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Daily Pivots: (S1) 0.8452; (P) 0.8491; (R1) 0.8524; More...

A temporary top is in place at 0.8529 and intraday bias is turned neutral and EUR/GBP first. Above 0.8529 will target 0.8786 resistance. Firm break there could bring further rally towards 0.9304 high. Nonetheless, price actions from 0.9304 are seen as a corrective pattern and there is no clear sign of up trend resumption yet. Hence, even in that case, we'll stay cautious on strong resistance below 0.9304. On the downside, below 0.8413 minor support with turn focus back to 0.8303 instead.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. In any case, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Rise from 0.6935 (2015 low) will resume at a later stage to 0.9799 (2008 high). However, sustained break of 0.8116 could bring deeper decline to next key support level at 0.7564 before the correction completes.

Daily Pivots: (S1) 1.4501; (P) 1.4550; (R1) 1.4638; More...

A temporary top could be in place at 1.4605 and intraday bias in EUR/AUD is turned neutral for consolidation. Downside of retreat should be contained by 1.4334 support and bring another rise. We're holding on to the case off trend reversal after defending 1.3671 key support. Above 1.4605 will target 1.4721 resistance. Decisive break of 1.4721 will confirm our bullish view.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction could be completed after defending 1.3671 key support. Break of 1.4721 cluster resistance (38.2% retracement of 1.6587 to 1.3624 at 1.4756) should confirm this case and target 61.8% retracement at 1.5455 and above. Overall, we'd expect the up trend from 1.1602 to resume later. However, sustained break of 1.3671 will invalidate our bullish view and would turn extend the fall from 1.6587 towards 1.1602 long term bottom.

US Treasury Secretary Mnuchin announced Trump's tax reform plan in a press conference yesterday; the biggest tax reform plan since 1986.

Trump has proposed slashing corporate tax from the current rate of 35% to 15%; from one of the highest in the world to one of the lowest. In terms of personal income tax, the current 7 tax bands (minimum 10%, maximum 39.6%) is to be simplified to 3 bands instead (10%,25%,35%). Trump has also called for a repeal of the 3.8% tax on investment income and death tax.

The aim for the plan is to improve corporate competitiveness, encourage US companies to repatriate overseas funds held offshore, create more jobs, and spur economic growth to a 3% target.

The dollar index and US stock markets nudged up ahead of the press conference lifted by market expectations on Trump's tax reform plan. However, it was followed by a retracement after the press conference. Dow Jones and the S & P 500 indexes failed to breach the psychological level at 21000 and 2400 respectively.

Although corporate tax cut will spur economic growth it will also slash more than $600 billion in revenue a year resulting in a rising deficit due to reduced tax revenue.

Trump had planned to finance tax cuts by a reduction in healthcare costs after repealing Obamacare. However, as the new healthcare bill had failed to pass on March 24, the US government's prospective financial stress will likely become heavier. Trump now expects the costs would lead to a 3% annual economic growth.

Trump has also promised a $1 trillion infrastructure plan, with an increase in spending on military defense, which will further add to the government deficit during his presidency.

The tax reform bill will still need Congress's approval to pass. Considering the prospective rising deficit, it is likely that conservative Republicans might not support the tax reform bill. If Trump is unable to get enough support again it will likely lead to substantial market disappointment likely to initiate a USD and Equity sell off.

The European Central Bank (ECB) will announce its interest rate decision at 12:45 BST today. It will be followed by the ECB's press conference at 13:30 BST. Markets expect that the ECB will keep rates on hold and keep the current QE programme unchanged. However, we need to keep an eye on whether the ECB will give hints about prospective gradual QE reduction. US durable goods and core durable goods for March are released at 13:30 BST.

Today, the highlight will be the ECB rate decision, followed by a press conference from President Draghi. The forecast is for no change in policy. On Tuesday, the euro surged following a Reuters report that the Bank may communicate a more optimistic bias at its coming meetings. We think it is far too early for that to happen at this gathering. The recent concerns of the officials with regards to a surge in Eurozone's bond yields, combined with the slowdown in the core CPI for March, suggest that the Bank could stay patient for now and wait at least until the June gathering to communicate a more upbeat bias. By that time, political risks that keep a risk premium on European yields may have dissipated further, and the bloc's core CPI may have picked up steam again.

