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• Indices turn red as blind faith in Trump growth policies fades;
• Gold and yen the winners as traders seek out safe havens;
• EIA inventory data could add to oil woes.

Financial markets have moved into risk averse mode as traders appear to lose faith in Donald Trump's ability to deliver on his ambitious election pledges.

The Trump trade has seen equity markets soar to record highs since November, with investors willing to look beyond some of the more unsavoury aspects of his mandate and instead focus on his growth agenda. However it's now coming to the end of the first quarter and people are starting to question just how long these measures are going to take and whether they'll get through Congress without compromises having to be made along the way.

The difficulties facing Trump over the healthcare bill, something that should have been relatively straightforward for him to get support on given the Republicans staunch opposition to Obamacare, is casting serious doubt over his other policies. A failure to get this through could jeopardise his plans for tax cuts and large infrastructure projects, the very things that investors have strongly bought into since the election.

It seems that the blind faith that investors had in Trump to deliver is starting to fade and the positions are being unwound and if yesterday is anything to go by, we could be in for a sharp correction. None of this is to say that Trump wont eventually follow through on his pledges and if he does, markets will likely reverse course once again. But indices could only go so high before serious questions were going to be asked and if would appear we've now hit that point and the answers simply aren't good enough.

The moves of the last 24 hours are some of the largest we've seen since the election and aside from going in the wrong direction, they've also taken out some technical supports which could further exacerbate the move. The safe havens are currently benefiting from this sudden risk aversion in the markets with Gold making small gains, having already rebounded strongly over the last week on the back of profit taking in the dollar, while the yen is also performing well, taking out technical support against the dollar and strongly testing it against the pound.

With not much to come on the economic data side today, apart from existing home sales, and Fed officials taking a day off from public appearances, the unwinding of the Trump trade may remain the key theme today. We will also get some oil inventory data from EIA, which could add to the woes in Brent and WTI crude, with the former looking to test the psychologically significant $50 mark and trade at levels last seen at the end of November.

The Trump jitters have returned with a vengeance this week with global stocks coming under renewed selling pressure as uncertainty mounts over Donald Trump's proposed economic growth agenda. Asian shares were vulnerable to steep losses during early trading on Wednesday posting their largest drop in two weeks amid the risk-off trading mood. In Europe, no prisoners were taken as the bearish contagion from Asian markets contaminated European equities. With recent reports of the Trump administration facing legislative obstacles to a health care bill sparking concerns over the future of the promised corporate tax cuts, Wall Street may be instore for further punishment this evening.

The growing threat of Donald Trump's proposed pro-growth policies falling short of market expectations may expose stock markets to further downside losses as investors scatter away from riskier assets to safe haven investments.

Dollar Index breaks below 100.00

The terrible mixture of protectionism fears and renewed Trump jitters have exposed the Greenback to steep losses this week with the Dollar Index breaking below 100.00. Bears have effectively exploited the “dovish hike” to attack the Dollar repeatedly with the uncertainty over Trump's economic growth agenda providing a foundation for sellers to install renewed rounds of selling. Although the technical break below 100.00 marks a major turning point in the trend, the downside may be limited in the longer term as sentiment remains bullish towards the US economy.

Dollar bullish investors are in desperate need of inspiration to elevate the Greenback and such may be provided by Yellen this week if she provides a hawkish surprise. From a technical standpoint, the Dollar Index is under intense pressure on the daily charts. Persistent weakness below the 100.00 resistance could encourage bears to send the Index towards 99.50.

Commodity spotlight – WTI

Oil prices were vulnerable to downside shocks on Tuesday with WTI Crude descending towards $48 as the growing concerns over the excessive oversupply in the global markets weighed heavily on sentiment. The bias towards oil is turning increasingly bearish and the fading optimism over the effectiveness of OPEC's supply cut deal has enticed bears to install repeated rounds of selling.

WTI crude may be instore for further punishment moving forward with production in the United States rising consistently and the inflated inventories simply counteracting the efforts of OPEC to stabilize the oil markets. Although most remain somewhat optimistic over OPEC extending its six-month contract, the resurgence of U.S shale coupled with concerns of some members not fully respecting the compliance in cutting production could obstruct the deal.

Much attention may be directed towards the pending EIA data this evening which could expose oil prices to further losses if crude stocks build. From a technical standpoint, the fact that oil markets remain subdued despite the Dollar's vulnerability continues to highlight how bone-deep the oversupply concerns have become. A breakdown below $48 on WTI Crude could encourage sellers to send prices lower towards $47.00.

