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Daily Pivots: (S1) 1.3912; (P) 1.3958; (R1) 1.4014; More....

Intraday bias in GBP/USD remains neutral as consolidation continues. On the upside, break of 1.4144 will extend the rebound from 1.3764 and target a test on 1.4345 resistance. Break there will resume larger up trend and target long term trend line resistance (now at 1.5056). On the downside, below 1.3764 will extend the correction from 1.4345 to 1.3651 resistance turned support instead.

In the bigger picture, as long as 1.3038 support holds, medium term outlook in GBP/USD will remains bullish. Rise from 1.1946 is at least correcting the long term down from 2007 high at 2.1161. Further rally would be seen back to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466. However, GBP/USD fails to sustain above 55 month EMA (now at 1.4279) so far. Break of 1.3038 support, will suggests that rise from 1.1946 has completed and will turn outlook bearish for retesting this low.

Daily Pivots: (S1) 0.9325; (P) 0.9349; (R1) 0.9379; More...

Intraday bias in USD/CHF remains neutral for consolidation above 0.9186. With 0.9469 resistance intact, deeper fall is still expected. On the downside, break of 0.9186 will extend the larger down trend to 0.9115 medium term projection level next. However, considering bullish convergence condition in 4 hour MACD, break of 0.9469 will indicate near term reversal and turn outlook bullish for 55 day EMA (now at 0.9520) and above.

In the bigger picture, fall from 1.0342 is seen as a medium term down trend. Deeper decline should be seen to 100% projection of 1.0342 to 0.9420 from 1.0037 at 0.9115. Break will target 161.8% projection at 0.8545. In any case, sustained trading above 55 day EMA is needed to be the first sign of medium term reversal. Otherwise, outlook will stay bearish even in case of strong rebound.

Daily Pivots: (S1) 106.53; (P) 106.83; (R1) 107.15; More...

Intraday bias in USD/JPY remains neutral as consolidation from 105.54 is still in progress. Outlook also remains bearish with 108.27 resistance intact. On the downside, break of 105.54 will extend the larger decline from 118.65 and target 100% projection of 118.65 to 108.12 from 114.73 at 104.20 next. However, break of 108.27 will be the first sign of near term reversal and will target 110.47 resistance for confirmation.

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.

Daily Pivots: (S1) 1.2582; (P) 1.2654; (R1) 1.2699; More....

Intraday bias in USD/CAD remains neutral at this point. On the upside, above 1.2757 will resume the rebound from 1.2246 and target a test on 1.2919 key resistance. We'd be cautious on strong resistance from there to limit upside. On the downside, below 1.2450 will turn bias back to the downside for 1.2246 support.

In the bigger picture, the rebound from 1.2246 is mixing up the medium term outlook. Nonetheless, USD/CAD is staying below falling 55 week EMA (now at 1.2771), hence, the bearish case is in favor. That is, fall from 1.4689 is not completed yet. Sustained break of 1.2061 key support will carry larger bearish implication and target 61.8% retracement of 0.9406 to 1.4689 at 1.1424. However, firm break of 1.2919 will revive the case of medium term reversal and turn outlook bullish.

Daily Pivots: (S1) 0.7811; (P) 0.7829; (R1) 0.7853; More...

AUD/USD recovers today but it's staying in range of 0.7758/7988. Intraday bias remains neutral at this point. On the upside, above 0.7988 will extend the rebound to retest 0.8135. On the downside, below 0.7758 will resume the fall from 0.8135 and target 0.7500 key near term support. At this point, there is no strong case for a range breakout yet and 0.7500/8135 could hold for a while.

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.

Dollar weakens broadly as another week starts rather quietly. On the other hand, Aussie and Kiwi stage a strong come back. Canadian Dollar doesn't follow as weighed down by concerns over the NAFTA talks that resumed this week. Euro is also mildly softer ahead of Italy election and outcome of German SPD vote on grand coalition this weekend. Technically, as noted before, dollar remains limited comfortably below near term resistance against others. It remains to be seen whether new Fed chair Jerome Powell's testimony would make or break the greenback.

BoJ Kuroda dismissed review on policy framework

BoJ Governor Haruhiko Kuroda, recently reappointed for another five year term, dismissed the request by an opposition lawmaker to review the policy framework. Kuroda told the parliament that "it's unfortunate that achievement of our price target has been delayed. But thanks to the effect of our powerful monetary easing, Japan's economy is no longer in a state that can be described as deflation." He also pointed to recovery in the economy and said "things are proceeding smoothly". And therefore, "I don't have any plan at this stage to conduct another comprehensive review."

Fed Powell's testimony unlikely to deviate from the monetary policy report

The week ahead is very busy. New Fed chair Jerome Powell's testimony will be a major focus. As a prelude, Fed released its semi annual Monetary Policy Report last Friday. The report noted that "with inflation having persistently run below the 2% longer-run objective the Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal". It appears that similar reference had not been revealed in previous FOMC statement or minutes.