As such, we think that Draghi will probably maintain a cautious tone overall and avoid fueling any tapering expectations today. The euro may experience a pullback in case such signals are seen as dovish, but given the currency's short-term uptrend, we would expect any negative reaction to remain relatively short-lived.

EUR/USD is already in a retreat mode. Yesterday the pair pulled back after it found resistance near the crossroad of the 1.0955 (R2) level and the upside resistance line drawn from the peak of the 2nd of February. However, given that the rate is trading above the longer-term downtrend line taken from the peak of the 3rd of May 2016, we consider the outlook to be positive. We would treat any slide on Draghi's comments as an extension of yesterday's correction and we see the likelihood for such a retreat to stay limited near the 1.0800 territory.

Trump says he will not immediately scrap NAFTA; CAD & MXN jump

CAD and MXN both experienced a relief bounce during the Asian morning Thursday, following news that President Trump will not immediately scrap NAFTA, and will instead renegotiate it. This announcement followed several media reports yesterday that the US administration may issue an executive order declaring its intention to withdraw from the trade agreement. Although these news could keep CAD and MXN supported for a few days, any sustained positive reaction in these currencies seems unlikely, at least not until the trade landscape clears out.

USD/CAD tumbled after it hit the 1.3645 (R3) resistance to stop at the 1.3530 (S1) support level. The rate is now back below the 1.3600 (R2) territory, which is the upper bound of the sideways range it has been oscillating within since September. Therefore, we expect the pair to stay within that range and the slide to continue for a while. A clear dip below 1.3530 (S1) is possible to initially aim for the next support of 1.3490 (S2), defined by Tuesday's low.

As for the US tax announcement yesterday, it was disappointing overall, offering no concrete details regarding the planned reforms, other than what we already knew from media reports and leaks over the past days. Perhaps due to the lack of clarity, both USD and US stock indices moved lower in the aftermath.

BOJ meeting: No surprises

Overnight, the BoJ kept its policy unchanged. The meeting statement contained no major surprises, with the Bank upgrading its assessment for the Japanese economy, but revising down its inflation forecasts. Perhaps due to the lack of new information, there was no reaction in JPY. We continue to expect the officials to keep their framework of QQE with yield curve control intact for the foreseeable future.

As for the rest of today's highlights:

In Sweden, the Riksbank's policy decision will be in focus. Expectations are for this Bank to stand pat as well. At the latest gathering, the Bank shifted to a much more dovish bias, expressing heightened concerns with regards to the strength of SEK. With data after that gathering showing that the nation's CPI slowed in March, we doubt that the Bank will change its dovish tone. This could hurt SEK.

On the indicators' front, Germany's preliminary CPI for April is expected to have accelerated, but given that these data will be released a few minutes ahead of Draghi's press conference, they may attract less attention than usual.

From the US, we get durable goods orders for March. Both the headline and the core figures are expected to have slowed from previously. The forecasts are supported by the nation's ISM manufacturing PMI for the month, where the New Orders sub-index slid somewhat. Something like that could hurt USD somewhat.

EUR/USD

Support: 1.0855 (S1), 1.0825 (S2), 1.0800 (S3)

Resistance: 1.0915 (R1), 1.0955 (R2), 1.1000 (R3)

USD/CAD

Support: 1.3530 (S1), 1.3490 (S2), 1.3455 (S3)

Resistance: 1.3560 (R1), 1.3600 (R2), 1.3645 (R3)

Daily Pivots: (S1) 120.68; (P) 121.32; (R1) 121.74; More...

A temporary top is in place at 121.97 in EUR/JPY and intraday bias is turned neutral first. Some consolidations would be seen but downside should be contained by 118.91 support and bring another rally. Above 121.97 will target 122.88 resistance first. Break will likely resume the larger rally from 109.20. In such case, EUR/JPY should break through 124.08 to 126.09 key resistance level.