Currency spotlight – USDJPY

The growing appetite for safe-haven assets amid the Trump jitters has boosted the Yen's allure on Wednesday with the USDJPY sinking below 111.60. The currency pair is coming under noticeably pressure on the daily charts with the break below 111.60 potentially providing permission for bears to drag prices lower towards 111.00. If the Dollar continues to depreciate and risk aversion intensifies, then the bearish combination could provide enough inspiration for sellers to look beyond 111.00. From a technical standpoint, weakness below 111.60 could act as encouragement for bears to eye 111.00 and potentially lower.

The DAX Index is steady in the Wednesday session, after considerable losses on Tuesday. Currently, the DAX is at 11,896.50. On the release front, there are no major economic indicators out of Europe. On Thursday, Germany publishes GfK Consumer Climate and the Eurozone releases Consumer Confidence.

European and US stock markets headed south on Tuesday, as investors have given a thumb-downs to the Federal Reserve, which has indicated that it plans to raise rates just two more times in 2017. This was apparent in the Fed's dot point plot as well as last week's rate statement. On Monday, FOMC member Charles Evans reiterated this stance, saying that he expected another two more rate hikes this year. Although three rate hikes in 2017 would be no mean feat, the markets would prefer four hikes, given the strong performance of the US economy. The Fed's cautious approach sent the DAX lower on Tuesday, but the euro took the opposite direction, punching above the 1.08 line and hitting 7-week highs against the dollar. With a lack of key fundamentals this week, the markets are focusing on comments from FOMC members who will be speaking this week, including Fed Chair Janet Yellen on Thursday.

In the Netherlands, Prime Minister Mark Rutte comfortably won last week's election, defeating far-right candidate Geert Wilders, a euro-sceptic. Next stop on the election train is France, which holds presidential elections next month. Polls have far rightist Marine Le Pen and centrist Emmanuel Macron running neck-and-neck in the first round of the presidential election on April 23. Still, Macron is expected to win in the second-round vote in May. In a highly-anticipated television debate on Monday, Macron and Le Pen had a chance to hawk their wares, and a survey found that Macron won the debate. Le Pen, leader of the far-right, has pledged to take France out of the eurozone and hold a referendum on EU membership. Macron's strong showing in the debate has improved market sentiment and helped boost the euro on Tuesday. France boasts the number two economy in the eurozone, so we can expect more volatility from the euro as we get closer to Election Day.

CRUDE OIL - The commodity extend its Tuesday losses on Wednesday opening the door for more declines. On the downside, support resides at the 47.00 level where a break will expose the 46.00 level. A cut through here will set the stage for a run at the 45.00 level. Further down, support resides at the 44.00 level. Its daily RSI is bearish and pointing lower supporting this view. On the upside, resistance resides at the 48.00 level. Further out, resistance comes in at the 49.00 level. A break above here will aim at the 50.00 level and then the 51.00 level followed by the 52.00 level. All in all, CRUDE OIL remains biased to the downside short term.

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EUR/USD has lost ground on Wednesday, paring the strong gains which marked the Tuesday session. Currently, the pair is trading at the 1.0760. On the release front, there are no major economic indicators out of Europe or the US. In the eurozone, January’s current account surplus slipped to EUR 24.1 billion, well off the forecast of EUR 29.3 billion. This marked the lowest surplus since July 2016. In the US, today’ highlight is Existing Home Sales, which is forecast to drop to 5.59 million. On Thursday, the US releases Unemployment Claims, and Fed Chair Janet Yellen will speak at an event in Washington, D.C.

With a lack of key fundamentals this week, the markets are focusing on comments from FOMC members who will be speaking this week, including Fed Chair Janet Yellen on Thursday. On Monday, Chicago Fed President Charles Evans said he expects the Fed to raise rates two more times this year. This echoes the Fed’s dot point plot as well as last week’s rate statement. Although three rate hikes in 2017 would be no mean feat, the markets would like four hikes, given the strong performance of the US economy. The Fed’s cautious approach disappointed the markets, as the US dollar has posted broad losses since last week. The euro has taken full advantage, as EUR/USD punched above the 1.08 line on Tuesday and hit 7-week highs.

