Sample Category Title

USD/JPY - 114.59

Original strategy  :

Exit long entered at 114.70

Position :  - Long at 114.70

Target :  -

Stop : -

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback recovered after finding support at 114.65, renewed selling interest emerged at 114.92 and dollar has fallen again today, suggesting near term downside risk remains for the fall from 115.51 top (last week’s high) to bring at least a retracement of recent upmove to 114.26 support but reckon downside would be limited to 114.00-05 (38.2% Fibonacci retracement of 111.69-115.51) and price should stay well above strong support at 113.56-61), bring rebound later.

In view of this, would be prudent to stand aside for now. Above the Kijun-Sen (now at 115.01) would suggest an intra-day low is formed, bring a stronger rebound to 115.25-30 but still reckon said resistance at 115.51 would cap upside. Only break there would revive bullishness and extend recent upmove to previous resistance at 115.62, then towards 115.90-00. 

Quiet start to busy week

Notes/Observations

Quiet EU session on Monday; Looking ahead numerous key events includes Netherlands election (Wed), G20 gathering in Germany and possible trigger to UK’s article 50. There are also numerous rate decision (FOMC on Wed, SNB, Norges and BOE on Thurs)

Italy Jan Industrial production saw its biggest monthly decline in 5 years (MoM: -2.3$ v -0.8%e)

Overnight:

Asia:

China Commerce Min (MOFCOM) Zhong Shan reiterated view that outlook for foreign trade faced lots of risks and uncertainties; Trade war between China and US would harm both economies

PBoC Gov Zhou Xiaochuan: Reiterates view that CNY currency (yuan) would remain stable and added it did not have a ‘bottom line’ for either dollar/yuan rate or FX reserves

China National Development and Reform Commission (NDRC) Vice Chairman Ning Jizhe: China's economic growth still mainly relied on domestic demand; unemployment rate in 31 major cities was about 5% in Jan-Feb period; industrial output grew more that 6%

Europe:

German Chancellor Merkel said to warn US President Trump that changes to US corporate tax could prompt retaliatory measures when they meet this Tuesday, Mar 14th; reviewing responses to border adjust tax, levying only US companies imports and not exports; May label the measure aprotective tariffwhich violates WTO rules.

PM May reportedly could trigger Article 50 as soon as Tuesday, March 14th if Parliament passed Brexit bill on Monday night

Brexit Min Davis stated that the govt was drawing up contingency plans for the unlikely event it had to walk away from talks with the European Union without a deal

Netherlands banned several Turkey ministers from entering Rotterdam over political campaigning among Turksih emigres; President Erdogan vowed to retaliate in the "harshest way" and called the Netherlands a "Nazi remnant"

Italy govt said to be working on plan to cut public debt which would transfer main assets of €50-60B into a vehicle which it would sell on market to raise money to cut public debt

Energy:

Weekly Baker Hughes US Rig Count: 768 v 756 w/w (+1.6%) (8th straight weekly rise)

Goldman Sachs analyst said to maintain positive outlook across the commodity complex; upholds Q2 WTI Oil & copper forecasts

Economic data

(TR) Turkey Jan Current Account: -$2.8B v -$2.8Be

(SE) Sweden Feb PES Unemployment Rate: 4.0% v 4.1% prior

(IT) Italy Jan Industrial Production M/M: -2.3% (largest decline in 5 years) v -0.8%e; Y/Y: 5.7% v 3.4% prior; Industrial Production WDA Y/Y: -0.5% v +3.2%e

Fixed Income Issuance:

None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Index snapshot (as of 09:30 GMT)

Indices [Stoxx50 -0.2% at 3,414, FTSE flat at 7,346, DAX flat at 11,967, CAC-40 flat at 4,992, IBEX-35 -0.2% at 9,985, FTSE MIB +0.1% at 19,669, SMI flat at 8,667, S&P 500 Futures -0.1%]

Market Focal Points/Key Themes: European equity indices are trading relatively flat after a generally positive end to the Asian session overnight; Banking stocks mixed in the Eurostoxx with shares of Deutsche Bank and Intesa Sanpaolo trading higher, despite shares of Santander and BNP Paribas weighing in the index; Commodity and mining stocks trading notably higher in the FTSE 100 as copper prices trade sharply higher intraday; conversely energy stocks are trading lower as oil prices gapped lower over the weekend, despite trading higher intraday.

