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The GBP/USD has formed a cup with handle pattern on H1 timeframe, suggesting further upside. W H4 camarilla is acting as support as the price broke above it, and it forms a clear handle at the brim of a cup. 1.2480 might spike the price to the upside, targeting D H3 H4 and H5 levels respectively, -1.2516, 1.2538, and 1.2580. If the price breaks below the handle, look for possible POC (D L3, double bottom, ATR pivot) 1.2425-45 rejection.

UK labour market data for March will be released at 09:30 BST including claimant count, ILO unemployment rate (from Dec to Feb) and average earnings (from Dec to Feb). The data will likely affect the strength of GBP and GBP crosses. GBP/USD hit a 1-week high of 1.2500 this morning, helped by the weakening of the dollar.

Bank of England Gorvernor Carney will make a speech at 09:30 BST this morning. We will likely get clues about the prospective measures that the BoE will likely take to cope with rising inflation, slowing wage growth and Brexit uncertainty.

The ILO unemployment rate has seen a downtrend since early 2012. UK average earnings, including and excluding bonus (from Dec to Feb), has seen a moderate uptrend in 2016. However, the increase of average earnings, excluding bonus, (from Dec to Feb) has slowed down since the beginning of this year.

UK inflation for February moved above the Bank of England’s 2% target for the first time since 2014. UK CPI (Mar), released yesterday, was 2.3% in line with expectations and the previous figure. Core CPI (Mar) fell to 1.8% in March from 2% in February. Although the latest inflation figures showed a slight slowdown the inflation uptrend is likely to continue. If the pace of wage growth is slower than the pace of inflations rise, resulting in consumers cutting down on their spending on clothing, non-food and non-necessities. It will lead to a slowdown of economic growth.

The British Retail Consortium (BRC) announced on Tuesday that UK retail sales fell by 1% in March (YoY). UK total sales edged up by only 0.1% in the January to March period marking the slowest pace of growth post the financial crisis. Non-food sales fell by 0.8% in the January to March period marking the biggest decline in nearly six years.

The dollar index plunged around 0.31% on Tuesday, falling from the psychological resistance level at 101.00 and hitting a 2-day low of 100.49. This morning the dollar index keeps on weakening thereby pushing gold prices up, spot gold hit a 5-month high of 1279.67. FOMC voting member, Neel Kashkari, was the only member to dissent the Fed’s rate hike decision in March. He stated his view on Tuesday that “there is still slack in the labour market and inflation needs to be higher”.

The Bank of Canada will announce its rate decision this afternoon at 15:00 BST. It will be followed by the BoC’s Gorvernor Poloz’s speech at 21:15 BST. Although Canadian economy is improving, however, the US economic outlook is still uncertain under Trump’s administration. The BoC is likely to keep rates on hold for the near future.

Thursday sees the release of Australian employment change and unemployment rate for March at 02:30 BST. German CPI for March will be released at 07:00 BST; it will likely affect the strength of the Euro and the trend of the DAX index.

The pair remains firmly in red following Tuesday's sharp fall (the biggest one-day fall since 15 Mar) and consolidating above fresh five-month low at 109.33, hit on early Wednesday's extension lower.

Long red candle that was formed on Tuesday is expected to heavily weigh on the market, as strong risk-off sentiment on rising geopolitical tensions, keeps yen well supported.

Eventual break below strong 110.00 support has boosted bears to continue larger bear-leg from 115.49, which is also the third wave of five-wave cycle from 118.65, towards its FE100% at 108.23.

Broken 110.00 support zone now acts as initial resistance, ahead of falling daily Tenkan-sen at 110.75.

Res: 109.73, 110.00, 110.75, 110.90
Sup: 109.33, 109.00, 108.50, 108.23

'Melenchon's steady rise has turned France's already topsy-turvy election campaign into one of the most unpredictable contests in recent history.' – Gregory Viscusi, Bloomberg

Pair's Outlook

Due to US Dollar weakness caused by fundamental political events, the EUR/USD currency exchange rate has returned to fluctuate near the 1.06 mark on Wednesday morning. Previously, as the pair was set to decline to the support cluster near the 1.0550 mark, the rate suddenly regained ground and tested the resistance put up by the weekly PP and the 100-day SMA near the 1.0620 level. The pair remained between the mentioned levels of resistance on Wednesday morning, as markets continued to watch fundamental events occurring in the world. Meanwhile, from a technical perspective the decline to the 1.0550 level is still to be expected.

Traders' Sentiment

SWFX market sentiment remains almost neutral, as 51% of open positions are long. Meanwhile, 54% of set up orders are to sell.

'In view rising geopolitical risk and Brexit uncertainties, we expect limited upside potential in GBPUSD this week.' – BMO Capital Markets (based on PoundSterlingLive)

Pair's Outlook

A set of upbeat inflation data on Tuesday provided the Sterling with a sufficient boost to once again stabilise above the cluster of important levels circa 1.2330. However, the rally was not strong enough for the Cable to climb over the 1.25 mark, suggesting that another U-turn today is possible, despite technical indicators giving different signals. A surge of more than 50 pips would cause the six-month down-trend to be breached, with focus then shifting to the second strong resistance, namely the cluster around 1.2630. However, should the GBP/USD pair continue to consolidate, the 1.24 major level would become open for exposure once again.

