.4000 handle against the U.S dollar, ahead of the release of key CPI and PPI inflation data from the United Kingdom economy. The GBPUSD pair found strong technical resistance from the 1.4088 level on Monday, with sterling traders quickly taking profit from over-extended levels. Trading sentiment surrounding the British pound remain bullish, following the UK and EU agreeing on a transitional Brexit deal after the UK’s scheduled departure on March 1st, 2019.

The GBPUSD pair remains intraday bullish whilst trading above the 1.4000 level, further upside towards 1.4088 and 1.4146 seems possible.

Should price-action move below the 1.4000 level, key technical support is then found at the 1.3960 and 1.3920 levels.

Yesterday, Morgan Stanley released a new report warning clients about bitcoin and other cryptocurrencies. In the report, it compared bitcoin to the dot-com bubble that happened almost two decades ago.

Morgan Stanley looked at the price trends of bitcoin and that of NASDAQ and realized a common trend. At their most exuberant periods ahead of bear markets, the two rallied between 250% and 280%. Indeed, bitcoin’s moves are similar to the tech boom and bust but are happening much faster – at 15 times the speed.

The current bear movement is not new in cryptocurrencies. Since 2009, bitcoin has had four bear movements with price drops of between 28% and 92%. At the current price, bitcoin has dropped by about 70% from its peak of near $20,000. In each bearish wave, bitcoin tends to lose 45% to 50% of the value. At this time in 2000, the NASDAQ had five bear moves with each one averaging 44%.

Bitcoin is now trading at $8,380, higher than its weekly low of $7,600. The price could trade in a narrow range as traders digest the latest news that Twitter (along with Facebook and Google) will also ban crypto-related ads.

European economic data will make headlines on Tuesday, as traders await the US Federal Reserve’s latest policy decision. Currency markets could see an active session in Europe as UK, Germany and Eurozone data are released.

Action begins at 06:45 GMT with SECO’s economic forecasts for the Swiss economy. The projections cover the country’s main GDP components.

Attention quickly shifts to Germany at 07:00 GMT with a report on producer inflation. Germany’s producer price index (PPI) is projected to rise 0.1% in February, which translates into an annualized gain of 2%.

In a separate report, the Swiss government will report its latest trade balance for the month of February. Bern’s surplus is expected to shrink significantly during the month.

The United Kingdom’s Office for National Statistics will unveil a deluge of inflation numbers beginning at 09:30 GMT. This includes data on retail prices, producer prices and consumer inflation. The consumer price index (CPI) is expected to ease to 2.5% annually in February, down from 2.7%. Producer prices are expected to fall to 2.7% from 2.8%.

The Centre for European Economic Research (ZEW) will release a pair of sentiment indicators gauging institutional investor confidence in the German and Eurozone economies. The German economic sentiment indicator is projected to fall to 13.0 in March from 17.8 the previous month. The euro area figure is forecast to fall to 28.1 from 29.3.

In the United States, the only data release of note is the American Petroleum Institute’s weekly crude inventory report. The data set is considered a precursor to the official numbers the following morning.

The Federal Open Market Committee (FOMC) will kick off its two-day policy meeting on Tuesday, with a rate announcement expected the following afternoon. The US central bank is widely expected to hike interest rates for the first time since December.

EUR/USD

Europe’s common currency regained some of its poise Monday, as prices rallied back to the mid-1.2300 region. At the moment, the EUR/USD is eyeing immediate resistance targets at 1.2414, which corresponds with the high from 14 March.

GBP/USD

Cable could get a lot of attention Tuesday as traders react to British inflation numbers. GBP/USD jumped to three-week highs at the start of the week after the UK and EU agreed on a transition deal. The pair is currently trading at 1.4036, with the bulls eyeing a test of the 1.4100 level.

USD/CAD

The USD/CAD lost some of its luster on Monday, but losses were generally well contained despite the greenback’s loss of momentum across the board. The pair was last down 0.1% to trade at 1.3068. The outlook remains generally favourable as the Fed continues to hike rates while the Bank of Canada attempts to talk down the loonie to reposition its national trade picture.

Daily Pivots: (S1) 0.8754; (P) 0.8785; (R1) 0.8825; More...

Intraday bias in EUR/GBP remains on the downside with 0.8815 minor resistance intact. Fall from 0.8967 is expected to extend to retest 0.8686 low. We'd be cautious on strong support from there to bring another rebound. But decisive break of 0.8686 will resume whole fall from 0.9305 and target 0.8303 key support next. On the upside, above 0.8815 minor resistance will turn bias neutral and bring consolidation first, before staging another fall.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of deeper fall. And in that case, EUR/GBP could have a retest on 0.8303. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 1.5909; (P) 1.5967; (R1) 1.6036; More....

EUR/AUD's rally is still in progress and reaches as high as 1.6036 so far. Intraday bias remains on the upside for 61.8% projection of 1.5130 to 1.5976 from 1.5621 at 1.6130 first. Break there will target 100% projection at 1.6444 next. On the downside, below 1.5896 minor support will turn intraday bias neutral first. But retreat should be contained above 1.5621 support to bring another rally.

In the bigger picture, current development suggests that rise from 1.3624 is not completed yet. And it's still in progress for 1.6587 key resistance level. We'd be cautious on strong resistance from there to limit upside, on bearish divergence condition in daily MACD. But for now, break of 1.5153 support is needed to indicate medium term reversal. Otherwise, outlook will stays bullish even in case of deep pull back.

Currency pair GBP/USD

The GBP/USD made a critical bullish breakout above the key resistance (red) trend line, which could spark the continuation of wave 5 (blue) within wave C (purple). Price is now building a series of higher highs and lows, which is confirming the uptrend.