In the Netherlands, Prime Minister Mark Rutte comfortably won last week’s election, defeating far-right candidate Geert Wilders, a euro-sceptic. Next stop on the election train is France, which holds presidential elections next month. Polls have far rightist Marine Le Pen and centrist Emmanuel Macron running neck-and-neck in the first round of the presidential election on April 23. Still, Macron is expected to win in the second-round vote in May. In a highly-anticipated television debate on Monday, Macron and Le Pen had a chance to hawk their wares, and a survey found that Macron won the debate. Le Pen, leader of the far-right, has pledged to take France out of the eurozone and hold a referendum on EU membership. Macron’s strong showing in the debate has improved market sentiment and helped boost the euro on Tuesday. France boasts the number two economy in the eurozone, so we can expect more volatility from the euro as we get closer to Election Day.

Gold Continued increase.

Gold has risen sharply, nearly invalidating the bearish short-term outlook. The momentum seems back to bullish. Key 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 Consolidating after Friday gains..

Silver rose sharply Friday, invalidating the bearish outlook linked to the previous bearish pause. Correct pullback has failed to find seller indicating test of 17.56 resistance (16/03/2017 high). Strong support is given at 16.84 (27/01/2016 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 Bearish momentum.

Crude oil's bearish pressures continues despite correct bounce due to a short-squeeze. The commodity had been unable to mount a serious challenge to resistance at 49.61 (08/12/2017 low) hourly support given at 47.09 (016/03/2017 low) Expected to see deeper selling pressures.

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 Selling pressures are lively.

EUR/CHF's is moving up and down. 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).

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 Back to bearish.

EUR/JPY rejection at 122.88 has triggered a correction. Yet, the pair is very volatile. Hourly support at 120.55 (17/01/2017 low) has been broken. Another support lies at 120.02 (08/03/2017 low). Resistance stands at 122.88 (13/03/0217 high).

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 Continued weakness but...

EUR/GBP is correcting lower. Yet there is the formation of a bullish flag which suggests reversal of current weakness targeting 0.9000. Key resistance is given at 0.8854 (15/01/2017 high) and other resistance can be found at 0.8787 (13/03/20167 high). Support is located at 0.8645( 05/02/2017 low).

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 Continued decline.

USD/CHF is declining. Hourly support is given at 0.9862 (31/01/2017 low). Key resistance can be found at a distance at 1.0344 (15/12/2016 high). Expected to show continued weakness.

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 Stalling below 1.3400.

USD/CAD is bouncing. However a break of resistance area around 1.3400 is needed to invalidate the current short term bearish technical structure. The road seems still wideopen for larger decline. 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 Failed to test key resistance at 0.7778.

AUD/USD has failed to test the key resistance at 0.7778 (08/11/2016 high). Hourly support at 0.7664 (16/03/2017 low) has been broken.

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 Pausing around 1.0800.

EUR/USD keeps on pushing higher, even though the pair is now pausing around 1.0800. A break of the upside channel would signal persistent buying pressures. Key resistance is given at a distance 1.0874 (08/12/2017 high). Strong support can be found at 1.0493 (22/02/2017 low). The technical structure suggests deeper increase towards resistance at 1.0874.

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 Bullish breakout.

GBP/USD has broken bearish downtrend channel. The pair has broken resistance at 1.2429 and there are rooms for further strength. Key resistance can be located at 1.2570 (24/02/2017 high). Hourly support is given at 1.2324 (03/17/2017 low).

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 Strong support has been broken.

USD/JPY has failed to break key resistance given at 115.62 (19/01/2016 high) confirming persistent selling pressure. The pair has broken strong support at 111.36 (28/11/2016 low). Hourly resistance can be located at 113.57 (16/03/2017 high).

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).

USD/CHF - 0.9930

Original strategy :

Sell at 1.0000, Target: 0.9900, Stop: 1.0035

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0000, Target: 0.9900, Stop: 1.0035

Position : -

Target :  -

Stop : -

Yesterday’s selloff after meeting renewed selling interest at 1.0003 adds credence to our view that recent decline from 1.0171 is still in progress and may extend weakness to 0.9900 (61.8% projection of 1.0109-0.9942 measuring from 1.0003), however, loss of downward momentum should prevent sharp fall below 0.9870-75 and reckon 0.9850 would hold from here, risk from there has increased for a rebound later.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0000-05 should limit upside and bring another decline. Only above previous support at 1.0060 (now resistance) would abort and signal low is formed instead, risk rebound to 1.0090-95 first.