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GBPUSD is turning lower at the moment after very slow and overlapping recovery up to 78.6% fib. level which is seen as a three wave move; a correction that is pointing back to march 28 low. However, 1.2455 should be broken to confirm the next bearish wave.

GBPUSD, 1H

Bullish sentiment that was regained on Thursday's break and closewell above weekly cloud top at 111.36 was offset by Friday's quick pullback after bulls briefly tested next pivot at 112.15 (Fibo 38.2% of 115.49/110.09 downleg), ending day firmly in red and closing at 111.36 level. The pair stands at the back foot on Monday as fresh near-term bears are probing below 111.36 handle (which also marks Fibo 38.2% of 110.09/112.18 upleg) and close below it would generate fresh bearish signal. Hourly studies in negative setup maintain downside pressure, as thick hourly cloud (111.44/74) so far caps recovery attempts. In addition, 4-hr studies are moving from neutral to bearish mode that also weighs on near-term action, as daily technicals maintain firm bearish mode. Sustained break below 111.36 handle would open next pivot at 110.90 (Fibo 61.8%) loss of which is needed to confirm reversal. Conversely, extended consolidation could be anticipated while the price holding around 111.36.

Res: 111.36; 111.57; 111.75; 112.15
Sup: 111.11; 110.90; 110.59; 110.09

'We saw a sharper-than-expected narrowing in the current account deficit which may have helped to ease the margins for the concerns over the potential downside risks for the pound going forward during the upcoming Brexit negotiations.' - Lee Hardman, MUFG

Data released on Friday showed that the UK's current account deficit hit a five-year record low, which surprised many experts. In the Q4 of 2016, the current account advanced from -25.7 billion pounds to -12.1 billion pounds. The country's trade balance with the rest of the world improved dramatically. Thus, in the Q4 of 2016, total trade deficit fell from 14.8 billion pounds to 4.8 billion pounds, due to the notable increase in goods export. In addition, there was also a less significant narrowing in the deficit on primary and secondary income accounts. According to the data, the deficits on secondary income and primary income fell from 4.3 billion pounds to 1.0 billion pounds amid a surge in direct investment. Overall, the UK's current account amounted for 2.4% of GDP, which by itself grew at the pace of 0.7%. This data marked the 16th consecutive quarterly increase and secured country's steady growth. A GDP rise in the last quarter reflects strong consumer spending and satisfactory results in the consumer-related industries. However, experts also recorded a 0.9% decline in business investment that is associated with the Brexit deal uncertainties. Finally, on a year-to-year basis, the UK's GDP lost 0.4%, which was also attributable to the country's decision to leave the EU.

'This puts GDP tracking for the first quarter firmly above 3 percent. It is still early, but all in all there is a lot to like in this report. It really makes it hard to imagine the Bank of Canada sounding overly dovish in April.' - Andrew Kelvin, TD Securities

The Canadian economy expanded at a stronger than expected pace in January, suggesting that the economy performed well in the Q1 of 2017. Statistics Canada reported that the country's GDP advanced 0.6% in January, following the preceding month's 0.3%. Canada's goods-producing industries expanded for the seventh time in eight months, growing 1.1% in January. Meanwhile, the country's service-producing industries grew 0.4%, the highest since June 2015. The largest contribution to the January increase was made by the manufacturing sector, which posted a 1.9% expansion. Furthermore, mining, quarrying, and oil and gas extraction grew 1.9% in the reported month, following a 0.5% contraction in December. Wholesale trade climbed 2.4%, the biggest monthly gain since July 2013, while retail sales advanced 1.5%, posting the sixth increase in seven months. Transportation and warehousing expanded 0.8%, whereas the construction sector rose 0.4%. The finance and insurance sector remained unchanged in the reported month, as growth in banking and other depository intermediaries was offset by a fall in financial investment services. Analysts suggest that if the economy maintains the same growth pace going further the BoC will likely increase its key interest rates at the beginning of 2018.

