Sample Category Title

EURUSD

The EUR/USD bullish breakout above resistance (orange/red) could restart the old uptrend whereas a bearish break below support makes a wave 4 (pink) less likely and a downtrend more probable.

The EUR/USD seems to have completed 5 bullish waves (blue) which could be a wave 1 (purple). The alternative is a wave A-B rather than 1-2. Price cannot break below the 100% Fib level otherwise it would invalidate the wave 2.

GBPUSD

The GBP/USD is testing the support at the 61.8% Fibonacci level, which is a new bounce or break spot.A bearish break and close below 1.37 and the support line (blue)makes the wave 4 (green) pattern less likely.

The GBP/USD could be in a wave 4 (blue), unless price breaks above the bottom of the wave 1 (red line).

USDJPY

The USD/JPY made a new lower low as part of a wave 5 (blue) pattern and has now reached a key support at the 105 round level.

On the lower 1 hour time frame, the USD/JPY could be building a bullish wave 4 (green) correction, which could indicate the potential for one more bearish wave 5 (green).

Daily Pivots: (S1) 105.20; (P) 105.75; (R1) 106.25; More...

Intraday bias in USD/JPY remains on the downside for the moment. Down trend from 118.65 has just resumed and should target 100% projection of 118.65 to 108.12 from 114.73 at 104.20 next. Firm break there will target 98.97 key support level. On the upside, above 106.37 minor resistance will turn bias neutral first. But outlook will remain bearish as long as 107.67 resistance holds.

In the bigger picture, current development argues that the corrective pattern from 118.65 is extending. The solid break of 61.8% retracement of 98.97 to 118.65 at 106.48 now suggests that the pattern from 125.85 high is possibly extending. Deeper fall could be seen through 98.97 key support (2016 low). This bearish case will now be favored as long as 110.47 resistance holds.

The forex markets are pretty steady in Asian session as an extremely busy week starts. Reactions to Italy election and Germany SPD vote on grand coalition were muted. Euro remains steady so far, staying as the second strongest major currency for the month after Yen. Canadian Dollar and Australian Dollar remain the weakest ones for the month. Asian stocks are weak, however, with Nikkei trading down -0.8%, HK HSI down -1.3% at the time of writing. Investors are cautious and US President Trump continued to step up his words on trade wars.

Trump: EU has been brutal to us

Trump counter-attacked on EU's criticism on his steel and aluminum tariff. He tweeted again during the weekend that the European Union has been "brutal to us". And he warned that "if the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S."

That was in reaction to European Commission President Jean-Claude Juncker's statement that "we will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk.

Trump's advisor Navarro: Tariffs exemption possible, but no exclusion

White House Director of the National Trade Council, Peter Navarro commented on Trumps' tariffs on Sunday: He said exemptions and exclusions are different. And, "there'll be an exemption procedure for particular cases where you need to have exemptions so that business can move forward." However, "at this point in time, there'll be no country exclusions." Navarro added that "As soon as he (Trump) starts exempting countries, he has to raise the tariff on everybody else." And, "as soon as he exempts one country, his phone starts ringing with the heads of state of other countries."

Trump is expected to formally sign an order for the 25% tariff on steel and 10% on aluminum this week, or next week latest.

No clear winner in Italy election

In Italy, based on the early vote counts, there will be no clear winner in the election. Center-right coalition of former Primer Minister Silvio Berlusconi is heading for a win in the election, but falls short of a majority. That means, it will take weeks of negotiations before a government could be formed. Anti-establishment Five Star movements to come in second place. Center-left coalition by the governing Democratic Party will come in third.

SPD approved grand coalition, Merkel secured fourth term

Angela Merkel secured her fourth term as Chancellor of Germany. Members of the Social Democrats voted for the coalition deal with Merkels' CDU/CSU. Months of political uncertainty has now ended. The SPD's vote results were overwhelming, with 66% supporting, and only 34% rejecting.

On the data front

China Caixin PMI services dropped 0.5 to 54.2 in February. Australia TD securities inflation dropped -0.1% mom in February. Australia building approvals rose 17.1% mom in January. Main focuses in European session is on UK PMI services. Eurozone will also release Sentix investor confidence, retail sales and PMI services revisions. Later in the day, US will release ISM non-manufacturing composite.

