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• USD weaker as Federal Reserve (Fed) moots bond sales
• German factory orders bounce back
• Draghi says European Central Bank (ECB) stance is appropriate

The US Federal Reserve released the minutes from its last meeting yesterday and the news was much as expected other than the tone seemed to suggest the Fed would start unwinding its massive $4.5 trillion bond stockpile later in the year. That, plus fear over what might happen when the US and Chinese Presidents meet. Trump's campaign trail comments about China stealing US jobs but the Chinese press is turning the tables on the US president and complaining that low taxes, cheap land and cheaper transport in America are factors leading to Chinese manufacturers moving production to the US. It'll be an interesting meeting.

Today's news is heavily slanted towards the EU. It started with German factory orders which bounced back from a dire 6.8% drop in January to 3.5% growth in February. This is further evidence of recovery in Europe overall and specifically in Germany. We will also get minutes from the last European Central Bank (ECB) meeting this morning. That has been pre-empted by ECB president Mario Draghi suggesting the current stance by the ECB is appropriate and that has weakened the Euro in early trade. I suspect that has nothing to do with Greece's unemployment rate, which we expect to remain gruesomely high at 23.1% or thereabouts.

Meanwhile, Sterling retains most of the gains it made last week, hovering as it is around €1.17 and $1.25. We are devoid of meaningful UK data today, so Sterling will be shifted by external factors. Tomorrow is a very different story and the Gross Domestic Product (GDP) data, manufacturing and industrial output numbers and the trade balance will move Sterling. The direction of travel is the only question mark.

And Donald Trump has removed hard-liner Steve Bannon from his National Security Council post. Whether it was for the controversy that seems to hang over Bannon wherever he goes or because he has a peculiar penchant for wearing two button down shirts at the same time is unknown.

Dead Donkey

A young lad buys a donkey for £100, but when the farmer delivers it, the donkey is stone dead and the farmer has already spent the money. "I'll take it anyway and raffle it off," says the boy. "You can't raffle a dead donkey," says the farmer. "Yes I can, I just won't tell them it's dead," says the boy.

A month later the boy meets the farmer at a market and he asked what happened with the raffle. "I sold 500 tickets at £2 a ticket and made £900 profit!" "Didn't anyone complain?" says the farmer. "Yes", the kid replies "Just the guy who won... so I gave him his £2 back".

[A career in investment banking beckons.]

EUR/GBP         –  0.8561

EUR/GBP – The major (A)(B)(C)-(X)-(A)(B)(C) correction from 0.9805 is unfolding and 2nd (A) has possibly ended at 0.6936.

Although the single currency dropped quite sharply last week, as long as support at 0.8485 (last week’s low) holds, consolidation with mild upside bias is seen for another rebound, above 0.8600 would bring test of 0.8660-65, however, break of resistance at 0.8735 is needed to retain bullishness and signal the fall from 0.8788 has ended, bring further gain to 0.8760 first. Looking ahead, only above said resistance at 0.8788 would extend the rebound from 0.8403 towards indicated resistance at 0.8857 which is likely to hold from here.

Our latest preferred count is that the wave V of a 5-wave series from 0.5682 ended at 0.9805 earlier and major from there has possibly ended at 0.8067 as A-B-C-X-A-B-C. We are keeping our view that the entire correction from 0.9805 has possibly ended at 0.7756 and as labeled as the attached daily chart and impulsive move from 0.9084 has ended at 0.7756 as a 5-waver which marked either the (C) wave or the A leg of (C), a daily close above resistance at 0.8831 would suggest (C) leg has ended and headway towards 0.9084.

On the downside, expect said support at 0.8485 to contain downside and bring another rise later. Below 0.8485 would defer and suggest top is formed instead, risk weakness to 0.8460-65 but break there is needed to provide confirmation and suggest the rebound from 0.8403 has ended, then retest of this support would follow.
 
Recommendation: Buy at 0.8510 for 0.8710 with stop below 0.8450.