Upcoming scheduled US earnings (pre-market) include Lifetime Brands, Del Taco Restaurants, and Townsquare Media.

Equities (as of 09:30 GMT)

Consumer Discretionary: [Aryzta ARYN.CH -6.4% (H1 results), Bang & Olufsen BO.DK -1.0% (Divests Czech subsidiary), Bovis Homes BVS.UK +7.3% (Rejects proposals from Redrow and Galliford Try)]

Consumer Staples: [HOCHDORF Holding HOCN.CH -0.5% (FY16 results)]

Energy: [Amec Foster Wheeler AMFW.UK +15.4% (to be acquired by Wood Group for £5.64/shr; FY16 results; contract win), Innogy IGY.DE -1.4% (FY16 results), Seadrill SDRL.NO +8.6% ($170M West Mira arbitration settlement), Senvion SEN.DE +2.5% (restricting measures, job cuts)]

Financials: [Helvetia Holding HELN.CH -3.9% (FY16 results), HSBC HSBA.UK +0.8% (Confirms Mark Tucker as new Chairman), Klepierre LI.FR +1.1% (€500M share repurchase)]

Healthcare: [TiGenix TIG.BE +1.6% (Top-Line Phase I/II Results of AlloCSC-01 in Acute Myocardial Infarction), Virbac VIRP.FR -7.7% (final FY16 results)]

Industrials: [ABB ABBN.CH -0.1% (Lower Pre-tax profit impact in 2016 from Korea case from $100M to $73M)]

Telecom: [Telit Communications TCM.UK +12.6% (FY16 results)]

Speakers

ECB's Smets (Belgium): improved economic outlook did not in itself signal a coming change in policy stance. Reiterated ECB view that it has not taken first step towards removing stimulus as it saw no considerable improvement in March inflation assessment (Staff Projections) compared to Dec outlook.

ECB's Visco (Italy): Reiterates view that a higher employment level is key to revive Italian growth. Euro skepticism was growing in member States and Europe political paralysis risk was never as high as it is today. USD currency appreciation and Fed hikes could intensify; have negative impact on emerging market economies

Swiss Stats Office updated inflation forecasts which raised 2017 CPI forecast from 0.0% to 0.5% and raise2018 CPI forecast from 0.2% to 0.3%

Poland Central Bank commented on inflation and growth outlook for 2017-19 period. Forecasted 2017 GDP at 3.7%, 2018 GDP at 3.3% and 2019 GDP at 3.2%. Forecasted 2017 and 2018 CPI at 2.0% and 2019 CPI at 2.3%. Inflation to stay below the 2.5% target in horizon period

France Presidential candidate Le Pen (Far right): New French franc currency would decline approx 10% against the Euro; falling currency will help more than it hurts

Japan reportedly to dispatch biggest warship on tour through South China Sea

Currencies

Busy week on central bank meetings and other key events. Wednesday’s Netherlands election outcome may well set the scene for the French April/May Presidential election. UK Govt could trigger Article 50 at any time in the next three weeks

Euro firmed to 1-month high during Asia in the aftermath of press reports last week that ECB discussed whether rates could rise before QE ended (idea did not get much discussion and did not have broad support). EUR/USD steady just ahead of the NY morning at 1.0670 area.

GBP/USD continued to move off recent 7-week lows and back above the 1.22 level. Amended EU (notification of withdrawal) Bill moved back in House of Commons today and reports that article 50 could be triggered as soon as Tuesday if all goes well in removing the amendments placed by the House of Lords last week.

USD/JPY in the mid-part of the 114 level in quiet trade.

Fixed Income:

Bund futures trade at 159.58 up 57 ticks rebounding sharply following a fortnight of declines having traded below 159 on Friday following the strong US jobs report. Support moves to Friday low of 158.87 followed by 158.74. Resistance moves to 159.85 Friday high followed by 160.20 then 161.06.

Gilt futures trade at 126.63 up 50 ticks trading up with Bunds on slight risk off tone ahead of the House of Commons vote on the Lords amendments to the latest Brexit Bill due to commence later today. Support moves to 125.88 the low seen on Friday followed by 125.57. Resistance remains at 126.87 followed by 127.35. Short Sterling futures trade flat to up 1bp, in slight flattening trade with Jun17Jun18 spread falling to 16/17bp.

