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Gold Consolidating.

Gold's weakness has paused as the precious metal surged yesterday out of the Fed rate hike. Strong support is given at 1177 (11/01/2017 low). The short-term momentum seems strong and it would not be abnormal to see an increase again towards resistance at 1263 (27/02/2017 high).

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 Bearish consolidation.

Silver's selling pressures have stopped below 17.00. Strong support is given at 16.63 (27/01/2016 low). Hourly resistance is now given at 17.52 (intraday high). Ongoing bearish pressures are due to some profit taking.

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 Ready for another leg lower.

Crude oil's bearish pressures continues despite ongoing consolidation due to some shortsqueeze. The commodity had been unable to mount a serious challenge to 55.24 (03/01/2017 high) resistance. Strong support given at 49.61 (08/12/2016) has been broken. 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 Moving sideways between 1.0700 and 1.0750.

EUR/CHF's renewed bearish pressures continues to increase. 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). Temporary surges seem the new normal for the CHF.

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 Setting higher lows.

EUR/JPY's momentum is definitely bullish despite ongoing momentum. Hourly support lies at 121.13 (intraday low). Strong resistance is given at a distance at 123.31 (27/01/2017 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 Selling pressures are lively.

EUR/GBP is trading lower despite ongoing volatility Selling pressures increase around 0.8800. Key resistance is given at 0.8854 (15/01/2017 high). The road is wide-open for further weakness as there is no close support.

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 slightly lower

USD/CHF keeps on weakening since the pair has exited uptrend channel. Hourly support is given at 0.9862 (31/01/2017 low) has been broken. Key resistance can be found at a distance at 1.0344 (15/12/2016 high). Expected to consolidate.

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 Bullish pressures have faded.

USD/CAD's bullish pressures have ended abruptly. The road seems wide-open 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 Consolidating.

AUD/USD's technical structure has changed. Support is given at 0.7494 (19/01/2017 low). Expected to target key resistance can be found at 0.7778 (08/11/2016 high).

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 Strengthening.

EUR/USD keeps on strengthening. The pair is lying in an uptrend channel. Key resistance is still 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 Bouncing higher within downtrend channel.

GBP/USD is moving up but the pair remains around support given at 1.2254 (19/01/2017 low). The road is still wide-open for further decline. Hourly resistance is given at 1.2300 (05/03/2017 high).

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 Trading mixed.

USD/JPY has failed to break key resistance given at 115.62 (19/01/2016 high). Hourly support given at 113.56 (06/03/2017 low) has been broken. Yet the pair is moving sideways.

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).

• US dollar correction continues, aided by more hawkish tones from BOE and ECB;
• Commodities higher as weaker dollar offers some reprieve;
• Oil pares losses but further downside could be on the cards.

Investors appear to be taking a bit of a breather on Friday following what has been quite a hectic week across the board, from politics to central banks and economic data.

The US dollar appears to be undergoing a small correction with expectations going into the Fed meeting on Wednesday having been so raised that there was nothing left in the move. It was classic buying the rumour selling the fact. A dovish hike was the minimum that was priced in and the Fed went no further at this stage which has prompted some profit taking.

The fact that this was accompanied by a more hawkish BoE on Thursday, with one policy maker voting for a hike and others suggesting they’re not far behind, and the ECB sending hawkish signals of its own, is clearly aiding the dollar moves. Should other central banks join the US in removing accommodation after years of ultra-loose monetary policy, it could take some of the pressure off the dollar this year, which will please the Trump administration that has repeatedly bemoaned others for keeping their own currencies artificially lower against the greenback.

Commodities continue to benefit from a softer dollar, with Gold having returned back to the levels we were seeing earlier in the month, although it remains vulnerable to further downside. Political risk appeared to be feeding the safe haven appeal of the yellow metal last month but with the first of three election hurdles overcome in Europe this year, this appears to have subsided a little. The French election remains the greatest risk on this front though and despite the jubilation among European leaders at the Dutch election result, there is no room for complacency. Populism remains on the rise, regardless of the lower than expected showing for Geert Wilders this week.

Oil is continuing to pare gains on Friday after having made considerable losses over the past week or so. Brent crude found support around $50 earlier in the week which appears to have triggered some profit taking, aided again by the weakness which followed in the dollar from Wednesday evening. WTI on the other hand appears to be having similar trouble with the psychological $50 level but from below. The price action over the last few days doesn’t look particularly bullish for oil and I do wonder whether the $50 level in Brent is on borrowed time. The size of the inventory builds in the US over the last five weeks and the fading possibility of an extension to the output deal appears to still be weighing on oil at the moment.

