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USD/CHF Bearish breakout.

USD/CHF has exited uptrend channel. Hourly support given at 1.0075 (13/03/2017 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 now wide-open for larger decline. Key resistance 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 Strong short-term bullish pressures.

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 Surging.

EUR/USD is 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 Trading 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 Selling pressures surged.

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. Expected to push lower.

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).

The People's Party for Freedom and Democracy (VVD), the liberal, centre-right party led by incumbent Prime Minister Mark Rutte, has emerged as the biggest party, fighting back the predicted challenge of Geert Wilders' far-right PVV party. Rutte is likely to have benefited from the high voter turnout (81%) and his tough stance in the diplomatic row with Turkey over the past week. EUR/USD moved up one figure to 1.073 on the publication of the exit poll, which shows that VVD remains the largest party.

Wilders, despite a projected second place with around 20 seats, is not likely to be part of any coalition negotiations, with all major parties unwilling to work with his populist, anti-immigration MPs. The PVV is likely to spend another four to five years in the opposition.

The unexpected victor of the night was GreenLeft, led by 30-year-old Jesse Klaver, which increased its four seats to a projected 14. It could now play a crucial part in the upcoming coalition talks.

Rutte's party is likely to get 33 seats (a loss of eight versus 2012) and will need to enter into coalition talks to form a new government, although Rutte is likely to stay on as Prime Minister. The collapse of Rutte's former coalition partner, the social democratic PvdA, tumbling from 38 seats to a projected nine, means the PM will need to seek new agreements. The Christian Democrats CDA (centre-right) and Democrats 66 (centre), each with an expected 19 MPs, are the most obvious candidates to join a VVD coalition. However, that still leaves him five seats short of the 76 needed for a majority, which is why a fourth coalition partner will be needed. The Christian Union CU (centre-right) or the GreenLeft could also be candidates.

Talks are likely to last for some time – possibly months. The final official election results will be published on 21 March by the Dutch Election Commission.

The new parliament will meet for the first time on 23 March, when official coalition talks will begin. However, informal coalition talks are likely to start today.

Depending on the composition of the new governing coalition, we might see more fiscal easing in the Netherlands going forward, as most parties want to increase borrowing and lower taxes to boost jobs and growth. However, the economy is in good shape generally and there is fiscal room for growth-enhancing reforms.

The first defeat for populists in Europe might also have important repercussions for the upcoming French presidential election on 23 April and we could see Le Pen losing momentum in the polls and markets starting to reprice risk. For the short-term market implications of a Le Pen win see also Le Pen – What If? Implications for Euro and Nordic markets, 13 February 2017.

Spot Gold peaked at $1229 on Thursday, on extension of post-Fed strong rally formed base at $1195 zone and signaled that correction from $1263 to $1195 might be over. Strong dollar's negative sentiment that came after Fed, boosted yellow metal and turned near-term bias higher. Bullish extension met initial target at $1129 (daily Kijun-sen / 50% retracement of $1263/$1195) and could extend towards next barrier at $1337 (Fibo 61.8%) after consolidation. Sustained break above $1237 is needed to confirm reversal. Broken daily Tenkan-sen offers solid support at $1215, followed by thickening daily cloud that contained correction from $1263 and is now underpinning recovery. Cloud top lies at $1210 and is expected to contain extended downticks to keep fresh near-term bulls in play.

Res: 1229, 1237, 1244, 1247
Sup: 1221, 1215, 1210, 1208

Downside risk towards strong support zone, formed by 200 / 100 SMA's has been sidelined after strong post-Fed rally that tested again 0.7700 barrier and closed marginally above it. Long bullish daily candle that was formed yesterday, underpins fresh upside action, together with widening daily cloud that contained 0.7739/0.7489 pullback. Corrective easing on overbought conditions could be expected ahead of fresh attempts higher and re-test of 0.7739 (23 Feb high). Dips should be ideally contained at 0.7630 (Fibo 38.2% of 0.7489/0.7717 recovery rally), while renewed downside pressure could be expected on loss of 0.7600 handle (daily Tenkan-sen / 50% retracement).

Res: 0.7717, 0.7739, 0.7758, 0.7776
Sup: 0.7663, 0.7630, 0.7600, 0.7576

USD/CHF - 0.9990

Original strategy :

Sell at 1.0050, Target: 0.9950, Stop: 1.0085

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0050, Target: 0.9950, Stop: 1.0085

Position : -

Target :  -

Stop : -

Although the greenback dropped sharply overnight and fell to as ow as 0.9978, current recovery suggests consolidation above this level would be seen and rebound to 1.0020 is likely, however, reckon upside would be limited and price should falter below previous support at 1.0060 (now resistance) and bring another decline later. A break of said support at 0.9978 would extend recent decline from 1.0171 top towards key support at 0.9967 but break there is needed to retain bearishness and extend fall to 0.9930-40.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0040-50 should limit upside. Above said previous support at 1.0060 would defer and suggest low is formed instead, risk rebound to 1.0090 and then test of resistance at 1.0109. 

• Fed raises rates as expected but maintains moderate outlook;
• Dutch election a success but not an excuse for complacency;
• BoE decision and US economic data still to come.

It's been a strong start to trading on Thursday, with investors buoyed by the election result in the Netherlands and the optimistic yet cautious rate hike and assessment from the Federal Reserve on Wednesday.