Monday liquidity report showed Friday's excess liquidity rose to a record high of €1.371T up €6B from €1.365T prior. Use of the marginal lending facility rose to €450M from €136M prior.

Corporate issuance saw a further $1.1B come to market on Friday via 2 issuers headlined by John Deere 3 part $1B offering bringing last weeks issuance to $45B via 65 tranches, putting the Months volume to just shy of $60B. For the week ahead analysts see issuance to slow to around $15-20B.
In Euro denominated issuance last week saw €27.3B come to market via 37 issuers and 41 tranches, with Tuesday seeing the bulk of the issuance with just over €14B priced.

Looking Ahead

(UK) Amended EU (notification of withdrawal) Bill back in House of Commons

(CH) Swiss Parliament holds Spring Session in Bern

(IL) Israel Central Bank (BOI) Feb Minutes

(MX) Mexico Feb ANTAD Same-Store Sales Y/Y: 3.0%e v 4.1% prior

06:00 (EU) Daily Euribor Fixing

06:00 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)

06:00 (IT) Italy Debt Agency (Tesoro) to sell 2019, 2024, 2033 and 2046 medium BTP Bonds

06:00 (LT) Lithuania to sell Bonds

06:00 (RO) Romania to sell Bonds

06:00 (NO) Norway to sell NOK6.0B in 12-month Bills

06:30 (DE) Germany to sell €2.0B in 6-month BuBills

07:00 (PT) Portugal Jan Trade Balance: No est v -€1.4B prior

07:00 (IL) Israel Jan Trade Balance: No est v -$0.9B prior

07:00 (IL) Israel to sell 2018, 2020, 2021, 2025 and 2027 bonds

07:25 (BR) Brazil Central Bank Weekly Economists Survey

07:30 (TR) Turkey TCMB Survey of Expectations

07:30 (EU) NATO's Stoltenberg Press Conference in Brussels

07:30 (UK) (UK) Scottish First Min Sturgeon (SNP) speech

07:30 (IS) Iceland to sell Bills

07:45 (DE) German Chancellor Merkel meets leaders of German Industry Groups in Munich

07:45 (US) Daily Libor Fixing

08:00 (IN) India announces details of upcoming bond sale (held on Fridays)

09:00 (ES) Spain Debt Agency (Tesoro) to announce size of upcoming Bill and bond issuance (held on Tuesday/Thursday)

09:15 (UK) Baltic Dry Bulk Index

09:50 (FR) France Debt Agency (AFT) to sell combined €5.8-7.0B in 3-month, 6-month and 12-month BTF Bills

09:30 (CH) Swiss Government Question Time in Parliament

09:30 (EU) ECB’s Draghi

10:00 (US) Feb Labor Market Conditions Index Change: +2.5e v +0.25 prior

10:30 (EU) ECB announces Covered-Bond Purchases

10:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

10:50 (UK) BoE conducts reverse Gilt auction

11:30 (US) Treasury to sell 3-Month and 6-Month Bills

EUR/USD – 1.0668

EUR/USD:   Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.

The single currency found renewed buying interest at 1.0525 and has staged a strong rebound, suggesting near term upside risk remains for the rebound from 1.0493 to extend gain to 1.0740-50, however, as broad outlook remains consolidative, reckon upside would be limited and price should falter well below resistance at 1.0829, bring retreat later, below 1.0600 would bring another test of said support at 1.0525 but break there is needed to signal the rebound from 1.0493 has ended, bring another test of this level later.Looking ahead, only a drop below 1.0493-96 support would add credence to our view that the rebound from 1.0340 has ended at 1.0829 and bring further fall to indicated key support at 1.0454. A sustained break below this level would suggest the rebound from 1.0340 has ended, bring subsequent decline to 1.0390-00, then towards said recent low at 1.0340.

Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.

On the upside, whilst initial recovery to 1.0740-50 cannot be ruled out, reckon upside would be limited and bring another decline later. A daily close above this level would risk retest of 1.0829 but break there is needed to signal the corrective rise from 1.0340 low is still in progress for retracement of recent decline to resistance at 1.0873 but still reckon upside would be limited to 1.0930-35 (61.8% Fibonacci retracement of 1.1300-1.0340) but reckon 1.1000 would hold from here, bring another decline in Q2.
 
