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Daily Pivots: (S1) 145.07; (P) 145.75; (R1) 146.53; More...

Intraday bias in GBP/JPY remains on the downside. Current fall from 156.59 is in progress for 143.51 medium term fibonacci level next. We'll look for bottoming signal there. But firm break will target 139.29 support. On the upside, above 147.47 minor resistance will turn intraday bias neutral first. But outlook will remain bearish as long as 150.92 resistance holds, in case of recovery.

In the bigger picture, the case for medium term reversal continues to build up. There is bearish divergence condition in daily MACD. 146.96 support was taken out. And GBP/JPY was rejected by 55 month EMA. Break of 38.2% retracement of 122.36 to 156.59 at 143.51 will pave the way to 61.8% retracement at 135.43 and below. This will now be the preferred case as long as 150.92 resistance holds.

Italian elections were held on Sunday with early exit polls indicating a hung parliament as widely expected. Full counting of votes is expected to be completed only by 2pm CET following which the results will be officially announced.

In anticipation of the election outcome, the markets are seen moving to a risk off sentiment. Gold prices which had weakened last week posted a strong reversal toward Friday's close.

Looking ahead, on the economic front, data from the Eurozone will see the release of the services PMI from various regions. The final services PMI data for the Eurozone is expected to show an unchanged print with an estimated reading of 56.7 for February. This was the same reading in the services PMI in January.

Data from the UK will see the release of the services PMI data. Economists forecast that services activity in the region rose slightly to 53.3, up from January's 53.0. Services data continues in the U.S. trading session. Markit's final services PMI is forecast to show an unchanged print at 55.9 while ISM's non-manufacturing PMI is expected to fall to 58.9, down from 59.9 that was registered in January.

Daily Pivots: (S1) 129.70; (P) 130.07; (R1) 130.57; More....

EUR/JPY's decline continues today and reaches as low as 129.34 so far. Intraday bias remains on the downside. Current fall from 137.49 is starting 126.61 medium term fibonacci level next. We'll tentatively look for bottoming signal there. On the upside, above 130.51 minor resistance will indicate temporary bottoming and bring consolidations, before staging another decline.

In the bigger picture, current development argues that rise from 109.03 has completed at 137.49, on bearish divergence condition in weekly MACD. Deeper fall should be seen to 38.2% retracement of 109.03 to 137.49 at 126.61 first. On the upside, break of 137.49 is needed to confirm medium term rise resumption. Otherwise, risk will now stay on the downside even in case of strong rebound.

Daily Pivots: (S1) 1.5792; (P) 1.5856; (R1) 1.5925; More....

At this point, intraday bias in EUR/AUD remains on the upside. Prior break of 1.5816 resistance confirmed medium term rise resumption. Further rally should be seen to 61.8% projection of 1.5258 to 1.5816 from 1.5626 at 1.5971. Break will target 1.6526. On the downside, below 1.5786 minor support will turn intraday bias neutral. But outlook will remain bullish as long as 1.5626 support holds.

In the bigger picture, medium term rise from 1.3624 is still in progress for 1.6587 key resistance. At this point, we'd be cautious on strong resistance from there to limit upside. But decisive break will confirm resumption of long term rise from 1.1602. On the downside, break of 1.5153 support is needed to indicate completion of the medium term rise. Otherwise, outlook will remain bullish in case of pull back.

Daily Pivots: (S1) 0.8894; (P) 0.8922; (R1) 0.8950; More...

EUR/GBP retreats mildly today but at this point intraday bias stays on the upside for further rally. Prior break of 0.8928 resistance indicates near term trend reversal. Decline from .9305 has completed at 0.8686 after hitting 61.8% retracement of 0.8312 to 0.9305. Further rebounds should be seen back to 61.8% retracement of 0.9305 to 0.8686 at 0.9069. Firm break there will target retest of 0.9305 high. On the downside, below 0.8877 minor support will turn intraday bias neutral again.

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.

EURUSD has completed two consecutive positive trading days following the rebound on the lower Bollinger band, which holds near the 1.2160 support level. However, currently, the pair is moving slightly lower below the 20 and 40 simple moving averages in the daily chart.

Remaining in the short-term chart, technically, the momentum indicators are endorsing the recent downside pressure. The RSI indicator is sloping south near the 50 level, while the MACD oscillator is falling below the trigger line but is still above the zero line. Moreover, the 20-SMA is ready to post a bearish cross with the 40-SMA, suggesting a bearish bias.

