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EURUSD (1.2408): The EURUSD was seen easing back on Friday after price action rallied to a fresh three year high. By Friday's close, the euro currency was seen closing with a strong bearish price action alongside a potential double top pattern. In the near term, the declines could be extended to the downside towards 1.2363 - 1.2330 level. Establishing support here could offer some short term bounce to the upside. However, the euro currency will need to break past the previously posted highs for any conviction of further gains. To the downside, watch for a break below 1.2363 - 1.2330 level, as this could suggest a decline based on the daily chart's double top pattern.

The U.S. dollar posted a rebound on Friday after briefly slipping sending most of the other major currencies to post fresh highs. However, the declines were short lived as the dollar managed to reverse the levels. The FOMC meeting minutes will be released on Wednesday and the markets are anticipating that the Fed could hike rates as early as March.

On the economic front, data from the UK showed that retail sales rose only 0.1% on the month missing estimates of a 0.5% increase. The previous month's data was revised slightly higher to show a 1.4% decline. Data on Friday was mostly dominated by the U.S. housing data. Building permits, housing starts posted modest gains while the import prices rose 1.0% on the month.

Looking ahead, the economic data is light with the U.S. markets closed due to a bank holiday. Eurozone current account data is due during the day while the Bank of England Governor Mark Carney will be speaking later in the evening.

New Zealand will be reporting its PPI numbers towards the close

BTCUSD is rallying higher, now seen in wave c or three, as part of a trend reversal. We see price breaching above the 9468 level, which is a confirmation for more upside. That said, once wave c or three fully show up, a new temporary correction as blue wave iv may start to unfold with possible support near the 10000 level.

BTCUSD, 4H

The euro continues to trade on the backfoot against the greenback in early week trading, as the U.S dollar index stages a comeback from three-year trading lows. The EURUSD pair currently trades around the 1.2420 region, with downside pressures likely to remain whilst price-action holds beneath the pairs 200-month moving average, located at 1.2430. With a lack of high-impacting macroeconomic data on Monday, the pair is likely to be increasingly technically driven, with the 1.2390 to 1.2430 price-range the key for the next directional move.

The EURUSD pair is only intraday bullish above the 1.2430 level, above this level key resistance is found at the 1.2490 and 1.2554 levels.

A strong move below the 1.2390 level will likely support further EURUSD selling, with key technical support found at the 1.2367 and 1.2291 levels

The U.S dollar continues to trade above the 106 handle against the Japanese yen in early Monday trading, as the U.S dollar index holds onto Friday’s strong trading gains. The USDJPY is currently trading around the 106.20 region, with liquidity and volume lacking in the pair as most Asian markets remain closed for the Chinese New Year. The current intraday bullish momentum in the pair is likely to continue, with USDJPY buyer’s medium-term upside price objective focused on the key 106.60 level.

The USDJPY pair remains bullish above the 105.91 level, further upside towards 106.40 and 106.60 looks increasingly possible.

If the USDJPY pair trades below the 105.91 level, sellers may push price-action back towards the 105.55 support region.

The Australian dollar is in recovery mode against the dollar following the drop that happened late last month. The currency has managed to recover from a low of 0.7789 to the current high of 0.795. All eyes are now on the Reserve Bank of Australia (RBA), which will release the minutes of the previous meeting. Traders will want to read the RBA's tea leaves about the status of the economy and the pace of future interest rates.

The EUR/USD pair is little changed following no major political developments during the weekend. Today, with no major economic data expected, and with the US being on holiday, there is a likelihood that the pair could trade within a narrow range. Looking ahead, traders will focus on Germany's consumer climate data which will be released tomorrow. They will also focus on the Fed minutes which will be released on Wednesday.

The cable is little changed, following an uneventful weekend in the US and in the UK. Traders are now focusing on Wednesday, when Governor Mark Carney will deliver a speech. They will want to get the clues about how the BoE expects to keep the rising inflation rate in check.

EUR/USD

The pair has fallen from the multi-year high level of 1.2561 to a low of 1.2414. The slight fall has come at a time when volatility is easing as traders shrug off the risks of rising inflation. The pair is trading in the middle of the 25-day and 14-day moving average, with the RSI falling to 50. The most likely scenario is where the pair recovers from the dip to get to the 1.2472 level.