Recommendation: Sell at 1.0740 for 1.0540 with stop above 1.0840.

Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.

News and Events:

USD tumbles as real wages dip into negative territory

The US dollar had a tough start into the week as investors remained unmoved after Friday’s job report and even appeared disappointed amid lacklustre data. The US economy created 235k private jobs in February, widely beating the median forecast of 200k, while the previous month’s reading was upwardly revised to 238k. All employment measures improved in February as the unemployment rate eased to 4.7% as participation climbed to 63%. The U-6 measure or the underemployment rate fell to 9.2% from 9.4% a month previous. So, after such a bullish report how come the USD came under pressure this morning?

Well, there are a few explanations for this. Firstly, wage growth clearly failed to impress despite the solid pace of job creation as average hourly earnings grew 0.2%m/m versus 0.3% expected. Indeed, inflation pressures have intensified over the last few months as crude oil prices recovered - the consumer price index reached 2.5% in January. However, nominal wage growth remained stable, which translates into weaker purchasing power for the common American. Looking at how the measure adjusted for inflation, one immediately notices that real wages contracted 0.52%. This is the first time since December 2013 that the gauge has dipped into negative territory. In fact, since December 2015 real wage growth has started to decelerate and actually contracted last month. This negative trend could explain why the Fed was not in such a hurry to raise rates last year. Looking forward, it should not influence Wednesday’s meeting as Janet Yellen cannot take the risk of disappointing the market, especially after selling that rate hike for the past few months. However, it will definitely impact the Fed’s tightening path as the Fed will find itself on the hot seat. On one hand, it will have to control rising inflationary pressures, although the core measure remains stable; while on the other, if the Fed adds too much pressure too quickly on the economy, by increasing borrowing rates, it will slow - if not reverse - the current fragile recovery.

All in all, in the short-term the market will stay focussed on the mounting political risk in Europe, which would help the dollar to hold ground. The dollar’s medium-term outlook is heavily dependent on the results of the EU political elections; however, should the political chessboard stay unchanged, the USD will start to reverse gains.

Brexit: Will Article 50 be triggered this week?

As Brexit proceedings drag on and fears of a hard Brexit continue to loom large, the pound continues to paint a very vivid picture of market worries. At present, UK Parliament remains split on PM May’s EU exit plans with The House of Lords meeting today to debate its proposed amendments.

The outcome however will be of little relevance as May will plough on and trigger Article 50 as planned. From that point, Britain’s EU divorce will take up to two years to complete but in our view, likely much longer as the UK will surely negotiate bilateral agreements. The question on everyone’s lips right now of course is whether the PM will cut the cord with no actual deal in place.

Currency-wise, the pound has been feeling the heat from both the single currency and the greenback over the past couple of weeks on the back of renewed hard Brexit fears. In our view, we believe that there is a strong opportunity to reload bullish pound positions. In our view, the dragging out of these proceedings will be more damaging than the actual exit itself. Brexit will not be the promised apocalyptic nightmare and will allow the UK breathing space to regain its competitive stance, free from constraint from Brussels.

Today's Key Issues (time in GMT):