Traders' Sentiment

There are 55% of traders being long the Pound today (previously 57%), whereas 51% of all pending orders are to acquire the British currency.

'As recent data suggest, the United States is not in bad shape fundamentally and this should be dollar-supportive. But right now the tide favours the yen and participants do not want to miss the next wave of yen buying.' – BBH (based on Reuters)

Pair's Outlook

The US Dollar suffered a great deal on Tuesday, amid rising tensions over both Syria and North Korea. As a result, the Buck lost more than 130 pips against the Japanese Yen, crossing the 110.50 psychological support, now being one step away from retesting the descending channel's lower border at 109.09. The support line is unlikely to be pierced, as it is bolstered by a number of other levels of significance. From a broad technical perspective the USD/JPY pair should post a recovery today, despite technical indicators suggesting otherwise. We, however, still expect the channel's support line to be put to the test before a rebound occurs.

Traders' Sentiment

Once again 70% of all open positions are long (previously 65%). Meanwhile, the share of buy orders inched up from 57 to 61%.

'Recently a degree of uncertainty has found its way into previously seemingly bulletproof financial markets.' – ANZ (based on Reuters)

Pair's Outlook

The US and Russian tensions over Syria and North Korean nuclear threats are the driving force behind the surge in the value of the yellow metal. Due to the combined effect of the global political turmoil a run to safety has caused the bullion's price to jump and touch the 1,280 level on Wednesday morning, which is a two percent increase, if compared to Tuesday's opening price. It is most likely that the fundamentals will continue to dictate the fluctuations in the commodity price, as technical analysis has become impaired on the daily chart.

Traders' Sentiment

SWFX traders are neutral bearish, as 52% of open positions are short. However, 56% of trader set up orders are to buy the yellow metal.

'The recent run of escalating inflation may have paused for now, but that has more to do with the timing of Easter than any change in the strong upward pressure on prices.' - Stephen Clarke, Resolution Foundation

British inflation remained unchanged in March compared to the prior month due to this year's later Easter and a slight fall in oil prices. The Office for National Statistics reported on Tuesday consumer prices rose 2.3% on an annualised basis last month, while market analysts anticipated a 2.2% increase. The sharp fall in the value of the British Pound paired with the recent rebound in oil prices boosted inflation across Britain. Furthermore, a combination of subdued wage growth and surging inflation started putting significant pressure on households' pockets, raising concerns over growth prospects as consumer spending accounts for about 60% of the British economy. Tuesday's data also showed that food prices climbed 1.2% on an annualised basis in March, the largest gain since 2014. However, the Bank of England said at its latest monetary policy meeting that there was no rush to raise interest rates and it was prepared to tolerate inflation above the 2% target. The main driver behind March's unchanged reading was a drop in airfares, which, in turn, was triggered by the later timing of this year's Easter holidays. Analysts suggest that consumer prices will continue surging until inflation hits 3% due to the weak Sterling and higher oil prices.

'The financial market experts expect this positive development to continue.' - Achim Wambach, ZEW

The mood among German investors improved markedly in April amid strong economic growth in the Q1 and easing concerns over the US President Donald Trump's protectionist policies. The Mannheim-based ZEW Institute reported on Tuesday that its Economic Sentiment Index jumped to 19.5, the highest level since August 2015, from 12.8 points seen in March, while analysts anticipated a slight increase to 13.2. Despite Trump's latest border tax threats, the German car industry reported that it started the year with solid growth. Moreover, figures released last week showed that both German industrial production and trade surplus soared in February. The assessment of the current economic situation in Germany climbed to 80.1 points in April, compared to the previous month's 77.3, whereas markets expected a modest increase to 77.7 during the reported period. Many analysts revised up its growth projections for the German economy. Thus, the Euro zone's largest economy is set to expand 1.5% in 2017 and 1.8% in 2018. Tuesday's strong figures provided support to the current German Chancellor Angela Merkel's government ahead of the September parliamentary elections. After the release, the EUR/USD pair rose above 1.0600.

'The fact that we've got a lot of jobs is a good thing - we wanted that. But the fact that you could create that many jobs in the context of growth that is so low points to a significant problem, and the problem is productivity growth is very low.' - Janet Yellen, Federal Reserve

US employers posted more open job positions in the second month of the year, official figures revealed on Tuesday. According to the Job Openings and Labor Turnover survey published by the Labour Department, job openings advanced 2.1% to a seasonally adjusted 5.7M during the reported period, following the preceding month's 5.6M and surpassing market analysts' expectations for a decrease to 5.59M. That marked the highest level since July 2016. February's gain boosted the jobs opening rate to 3.8% after it remained steady at 3.7% for four consecutive months. Nevertheless, hiring fell to 5.3M in February, compared to 5.4M registered in the preceding month. Therefore, the hiring rate dropped to 3.6% from 3.7% in January. Analysts stated that the US labour market is at or close to full employment, with the unemployment rate at a near 10-year low of 4.5%. Monthly job openings are closely followed by the Federal Reserve Chair Janet Yellen, as it is considered as a key barometer of economic conditions and the labour market trends. On Monday, the Fed Chair hinted at two more rate hikes this year, and some analysts suggested that the Fed might want to pull the trigger in June. After the release, the USD/JPY pair dropped to 100.58, its lowest level since November 18.