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Bears are taking a breather on Monday after last Thu/Fri action being firmly in red, as the dollar regained footing after being hit by US government shutdown.

However, recovery attempts from session low at 110.49 (also low of last Friday) were limited under 111.00 barrier and keep intact bearish bias for renewed attack at key supports at 110.15/00 (Fibo 61.8% of 107.31/114.73 rally / psychological support).

Bank of Japan's policy meeting is coming in focus (due tomorrow) with the central bank expected to maintain its ultra-easy policy, which would disappoint some trader who expect some shift in the policy.

Favored near-term scenario sees eventual break through 110.15/00 pivots (close below 110.15, Fibo 61.8% of 107.31/114.73 ascend is needed to generate strong bearish signal) and fresh acceleration towards next target at 109.06 (Fibo 76.4%).

Falling 10 SMA continues to pressure and marks resistance at 111.11, guarding upper pivots at 111.48 (last Thu recovery peak) and 111.70 (200SMA).

Res: 110.91, 111.11, 111.48, 111.70
Sup: 110.49, 110.15, 110.00, 109.54

The common European currency has reached a dominant support line against the New Zealand Dollar. The encounter has resulted in a rebound.

After reaching the weekly pivot point level at 1.660, the rebound continued in accordance with the most dominant channel. A new pattern has been mapped and the common European currency is likely to continue a short-term surge.

Furthermore, technical indicator of the 100 – hour simple moving average is providing support at 1.677 at the time of this analysis.

The US Dollar has continued to trade in the same direction against the Swiss Franc since late December 2017.

The most dominant channel's support has been moved lower. Secondly, a medium-term pattern has been mapped. In addition, the medium term channel continued to move south after testing weekly pivot point level at 0.961.

Regarding the short-term future, the medium term channel is likely to be narrower until it breaches the dominant channel and finds support at 0.947.Meanwhile, technical indicators are still in favor of a fall because the 55 – hour, 100 – hour and 200 – hour SMAs are located above the exchange rate.

EUR/USD’s reversal from the 1.2285 mark mid-Friday confirmed the formation of a new descending channel. The increasing strength of the bearish sentiment was apparent later in the day when the Euro tried to surpass a significant support area formed by the 100– and 55-hour SMAs and the monthly R2 circa 1.2225. Any attempt to edge lower was interrupted when the pair opened 54 pips higher in this session which was followed by a re-test of the aforementioned support. This day is quiet in terms of fundamentals; however, political events, especially the US turmoil over government shutdown, are likely to drive the market. Technical indicators confirm that there is still some potential south, possibly down to the 200-hour SMA and the weekly S1 at 1.2150, that could be realised today.

Friday's trading session ended with a 39-pip loss for the GBP/USD exchange rate. Further decline below the 1.3850 mark was limited by the combined support of the 55– and 100-hour SMAs. Even though the Sterling breached the prevailing short-term channel, it remained near the former until early Monday.

Technical indicators suggest that the price could fluctuate without any notable leaps today. However, it is more likely that the Pound tries to regain some of loses which occurred on Friday. A possible upside target could be the weekly R1 at 1.3959, as the upper boundary of a longer-term ascending channel is likewise located near this mark.

The bearish sentiment prevailed in the market on Friday. Despite breaching the 100-hour SMA, the US Dollar failed to move below this line, thus remaining in the 110.50/90 area by Monday morning. As apparent on the chart, the northern barrier is provided by the 200-, 100– and 55-hour SMAs and the weekly PP circa 110.80. It is unlikely that this strong resistance cluster is breached, thus pointing to a possible decline in this session. The daily low could be the monthly S2 and the weekly S1 near the 110.20 mark. By and large, political events in the United States are expected to be a strong driving force today, and it therefore could cause sudden fluctuations. However, the psychological 111.00 mark should still hold strong.

The strong upside momentum that drove Gold on Friday morning reversed south near the 1,338.00 mark. This move was followed by a period of decline. The yellow metal was stranded between the 55– and 100-hour SMAs for the most part; however, a strong hourly fall breached the former and left the rate testing the 200-hour SMA and the monthly R1 by the time of this analysis. In terms of fundamentals, this support area is expected to hold unless a positive outcome regarding the US government shutdown results in a notably stronger US Dollar. On the other hand, the northern side is guarded by the 100-hour SMA and the weekly PP circa 1,334.00. It is likely that the pair remains stranded between the aforementioned barriers until a breakout determines the pair’s further direction.

The British Pound fluctuated against the US Dollar after the UK retail sales report, falling initially by 4 base points to the 1.3916 mark. The GBP/USD exchange rate briefly touched the 1.3945 level remaining in the bearish trend.

Britain's shop sales depreciated by more than anticipated in December, confirming the weakest yearly growth in retail in four years, as consumer spending remained limited due to Brexit-hit prices. The Office for National Statistics revealed that the volume of retail sales fell 1.5% from November, reversing a 1.0% increase registered in the prior month. Meanwhile, the Bank of England anticipated the squeeze on consumers to ease this year, as inflation calms down and pay growth accelerates.

Cable bounced to 1.3900 are in European trading after easing to 1.3857 in Asia, following gap-higher opening on Monday. Overall bulls remain intact despite repeated strong rejections at 1.3942 and conflicting technical/political factors and keep focus shifted higher. Bulls need sustained break above 1.3945 to open way for eventual test of psychological 1.40 barrier and further extension of recovery leg from post-Brexit low at 1.1930. The pair is currently riding on the wave of five-wave sequence from 1.3075 (Oct/Nov higher base) which could travel to its Fibonacci expansion 138.2% at 1.4034 and FE 161.8% at 1.4123, in extension. Thick hourly cloud (spanned between 1.3891 and 1.3849) marks solid support, guarding rising 10SMA (1.3737) which is expected to contain extended dips and keep bulls intact.

Res: 1.3911, 1.3945, 1.4000, 1.4034
Sup: 1.3891, 1.3849, 1.3804, 1.3756

NZDUSD (0.7274): The NZDUSD continues to maintain its hold near the 4-month high. However, failure to post any higher highs at this level indicates that the currency pair could be looking to post a correction. On the 4-hour chart, immediate support is seen near the current higher lows at 0.7283. A break down below this level is required in order for NZDUSD to confirm the downside correction. The kiwi could be targeting 0.7160 followed by an eventual move towards testing the support at 0.7000 level.