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Global Markets:

• Asian stock markets: Nikkei down 0.20 %, Shanghai Composite gained 0.05 %, Hang Seng lost 0.30 %, ASX 200 fell 0.35 %
• Commodities: Gold at $1201 (-0.15 %), Silver at $16.95 (+0.15 %), WTI Oil at $48.50 (+1.60 %), Brent Oil at $51.65 (+1.40 %)
• Rates: US 10 year yield at 2.60, UK 10 year yield at 1.23, German 10 year yield at 0.45

News & Data:

• New Zealand Current Account (NZD) (Q4): -2.335bn (est -2.425bn, prev -4.891bn)
• Australia Westpac Consumer Confidence SA (Mar): +0.1% @ 99.7 (prev +2.3% @ 99.6)
• Australia New Motor Vehicle Sales (MoM) (Feb): -2.70% (prev 0.60%)
• Australia New Motor Vehicle Sales (YoY) (Feb): -4.10% (prev -0.90%)
• PBOC sets USD/CNY central rate at 6.9115 (vs. yesterday at 6.9118)
• Asian stocks slip, Fed's decision day makes investors wary – RTRS
• Dollar off recent highs ahead of expected Fed rate hike – RTRS

Markets Update:

The Dollar is bid ahead of the Federal Reserve rate decision tonight. EUR/USD traded as low as 1.0605 yesterday, and price action is looking increasingly bearish. Key intraday support is noted at 1.0570 and 1.0520.

Meanwhile, USD/JPY tested Friday's high at 115.40 yesterday. While it failed to break above it, it remains well supported. In Asia, the pair consolidated in a 114.65-85 range. Should it break above 115.40 resistance, a rally towards 117 seems likely.

The US central bank will very likely increase rates by 25bps, and signal that further rate hikes could follow this year. Much will depend on the new forecasts and the tone of the FOMC though. Should they remain rather cautious overall, the Dollar could come under pressure. Since a rate hike tomorrow is almost 100 % priced in, that alone will not support the Dollar by much.

Upcoming Events:

• 07:45 GMT – French CPI
• 08:15 GMT – Swiss PPI
• 09:30 GMT – UK Unemployment Rate
• 09:30 GMT – UK Claimant Count Change
• 09:30 GMT – UK Average Hourly Earnings
• 10:00 GMT – Italian CPI
• 12:30 GMT – US CPI
• 12:30 GMT – US Retail Sales
• 14:00 GMT – US NAHB Housing Market Index
• 14:30 GMT – US Crude Oil Inventories
• 18:00 GMT – Federal Reserve Rate Decision
• 18:00 GMT – FOMC Statement
• 18:30 GMT – FOMC Press Conference
• 21:45 GMT – New Zealand GDP

Daily Pivots: (S1) 1.3992; (P) 1.4051; (R1) 1.4087; More...

Intraday bias in EUR/AUD remains neutral as the correction from 1.4183 continues. Deeper retreat could be seen but downside should be contained by 1.3874/4014 support zone and bring another rally. As noted before, we're favoring the case of medium term trend reversal defending key support level at 1.3671, on bullish convergence condition in daily MACD Above 1.4183 will turn bias back to the upside for 1.4289 resistance. Sustained break there will affirm our bullish view and target 1.4721 key resistance next. However, break of 1.3874 will dampen our view and turn bias to the downside for 1.3624 low.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. We'd expect strong support from 1.3671 key level to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4721 resistance will indicate completion of such correction and turn outlook bullish for retesting 1.6587 high. However, sustained break of 1.3671 will invalidate our bullish view and would turn focus back to 1.1602 long term bottom.

Daily Pivots: (S1) 1.0700; (P) 1.0722; (R1) 1.0733; More...

Intraday bias in EUR/CHF remains neutral for the moment. With 1.0689 minor support intact, we continue to favor the case of trend reversal, on bullish convergence condition in daily MACD, after defending 1.0620 key support level. That is, correction from 1.1198 could have completed. Above 1.0823 will target 1.0897 resistance next. However, break of 1.0689 support will dampen our view and turn focus back to 1.0629 low again.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Decisive break of 1.0897 resistance should confirm that it's completed. And in that case, larger up trend is resuming for another high above 1.1198. Meanwhile, sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485.

Daily Pivots: (S1) 1.0581; (P) 1.0621 (R1) 1.0644; More.....

Intraday bias in EUR/USD remains mildly on the downside for 1.0494 support. Overall, price actions from 1.0339 are seen as a corrective pattern. Break of 1.0494 will revive that case that such correction is completed. And in such case, deeper decline should be seen to retest 1.0339. Meanwhile, above 1.0713 will turn bias back to the upside for 1.0828 and above to extend the correction from 1.0339.

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.

Daily Pivots: (S1) 1.2100; (P) 1.2161; (R1) 1.2213; More...

Intraday bias in GBP/USD remains on the downside as the fall from 1.2705 is in progress. Deeper decline would be seen to retest 1.1946/86 support zone. As noted before, consolidation pattern from 1.1946 is completed at 1.2705 is resuming larger down trend. Break of 1.1946 will confirm our bearish view. On the upside, above 1.2250 minor resistance will turn bias neutral again. But outlook will stay bearish as long as 1.2346 support turned resistance holds.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Daily Pivots: (S1) 1.0076; (P) 1.0092; (R1) 1.0116; More.....