News and Events:

EUR upside is still limited… for now

The single currency had a nice ride after the last FOMC meeting and the dovishness of Fed members regarding the pace of rate normalisation. However, the easing political uncertainty that stems from the rise of populism across EU members has also helped the EUR to get some colour back. The game is not over yet as the French election remains the major hurdle for further EUR appreciation. Since yesterday evening, EUR/USD has been testing a key resistance area at between 1.08 and 1.09 (previous highs and 200dma that currently stands at 1.0896). We do not expect a clear break of these levels before the French election; however the market will be extremely sensitive to upcoming economic data from the US as it could slow down the Fed tightening path.

As we approach the first and second rounds of the French elections, the classic safe haven currencies - CHF and JPY - should perform well against the backdrop of political uncertainty and doubt about the strength of the US economic recovery.

Yields Seeking Dominates in FX

The USD continues to lose ground as US yields back off highs following the dovish Fed. EM FX has gained meaningfully against the USD (marginal pause today) while G10 currencies are less directional. The broad sentiment is that markets are again in a “goldilocks” phase with accommodating monetary policy dominating and political risk emulating from the US and European deceleration. With the Fed keeping the Dots unchanged and PVV’s disappointing result in the Dutch elections, investor’s short-term fears have faded. FX volatility as shifted lower giving investors renewed reason to changes yields. We are concerned that the market is underpricing the probability of the Fed rate hiking cycle continuing in June. In FX, carry and momentum trades are positing significant risk adjusted returns. Buying of EURUSD has increased popularity as shallow Fed policy path seem to collide with ECB tightening in September. As we have stated in numerous forecasts it is unlikely that the dollar will dominate 2017. Trading long EURJPY would be the highest conviction strategy for this Fed/ECB convergent trade. This weekend, the G20 finance ministers and central bank will meet. In broad terms, the G20 has had time finding consensus or to provide real solutions making for a limited statements. Given the concern with the rise of populism and protectionism there will clearly be some notable headlines heading over the wire. However, it’s unlikely any splashy comments will have a lasting market impact. Specific focus will be on US Treasury Secretary Mnuchin regarding USD policy and global trade. On the surface Mnuchin has indicated a comfort level with a stronger USD yet should the Fed trigger global rotations into USD we suspect that administration will act. When the hype from the G20 clears on Monday we should see a “greenlight” for extensive risk taking. On the docket today US will release industrial production and Michigan sentiment which are both expected to see further improvement.

UK unemployment falls to 42-year low

What a contradiction! The expected economic nightmare triggered by the Brexit vote has not materialised. Indeed, unemployment rate has reached its lowest level in 42 years at just 4.7%. It seems that at least for now, the UK economy is not the worse off from its decision to exit of the European Union. Nonetheless, it is worth noting that pressure on wages are almost non-existent. In our view, the lack of job security (for example with the zero-hour contract) is also pushing unemployment rate to go lower.

Earlier this week, the BoE decided to keep its interest rates on hold at 0.25%. It is clear that Brexit fears are definitely helping the central bank as the pound remains weak. We maintain our bullish view on the pound and we see European uncertainties growing in the medium term, in particular given the French Elections.

When looking more specifically at data, inflation is on the rise and we should see the BoE hinting to further tightening in the future. The triggering of the article 50 looms and negotiations are likely to last longer than expected as trade agreements are paramount for the future UK competitiveness.

Today's Key Issues (time in GMT):

• Jan Trade Balance EU, last 124m, rev 57m EUR / 09:00
• Jan Trade Balance Total, last 5798m, rev 5730m EUR / 09:00
• Jan Trade Balance SA, exp 22.0b, last 24.5b EUR / 10:00
• Jan Trade Balance NSA, last 28.1b EUR / 10:00
• Mar IGP-M Inflation 2nd Preview, exp 0,22%, last 0,02% BRL / 11:00
• Jan Manufacturing Sales MoM, exp -0,30%, last 2,30% CAD / 12:30
• Feb Industrial Production MoM, exp 0,20%, last -0,30% USD / 13:15
• Feb Capacity Utilization, exp 75,50%, last 75,30% USD / 13:15
• Feb Manufacturing (SIC) Production, exp 0,50%, last 0,20% USD / 13:15
• Mar P U. of Mich. Sentiment, exp 97, last 96,3 USD / 14:00
• Mar P U. of Mich. Current Conditions, exp 111, last 111,5 USD / 14:00
• Mar P U. of Mich. Expectations, exp 87,1, last 86,5 USD / 14:00
• Mar P U. of Mich. 1 Yr Inflation, last 2,70% USD / 14:00
• Mar P U. of Mich. 5-10 Yr Inflation, last 2,50% USD / 14:00
• Feb Leading Index, exp 0,50%, last 0,60% USD / 14:00
• 4Q BoP Current Account Balance, exp -$12.00b, last -$3.40b INR / 22:00
• Feb Labor Market Conditions Index Change, exp 2,5, last 1,3 USD / 23:00
• ECB's Coeure takes part in G-20 meeting in Baden-Baden EUR / 23:00
• Feb Industrial Production YoY, exp 1,30%, last 2,30% RUB / 23:00
• Feb Tax Collections, exp 93044m, last 137392m BRL / 23:00