Euro's long term uptrend started in Feb 1981 at 0.5039 and is unfolding as a (A)-(B)-(C) move with (A): 0.8433 (Feb 1993), (B): 0.5682 (May 2000) and impulsive wave (C) should have ended at 0.9805 with wave III ended at 0.7254 (May 2003), triangle wave IV at 0.6536 (23 Jan 2007) and wave V as well as wave (C) has ended at 0.9805.

We are keeping an alternate count that only wave III ended at 0.9805 and the correction from there is the wave IV and may extend weakness to 0.7700, however, it is necessary to see a daily close above resistance at 0.9143 would change this to be the preferred count.

USD/CAD – 1.3427

USD/CAD – Wave v ended at 0.9407 and a-b-c correction may extend gain to 1.4700

Although the greenback has rebounded again after holding above support at 1.3264 and further consolidation would be seen, as long as resistance at 1.3456-60 holds, prospect of another retreat remains, below 1.3375 would bring weakness to 1.3300 but break of said support at 1.3264 is needed to retain bearishness and add credence to our view that a temporary top has been formed at 1.3535 last month, bring correction of recent upmove to previous resistance at 1.3210-12 (now support). Only below this level would suggest the rebound from 1.2969 has ended and prolong choppy trading, bring weakness to 1.3100 but downside should be limited to 1.3056 support, bring rebound later.

We are keeping our view that the wave b from 1.0657 (a leg top) has possibly ended at 0.9633 with (a): 0.9800, wave (b): 1.0447 and wave c at 0.9633, the subsequent rise from there is now treated as wave c exceeded indicated upside target at 1.3770-80 and 1.4000 and wave (3) has possibly ended at 1.4690 and wave (4) correction has commenced for retracement back to 1.2832 support, then 1.2410-20.

On the daily chart, our latest preferred count remains that the A of (B) rally from 0.9059 low (7 Nov 2007) unfolded into an impulsive wave with i: 0.9059-1.0380, ii ended at 0.9819, iii at 1.3019 followed by triangle wave iv at 1.2026 , then wave v formed a top at 1.3066 and also ended the wave A. The wave B is unfolding as an double three a-b-c-x-a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c at 1.0784, followed by wave x at 1.1725, another set of a-b-c unfolded with 2nd a at 0.9931, 2nd b at 1.0674. the 2nd c has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3900 had been met and gain to 1.4700 would follow.

On the upside, expect recovery to be limited and bring another decline. Above 1.3455-60 would suggest the retreat from 1.3535 has possibly ended, bring a stronger rebound to 1.3500, then retest of 1.3535. A break of this resistance would revive bullishness and signal the rise from 1.2969 is still in progress for retest of 1.3599 top, once this level is penetrated, this would confirm the erratic rise from 1.2461 low has resumed for a stronger correction of early decline from 1.4690 (2016 high) to 1.3700 and later towards 1.3790-00, however, reckon upside would be limited to 1.3835-40 (61.8% Fibonacci retracement of 1.4690-1.2461) and bring retreat later.

Recommendation: Hold short entered at 1.3390 for 1.3190 with stop above 1.3460.

Longer term - The selloff from 1.6194 (21 Jan 2002) to 0.9059 (07 Nov 2007) is viewed as (A) wave which is a 5-waver as labeled on the monthly chart as below, the subsequently rally is labeled as (B) with impulsive A leg of (B) ended at 1.3066, wave B of (B) is unfolding which has either ended at 0.9407 or would extend one more fall but downside should be limited to 0.9200 and 0.9000 should hold.

EUR/USD continues to show little movement this week and this pattern has continued in the Thursday session. Currently, the pair is trading at 1.0660. On the release front, German Factory Orders rebounded in February with a gain of 3.5%, close to the forecast of 3.4%. The ECB will release the minutes from its March policy meeting and ECB President Mario Draghi will speak at a conference in Frankfurt. In the US, today's highlight is unemployment claims, which is expected to drop to 251 thousand. On Friday, the US releases Nonfarm Employment Change, which is expected to drop sharply to 174 thousand. We'll also get a look at wage growth and the unemployment rate.