Intraday bias in USD/CHF remains neutral for the moment as the pull back from 1.0169 continues. At this point, with 1.0008 support intact, further rise is mildly in favor. Above 1.0169 will turn bias to the upside and target a test on 1.0342 resistance. Based on neutral medium term outlook, we'd be cautious on topping below 1.0342. On the downside, break of 1.0008, however, will indicate completion of the rebound from 0.9860. And intraday bias will be turned back to the downside for 0.9860.

In the bigger picture, prior rejection from 1.0327 resistance argues that USD/CHF is staying in a medium term sideway pattern. 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 another fall, we'd expect strong support from 0.9443/9548 support zone.

Daily Pivots: (S1) 114.44; (P) 114.81; (R1) 115.12; More...

Intraday bias in USD/JPY remains neutral as the consolidation from 115.49 temporary top extends. Deeper retreat cannot be ruled out. But we'd expect strong support above 113.60 to contain downside and bring rise resumption. As noted before, corrective decline from 118.65 should have completed with a a double bottom pattern (111.58, 111.68). Above 115.49 should turn bias to the upside and pave the way for a test on 118.65. Decisive break there will extend whole rise from 98.97 and target 125.85 high next. On the downside, however, break of 113.60 will invalidate our view and turn bias back to the downside for 111.58/68 support zone instead.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

Daily Pivots: (S1) 0.7539; (P) 0.7559; (R1) 0.7578; More...

AUD/USD's correction from 0.7490 is still in progress and intraday bias stays neutral first. We'd continue to expect recovery to be limited by 0.7631 resistance and bring fall resumption. As noted before, rise from 0.7150 has completed at 0.7740 already. Below 0.7490 will turn bias back to the downside and target 0.7144/7158 support zone. However, break of 0.7631 resistance will dampen our bearish view and turn bias back to the upside for 0.7740 instead.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seek to 55 month EMA (now at 0.8185) and above.

Daily Pivots: (S1) 1.3446; (P) 1.3470; (R1) 1.3503; More...

USD/CAD is still bounded in consolidation below 1.3534 and intraday bias remains neutral for the moment. Another fall cannot be ruled out as the consolidation extends. But downside should be contained by 38.2% retracement of 1.3008 to 1.3534 at 1.3333 and bring another rally. Above 1.3534 will turn bias to the upside for retesting 1.3598 high next.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg, started from 1.2460 is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. Break of 1.2968 wold at least bring at retest of 1.2460 low. However, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Markets are holding their breath as the highly anticipated FOMC meeting awaited. DJIA's recovery lost steam and closed down -44.11 pts, or -0.21%, at 20837.37 after breaching 20800 briefly. S&P 500 also lost -8.02 pts, or -0.34%, to close at 2365.45. Both indices are holding above last week's low at 20777.16 and 2354.54 so far. 10 year yield stayed in tight range below recent resistance at 2.621 and closed down -0.013 at 2.595. Gold continued to engage in range trading around 1200. WTI crude oil dived sharply to as low as 47.09 but recovered to 48.50 for the moment.

Dollar index trading mildly higher to 101.70 at the time of writing, holding above 100.66 near term support. In the currency market, despite some volatility, major pairs and crosses are generally stuck in last week's range, except GBP/CHF. General weakness is seen in Euro for the week as the common currency pared back post ECB gains. Yen follows as the second weakest as its rebound attempt quickly falters.

Fed to upgrade economic projections

Fed is widely expected to hike federal funds rate by 25bps to 0.75-1.00%. The rate hike itself is well priced in. Thus the focus will be largely on three things, the FOMC statement, new economic projection, and Fed chair Janet Yellen's press conference. Markets are looking through today's hike and are eager to get the hints on what Fed would do next. The table below showed FOMC's median projections back in December.

Federal funds rate are projected to be at 1.4% by the end of 2017, 2.1% by the end of 2018. They equivalent to 3 rate hikes in total for this year and 2-3 hikes next year. Any upward revision to the numbers will imply a faster path. In particular, some analysts are anticipating a meaningful revision to 2018's projections to reflect a firmer chance of 3 hikes. Meanwhile, the markets will also look closely to the revisions to economic projections, with focuses on the core PCE number for this year and next.

More on FOMC:

• Upcoming Rate Hikes And 2018 Median Dot Plot In Focus
• FOMC Preview - It's All in the Dots
• Fed Expected to Raise US Interest Rates
• FOMC Preview: Fed to Maintain Signal of Three Hikes this Year

UK employment, US CPI and retail sales featured

Elsewhere, New Zealand current account deficit narrowed to NZD 2.3b in Q4. Australia Westpac consumer confidence rose 0.1% in March. UK employment data will be a main focus in European session. Swiss will release PPI and Eurozone will release employment. US will release Empire state manufacturing, CPI, retail sales and NAHB housing market index.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3446; (P) 1.3470; (R1) 1.3503; More...

USD/CAD is still bounded in consolidation below 1.3534 and intraday bias remains neutral for the moment. Another fall cannot be ruled out as the consolidation extends. But downside should be contained by 38.2% retracement of 1.3008 to 1.3534 at 1.3333 and bring another rally. Above 1.3534 will turn bias to the upside for retesting 1.3598 high next.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg, started from 1.2460 is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. Break of 1.2968 wold at least bring at retest of 1.2460 low. However, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Economic Indicators Update