AUD/USD

The AUD/USD pair has formed a symmetrical triangle, which places it at an ideal position for a break out. The pair is currently trading at 0.7920. At the same time, the pair's MACD shows a neutral stance following last week's slight correction. The pair's RSI is at 48. Today, the pair could continue trading within a range, with a breakout in either direction coming tomorrow after the release of RBA's minutes.

GBP/USD

The pair is currently trading at the 1.4031 level, which is down from the monthly high of 1.4146. The pair is trading at the 14-day moving average level, which is also at an important support as shown below. The most likely scenario is where the pair trades above the support level and tries to recover the lost gains. If this scenario works out, the next price target will be 1.4150.

Sunrise Market Commentary

• Rates: Room for consolidation ahead of Wednesday's FOMC Minutes?
  We expect trading to be sentiment-driven and technically in nature today amid an empty eco calendar. Volumes will be low in absence of US traders (President's Day Holiday). Underlying sentiment remains bearish for core bonds, but we'd argue in favour of some consolidation in the run-up to Wednesday's FOMC Minutes.
• Currencies: USD decline slows, at least for now
  The dollar tested key support area's on Friday, but rebounded later in the session. The econ calendar is thin today. The rebound in equities went hand-in-hand with a weaker dollar recently. Will this link persist? At least this morning, there are tentative signs that it might become less tight

The Sunrise Headlines

• US stock markets ended near opening levels on Friday, but last week's performance was the strongest in 5 years. Asian risk sentiment is ebullient with China still closed for Lunar New Year.
• A Russian propaganda arm oversaw a criminal and espionage conspiracy to tamper in the 2016 US presidential campaign to support Donald Trump and disparage Hillary Clinton, said an indictment released on Friday.
• China warned it may hit back if the US implements aluminium and steel restrictions as recommended by the Commerce Department on Friday.
• Fitch upgraded the Greek rating from B- to B (positive outlook). Fitch expects reduced political risks, general government primary surpluses and legislated fiscal measures to improve Greece's general government debt sustainability.
• London's property market has moved out of its boom phase and home sellers need to be more realistic about their price demands, according to Rightmove. Asking prices were down 1% Y/Y, a sixth consecutive fall.
• Buoyant sales of cars and electronics led Japan's exports to a 14th straight month of growth in January (12.2% Y/Y). Imports increased by 7.9% Y/Y. The adjusted trade surplus rose more than forecast, to ¥373.3bn.
• Today's eco calendar contains only second tier EMU eco data. The Eurogroup choses the next ECB vice-president out of Spanish economy minister de Guindos and Irish ECB governor Lane. US markets are closed for President's Day.

Currencies: USD Decline Slows, At Least For Now

USD decline slows, at least for now

On Friday morning, the dollar remained under pressure, extending the established downtrend. Important USD support in EUR/USD and in the trade-weighted dollar caused USD selling to slow. Gradually, even a modest USD short-squeeze kicked in ahead of the long weekend in the US. US eco data were also again slightly USD supportive, even as we have to admit that didn't help the dollar much of late. EUR/USD finished the session at 1.2406 (from 1.2506). USD/JPY also rebounded off intraday lows well below 106 and finished the week at 106.21.

Overnight, several Asian markets are closed for the Lunar New Year Holidays. Japanese equities extend their rally. Japanese trade data (both exports and imports) were strong and equities are also supported by a slowing yen rally. USD/JPY tries to regain the 106.50 level. EUR/USD hovers in the low 1.24 area.

US markets are closed for President's Day holiday. The EMU eco calendar is thin. At the end of last week, the USD selling finally slowed. With US markets closed, we probably won't get a clear sign for USD trading. Later this week, the calendar remains uninspiring. The Minutes of the January Fed meeting and CB speeches have most market moving potential. Global risk sentiment remains a factor of importance, too. Of late, the risk rally went hand-in-hand with a USD decline. We look out whether this link holds. There are tentative signs this morning that a positive risk sentiment shouldn't cause further USD losses. From a technical point of view, EUR/USD 1.2555/98 (correction top, 62% retracement) remains key resistance. A break would indicate more trouble for the dollar. We don't see a need for such a break because of the economic fundamentals. However, dollar sentiment remains fragile. We keep the working hypothesis for EUR/USD to hold the 1.2598/1.2206 band. A downside break would call of the ST USD alert.