The week ahead

For the week ahead, RBA, BOC, ECB and BoJ would have monetary policy meetings, scheduled on Tuesday, Wednesday and Thursday, Friday respectively. RBA is widely expected to keep interest rate unchanged at 0.50%. Governor Philip Lowe and other policymakers have been clear in their neutral stance. RBA is not going to follow other global central banks for tightening. NAB recently adjusted their expectation to just one RBA hike this year, not two. Westpac maintained their forecast that RBA will be on hold throughout this year.

For BOC, the biggest uncertainty on the economic outlook is undoubtedly future trade relations with the US, in particulate NAFTA negotiations. Also, it should be noted again that Canada is the biggest steel importer to the US. And the newly to be imposed tariff could give the country's economy another blow. BoC is not expected to hike again until the picture becomes clear.

As such, the central bank would be cautious over rate hike decisions. ECB would also maintain its rates and QE program unchanged. However, the focus is the timing for changing the forward guidance. The language in the accompanying statement and President Mario Draghi's comments at the press conference would be closely watched. For now, it's expected that ECB officials will discuss tweaking the languages, but hold it for June meeting. So Euro bulls could be disappointed out of the meeting.

On the dataflow, the focus is on US employment report due Friday. Non-farm payrolls probably increased 205K in February, up modestly from January's 200K. The unemployment rate probably slid -0.1 percentage point to a new low of 4%. Average hourly earnings might have grown 0.2% m/m in February, easing from 0.3% in the prior month. Scheduled for release on the same day is Canada's employment situation. The number of employment probably increased 21K in February, after contracting -88K a month ago. The unemployment rate might have stayed unchanged at 5.9%.

USD/JPY Daily Outlook

Daily Pivots: (S1) 105.20; (P) 105.75; (R1) 106.25; More...

Intraday bias in USD/JPY remains on the downside for the moment. Down trend from 118.65 has just resumed and should target 100% projection of 118.65 to 108.12 from 114.73 at 104.20 next. Firm break there will target 98.97 key support level. On the upside, above 106.37 minor resistance will turn bias neutral first. But outlook will remain bearish as long as 107.67 resistance holds.

In the bigger picture, current development argues that the corrective pattern from 118.65 is extending. The solid break of 61.8% retracement of 98.97 to 118.65 at 106.48 now suggests that the pattern from 125.85 high is possibly extending. Deeper fall could be seen through 98.97 key support (2016 low). This bearish case will now be favored as long as 110.47 resistance holds.

Economic Indicators Update

For the 24 hours to 23:00 GMT, the AUD marginally declined against the USD and closed at 0.7754 on Friday.

LME Copper prices rose 0.5% or $31.0/MT to $6883.0/MT. Aluminium prices rose 0.1% or $1.0/MT to $2144.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7751, with the AUD trading slightly lower against the USD from Friday’s close, after overnight data indicated that Australia’s AiG performance of services index eased to a level of 54.0 in February. In the prior month, the index had recorded a reading of 54.9.

On the contrary, the nation’s seasonally adjusted building approvals climbed 17.1% on a monthly basis in January, exceeding market expectations for a rise of 5.0%. In the previous month, building approvals had dropped by a revised 20.6%.

Elsewhere in China, Australia’s largest trading partner, the Caixin/Markit services PMI fell more-than-expected to a level of 54.2 in February, after recording a nearly 6-year high level of 54.7 in the prior month. Markets were expecting the PMI to drop to a level of 54.3.

The pair is expected to find support at 0.7735, and a fall through could take it to the next support level of 0.7720. The pair is expected to find its first resistance at 0.7769, and a rise through could take it to the next resistance level of 0.7788.

Moving ahead, investors would closely monitor the Reserve Bank of Australia’s interest rate decision, due tomorrow.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR rose 0.43% against the USD and closed at 1.2329 on Friday.

In economic news, data showed that the Euro-zone’s producer price index (PPI) climbed less-than-anticipated by 1.5% on an annual basis in January, compared to an advance of 2.2% in the previous month, while markets were anticipating the PPI to increase 1.6%.

Separately, Germany’s retail sales registered an unexpected drop of 0.7% on a monthly basis in January, confounding market expectations for a gain of 0.7% and dampening hopes that private consumption will propel growth in Euro-bloc’s largest economy this year. In the previous month, retail sales had registered a revised drop of 1.1%.

The greenback declined against a basket of major currencies on Friday, pressured by continuous fears over trade wars following the US President, Donald Trump’s proposal to impose hefty tariffs on steel and aluminium imports.