The GBP/USD breakout is probably a wave 3 momentum (orange) and the bull flag chart pattern is therefore probably a wave 4 correction. A break above the resistance (red) trend line could spark a continuation within wave 5 (orange).

Currency pair EUR/USD

The EUR/USD bounced at the 61.8% Fibonacci support level of wave 2 vs 1 (purple), which could be a continuation within the bullish waves 5 (pink/purple).

The EUR/USD completed the bearish wave C (green) within a larger WXY (blue) correction and has broken above the local resistance trend line (dotted orange). The next key breakout is the resistance trend line (red).

Currency pair USD/JPY

The USD/JPY bounced at the support (blue) zone of the bigger triangle chart pattern. Price could now be ready to retest the resistance trend line (red).

The USD/JPY bounced at the 88.6% Fibonacci support level of wave 2 (blue). Price needs to break above the next resistance trend line (orange) for a bullish breakout within wave 3 (green).

Daily Pivots: (S1) 1.1700; (P) 1.1722; (R1) 1.1752; More...

EUR/CHF's rise and break of 1.1740 indicates resumption of rebound from 1.1445. Intraday bias is back on the upside for retesting 1.1832 high. At this point, we'll stay cautious strong resistance from there to bring another fall. Corrective pattern from 1.1832 might still have an attempt on 1.1355 cluster support (38.2% retracement of 1.0629 to 1.1832 at 1.1372) before completion. On the downside, below 1.1672 minor support will target 1.1445 low again. However, decisive break of 1.1832 will confirm up trend resumption for 1.2 handle next.

In the bigger picture, a medium term top should be in place at 1.1832 on bearish divergence condition in daily MACD. But there is no indication of long term reversal yet. As long as 1.1198 resistance turned support holds, we'd still expect another rise through prior SNB imposed floor at 1.2000.

Daily Pivots: (S1) 1.3040; (P) 1.3082; (R1) 1.3118; More....

A temporary top is in place at USD/CAD at 1.3124 and intraday bias is turned neutral first. Some consolidations would be seen. But downside should be contained by 1.2802 support and bring rise resumption. Above 1.3124 will extend recent rally to 161.8% projection of 1.2061 to 1.2916 from 1.2246 at 1.3629 next.

In the bigger picture, we're favoring the medium term bullish case. That is larger down trend from 1.4689 has completed at 1.2061 as a correction, drawing support from 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. Sustained break of 38.2% retracement of 1.4689 to 1.2061 at 1.3065 will pave the way to 61.8% retracement at 1.3685. This will be the preferred case now as long as 1.2802 support holds.

Market movers today

With no major data releases, financial markets are likely to be in wait-and-see mode ahead of the FOMC meeting tomorrow.

The G20 finance ministers and central bank governors' meeting in Buenos Aires finishes today, where the statement on trade will be particularly interesting.

In Denmark, data for consumer confidence is due, which had a strong start to 2018, with increases in January and February taking the indicator to its highest level since July 2017. We expect the mood to remain upbeat in March and estimate an unchanged score of 8.5.

Sweden's Riksbank Deputy Governor Henry Ohlsson is scheduled to speak about the economic situation and current monetary policy today.

In Norway, focus turns to the opposition's vote of no confidence in the Minister of Justice Sylvi Listhaug after a Facebook update last week. The vote could ultimately result in Prime Minister Erna Solberg deciding the newly-formed government resign. For markets, however, the impact should be modest even in a situation where the government resigns.

Selected market news

Facebook scandal induces heavy equity tumble. The catalyst was tech stock Facebook, which fell close to 7%. In an Orwellian twist, the Financial Times reported that data firm Cambridge Analytica may have used Facebook to harvest data on 50 million people without consent. The user information was exploited for political benefit, including aiding the Trump presidential campaign. The data firm has close ties with President Trump's former Chief Strategist Steve Bannon. Officials across the Atlantic are calling for action.

The tech sell-off led stocks into the red. US flagship stock index S&P 500 was down over 2% before recovering up to the close. The implied volatility index VIX rose up to 19 and high yield credit spreads rose.

The Trump administration plans to impose tariffs worth USD60bn on China as early as this week, according to WaPo. For more on the administration's ongoing assault on globalisation see Strategy - Trump's attack on globalisation continues.

The EU and UK have settled on a Brexit transition deal. The conditional agreement grants British business with much needed visibility with a transition period lasting 21 months. Pressure has been mounting on the May administration, which hailed the deal as a big win. Difficult issues such as the Northern Ireland border and governance were left for the future. The pound surged against the euro, while retracting roughly half in the evening.

With no real macro events or releases today it's all eyes on the FOMC tomorrow. We expect a 25bp rate hike to 1.5-1.75% and guidance with respect to future hikes remaining relatively intact

Daily Pivots: (S1) 0.7694; (P) 0.7709; (R1) 0.7733; More...

Intraday bias in AUD/USD remains on the downside at this point. Fall from 0.7915 is part of whole decline form 0.8135 and should be targeting 0.7500 key support next. We'll keep an eye on sign of downside acceleration to gauge the chance of breaking 0.7500. On the upside, above 0.7769 minor resistance will turn intraday bias neutral first. But outlook will remain bearish as long as 0.7915 resistance holds.

In the bigger picture, medium term rebound from 0.6826 is seen as a corrective move. It might still extend higher but we'd expect strong resistance from 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside to bring long term down trend resumption. On the downside, break of 0.7500 support will now be an important signal that such corrective rebound is completed. In that case, AUD/USD would be heading back to 0.6826 low in medium term.