'Despite sharply rising ‘wealth', today's data suggests Q4's stronger consumer is flagging, both a risk to the 2017 growth outlook, but also possibly signalling little inflation pressure in the Q1 CPI print due at the end of this month.' - UBS

Australian retail sales dropped unexpectedly in February, generating major concerns about the outlook for the economy. According to the Australian Bureau of Statistics, sales fell 0.1% on a seasonally adjusted basis, following the previous month's gain of 0.4% and falling behind analysts' expectations for a 0.3% increase. February's drop marked the second monthly decline in the last three months. The ABS said sales dropped 2.5% in clothing, footwear and personal accessory retailing and 0.4% in household goods retailing. Meanwhile, food and in department store sales advanced 0.3% and 0.8%, accordingly. The retail sales report measures broad consumer spending patterns, which accounts for more than half of Australia's economy. Despite high construction activity, sales of household goods dropped 0.4%, following a 2.5% fall in the furniture, floor coverings, houseware and textile goods subcategory. In regional terms, sales declined 07% in Western Australia, 0.3% in Victoria, 0.2% in Queensland, 0.5% in Tasmania and 0.5% in the Australian Capital Territory, offsetting gains of 0.4% in in New South Wales and the Northern Territory and a 0.1% rise in South Australia. Growth in national sales over the last year dropped to 2.7%, the lowest in almost four years.

On the updated count of EURUSD we see price trading south following a completed a zig-zag correction, that was in progress since start of the year. Current reversal is strong and clearly impulsive, thus an important sign of a top in place, meaning a minimum three wave reversal to the downside may start to unfold but ideally that's a start of an impulsive drop in wave five of a higher degree. At the moment we see price trading in the first wave 1), probably in late stages, so let's be aware of corrections that may pop up during the process in the next few sessions as wave 2), that may later find resistance around the previous swing low at the 1.0760 level.

EURUSD, 4H

Cable is maintaining positive tone at the beginning of the week and holding firmly above psychological 1.2500 support (also daily Ichimoku cloud top, reinforced by rising Tenkan-sen line).

The pair posted fresh marginally higher recovery high at 1.2553 on Monday, after Friday’s strong rally, with strong bullish sentiment being underpinned by the third consecutive bullish week.

Near-term action is in consolidation mode within 1.2511/53 range and fresh upside attempts could be expected while 1.2500 support is holding.

Daily studies in firm bullish setup support scenario for final push towards key near-term barrier at 1.2613 (27 Mar recovery top).

However, slow stochastic on 4-hr chart is reversing from overbought territory, signaling extended correction.

Next strong support below 1.2500 handle lies at 1.2485 (Fibo 38.2% of 1.2374/1.2613 rally) and potential close below here would soften near-term structure and risk further easing towards next key points at 1.2443 (Fibo 61.8%) and 1.2414 (100SMA).

Res: 1.2557, 1.2568, 1.2613, 1.2671
Sup: 1.2500, 1.2485, 1.2443, 1.2414

The NZD/USD has been trading within the bearish channel, with a very low ATR. Slow zig-zag that has been forming this downtrend points out to new POC zone where price could reject and a breakout/continuation level just below it. The POC (EMA89, D H3, ATR pivot, Upper channel line) 0.7000-7015 could reject the price towards 0.6980. Breakout and 4h close below 0.6980 suggests 0.6960 as the next target. Break of 0.6960 could pull the price lower to 0.6930.

D H3 - Daily Camarilla Pivot (Daily Resistance)

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

W L3 - Weekly L3 Camarilla (Strong Weekly Support)

D L4- Daily L4 Camarilla ( Very Strong Daily Support)

D L5- Daily L4 Camarilla ( Strongest Daily Support)

EUR/USD

The EUR/USD pair maintained the sour tone on Friday, ending the week at 1.0656, its lowest since mid March. The release of worse-than-expected EU preliminary inflation for March weighed on the common currency, further reinforcing early week talks on the ECB being concerned about yields raise and that therefore, was not considering retrieving its massive stimulus program. Dollar's performance was uneven across the board, but ended it generally stronger, except against the Pound that managed to end the week with gains, in spite of softer final growth figures for the last quarter of 2016, as Fed's Dudley stated that the Central Bank could begin shrinking its balance sheet as soon as this year, should the economy perform in line with their expectations.

The week will start with the release if the final Markit manufacturing PMIs for the EU, expected with modest revisions from the flash readings, still showing that the EU's private sector kept growing at its fastest pace in years, and another speech from Fed's Dudley.

From a technical point of view, the EUR/USD pair has turned strongly bearish after toping at 1.0905 at the beginning of last week, given that in the daily chart, the price has faltered around the 200 DMA before turning south, now trading also below the 20 DMA and not far above a horizontal 100 DMA, this last around 1.0620, now the immediate support. Technical indicators in the mentioned time frame head sharply lower within negative territory, indicating strong momentum within sellers. In the shorter term, and according to the 4 hours chart, the RSI indicator turned south after being unable to recover from oversold territory, now around 26, whilst the Momentum indicator turned flat within bearish territory, as the price develops far below its 20 and 100 SMAs, all of which supports additional declines, with the downward momentum expected to accelerate on a break below 1.0590.