The Fed also warned of the elevated valuation of asset prices. As suggested in the report, "valuation pressures continue to be elevated across a range of asset classes even after taking into account the current level of Treasury yields and the expectation that the reduction in corporate tax rates should generate an increase in after-tax earnings. Leverage in the nonfinancial business sector has remained high, and net issuance of risky debt has climbed in recent months".

Powell's message in the testimony will likely not deviate much from the report regarding monetary policy. He's expected to reiterate the gradual path of monetary policy normalization. Yet, his comments about the growth outlook in light of the tax reform plan would be closely watched.

UK PM May to make high profile speech on Brexit again

Another focus is UK Prime Minister Theresa May's high profile speech on Brexit on Friday. May is expected to lay out an "ambitious" vision of future relationship with EU. That came after the Cabinet's Brexit "war committee" has finally reached a consensus on the stance last week. May said that "the deal we negotiate with the EU must present an ambitious future for our great country".

And, she added " I will present the committee's conclusions to an additional session of the full Cabinet before travelling to the North-east on Friday to give a speech setting out this Government's vision of what our future economic partnership with the European Union should look like."

May also emphasized that "delivering the best Brexit is about our national future, part of the way we improve the lives of people all over the country. So I concluded the meeting by reminding the committee that the decisions we make now will shape this country for a generation."

It should be reminded that there are expectations of a BoE rate hike as early as during the meeting in May. But that's heavily tied to the assume for an agreement with EU for the transition period after Brexit. Such expectation could change drastically depending on what markets would expect after PM May's speech.

On the data front

Here are some highlights for the week ahead:

• Monday: UK BBA mortgage approvals; US new home sales
• Tuesday: German CPI; Eurozone M3; US durables, trade balance, wholesale inventories, house price indices, consumer confidence, Fed Powell's testimony
• Wednesday: Japan industrial production, retail sales, housing starts; New Zealand business confidence; UK BRC shop price, Gfk consumer confidence; China PMIs; Swiss UBS consumption indicator, KOF economic barometer; German Gfk consumer sentiment; Eurozone CPI flash; Canada IPPI and RMPI; US GDP revision, Chicago PMI, pending home sales
• Thursday: New Zealand terms of trade; Japan capital spending, consumer confidence; China Caixin PMI; Swiss GDP, retail sales; Eurozone PMI manufacturing final, unemployment rate; UK PMI manufacturing, M4, mortgage approvals; UK ISM manufacturing, construction spending
• Friday: New Zealand building consents; Japan household spending, unemployment rate, monetary base, Tokyo CPI core; German retail sales, import prices; UK construction PMI; Eurozone PPI; Canada GDP

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7811; (P) 0.7829; (R1) 0.7853; More...

AUD/USD recovers today but it's staying in range of 0.7758/7988. Intraday bias remains neutral at this point. On the upside, above 0.7988 will extend the rebound to retest 0.8135. On the downside, below 0.7758 will resume the fall from 0.8135 and target 0.7500 key near term support. At this point, there is no strong case for a range breakout yet and 0.7500/8135 could hold for a while.

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.

Economic Indicators Update

Key Highlights

• The Euro declined this past week and broke the 1.2350 support against the US Dollar.
• There is a key bullish trend line forming with support at 1.2265 on the 4-hours chart of EUR/USD.
• The pair must break the 1.2350 and 1.2370 resistance levels to gain upside momentum.
• The Euro Zone CPI in Jan 2018 increased 1.3% (YoY), similar to the forecast.

EURUSD Technical Analysis

This past week was mostly bearish for the Euro as it moved below the 1.2350 support against the US Dollar. The EUR/USD pair is currently holding the 1.2250 support, but it remains at a risk of more declines.

The 4-hours chart suggest that the pair struggled to hold gains above the 1.2400 level and declined below the 100 simple moving average (red, 4-hour). The pair traded close to the 1.2250-60 support area and later is started consolidating losses.

On the downside, there is a key bullish trend line forming with support at 1.2265 on the same chart. If there is a break below the trend line and support at 1.2250, there could be more losses toward the 1.2200 level.

On the upside, there is a connecting bearish trend line with resistance at 1.2330. Above 1.2330, the pair must break the 1.2350 and 1.2370 resistance levels to move back in the bullish zone.

Above 1.2370, the next major resistance is near the 50% Fib retracement level of the last decline from the 1.2555 high to 1.2260 low at 1.2407.

This past week, the Euro Zone saw the CPI report for Jan 2018 by the Eurostat. The market was looking for a rise of 1.3% compared with the same month a year ago. The actual result was similar, but the monthly CPI declined 0.9%, compared with the last +0.4%.

The report added:

The lowest annual rates were registered in Cyprus (-1.5%), Greece (0.2%) and Ireland (0.3%). The highest annual rates were recorded in Lithuania and Estonia (both 3.6%) and Romania (3.4%). Compared with December 2017, annual inflation fell in twenty-one Member States, remained stable in one and rose in six.

