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The Euro failed to move above its weekly high of 1.24 on Wednesday, as it reversed from the bottom boundary of the three-week channel down.

Later on, better-than-expected US inflation data strenghened the Dollar, thus allowing for a breakout of the 55– and 200-hour SMAs. This hourly plunge was stopped by the weekly PP and the 100-hour SMA near 1.23. The subsequent surge of the pair was caused risk-averse investors who re-took their positions on Wall Street. The rate advanced even further up to the 1.2450 mark.

Meanwhile, the Asian session was spent calmly due to a Chinese bank holiday. The rate might edge slightly higher today, as no immediate resistance is apparent. However, the general movement should be south, as bears might want to re-gain some lost positions after the strong surge.

The EUR/USD currency pair hammered through the floor on Wednesday, as the report showed that the US consumer prices rose more than anticipated in January. The Greenback gained against the Euro 61 base points or 0.49%, but then the exchange rate rebounded significantly.

The release showed that the US Consumer Price Index surged 0.5% over the course of January, beating forecasts for only a 0.3% rise. Projections for further price pressure strengthened as well as the Fed is largely expected to raise interest rates again in December. The separate report showed that retail sales in the United States marked an unexpected decline of 0.3%, following a downwardly revised December's figure.

The Australian dollar extends strong rebound from 0.7758 (09 Feb correction low) to crack 20SMA at 0.7959 and expose key barriers at 0.80 zone (psychological resistance / Fibo 61.8% of 0.8135/0.7758 pullback.

The Aussie regained ground quickly after dip to 0.7773 after stronger than expected US inflation as the greenback came under renewed pressure shortly after data release on buy the rumor sell the fact scenario.

Daily techs are nearly at full bullish setup but lacking momentum, which could result in hesitation ahead of 0.80 pivots.

Broken Fibo 38.2% barrier at 0.7902 is now reverted to solid support which should keep the downside protected, guarding pivotal 10SMA support at 0.7871.

Eventual break above 0.80 will be strong bullish signal for extension of recovery from 0.7758 which is underpinned by rising and thickening daily / weekly Ichimoku clouds.

Res: 0.7959, 0.7991, 0.8000, 0.8046
Sup: 0.7947, 0.7902, 0.7871, 0.7814

NZDUSD (0.7376): The New Zealand dollar posted a strong recovery yesterday as price managed to rise back to a one week high. However, further gains can be expected only a close above the previous highs near 0.7408. There is a possibility that this level could be tested but we expect that NZDUSD could reverse in the short term. Support at 0.7333 is likely to be tested to the downside. The fact that a retest of the lower support level at 0.7160 is still pending could remain as the downside risk.

GBPUSD (1.4011): The British pound maintained gains with price rising to a four-day high as the GBPUSD managed to recover back to the previously established range. The resistance level at 1.4037 is likely to be tested once again in the near term. Further gains can be expected only on a strong close above the resistance level. Meanwhile, as long as the resistance holds, the GBPUSD could be seen maintaining a sideways range within the levels mentioned

EURUSD (1.2459): The EURUSD was seen posting strong gains yesterday as the common currency maintained gains for three consecutive sessions. Price action recovered back to the 1.2450 handle as it breached the resistance level of 1.2363 - 1.2333 region. However, a follow through is required for the currency pair to maintain the upside trend. Near term dips towards 1.2363 could see support being established which could signal the upside bias. In the event that EURUSD breaks below this level once again, we expect the declines to resume.

Consumer prices in the United States were seen rising stronger than expected in the month of January. Despite the upbeat figures, the U.S. dollar turned weaker on the day. Headline CPI rose 0.5% on the month beating estimates and rising to an annual pace of 2.1% while core CPI increased 0.3% on the month for an annual gain of 1.8%.

However, the upbeat data was offset by soft retail sales which fell 0.3% in January. The hourly earnings data also showed an increase of 0.8% in January up from December's revised 0.6% increase.

Elsewhere, the Swedish central bank was seen holding its monetary policy unchanged at -0.50% at its meeting yesterday. The central bank signaled that it would hike interest rates in the second half of 2018 while downgrading its inflation forecasts.

Looking ahead the ECB's Chief economists Peter Praet will be speaking at a panel discussion today. Data from the U.S. will see the producer prices numbers coming out for January. This will be followed by the regional manufacturing index data.

Strong US Inflation and soft retail makes the dollar weak
Saudi oil ministers fuelled the bull rally once again
Precious metal looks strong from technical perspective

European markets and US futures are staring the day on a positive note as investors have shrugged off the concerns that the Fed would adopt any aggressive stance towards their monetary policy. The inflation data released over in the US was hot and it was better than the forecast. The text book trade, higher dollar on the back of better inflation number, wasn’t able to last long as investors started to factor in other aspects.

The US CPI number released yesterday printed the reading of 2.1% against the forecast of 1.9%. The signal that rising ISM prices could have an impact on the CPI number, did filter through and stamp of that was all over the reading. However, what saved the day for investors was the retail sales number which came below the forecast.

A soft retail number simply gives the message that consumers have started to ease off from their spending or they are not digging deep into their pockets. A sensible approach would be that the Fed isn’t going to increase the interest rate when they can clearly see that the retail data was soft. However, one factor which has become acute after the dust settled from yesterday’s economic reading is that the March interest rate hike is pretty much a done deal. Again, it only looks like that it is a done deal for now, because if we get a soft readings from the US NFP, the game could change.

As for the commodity market, comments from the Saudi oil ministers fuelled the bull rally once again. Saudi Arabia clearly has a more interest in keeping the oil price higher than any other country right now because of its gigantic IPO of Armco. The Saudi oil minister made traders happy by announcing that Saudi Arabia prefers an undersupplied oil market and it is not likely that the country would turn its back to keep the production down. The dollar weakness is another reason that we are seeing the recovery in the commodity metal today.

Precious metal looks strong from technical perspective especially when you pull up the daily chart. The precious metal is holding steady on Thursday thanks to the US data. The inflation data hasn’t changed the matrix and there is no change in the odds for the Fed to increase the interest much faster than previously thought. Gold is using its both plays; inflation hedge and safe haven. Higher inflation calls for an inflation hedge trade and aggressive stance adopted by the Fed for their monetary policy triggers the safe haven trade. So it is more of a win and win scenario.

The DAX30 has been in a steady uptrend. We can see a cluster of resistance that makes for a POC zone ( W H3, D H3, channel top, historical sellers) 12500-12510 is the zone and we could see a bearish reversal candlestick configuration that might turn the price down. If the price is rejected, watch for 12400. Clear break below should target 12367, 12299 and 12197. However if the price proceeds and makes 1h momentum candle or 4h close above 12510. we might see 12606 and eventually 12783 by Friday. Weekly H3 resistance is the most important level now.

W H3 -Weekly Camarilla Pivot (Weekly Interim Resistance)

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Daily Camarilla Pivot (Daily Support)

D L4 – Daily H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

EUR/USD

Current level - 1.2490

The sharp reversal at 1.2270 led to a break through 1.2390 peak and currently the pair is heading for a test of 1.2540 peak. Initial pullback is expected, to 1.2390 area.

USD/JPY

Current level - 106.44

The bias remains bearish, for a slide to 105.90-40 area. Crucial on the upside is 107.50.

GBP/USD

Current level - 1.4055

The break through 1.3920 points to another test of 1.4090 hurdle and an eventual break through the later will challenge 1.4280. Initial intraday support lies at 1.3920.