German and Eurozone PMI reports, which are important gauges of the economy, looked solid in March. Manufacturing PMIs posted to expansion, and Services PMIs followed suit. German Services PMI climbed to a 15-month high, while Eurozone Services PMI jumped to a 71-month high, although it missed expectations. The euro shrugged off these strong numbers, as it continues to have an uneventful week. EUR/USD dropped 1.9 percent last week, marking its worst weekly decline since November 2016. The ECB will release the minutes of its March meeting, at which the central bank made no changes to interest rates or its asset purchase program. Although inflation levels have improved to their highest levels in years, they remain below the ECB target of 2.0%, so the central bank still has some breathing room and isn't under immediate pressure to tighten monetary policy. The ECB's asset purchase program of EUR 60 billion/mth is scheduled to expire in December. Any surprises from the minutes could have a strong impact on the movement of the euro.

The Federal Reserve released the minutes of its March policy meeting on Wednesday. At the meeting, the Fed raised rates a quarter-point to 0.75%, but the dovish rate statement disappointed the markets, triggering broad losses for the US dollar. In the minutes, policymakers noted upside risk to the US economy, but remained divided on whether inflation will rise to the Fed target of 2.0%. Most policymakers were in favor of taking steps to trim the $4.5 trillion balance, which has ballooned since the Fed implemented its aggressive quantitative easing program back in 2008. So what's next for the Fed? According to the CME's Fed Watch, the odds of a rate hike at the May meeting are just 5 percent, while the likelihood of a rate hike in June stand at 63 percent.

The DAX Index has edged higher on Thursday. Currently, the DAX is trading at 12,186.75. In economic news, German Factory Orders rebounded in February with a gain of 3.5%, close to the forecast of 3.4%. The ECB will release the minutes from its March policy meeting and ECB President Mario Draghi will speak at a conference in Frankfurt. On Friday, Germany publishes Industrial Production and Trade Balance.

The eurozone has enjoyed a solid first quarter in 2017, and March PMI reports were positive. Manufacturing PMIs posted to expansion, and Services PMIs followed suit. German Services PMI climbed to a 15-month high, while Eurozone Services PMI jumped to a 71-month high, although it missed expectations. The euro shrugged off these strong numbers, as it continues to have an uneventful week. EUR/USD dropped 1.9 percent last week, marking its worst weekly decline since November 2016. The ECB will release the minutes of its March meeting, at which the central bank made no changes to interest rates or its asset purchase program. Although inflation levels have improved to their highest levels in years, they remain below the ECB target of 2.0%, so the central bank still has some breathing room and isn’t under immediate pressure to tighten monetary policy. The ECB’s asset purchase program of EUR 60 billion/mth is scheduled to expire in December. Any surprises from the minutes could have a strong impact on the movement of the euro.

There were no dramatic surprises from the Federal Reserve minutes for March, which were released on Wednesday. At that meeting, the Fed raised rates a quarter-point to 0.75%, but the dovish rate statement disappointed the markets, triggering broad losses for the US dollar. In the minutes, policymakers noted upside risk to the US economy, but remained divided on whether inflation will rise to the Fed target of 2.0%. Most policymakers were in favor of taking steps to trim the $4.5 trillion balance, which has ballooned since the Fed implemented its aggressive quantitative easing program back in 2008. So what’s next for the Fed? According to the CME’s Fed Watch, the odds of a rate hike at the May meeting are just 5 percent, while the likelihood of a rate hike in June stand at 63 percent.

Gold Monitoring resistance at $1263.

Gold is getting stronger. The momentum seems back to bullish despite some consolidation. Resistance is located at 1263 (27/02/2017 high). Hourly support can be found at 1224.10 (16/03/2017 low).

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

Silver Increasing again.

Silver has increased above 18.00 which is now a support. Strong resistance is given at a distance at 18.49 (27/02/2017 high). Key support is given at 16.82 (15/03/2017 low).

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Crude oil Short-term bullish.

Crude oil keeps on increasing. The commodity had been located in a bearish trend since the commodity had been unable to mount a serious challenge to resistance at 55.24 (03/01/2017 high) but now the pair is heading higher. Resistance is given at 51.88 (05/041/2017 high). Hourly support is given at 47.09 (22/03/2017 low).