Overall, the Euro may find it hard to recover above 1.2350 in the near term. On the downside, the 1.2250 and 1.2200 levels are important supports.

STOCKS

Dow (25309.99, +1.39%) is trading just below interim resistance near 25500. A break above 25500, if seen could take it higher towards 26000 else a fall back towards 24400 or lower is possible.

Dax (12483.79, +0.18%) is trying to move up gradually towards 12600 resistance which is likely to hold and push the index back towards 12400.

Levels near 106.50 is important on the Japanese Yen and while that holds, the Nikkei (22071.52, +0.82%) is likely to move up in the near term
towards 22500 levels. If the Japanese Yen sees further strength in the next few sessions, rise in Nikkei could be limited on the upside. Immediate target would be 22500 in the coming sessions.

3325-3350 could be an immediate resistance for Shanghai (3302.41, +0.41%) and while that holds, the index is likely to come off towards 3300 or lower again by end of the week of early next week.

Nifty (10491.05, +1.04%) and Sensex (34142.15, +0.95%) have risen from current support level as visible on the daily candles and while that holds, the indices may move up some more this week towards 10620 and 34500-34750 respectively. Immediate view is bullish.

COMMODITIES

WTI (63.84) and Brent (67.50) have risen from previous levels. WTI has broken above immediate resistance near 63 and while the rise continues, WTI may move up towards 65. Brent on the other hand, is likely to test 68 on the upside, break of which can lead to further rise towards 69-70 in the medium term.

Gold (1337) is holding above support near 1320 and while that holds, the price may move up towards 1350/60 again in the coming sessions. Near term looks bullish.

Copper (3.2170) is almost stable without any major movement. It is likely to move up to 3.15-3.30 levels in the near term.

FOREX

The Dollar Index (89.722) tested resistance on daily candles near 90.1-90.2 last week and if the ranging movement of the last 3 weeks continues, it is likely to dip this week towards support near 88.25 on the daily candles.

Euro (1.2318) has also been ranging for the last 3 weeks in the broad 1.22-1.255 zone and if the ranging continues this week, we could see another test of 1.25 sometime late in the week.

The Dollar-Yen (106.51) has some support near 106.25-106.5 on the 3 day line chart and the weekly candles. If it breaks this support, it could dip further to test 105.5 on weekly line chart which is a crucial support level (and had held last week).

The Euro-Yen (131.17) could find some support on daily candles near 131 in the near term. The downside target of 105.5 for Dollar Yen and the upside target of 1.25 for the Euro this week gives the probable target for Euro Yen as 131.87.

Pound (1.4008) could test resistance near 1.405-1.408 on daily candles in the next couple of sessions and dip from there.

Dollar-Rupee (64.735): Support likely at 64.60. If breached, see 64.45-30. Might go back up towards 64.80-90.

INTEREST RATES

US 10 Year Yield (2.8532), US 30 year Yield (3.1448), US 5 year yield (2.6015), US 2 year yield (2.23) : As predicted last Friday, the 10 Yr yield has indeed come back below 2.9% again and the Feb ranging between 2.85% and 2.95% continues. Similarly, the other yields have also dipped slightly and have come nearer to their long term resistance levels.As mentioned last week, a test of 3% for the 10 Year yield still looks to be few weeks away.

(Long term resistance levels for the 4 yields earlier mentioned are as follows: 2.85-2.90, 3.20, 2.7 and 2.2 respectively - we have been expecting these levels to hold in this month.)

The German-US 10 Yr yield spread (-2.2) is near support and could see a bounce in this week / next week. Note that the German 10 Yr yield (0.65%) has dipped below support near 0.7% and hence a bounce in the German-US yield spread could be led by a further dip in US 10 Yr yield.

GOLD - The commodity may have closed lower the past week but a recovery higher threat. On the downside, support comes in at the 1,320.00 level where a break will turn attention to the 1,310.00 level. Further down, a cut through here will open the door for a move lower towards the 1,300.00 level. Below here if seen could trigger further downside pressure towards the 1,240.00 level. Conversely, resistance resides at the 1,350.00 level where a break will aim at the 1,360.00 level. A turn above there will expose the 1,370.00 level. Further out, resistance stands at the 1,380.00 level. All in all, GOLD looks to weaken further

EURUSD - With the pair seeing price hesitation the past week, a directional move is a challenge. On the upside, resistance comes in at 1.2350 level with a cut through here opening the door for more upside towards the 1.2400 level. Further up, resistance lies at the 1.2450 level where a break will expose the 1.2500 level. Conversely, support lies at the 1.2250 level where a violation will aim at the 1.2200 level. A break of here will aim at the 1.2150 level. Below here will open the door for more weakness towards the 1.2100. All in all, EURUSD faces further bear threats on correction.