Support levels: 1.0620 1.0590 1.0565

Resistance levels: 1.0670 1.0710 1.0745

USD/JPY

The USD/JPY pair advanced up to 112.19 early Friday, its highest for the week, but closed the day in the red around 111.36 as the positive momentum faded on mute yields. The advance, was triggered by better-than-expected Japanese inflation figures that picked up in February, whilst the unemployment rate fell to a two-decade low. Core yearly inflation surged for a second consecutive month up by 0.2% still far away from the BOJ's 2% target, but at least out of negative territory. The poor performance of equities and yields, however, pushed the pair into the red during the last two sessions of the week. The daily chart shows that, despite closing with gains, the pair set a lower low and a lower high, indicating that the bearish dominant trend remains firm in place in the longer run. Daily basis, the pair is trading between the 100 and 200 SMAs, with the shortest capping the upside around 114.40, and the longest providing support at 109.20. Technical indicators in the mentioned chart diverge from each other, with the Momentum recovering and the RSI heading south, both within negative territory. Shorter term, the 4 hours chart shows that the 100 and 200 SMAs keep heading south above the current level, whilst technical indicators have turned flat within neutral territory. Renewed selling pressure below 111.00, will likely favor additional declines towards the 110.10 level, last week low.

Support levels: 110.95 110.50 110.10

Resistance levels: 111.60 112.00 112.50

GBP/USD

The GBP/USD pair closed Friday at 1.2550, marginally higher weekly basis and at its highest settlement since early February. The pair fell to 1.2375 last Wednesday, when the UK formally triggered the Brexit through a letter to the EU, further undermined by news that the Scottish Parliament backed FM minister Sturgeon desire to trigger a second independence referendum. The Pound, however, managed to recover the ground lost, despite UK's final Q4 GDP suffered a modest downward revision, down to 1.9% from previous 2.0%, whilst Total Business investment fell by 0.9% in the last three months of 2016. The current account balance however, improved in the same period, printing a deficit of £12 billion against a previously revised one of £25 billion. Technically, the daily chart for the pair shows that the upside is favored as the price settled above the 23.6% retracement of its January's rally and well above a bullish 20 SMA, whilst the RSI indicator resumed its advance within positive territory, now heading north around 60. In the 4 hours chart, technical indicators maintain upward slopes well into positive territory, whilst the 20 SMA has turned flat well below the current level, in line with the longer term perspective.

Support levels: 1.2520 1.2480 1.2445

Resistance levels: 1.2579 1.2620 1.2660

GOLD

The GBP/USD pair closed Friday at 1.2550, marginally higher weekly basis and at its highest settlement since early February. The pair fell to 1.2375 last Wednesday, when the UK formally triggered the Brexit through a letter to the EU, further undermined by news that the Scottish Parliament backed FM minister Sturgeon desire to trigger a second independence referendum. The Pound, however, managed to recover the ground lost, despite UK's final Q4 GDP suffered a modest downward revision, down to 1.9% from previous 2.0%, whilst Total Business investment fell by 0.9% in the last three months of 2016. The current account balance however, improved in the same period, printing a deficit of £12 billion against a previously revised one of £25 billion. Technically, the daily chart for the pair shows that the upside is favored as the price settled above the 23.6% retracement of its January's rally and well above a bullish 20 SMA, whilst the RSI indicator resumed its advance within positive territory, now heading north around 60. In the 4 hours chart, technical indicators maintain upward slopes well into positive territory, whilst the 20 SMA has turned flat well below the current level, in line with the longer term perspective.

Support levels: 1.2520 1.2480 1.2445

Resistance levels: 1.2579 1.2620 1.2660

WTI CRUDE

Crude oil prices were in steady recovery mode this past week, with West Texas Intermediate crude oil futures settling at $50.80 a barrel. On Friday, the Baker Hughes report showed that the number of active US oil rigs drilling in the US rose by 10 to 662 in the week ending March 31st, but hopes that the OPEC would extend its output cut pass June lifted sentiment. During the weekend, OPEC’s Secretary-General Mohammad Barkindo said that stockpiles are starting to decline  in the region, and bringing the market to balance, with a drag of an estimated of 285 million barrels of oil in storage, and therefore oil prices will likely hold on to gains. In the daily chart,  the price has recovered far above its 20 and 200 DMAs, whilst technical indicators re-entered positive territory, although losing their upward momentum, somehow limiting chances of a steeper advance, but far from suggesting upward exhaustion. Shorter term, the 4 hours chart shows that indicators have settled in overbought territory, lacking directional strength, but also that the 20 SMA heads sharply higher above the 100 SMA and both below the current level, in line with the longer term perspective.