• Jan Trade Balance ex Ships, last 6.9b, rev 7.9b DKK / 08:00
• Jan Current Account (Seasonally Adjusted), last 19.7b, rev 21.5b DKK / 08:00
• Bank of Italy Governor Visco Attends Foreign Office Conference EUR / 08:30
• mars.10 Total Sight Deposits CHF, last 553.4b CHF / 09:00
• mars.10 Domestic Sight Deposits CHF, last 471.5b CHF / 09:00
• Jan Industrial Production NSA YoY, last 3,40%, rev 3,50% EUR / 09:00
• Jan Industrial Production WDA YoY, exp 3,20%, last 6,60%, rev 6,80% EUR / 09:00
• Jan Industrial Production MoM, exp -0,80%, last 1,40% EUR / 09:00
• ECB's Villeroy De Galhau speaks in Paris EUR / 10:15
• ECB's Liikanen Speaks at Seminar on Rome Treaty in Helsinki EUR / 11:00
• Central Bank Weekly Economists Survey (Table) BRL / 11:25
• TCMB Turkey Survey of Expectations TRY / 11:30
• ECB Board Member Sabine Lautenschlaeger Speaks in Dublin EUR / 12:45
• 2Q Manpower Survey, last 15% NZD / 13:01
• 2Q Manpower Survey, last 8% AUD / 13:01
• ECB President Draghi opens conference in Frankfurt EUR / 13:30
• mars.10 Bloomberg Nanos Confidence, last 57,4 CAD / 14:00
• Feb Labor Market Conditions Index Change, exp 2,5 USD / 14:00
• ECB Vice President Constancio chairs panel in Frankfurt EUR / 14:00
• ECB Publishes Weekly QE Holdings EUR / 14:45
• Bank of England Bond Buying Operation (Reinvestment) GBP / 14:50
• ECB's Praet chairs panel in Frankfurt EUR / 16:30
• mars.12 Trade Balance Weekly, last $697m BRL / 18:00
• Feb Export Price Index MoM, last 1,10% KRW / 21:00
• Feb Export Price Index YoY, last 7,40% KRW / 21:00
• Feb Import Price Index YoY, last 13,20% KRW / 21:00
• Feb Import Price Index MoM, last 2,10% KRW / 21:00
• RBA's Bullock Speech at Bloomberg, Sydney AUD / 21:30
• 4Q BoP Current Account Balance, exp -$12.00b, last -$3.40b INR / 22:00
• mars.12 ANZ Roy Morgan Weekly Consumer Confidence Index, last 113,9 AUD / 22:30
• Feb Foreign Direct Investment YoY CNY, exp -4,20%, last -9,20% CNY / 23:00
• Feb Budget Balance YTD, exp -350.0b, last -23.4b RUB / 23:00
• Feb Tax Collections, exp 93663m, last 137392m BRL / 23:00
• ECB President Mario Draghi Speaks in Frankfurt EUR / 23:00

The Risk Today:

EUR/USD continues to strengthen. Hourly resistance given at 1.0679 (16/02/2017 high) has been broken while hourly support at 1.0493 (22/02/2017 low). The technical structure suggests deeper consolidation towards 1.0500. 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 continues to edge lower despite ongoing consolidation since the pair has broken support given at 1.2254 (19/01/2017 low). The road is wide-open for further decline. Hourly resistance is now 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 is pushing higher towards key resistance given at 115.62 (19/01/2016 high). Hourly support can be found at 113.56 (06/03/2017 low). 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 is still riding within uptrend channel and is on its way to monitor hourly support implied by lower bound of the uptrend channel. Key resistance is given 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/JPY - 114.57

USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.

Although the greenback rose to 115.51 late last week, the subsequent retreat suggests consolidation below this level would be seen and risk has increased for pullback to 114.00-05, however, reckon support at 113.56-61 would limit downside and bring another rise later. Above indicated resistance at 115.51-62 would signal the erratic rise from 111.59 low is still in progress and may extend further gain to 116.00-10, break there would suggest the pullback from 118.66 has ended, bring further gain to resistance at 116.87 first. Looking ahead, a sustained break above there would signal early upmove has resumed for further gain to another previous resistance at 117.53 next.

Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00.

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.

On the downside, whilst initial pullback to 114.00-05 cannot be ruled out, reckon downside would be limited to 113.56-61 support area and bring another rise. A daily close below there would suggest the rebound from 111.59 has ended, bring further fall to 113.00-05 and possibly 112.70-80. Looking ahead, a daily close below latter level would retain bearishness and bring further fall to 112.00-10, break there would bring test of indicated support area at 111.59-69, however, dollar needs to penetrate indicated support at 111.36 to retain bearishness, bring retracement of recent upmove to 110.90-00, then 109.90-95 (50% Fibonacci retracement of 101.19-118.66) but downside should be limited to 109.50 and price should stay above 109.00, bring rebound later.

Recommendation: Stand aside for this week.

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.

Strong upside rejection on Friday and today's fresh weakness that pressures daily cloud base at 114.51, weakened near-term structure and give initial signal of false break above the cloud. Increased downside risk could be expected on firm break below widening daily cloud, with bearish divergence on daily chart slow stochastic, supporting the notion. Next pivotal supports lay at 114.10/03 (rising daily Tenkan-sen/Fibo 38.2% of 111.67/115.49 rally) and extended dips may find footstep here. Otherwise, break lower would generate stronger reversal signals. Meantime, hopes of fresh upside action are expected to stay alive while cloud base holds, as Ichimoku studies on daily chart are supportive. Close above daily cloud and extension above Friday's high at 115.49, are required to signal bullish continuation and expose next target at 115.91 (Fibo 61.8%).