UK retail sales disappointed on Friday, but didn't hurt sterling much. UK PM May spoke with German Chancellor Merkel. There was no clear result of the talks, but maybe May gained support for some kind of a tailor-made solution. EUR/GBP declined slightly towards the end of the session. Rightmove house prices were higher than expected 0.8% M/M, but the London boom market was said to be over. We expect more consolidation in the 0.8690/0.8930 trading range. The day-to-day momentum became less skeptical on sterling

EUR/USD topside test rejected, for now

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Currency pair EUR/USD

The EUR/USD failed to break above the previous top (red) and the bearish bounce is showing strong momentum. This could indicate that there is an expansion of the corrective pattern via a WXY (blue) within wave 4 (purple). A new break above 1.25 however would still make an uptrend continuation more likely.

The EUR/USD seems to be building a bearish ABC (green) zigzag when considering the strong bearish price action in wave A (green). A break below the support trend lines (blue) could see price fall lower towards 1.2250-1.23.

Currency pair GBP/USD

The GBP/USD is still testing the main resistance trend line (red). A bullish breakout could indicate a likely chance of continuation once price breaks above resistance

The GBP/USD is probably in a corrective wave 4 (blue) and could be in a wave 5 once price breaks above the resistance trend line (orange)

Currency pair USD/JPY

The USD/JPY came close to hitting the -61.8% Fibonacci target but missed it by a few pips. There is a chance that price will hit resistance and turn around to complete the target.

The USD/JPY seems to have completed a wave 3 (orange) and price is now building a potential corrective wave 4 (orange).

For the 24 hours to 23:00 GMT, the AUD declined 0.63% against the USD and closed at 0.7902 on Friday

LME Copper prices rose 0.9% or $61.0/MT to $7159.0/MT. Aluminium prices rose 1.2% or $25.5/MT to $2189.5/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7926, with the AUD trading 0.3% higher against the USD from Friday’s close.

The pair is expected to find support at 0.7883, and a fall through could take it to the next support level of 0.7841. The pair is expected to find its first resistance at 0.7978, and a rise through could take it to the next resistance level of 0.8031.

Amid no major macroeconomic releases in Australia today, investor sentiment would be governed by global macroeconomic factors.

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

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For the 24 hours to 23:00 GMT, the EUR declined 1.02% against the USD and closed at 1.2407 on Friday.

On the macro front, Germany's wholesale price index rose 0.9% on a monthly basis in January, beating market expectations for a rise of 0.2%. In the prior month, the wholesale price index had recorded a fall of 0.3%.

In the US, data showed that housing starts climbed more-than-anticipated by 9.70%, on a monthly basis, to an annual rate of 1326.0K in January, reaching its highest annual rate since October 2016 and compared to a revised level of 1209.0K in the previous month. Markets were expecting housing starts to rise to a level of 1234.0K. Additionally, building permits in the US unexpectedly rose 7.40%, on a monthly basis, to an annual rate of 1396.0K in January, hitting its highest level since June 2007. Building permits had recorded a revised reading of 1300.0K in the previous month, while investors had envisaged for a rise to a level of 1300.0K. Moreover, the flash Reuters/Michigan consumer sentiment index rose unexpectedly to 99.90 in February, marking its highest level in 14 years and higher than market expectations for a drop to a level of 95.40. In the previous month, the Reuters/Michigan consumer sentiment index had registered a reading of 95.70.

In the Asian session, at GMT0400, the pair is trading at 1.2421, with the EUR trading 0.11% higher against the USD from Friday's close.

The pair is expected to find support at 1.2358, and a fall through could take it to the next support level of 1.2296. The pair is expected to find its first resistance at 1.2519, and a rise through could take it to the next resistance level of 1.2618.

Going ahead, traders would keep a close watch on Euro-zone's current account balance and construction output data, both for December, slated to release in few hours.

The currency pair is trading below its 20 Hr and 50 Hr moving average.