Support levels:  50.45 49.70 49.00

Resistance levels: 51.25 51.90 52.50

DJIA

US equities closed Friday in the red, although with solid gains for the first quarter of this 2017. The Dow Jones Industrial Average ended at 20,663.22, down 65 points on the day, but up 4.6% in the three months. The Nasdaq Composite shed 2 points to 5,911.74, while the S&P lost 0.23%, to 2,362.72 up 10% and 5.5% respectively in the quarter. Within the Dow, Intel was the best performer, adding 0.90%, followed by Wal-Mart that advanced 0.68%. Exxon Mobile was the worst performer, down 2.02%, followed by El du Pont that lost 1.60%. The DJIA daily chart shows that the index consolidated near its weekly high, but also that the risk remains towards the downside, as it was unable to advance beyond its 20 DMA, whilst technical indicators pared gains below their mid-lines, and resumed their slides. In the 4 hours chart, the benchmark presents a neutral-to-bearish stance, developing below its 100 and 200 SMAs and currently struggling with a horizontal 20 SMA, whilst technical indicators are stick around their mid-lines, with modest downward slopes.

Support levels: 20,623 20,562 20,513

Resistance levels: 20,717 20,757 20,806

FTSE 100

The FTSE closed in the red last Friday, down 46 points or 0.63%, to 7,322.92, undermined by news coming from South Africa, as companies with business in the country led the decline following news that Finance Minister Gordhan was dismissed. Mining-related equities also weighed on the benchmark as metals fell on renewed dollar's demand. Old mutual was the worst performer, down 7.51%, followed by Mediclinic International that shed 6.19% and Anglo American that closed 3.41% lower. The best performer was ITV that gained 3.55%. The daily chart for the Footsie shows that the index has settled below its 20 DMA whilst technical indicators turned south within neutral territory, increasing the risk of a bearish extension, although not enough to confirm it, given that the benchmark closed the week well off its low of 7,254. In the 4 hours chart, the index is now below horizontals 20 and 100 SMAs, whilst technical indicators are also easing around their mid-lines, in line with the longer term perspective. Friday's low of 7,319 is the immediate support, the level to break to confirm another leg lower towards the mentioned 7,254.

Support levels: 7,319 7,289 7,254

Resistance levels: 7,349 7,387 7,415

DAX

European equities closed mixed on Friday, but the German DAX managed to extend its advance, adding 56 points to end as 12,312.87, its highest settlement since April 2015. A weaker EUR underpinned the benchmark, while better-than-expected local employment data offsetting softer inflation figures released earlier in the week. RWE AG was the best performer, up 2.68% followed by E.ON that added 1.84%. Only six components closed in the red, with Commerzbank leading the decline, down 0.82%, followed by Daimler that shed 0.72%. The index holds not far from record highs settle two years ago at 12,399, maintaining the bullish reading according to technical readings, given that in the daily chart, it advanced further above a bullish 20 SMA, whilst technical indicators maintain their bullish slopes within positive territory, although with limited upward momentum. In the 4 hours chart, technical indicators consolidate within overbought territory, lacking directional strength, whilst the 20 SMA maintains its strong bullish slope far below the current level, indicating that the risk remains towards the upside.

Support levels: 12,275 12,221 12,180

Resistance levels: 12,341 12,399 12,450

EUR/USD – 1.0677

EUR/USD:   Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.

Although the single currency opened higher last week and rose to as high as 1.0906, the subsequent selloff dampened our previous bullish view and suggest top is formed there, hence consolidation with downside bias is seen for test of 1.0600, break there would add credence to this view and suggest the erratic rise from 1.0340 has ended at 1.0906, hence further fall to 1.0525 would be seen but a daily close below support at 1.0493 is needed to provide confirmation, bring further decline to 1.0450-55 first.

Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.

On the upside, whilst initial recovery to 1.0700 cannot be ruled out, reckon upside would be limited to 1.0740-50 and bring another decline. Above 1.0800 would defer and risk a stronger rebound to 1.0870-75 but price should falter below said resistance at 1.0906, bring further choppy trading. Only above 1.0906 would revive near term bullishness and extend the erratic rise from 1.0340 low for retracement of early downtrend to 1.0930-35 (61.8% Fibonacci retracement of 1.1300-1.0340), then 1.1000. Having said that, reckon upside would be limited to 1.1065-70 and price should falter below 1.1100, bring retreat later.
 
Recommendation: Sell at 1.0750 for 1.0550 with stop above 1.0850. 

Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.