The Risk Today:

EUR/USD keeps on strengthening. The pair is lying in an uptrend channel. Key resistance is still 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 is moving up but the pair remains around support given at 1.2254 (19/01/2017 low). The road is still wide-open for further decline. Hourly resistance is given at 1.2300 (05/03/2017 high). 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 has failed to break key resistance given at 115.62 (19/01/2016 high). Hourly support given at 113.56 (06/03/2017 low) has been broken. Yet the pair is moving sideways. 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 keeps on weakening since the pair has exited uptrend channel. Hourly support is given at 0.9862 (31/01/2017 low) has been broken. Key resistance can be found at a distance at 1.0344 (15/12/2016 high). Expected to consolidate. 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/CHF - 0.9945

Original strategy :

Sell at 1.0020, Target: 0.9920, Stop: 1.0055

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0020, Target: 0.9920, Stop: 1.0055

Position : -

Target :  -

Stop : -

As the greenback has remained under pressure, suggesting recent decline from 1.0171 is still in progress and may extend further weakness to 0.9920-25, however, loss of near term downward momentum should prevent sharp fall below 0.9900 and reckon 0.9870-75 would hold from here, risk from there has increased for a strong rebound later.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as the lower Kumo (now at 1.0019) 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.

GBP/USD - 1.2388

Original strategy :

Buy at 1.2300, Target: 1.2400, Stop: 1.2265

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2310, Target: 1.2410, Stop: 1.2275

Position : -

Target :  -

Stop : -

As cable has maintained a firm undertone after this week’s rally, adding credence to our view that the rise from 1.2109 low is still in progress for retracement of recent decline, hence further gain to previous support at 1.2384 would be seen, however, near term overbought condition should prevent sharp move beyond 1.2410-15 and reckon 1.2440-50 would hold, price should falter well below resistance at 1.2471, bring retreat later.

In view of this, we are looking to buy cable on pullback as 1.2300-10 should limit downside and bring another rise. Below 1.2265-70 would suggest top is possibly formed, risk test of said support at 1.2241 which is likely to hold on first testing.

EUR/USD - 1.0770

Original strategy  :

Buy at 1.0675, Target: 1.0775, Stop: 1.0640

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0675, Target: 1.0775, Stop: 1.0640

Position : -

Target :  -

Stop : -

As the single currency has eased after rising to 1.0782, suggesting consolidation below this level would be seen and pullback to 1.0725-30 cannot be ruled out, however, reckon downside would be limited to support at 1.0706 and the lower Kumo (now at 1.0674) should hold, bring another rise later to resistance at 1.0799 but loss of near term upward momentum should prevent sharp move beyond another previous resistance at 1.0829, bring retreat later.

In view of this, would not chase this rise here and we are looking to buy euro on pullback as 1.0670-75 should limit downside. Below 1.0640-50 would signal top is formed, bring weakness to 1.0620-25 but said support at 1.0600 should remain intact.

USD/JPY - 113.26

Original strategy  :

Sell at 114.00, Target: 113.00, Stop: 114.35

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 114.00, Target: 113.00, Stop: 114.35

Position :  -

Target :  -

Stop : -

Although the greenback recovered after falling to 112.90 yesterday and consolidation above this level would be seen for corrective bounce to 113.65-70, reckon 114.00 would limit upside and bring another decline later, below said support at 112.90 would extend recent decline from 115.51 to 112.76-77, then towards 112.50 but reckon downside would be limited to 112.00-10, bring rebound later.

In view of this, we are looking to sell dollar on subsequent recovery as 114.00 should limit upside. Only above previous support at 114.48-52 would abort and signal low is formed instead, risk a stronger rebound to 114.89 resistance first, break there would signal the retreat from 115.51 has ended, then gain to 115.20 resistance would follow.