In the bigger picture, price actions from 109.20 is still seen as a corrective move for the moment. But current development suggests that the first leg is finished at 109.20, second leg at 114.84. And rise from 114.84 is possibly developing into the third leg. Further rise will now be in favor through 124.08 resistance. Strong break of 126.09 support turned resistance will confirm completion of whole fall from 149.76 at 109.20. In such case, rise from 109.20 is developing into a medium term move for 141.04 and above.

Daily Pivots: (S1) 142.15; (P) 142.83; (R1) 143.33; More....

GBP/JPY's rally is still in progress and intraday bias remains on the upside for 144.77 resistance. Consolidation pattern from 148.42 should have completed three waves down to 135.58, after hitting 135.39 fibonacci level. Break of 144.77 should extend whole rise from 122.36 through 148.42. On the downside, break of 140.04 support is needed to indicate short term topping. Otherwise, outlook will remain bullish in case of retreat.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern. As long as 50% retracement of 122.36 to 148.42 at 135.39 holds, another rising leg would be seen to 38.2% retracement of 195.86 to 122.36 at 150.42 and possibly above. However, firm break of 135.39 will bring retest of 122.36, with prospect of resuming the larger down trend from 195.86.

Daily Pivots: (S1) 1.0807; (P) 1.0838; (R1) 1.0860; More...

A temporary top is in place at 1.0869 and intraday bias in EUR/CHF is turned neutral for the moment. Some consolidations could be seen but downside should be contained by 1.0781 and bring another rise. Above 1.0869 will target 1.0897 resistance next. Break there will confirm trend reversal. Nonetheless, break of 1.0781 will bring deeper fall back towards 1.0652 support instead.

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Current strong rebound is raising the chance that it's completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.0823 resistance will affirm this bullish case. Further break of 1.0999 will target a test on 1.1198 high. For now, this will be the preferred case as long as 1.0652 support holds.

The pair remains bullish and returns above 111.00 handle on fresh strength, after Wednesday's spike to 111.76, on probe above strong barrier (weekly cloud top at 111.36). No significant impact from yesterday's Doji candle with long upper shadow is seen so far, as the pair is on fresh rally (underpinned by rising hourly cloud) for renewed attempts above weekly cloud and retest of yesterday's high, reinforced by weekly Tenkan-sen. Bullish setup of daily MA's and momentum studies are supportive for firm break and close above 111.36/78 pivots, to signal fresh extension higher and test of next key barrier at 112.18 (31 Mar high). Slow stochastic is overbought on daily chart but continues to head north, however, corrective action should be anticipated in the near-term. Wednesday's low at 110.85 marks solid support, followed by hourly cloud base at 110.54, with extended downticks expected to hold above psychological 110.00 support, reinforced by weekly Kijun-sen line.

Res: 111.41; 111.76; 112.18; 112.67
Sup: 111.00; 110.85; 110.54; 110.00

Daily Pivots: (S1) 1.0855; (P) 1.0903 (R1) 1.0950; More....

Intraday bias in EUR/USD remains neutral for consolidation below 1.0949 temporary top. At this point, another rise could be seen as long as 1.0777 support holds. But still, rise form 1.0339 is seen as a corrective move. Hence we'd pay attention to topping signal even if EUR/USD rises through 1.0949. On the downside, below 1.0777 minor support will turn bias to the downside for 1.0569 support first.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

Daily Pivots: (S1) 1.2812; (P) 1.2838; (R1) 1.2871; More...

Breach of 1.2903 temporary top indicates resumption of recent rally. Intraday bias turned back to the upside. Current rise would target 161.8% projection of 1.2108 to 1.2614 from 1.2365 at 1.3184. At this point, price actions from 1.1946 are still interpreted as a correction pattern. Therefore, we'd expect strong resistance below 1.3444 to bring larger down trend resumption. On the downside, break of 1.2755 minor support will turn bias to the downside. Further break of 1.2614 resistance turned support will now indicate near term reversal.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.