In raising interest rates by 25 basis points – as they strongly hinted they would ahead of the decision – and sticking to their forecasts of three rate hikes this year, the Fed appeared to tick every box. The rate hike shows confidence in the economy and by resisting any urge they may have had to raise expectations, to say four hikes this year, as some anticipated, they've kept investors onside and not raised concerns about the risk of raising too quickly.

In essence, the Fed has struck a good balance and investors are clearly on board. With this outcome fully priced in though we have seen some profit taking on pre-Fed positioning which has weighed on the US dollar in the near term, while US Treasuries have slipped slightly and commodities including Gold have been given a boost.

The result of the Dutch election appears to have filled people with a huge sense of relief, with the populist wave that has seen the UK vote to leave the EU and the US elect Donald Trump having stumbled at the euro hurdle. It would appear that lessons may have been learned from the two votes last year and people turned out in large numbers to ensure that the rot stops here.

But are we just luring ourselves into a false sense of security? Geert Wilders support in the Netherlands was never even close to that of Brexit in the UK or Trump in the US and the fact is that his party still achieved the second highest number of seats and closed the gap dramatically compared to the last election, with Labor being decimated this time around. People may want to celebrate the result now but as we saw in the UK, Wilders is playing the long game and support is growing. If the eurozone doesn't address the very issues that are driving people to support him, they may not be so lucky next time around.

The situation in France was always a much bigger risk, with support for Marine Le Pen being far greater than Wilders – possibly aided by her less extreme views in some areas. While we may see greater voter turnout than normal from those wanting to block Le Pen, as appears to have been the case in the Netherlands, it's far too soon to declare victory. Le Pen is still a serious candidate and will likely use the Dutch election to rally her supporters to head to the polls in droves and make their voices heard to those in Brussels that prefer to bury their head in the sand.

Two of this week's main events may be out of the way but things are unlikely to ease up, with the Bank of England becoming the third central bank to announce its latest monetary policy decision today. While no change is expected, attention will be drawn to the minutes after reports yesterday that they could consider raising interest rates next month, a scenario that seems extraordinarily unlikely at this moment. There's also plenty of US economic data still to come including building permits, Philly Fed manufacturing index, jobless claims, housing starts and JOLTS job openings.

GBP/USD - 1.2259

Original strategy :

Buy at 1.2220, Target: 1.2320, Stop: 1.2185

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2200, Target: 1.2310, Stop: 1.2165

Position : -

Target :  -

Stop : -

As cable rallied again after finding renewed buying interest at 1.2178 yesterday, suggesting the rise from 1.2109 low is still in progress for retracement of recent decline, above 1.2310 resistance would extend gain to 1.2335-40 (61.8% Fibonacci retracement of 1.2479-1.2109), however, previous support at 1.2347 should turn into resistance and limit cable’s upside, bring retreat later.

In view of this, we are looking to buy cable on pullback as 1.2220-30 should limit downside and bring another rise. Only below said support at 1.2178 would abort and signal the rebound from 1.2109 has possibly ended, risk weakness to 1.2145-50 first.

EUR/USD - 1.0722

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 found renewed buying interest at 1.0600 yesterday and has rallied, reviving our bullishness for recent erratic upmove from 1.0493 low to extend further gain to 1.0755, break there would encourage for headway to 1.0775-90 but reckon resistance at 1.0799 would limit upside and price should falter well below 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 the Kijun-Sen (now at 1.0677) should limit downside. Below the upper Kumo (now at 1.0657) would signal top is formed, bring weakness to 1.0620-25 but said support at 1.0600 should remain intact.

The DAX Index has edged lower in the Thursday session. Currently, the DAX is at 12,129.05. On the release front, Eurozone Final CPI improved to 2.0%, matching the forecast. Eurozone Final Core CPI also matched its estimate, remaining at 0.9%. It’s a busy day in the US, with the release of three key indicators – Building Permits, Philly Fed Manufacturing Index and unemployment claims. The week wraps up with consumer confidence data, with the release of UoM Consumer Confidence on Friday.

There were no raised eyebrows when the Federal Reserve raised rates by a quarter-point on Wednesday. The hike, the second in just three months, raised the raised the benchmark lending rate to a 0.75%-1% range. What was not expected, however, was the sharp drop of the dollar against its major rivals, including the euro. The markets were hoping that a red-hot US economy would propel the Fed to accelerate its pace of monetary tightening. There was disappointment as Fed Chair Janet Yellen reiterated that further rate hikes would be done gradually, pushing the dollar on Wednesday.

The eurozone continues to post improved inflation and growth data, and this has led to calls in some quarters for the ECB to tighten monetary policy. The ECB has kept the benchmark rate at a flat 0.0%, and its asset-purchase program does not expire until December. Will ECB President Mario Draghi taper the monthly purchases or at least signal such an intent? Draghi is doing his best to perform a complicated balancing act. A stronger economy would favor tighter policy, but he does not want ECB to become entangled in heated political contests in Europe. Dutch voters went to the polls on Wednesday, and France and Germany will hold elections in April and September, respectively.

Governments across Europe breathed a sigh of relief following the results of the election in the Netherlands. The centre-right coalition of Prime Minister Mark Rutte won the most votes, handily defeating the anti-EU Freedom Party, headed by Geert Wilders. The election was closely watched across Europe, as it was viewed as a bellwether of populist sentiment on the continent. Leaders in France and Germany, who are also facing tight races due to rising anti-EU sentiment, are hopeful that they can copy Rutte’s recipe for electoral success. The election results have helped push the euro to its highest level February 5.