On the macro front, the US final Reuters/Michigan consumer sentiment index climbed less than initially estimated to a level of 99.7 in February, compared to a preliminary print indicating a rise to a level of 99.9. In the previous month, the index had recorded a level of 95.7.

In the Asian session, at GMT0400, the pair is trading at 1.2325, with the EUR trading a tad lower against the USD from Friday’s close.

The pair is expected to find support at 1.2263, and a fall through could take it to the next support level of 1.2201. The pair is expected to find its first resistance at 1.2376, and a rise through could take it to the next resistance level of 1.2427.

Moving forward, traders would focus on the final Markit services PMIs for February, slated to release across the Euro-zone in a few hours. Also, the Euro-zone’s Sentix investor confidence for March and retail sales data for January, will be on investors’ radar. Later in the day, the US ISM non-manufacturing and the final Markit services PMIs for February, will be keenly eyed by market participants.

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 GBP slightly rose against the USD and closed at 1.3786 on Friday.

On Friday, Britain’s Prime Minister, Theresa May, in a much-awaited Brexit speech, acknowledged that the UK and the European Union (EU) would have reduced access to each other’s markets after Brexit. However, she insisted that Britain wanted the “broadest and deepest possible agreement” and that the nation was close to agreeing the terms of an implementation period that will help smooth the country’s departure from the EU. Further, she conceded that no side can get exactly what it wants in Brexit negotiations. Commenting on the European Court of Justice jurisdiction, she stated that its existence, and its rulings, will continue to impact the UK.

Separately, data revealed that UK’s Markit construction PMI registered a rise to a level of 51.4 in February, compared to a 4-month low level of 50.2 in the prior month, while investors had envisaged for a rise to a level of 50.5.

In the Asian session, at GMT0400, the pair is trading at 1.3793, with the GBP trading 0.1% higher against the USD from Friday’s close.

The pair is expected to find support at 1.3760, and a fall through could take it to the next support level of 1.3728. The pair is expected to find its first resistance at 1.3821, and a rise through could take it to the next resistance level of 1.3850.

Trading trend in the Pound today is expected to be determined by the release of UK’s Markit services PMI for February, due in a few hours.

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 declined 0.49% against the JPY and closed at 105.54 on Friday.

The Japanese Yen jumped against the USD, after the Bank of Japan (BoJ) Governor, Haruhiko Kuroda, hinted that the central bank may consider about withdrawing its quantitative-easing program in 2019.

In the Asian session, at GMT0400, the pair is trading at 105.54, with the USD trading flat against the JPY from Friday’s close.

Overnight data showed that Japan’s Nikkei services PMI declined to a level of 51.7 in February, compared to a reading of 51.9 in the prior month.

The pair is expected to find support at 105.14, and a fall through could take it to the next support level of 104.75. The pair is expected to find its first resistance at 106.04, and a rise through could take it to the next resistance level of 106.55.

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 0.44% against the CHF and closed at 0.9369 on Friday.

In the Asian session, at GMT0400, the pair is trading at 0.9362, with the USD trading 0.07% lower against the CHF from Friday’s close.

The pair is expected to find support at 0.9331, and a fall through could take it to the next support level of 0.9299. The pair is expected to find its first resistance at 0.9402, and a rise through could take it to the next resistance level of 0.9441.

Amid no key macroeconomic releases in Switzerland today, investor sentiment would be governed by global macroeconomic events.

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 rose 0.49% against the CAD and closed at 1.2896 on Friday.

The Canadian Dollar lost ground against the USD, after Canada’s annualised gross domestic product (GDP) advanced less-than-anticipated by 1.7% on a quarterly basis in the final three months of 2017, compared to market expectations for a rise of 2.0%. The nation’s GDP had registered a revised growth of 1.5% in the previous quarter.

In the Asian session, at GMT0400, the pair is trading at 1.2894, with the USD trading a tad lower against the CAD from Friday’s close.

The pair is expected to find support at 1.2842, and a fall through could take it to the next support level of 1.2790. The pair is expected to find its first resistance at 1.2931, and a rise through could take it to the next resistance level of 1.2968.

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

Trump counter-attacked on EU's criticism on his steel and aluminum tariff. He tweeted again during the weekend that the European Union has been "brutal to us". And he warned that "if the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S."

That was in reaction to European Commission President Jean-Claude Juncker's statement that "we will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk.