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Daily Pivots: (S1) 110.47; (P) 110.84; (R1) 111.49; More....

Intraday bias in USD/JPY remains neutral as it's bounded in range of 110.10/111.57. With 111.57 minor resistance intact, further fall is still in mildly favor. On the downside, break of 110.10 will extend the current fall from 118.65 to 100% projection of 118.65 to 111.58 from 115.49 at 108.42 and possibly below. Meanwhile, firm break of 111.57 will indicate short term bottoming and bring rebound back to 55 day EMA (now at 112.88).

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. sustained trading below 55 week EMA (now at 111.11) will indicates that such consolidation is not completed. And another fall would be seen back to 98.97 as the third leg. In that case, downside would be contained by 61.8% retracement of 75.56 to 125.95 at 94.77 to complete the correction. On the upside, above 115.49 will extend the rise from 98.97 to retest 125.85 first. Overall, up trend from 75.56 is expected to resume after the consolidation from 125.85 completes.

Daily Pivots: (S1) 0.9924; (P) 0.9950; (R1) 0.9988; More.....

USD/CHF's rebound from 0.9812 is still in progress and intraday bias remains on the upside at this point. The rise from 0.9812 short term bottom should target 55 day EMA (now at 1.0023) next. Sustained trading above there will argue that whole decline from 1.0342 has completed. Further rise should then be seen to 1.0169 resistance for confirmation. On the downside, below 0.9912 minor support will turn bias back to the downside for 0.9812 instead.

In the bigger picture, USD/CHF is staying in medium term sideway pattern between 0.9443/1.0342. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of deeper fall, we'd expect strong support from 0.9443/9548 support zone.

The dollar index has rebounded noticeably from a 4-and-a-half-month low of 98.85, helped by outperforming US consumer confidence for March, and recent Fed comments. This morning, the dollar index rallies and touches a 1-week high of 100.02.

Monday March 27, USD/JPY hit the lowest level of 110.10 since November 18, caused by the slump of USD on Trump's healthcare bill failure.

Since then, the downtrend was held above the significant support line at 110.00, where there is relatively strong support.

On the 4-hourly chart, the 10 SMA has crossed over the 20 SMA from below, indicating the trend has turned bullish.

Today, at 13:30 BST, sees the release of US initial jobless claims (the week ending March 24), Q4 GDP final reading and Q4 PCE inflation figures for March; with better-than-expected readings it is likely to provide further support to USD.

The resistance level is at 111.40, followed by 111.70 and 112.00.
The support line is at 111.00, followed by 110.70 and 110.40.

Daily Pivots: (S1) 1.0727; (P) 1.0777 (R1) 1.0814; More.....

EUR/USD's fall continues today and reaches as low as 1.0721 so far. Current development argues that corrective rise from 1.0339 could be completed at 1.0905. Intraday bias remains on the downside for 55 day EMA (now at 1.0682) first. Sustained break there will affirm this view and target 1.0494 resistance for confirmation. On the upside, above 1.0798 minor resistance will turn bias back to the bias up to the upside for 1.0905 instead.

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.

Dollar trades mixed today in spite of news about US President Donald Trump's infrastructure spending. US Transportation Secretary Elaine Chao said the Trump would unveil a USD 1T infrastructure plan over ten years, later this year. But no detail was provided. Chao said that the plan would cover "more than transportation infrastructure, it will include energy, water and potentially broadband and veterans hospitals as well." However, the news is shrugged off by investors as they remain skeptical on Trump's ability push through his economic policies.

Released from US, initial jobless claims dropped 3k to 258k in the week ended March 25, above expectation of 245k. The four week moving average rose from 246.5k to 254.25k. Continuing claims rose 65k to 2.05m in the week ended March 18. Q4 GDP growth was revised up to 2.1% annualized, above expectation of 2.0%. GDP price index was also revised up to 2.1%. From Canada, IPPI rose 0.1% mom in February, RMPI rose 1.2% mom.

Euro stays soft on weak German CPI

Euro has been under some pressure as markets reassess the possibility of early stimulus exit by the central bank. And the common currency stays soft after mixed data. In particular, German CPI rose 0.2% mom, 1.6% yoy in March, slowed from 0.6% mom and 2.2% in February, and missed expectation of 0.4% mom, 1.8% yoy. Eurozone business climate was unchanged at 0.82 in March versus expectation of 0.87. Economic confidence dropped to 107.9 versus expectation of 108.3. Industrial confidence dropped to 1.2 versus expectation of 1.4. Services confidence dropped to 12.7 versus expectation of 14.0. Consumer confidence was finalized at -5. Also from Europe, Swiss KOF leading indicator rose to 107.6 in March.

ECB Nowotny: strategy for 2017 largely set

A Reuters report quoted unnamed source saying yesterday that the markets have over-interpreted ECB's message in the March meeting. Today, ECB governing council member Ewald Nowotny said together that "the strategy for 2017 has largely been set and from my point of view there is no reason to depart from this." Also, another governing council member Klass Knot said that "only if the economy does even better than we now expect in our estimates could we consider bringing the tapering forward." Regarding ending asset purchase before rate hike, Knot said that "this sequence makes sense, the forward guidance makes sense and I don't see a need to revisit that now."

EC Tusk to UK: We already miss you

European Council President Donald Tusk expressed his emotion on receiving the Brexit trigger letter from UK. Tusk said that there is "no reason to pretend that this is a happy day, neither in Brussels, nor in London." And, "what can I add to this? We already miss you." However, French President Francoise Hollande told May in a phone call that he opposed to negotiating the trade deal together with withdrawal from EU. A statement from Hollande's Élysée office said that "The president indicated that the talks must at first be about the terms of withdrawal, dealing especially with citizens' rights and obligations resulting from the commitments made by the United Kingdom. On the basis of the progress made, we could open discussions on the framework of future relations between the United Kingdom and the European Union." German Chancellor Angela Merkel expressed similar view yesterday.

UK prime minister Theresa May said in the Brexit letter than "we are leaving the European Union, but we are not leaving Europe - and we want to remain committed partners and allies to our friends across the continent."Brexit secretary David Davis said that UK will publish details on converting EU laws into UK laws to pave the way for a smooth transition and avoid any legal black holes. Davis said that "converting EU law into U.K. law, and ending the supremacy of lawmakers in Brussels, is an important step in giving businesses, workers and consumers the certainty they need."

BoJ Iwata: No need to buy US treasuries

In Japan, BoJ Deputy Governor Kikuo Iwata said that there is no need to buy US treasuries as sufficient monetary easing could be done by JGB purchases. He told parliament that "we can achieve our 2 percent inflation target and seek an eventual exit from our quantitative easing program without buying U.S. Treasury debt." And he warned that "buying U.S. Treasury debt unnecessarily would be interpreted as currency intervention."

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0727; (P) 1.0777 (R1) 1.0814; More.....

EUR/USD's fall continues today and reaches as low as 1.0721 so far. Current development argues that corrective rise from 1.0339 could be completed at 1.0905. Intraday bias remains on the downside for 55 day EMA (now at 1.0682) first. Sustained break there will affirm this view and target 1.0494 resistance for confirmation. On the upside, above 1.0798 minor resistance will turn bias back to the bias up to the upside for 1.0905 instead.

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.

Economic Indicators Update

EURUSD: With the pair closing further lower on Wednesday, it now looks to weaken further in the days ahead. This exposes its support located at 1.0700 level. Resistance comes in at 1.0800 level with a cut through here opening the door for more upside towards the 1.0850 level. Further up, resistance lies at the 1.0900 level where a break will expose the 1.0950 level. Conversely, support lies at the 1.0700 level where a violation will aim at the 1.0650 level. A break of here will aim at the 1.0600 level. All in all, EURUSD faces further pullback threats.

Global stock markets were mixed on Thursday with investors losing their appetite for risk after the Brexit reality started to sink in. Asian shares turned lower amid the China liquidity fears and the sense of caution has already limited gains in Europe. With the Brexit developments and fresh liquidity concerns in China possibly denting risk sentiment further, Wall Street may find itself under selling pressure. Although global stocks have handsomely benefited from the Trump effect and unwavering optimism over fiscal stimulus boosting US growth, the downside risks could be extreme if reality fails to match market expectations.

Sterling turns highly sensitive

Sterling could be instore for a very rocky ride moving forward as the Brexit talks officially get under way. With the remaining 27 EU member states meeting at the end of April to agree on the guidelines for the Brexit settlement and formal negations potentially starting as late as June, Sterling sensitivity may intensify as investors become jittery. With the hard Brexit fears lingering in the background and concerns of complications in the early stages of the negations weighing on sentiment, the bearish bias towards Sterling remains intact. While there is a possibility of the GBPUSD experiencing technical bounces as investors reposition, sellers may exploit the opportunities to install fresh rounds of selling. From a technical standpoint, the GBPUSD bears need to conquer 1.2400 to open a path lower towards 1.2300.

Dollar Index breaks above 100.00

The chorus of hawkish speeches from Fed officials during Wednesday's trading session has encouraged Dollar bullish investors to elevate the Dollar Index back above the psychological 100.00 level. It seems like markets may be looking beyond last week's failure of Trump's healthcare reform with investors maintaining some optimism over the pending fiscal stimulus. While a layer of uncertainty over Trump has created some headwinds for the bulls, the improving sentiment towards the US economy as a whole could play a part in ensuring the currency remains buoyed. Investors may direct their attention towards the pending US GDP report for four quarter of 2016 which could boost the Dollar further if the figure exceeds expectations. Technical traders may observe if the Dollar Index is able to attain a daily close above 100.00 which could encourage further upside.

Commodity spotlight - WTI

WTI Crude charged into gains on Wednesday with prices clipping above $49.60 after U.S Crude inventories grew less than expected which eased some oversupply concerns. Although the relatively bullish US crude inventories data and supply disruptions in Libya have provided oil markets a welcome boost, the gains may be limited as investors mull over the effectiveness of OPEC's supply cuts. As long as optimism continues to fade over OPEC stabilizing the saturated oil markets, bears will have many opportunities to attack prices lower. From a technical standpoint, oil bears may exploit the technical bounce to send oil prices back below $49.

The Aussie is holding above thick daily cloud on Thursday after previous day's strong rally, but so far unable to clearly next picot at 0.7666 (daily Tenkan-sen).

Consolidation below the latter is under way, with near-term action being biased higher on bullish near-term studies, with daily cloud top (currently at 0.7641) expected to hold and keep scope for further recovery in play.

However, bullish scenario requires sustained break above Tenkan-sen line for fresh extension higher and attack at next pivot at 0.7685 (Fibo 61.8% of 0.7747/0.7585 pullback).

Conversely, failure to hold above daily cloud would be negative signal, with extension below daily Kijun-sen at 0.7618, to revive near-term bears.

Res: 0.7666; 0.7685; 0.7709; 0.7739
Sup: 0.7641; 0.7618; 0.7588; 0.7550

Thursday March 30: Five things the markets are talking about

U.K's divorce proceeding with the E.U have officially begun, and like most separations, expect the "children," in this case the electorate, who will be the most affected when things get emotional and messy.

In this circumstance, a two-year timeline to complete and signoff on the exit seems very tight, and the cost will be like building a house, more than the initial proposed budget.

Over the coming months, and years, it's not going to be an easy ride for either sterling, Governor Carney or PM Theresa May, let alone the U.K electorate or mainland Europe. It will however keep capital markets very busy.

This divorce will redefine the country's relationship with its largest trading partner and end decades of deepening political integration on the continent.

Elsewhere, the U.S dollar has got a lift from 'hawkish' Fed officials, while crude gains on lower inventory numbers. The U.S reports its third estimate for Q4 GDP this morning, while tomorrow's data include data on personal spending and incomes.

1. Stock slip on Q1 close

Global equities are under pressure as investors approach the end of the best quarter for stocks in four years.

Japan's Topix fell -0.9%. The index is up +0.6% for the quarter, despite the yen's (¥111.23) strengthening this year. Down-under, the Aussie's S&P/ASX 200 index climbed +0.4%, gaining for a third day to the highest since April 2015 as energy shares jumped.

In Hong Kong, the Hang Seng fell -0.3% while the Hang Seng China Enterprises Index lost -0.7%.

In China, the Shanghai Composite (-1%) was one of the worst performers, as investors ponder the People's Bank of China's (PBoC) support after the central bank skipped its reverse repo operation injection for the fifth consecutive day.

In Europe, equity indices are trading mixed, but generally higher as market participants digest the formal start of Brexit. Banking stocks are generally lower in the Eurostoxx, while commodity and energy trade notably higher in the FTSE 100.

U.S stocks are set to open in the red (-0.1%).

Indices: Stoxx50 -0.1% at 3,470, FTSE +0.1% at 7,378, DAX +0.1% at 12,215, CAC-40 flat at 5,070, IBEX-35 flat at 10,370, FTSE MIB +0.1% at 20,289, SMI +0.1% at 8,666, S&P 500 Futures -0.1%

2. Oil prices steady after two days of gains, gold slips

Crude oil prices are little changed ahead of the U.S open after two-days of increases as bloated U.S. inventories limited the impact of supply disruptions in Libya and lower supply from other OPEC exporters.

Brent crude oil is unchanged at +$52.42 a barrel, while U.S light crude oil (WTI) is down -5c at +$49.56. Both benchmarks rose more than +$1 a barrel yesterday to their highest levels for two-weeks, rallying back from a four-month low.

Note: Oil production in Libya has fallen more than -250k bpd this week as armed protesters have blocked oilfields of Sharara and Wafa.

A Reuters survey released yesterday showed that OPEC members have complied with +95% of their commitments under last Nov.'s deal cut. Nevertheless, members are still finding it difficult to tighten the oil market because inventories in many parts of the world are at, or near, record highs.

Note: This week's U.S EIA report showed that U.S. crude stocks rose +867k barrels to a record of nearly +534m barrels last week.

Investors are waiting to see if OPEC and non-OPEC members decide to extend its production curbs into H2.

Gold prices have dipped overnight (down -0.1% at +$1,250.66 an ounce) as the dollar strengthened, but economic uncertainty around the U.K's departure from the E.U and the approaching French elections has capped those losses.

3. Rate divergence the "name of the game"

In Europe, yields on 10-year German Bunds (-2 bps to +0.29%) are under pressure in the secondary market after a series of inflation releases on a state level show consumer prices are rising at a slower pace. The reports appear to fall in line with the recent ECB view that the pick up in inflation was "temporary." This reinforces the view that the ECB is not anywhere near the exit of its QE.

Elsewhere, ten-year Italian BTP's have rallied more than +10 bps against Bunds this month, and with the ECB trying to eliminate the hike/tapering discussion; investors should be expecting more spread tightening in the short-term.

Ahead of the U.S open, yields on U.S 10's are little changed at +2.38%. The yield fell -4 bps yesterday after backing up the same amount on Tuesday. Aussie 10-year yields fell -3 bps to +2.69%.

4. Dollar finds much needed Fed support

The 'mighty' dollar is better bid overnight after Fed officials yesterday suggested that some policymaker's (Rosengren) favor raising interest rates more than twice this year.

Note: Fed fund futures show a +20% chance that rates will end the year above +1.5%. Bank of Cleveland President Loretta Mester, Bank of Dallas President Robert Kaplan and New York Fed President William Dudley are all due to speak later today.

The EUR/USD (-0.3% to a new week low at €1.0731) has come under selling pressure since a report Wednesday said that the ECB thought the March meeting was "over interpreted" as too hawkish. Expect speeches by ECB policymakers to be closely watched today.

Sterling (-0.25% at £1.2406) is withstanding the formal start to Brexit. Investors now have to gauge how much of a "hard" divorce is already priced in?

5. March inflation data eases for both Germany and Spain

This morning's Euro inflation data releases for March appear to fall in line with recent ECB view that the pick up in inflation was "transitory."

Consumer-price growth in Spain (+2.1%) weakened for the first time in almost a year, while Germany's Saxony date also shows a drop (+1.8% vs. +2.4%).

Note: German regional inflation numbers are being released throughout the morning.

The market expects the euro-zone flash inflation number due Friday to show a drop to +1.8%.

These weaker headline prints should reinforces view that the ECB is not anywhere near the exit of its expansionary monetary strategy and would maintain its forward guidance that rates to stay low or lower in the forecast horizon.

USD/CAD is unchanged in the Thursday session. Currently, the pair is trading at 1.3340. On the release front, the US releases Final GDP, with an estimate of 2.0%, compared to Preliminary GDP which came in at 1.9%. We’ll also get a look at unemployment claims. There are no Canadian events on the schedule. On Friday, Canada releases GDP, with the estimate standing at 0.3%. The US releases UoM Consumer Sentiment, which is expected to improve to 97.8 points.

What’s next for the Bank of Canada? On Tuesday, BoC Governor Stephen Poloz hinted that the BoC would not be raising interest rates in the near future, saying that the Canadian economy had not yet recovered from the huge drop in oil prices. He added that raising interests rates back to “normal” would have a negative effect on the economy and would likely trigger a recession. The last time the BoE raised rates was in 2010, and analysts don’t forecast another hike before 2018. President Trump’s “America first” stance is a serious concern for Canada, which is heavily reliant on open trade. Poloz criticized Trump’s protectionist agenda, saying that “protectionism does not promote growth and its costs are steep”.

It’s been a rough start for the Trump administration, which has been beset by controversy and crises. Trump, who has been in office for more than two months, has yet to provide any details of an economic policy, to the consternation of the markets. Last week, Trump’s proposed bill was dead on arrival before even being voted on, a humiliating defeat for the president. This setback has made the markets even more jittery about Trump, and the inquiry into the Trump administration’s links with Russia is gathering steam, which is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but the White House will need to improve coordination with Republican lawmakers to ensure that his next attempt to pass legislation is not a repeat of the healthcare debacle.