Res: 114.99, 115.49, 115.91, 116.33
Sup: 114.51, 114.24, 114.10, 113.65

EUR/USD is unchanged in the Monday session, after posting strong gains at the end of last week. Currently, the pair is trading at 1.0670. On the release front, there are no major releases in the eurozone or the US. ECB President Mario Draghi will deliver remarks at an event in Frankfurt.

The euro posted considerable gains on Friday, as some ECB policymakers raised the possibility of higher interest rates at last week's policy meeting. At the meeting, the ECB held course and maintained interest rates at a flat 0.00%. The markets were left to pick up on nuances, as ECB President Mario Draghi noted that the central bank removed one phrase from its standard introductory statement – 'using all the instruments available within its mandate'. Draghi stated that the removal of this phrase means that the ECB 'no longer has a sense of urgency in taking further actions …. prompted by the risk of deflation'. With growth and inflation showing signs of improvement, the ECB has been under pressure to tighten policy and reduce its asset-purchase program. Germany, in particular, is unhappy with the ECB's ultra-loose policy and on Thursday, German Finance Minister Wolfgang Schaeuble bluntly stated that he wanted to see a 'timely start to the exit' from the ECB's asset-purchase scheme. For his part, Mario Draghi must balance the improved economy with upcoming elections in the Netherlands and France. Euro-skeptics are a strong force throughout Europe and Draghi is reluctant to make any major moves in the middle of heated political campaigns.

The US economy delivered strong economic data on Friday. Nonfarm payrolls sparkled in February, as the indicator jumped to 235 thousand, easily beating the estimate of 196 thousand. Wage growth climbed 2.6% compared to February 2016, while the participation rate edged up to 63.0%, up from 62.9%. These numbers make it a virtual certainty that the Fed will raise rates by a quarter-point on Wednesday. Although a rate hike has been priced in by the markets, there have been disappointments in the past, so a rate move will likely give the dollar a boost against its major rivals, such as the euro. The solid job numbers also give President Trump a much-needed boost. Trump is under pressure to present an economic agenda, but the markets won't mind giving him some additional breathing room with the economy performing well.

The AUD/USD has formed an X cross (intersection of two trend lines or a trend line with a strong PP) exactly at the POC zone 0.7595-0.7605 (H5, ATR top, 78.6) and the pair might start to reject towards 0.7555 zone. If the pair breaks below 0.7545 (ATR, EMA89 support) we should see a continuation towards 0.7525, L3 support. Final target is 0.7480 for this move. Ideally for this scenario to succeed, the pair should stay below 0.7635 as the spike to 0.7635 would lead to a possible ascending scallop with a stronger correction to the upside.

EUR/USD

Current level - 10709

Despite the positive bias, my outlook is counter-trend, for a break through 1.0620 crucial support, towards 1.0490 lows. 

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 114.53

The recent reversal at 115.50 led to a corrective slide and the intraday bias is negative, for a possible test above 114.10 support zone. Initial intraday resistance lies at 114.95 and a break through the latter will signal a renewal of the general upmove, towards 115.65 area. 

GBP/USD

Current level - 1.2210

The intraday bias is positive above 1.2185 minor support, with a risk of an intraday rise towards 1.2300 major hurdle. A break through 1.2185 will signal a slid towards 1.2080 zone.

'Following the ECB's policy review on Thursday, President Mario Draghi refused to speculate on the possibility of rate increases before quantitative easing ends.' - Tanvir Sandhu, Bloomberg

Pair's Outlook

Due to comments from the president of the European Central Bank, Mario Draghi, the common European currency jumped against the US Dollar in the recent trading sessions. The currency exchange rate already reached the new second weekly resistance level at 1.0718. The last time the rate was at such level was on February 6. As Mario Draghi is set to speak also on Monday, it is likely that the Euro would continue the surge. In such case the weekly S2 would be broken, and the rate would surge up to the monthly R1, which is located at 1.0772 level.

Traders' Sentiment

SWFX traders have become bearish regarding the pair, as 53% of open positions are short on Monday. Meanwhile, 55% of trader set up orders are set to sell the Euro.