If price action remains below the 1.2300 psychological level, there is scope to test the 1.2200 handle and next, the 1.2160 support barrier. Clearing these key levels could see additional losses towards 1.2080, which coincides with the 23.6% Fibonacci retracement level of the upleg from 1.0560 to 1.2540.

On the flip side, if prices successfully surpass the 20-SMA at 1.2320, then the focus could shift to the upside again and the price could challenge the upper Bollinger band near 1.2470. From there, EURUSD could be on the path towards the 1.2540 resistance level.

It is worth mentioning that the world’s most traded currency has been developing with an ascending movement since April 2017 and tested the diagonal line several times in the past.

Daily Pivots: (S1) 1.1509; (P) 1.1534; (R1) 1.1574; More...

Intraday bias in EUR/CHF remains neutral as consolidation from 1.1445 is extending. Near term outlook will remain bearish as long as 1.1639 resistance holds. On the downside, break of will resume the corrective fall from 1.1832 and target 1.1355 cluster support (38.2% retracement of 1.0629 to 1.1832 at 1.1372.) At this point, we'd expect strong support from there to contain downside and bring rebound.

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.

Market movers today

Focus today will be on the results of the Italian election and news around the US tariffs on steel and aluminium and retaliation.

On the data front, look out for the US ISM non-manufacturing index for February in the afternoon, where there may be some downside risk after a very strong number in January. In the euro area, PMI services (final) and the Sentix index will be out this morning.

The annual National People's Congress (NPC) in China started today and will run for about 10 days. Premier Li Keqiang has presented his work report already and announced that the growth target for 2018 will be 6.5%, but did not use the expression 'or higher' as some had expected. Fiscal policy is also being tightened as it continues to be focused on fighting financial risks and securing a stable outlook. The NPC is likely to approve the removal of the two-term limit on being president, paving the way for Xi Jinping to stay on beyond 2023.

In the Scandies, the key release today is the monthly house price statistics from Real Estate Norway , see Scandi Markets on page 2.

In terms of the rest of the week, look out for the ECB meeting on Thursday , US non-farm payrolls on Friday and a range of Fed speeches , which will be particularly interesting after the US trade tariffs were announced last week.

Selected market news

Market focus this morning is on markets digesting political developments in the eurozone on Sunday. In Germany, the SPD voted in favour (66% of votes) of a grand coalition with CDU/CSU, meaning a new government should be in place over the coming weeks. The development is positive for the German/French reform push and more accommodative fiscal policies, which is why the EUR gained ahead of the exit polls in Italy. At the time of writing, however, the EUR has erased its gains as projections suggest the Italian election will end with a hung parliament. The anti-establishment parties in Five Start and Northern League seem to be the winners complicating the process for a center-right coaliation to get formed. For more information, see our Italian Election Monitor - Eurosceptic shift released this morning.

In Norway , the government announced new regulation on monetary policy on Friday, which adopted two main changes. First, the inflation target was lowered to 2.0% (from 2.5%). Second, financial stability was formally introduced. Overall, the decision on the inflation target has been underway for some time and only the timing was a little surprising. In addition, the overall change in many ways formalised previous practice. Norges Bank's inflation projection (see chart ) implies that the near-term policy impact is modest. We stick to our call for a December hike but believe the probability of a September increase has risen.

As expected, Friday's FX reserve data from Danmarks Nationalbank showed no February intervention. The release did show a sharp rise in government deposits - likely to be a result of pension tax payments - which has implications for DKK liquidity and DGB issuance. See flash comment Denmark: Surge in government deposits but no FX intervention , 2 March.

Masayoshi Amamiya, another BoJ deputy nominee said in confirmation hearing at lowe house:

• Japan's banking system remains stable now
• But the environment surrounding financial institutions is becoming more severe
• Benefits of monetary stimulus outweighs side effects
• Hitting 2% inflation target was more difficult than expected.
• But inflation momentum is on the way

A nominee for BOJ deputy governor Masazumi Wakatabe: Said in confirmation hearing at lower house:

• What's most important is to make a full exit from deflation.
• The BOJ's 2 percent inflation target is effective and meaningful for this purpose.
• Prematurely shifting the BOJ's easy policy could pull Japan back to deflation.