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 24.82 (13/11/2002) while resistance can now be found at 55.24 (03/01/2017 high).

EUR/CHF Short-term bearish.

EUR/CHF's is trading around 1.0700. The medium-term pattern suggests us to see continued bearish pressures towards key support that can be found at 1.0623 (24/06/2016 low). Expected to see further decline.

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

EUR/JPY Continued decline.

EUR/JPY rejection at 122.88 has triggered a correction. The pair is also very volatile. Hourly support at 119.33 (23/03/2017 low) has been broken. Resistance stands at 122.88 (13/03/0217 high). The road is wide-open for further weakness towards strong support given at 113.73 (09/11/2016 low).

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Collapsing.

EUR/GBP is getting lower. Hourly resistance is given at 0.8591 (05/04/2017 high). Strong resistance is given at 0.8787 (13/03/2017 high). Hourly support can be found at 0.8484 (31/03/2017 low). Expected to show continued weakness.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

USD/CHF Pushing higher.

USD/CHF is strengthening. Hourly support is given at 0.9814 (27/03/2017 low). Key resistance can be found at a distance at 1.0344 (15/12/2016 high). Expected to show another leg higher.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/CAD Pushing higher.

USD/CAD has broken resistance area around 1.3400 which invalidates the short term bearish technical structure. Hourly support is given at 1.3265 (21/03/2016 low) is at stake. Key support is given at 1.2969 (31/01/2017 low).

In the longer term, there is a golden cross with the 50 dma crossing the 200 dma indicating further upside pressures. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low).

AUD/USD Edging lower.

AUD/USD is getting lower. The pair has failed to test the key resistance at 0.7778 (08/11/2016 high). Expected to see some short-term weakness towards support area around 0.7500.

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

EUR/USD Consolidating below 1.0700.

EUR/USD is now consolidating. The pair is heading lower since the pair failed to hold above former resistance given at 1.0874 (08/12/2017 high). Hourly support can be found at 1.0630 (intraday low). Stronger support can be found at 1.0494 (22/02/2017 low). Expected to see further short-term weakness.

In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD Fading momentum.

GBP/USD's bullish pressures have faded abruptly. Hourly resistance is located at 1.2615 (27/03/2017 high) while hourly support can be found at 1.2324 (03/17/2017 low). Expected to show continued strengthening towards stronger resistance at 1.2775 (06/12/2016 high) if support area around 1.24 stands.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Monitoring support at 110.

USD/JPY's momentum is slowing down. Hourly resistance is given at 112.20 (31/03/2017 high). Stronger resistance can be located at 113.57 (16/03/2017 high) while support is given at 110.11 (27/03/2017 low).

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

DAX remains at the back foot and opened lower on Thursday after previous day's strong fall.

Extension of pullback from fresh record high at 12410 (posted on 03 Apr) hit the mid-point of 11878/12410 upleg and sees risk of deeper pullback on cracking converged daily Tenkan-sen/ Kijun-sen lines (12176/12144) respectively.

Daily RSI that reversed from overbought territory is heading south and showing a plenty of space at the downside.

Close below daily Kijun-sen is seen as initial bearish signal to open a cluster of supports below that starts with 20SMA (12123) then Fibo 61.8% (12081) and 30 SMA (12065).

The move is seen as correction of broader uptrend since Feb 2016 low at 8695 and should be ideally contained between 12081/12036 zone (Fibo 61.8% / bull-trendline connecting 11459 and

11878 trough) to avoid deeper pullback that may extend below psychological 12000 support on violation of the latter points.

Another bearish signal is forming on reversal of RSI / slow stochastic from oversold territory on weekly chart that may signal stronger correction on break below 12000/11878 supports.

Resistance points lay at 12201 (session high), 12243 (Fibo 38.2% of current 1241/12141 downleg) that marks the upper pivot.

Res: 12201, 12243, 12275, 12307
Sup: 12144, 12123, 12081, 12036