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Daily Pivots: (S1) 1.3350; (P) 1.3393; (R1) 1.3416; More...

Intraday bias in USD/CAD remains neutral for the moment as consolidation continues below 1.3436 temporary top. Deeper retreat cannot be ruled out. But we'd expect downside to be contained well above 1.3209 resistance turned support and bring rally resumption. Above 1.3436 will extend the whole rise from 1.2968 and target 1.3598 high. Break there will resume the medium term rally from 1.2460 to next fibonacci level at 1.3838.

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 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.

Daily Pivots: (S1) 138.64; (P) 139.14; (R1) 139.55; More...

GBP/JPY remains bounded in range of 138.53/142.79. Intraday bias remains neutral at this point. We're treating price actions from 148.42 as a corrective pattern. Break of 138.53 support will bring deeper decline to 136.44 support and possibly below. However, we'd expect strong support at 50% retracement of 122.36 to 148.42 at 135.39 to bring rebound. On the upside, above 142.79 will turn bias back to the upside for 144.77 and above.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern. Main focus is on 38.2% retracement of 195.86 to 122.36 at 150.42. Rejection from there will turn the cross into medium term sideway pattern with a test on 122.36 low next. Though, sustained break of 150.42 will extend the rebound towards 61.8% retracement at 167.78.

Daily Pivots: (S1) 120.30; (P) 120.50; (R1) 120.63; More...

Intraday bias in EUR/JPY stays neutral for consolidation below 121.18 temporary top. We're holding on to the view that corrective fall from 124.08 has completed at 118.23 already, after defending 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39). Decisive break of 121.32 resistance should confirm this case and target 124.08 high next. However, break of 119.45 support should invalidate this bullish view and would likely extend the fall from 124.08 through 118.23.

In the bigger picture, price actions from 109.20 medium term bottom are seen as part of a medium term corrective pattern from 149.76. Strong rebound from 118.45 resistance turned support suggests that it's still in progress. Break of 124.08 will target 126.09 key resistance level. We'd be cautious on strong resistance there to limit upside. However, sustained break there will be a strong sign of medium term momentum and could target 141.04 resistance next.

Daily Pivots: (S1) 1.0690; (P) 1.0718; (R1) 1.0733; More...

With 1.0683 minor support intact, further rise is expected in EUR/CHF. As noted before, a short term bottom is likely in place at 1.0629 on bullish convergence condition in 4 hour MACD. Current development raised the chance of larger trend reversal after defending 1.0620 key support level. Decisive break of 1.0749 should affirm this bullish case and target 1.0897. On the downside, though, below 1.0683 minor support will turn bias back to the downside for 1.0629 instead.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. There is no confirmation of completion yet. Sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485. However, strong rebound from 1.0620 and break of 1.0897 resistance will indicate trend reversal and turn outlook bullish.

Daily Pivots: (S1) 1.3878; (P) 1.3921; (R1) 1.3966; More...

Intraday bias in EUR/AUD remains neutral for the moment for consolidation below 1.4014 temporary top. At this point, we're still preferring the case of short term bottoming at 1.3624, on bullish convergence condition in 4 hour MACD. Hence, another rise is expected and above 1.4014 will target 1.4289 resistance. Break there will confirm trend reversal. However, below 1.3835 minor support will dampen our bullish view and turn bias back 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) 0.8636; (P) 0.8660; (R1) 0.8681; More...

EUR/GBP lost some upside momentum after hitting 0.8682. But further rise is still expected as long as 0.8546 support stays intact. As noted before, rise from 0.8402 is viewed as the third leg of the corrective price actions from 0.8303.Such rally would target 0.8851 resistance and above. However, whole price actions from 0.8303 are viewed as the second leg of the correction from 0.9304. Hence, we'd expect strong resistance from 100% projection of 0.8303 to 0.8851 from 0.8402 at 0.8950 to limit upside. On the downside, below 0.8546 minor support will turn bias back to the downside for 0.8402 support. instead

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

Sterling weakens broadly yesterday and is trading as the second weakest major currency for the week at the moment. The House of Lords in US passed an amended bill on Brexit yesterday after having the highest turnout since 1831. The vote was passed by 366 to 268 to add addition condition to the so called "European Union (Notification of Withdrawal) Bill". That demands a guarantee of "meaningful vote" by the Parliament on the outcome of Brexit talks. And it's seen by analysts as securing veto power on any final agreements. The bill will now return to the House of Commons for deciding whether to accept the Lord's amendments. The debate could probably held on next Monday.

The UK Brexit Secretary David Davis described the result of the vote as "disappointing". And he criticized that "it is clear that some in the Lords would seek to frustrate that process, and it is the government's intention to ensure that does not happen." Davis pledged to "overturn these amendments in the House of Commons." Brexit minister for the Lords George Bridges also said in his final plea before the vote that "this amendment simply makes the negotiations much harder from day one for the prime minister as it increases the incentive for the European Union to offer nothing but a bad deal."

UK Chancellor Exchequer to deliver budget statement

Sterling traders are also getting cautious ahead of Chancellor of Exchequer Paul Hammond's first full budget statement today. The statement comes at the time just weeks before prime minister May's trigger of Article 50 for Brexit negotiation. And there are a lot of uncertainties surrounding the situation. The focus will be on what he would do to shield the UK economy from the impact of Brexit. Hammond has already revealed that he plans to build up GBP 60b reserve to deal with Brexit related uncertainties.

Japan Q4 GDP revised up, but missed expectation

The Japanese yen strengthens today, in particular against European majors, as Nikkei continues its slump. Q4 GDP growth was finalized at 0.3% qoq, revised up from 0.2% qoq but missed expectation of 0.4% qoq. GDP deflator was finalized at -0.1% qoq, unrevised. Current account surplus narrowed to JPY 1.26T in January, below expectation of JPY 1.46T. Bank lending grew 2.8% yoy in February. Also from Asian session, New Zealand manufacturing activity rose 0.8% in Q4.

Looking ahead...

German industrial production and Swiss CPI will be featured in European session. Main focus could be on US ADP employment report. US will also release non-farm productivity revision. Canada will release housing starts, labor productivity and building permits.

EUR/GBP Daily Outlook

Daily Pivots: (S1) 0.8636; (P) 0.8660; (R1) 0.8681; More...

EUR/GBP lost some upside momentum after hitting 0.8682. But further rise is still expected as long as 0.8546 support stays intact. As noted before, rise from 0.8402 is viewed as the third leg of the corrective price actions from 0.8303.Such rally would target 0.8851 resistance and above. However, whole price actions from 0.8303 are viewed as the second leg of the correction from 0.9304. Hence, we'd expect strong resistance from 100% projection of 0.8303 to 0.8851 from 0.8402 at 0.8950 to limit upside. On the downside, below 0.8546 minor support will turn bias back to the downside for 0.8402 support. instead

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

Economic Indicators Update

STOCKS

Equities are all mixed. Dow is in a correction phase while Dax and Shanghai looks bullish for the near term. Nikkei could bounce back from support levels while we need price confirmation on nifty for immediate directional cue.

Dow (20924, -0.14%) has possibly entered into a short term correction phase which could extend towards 20800-20750 levels as mentioned earlier.

Dax (11966.14,+0.06%) has taken immediate support near 11928 and if that holds, it could inch up towards 12090 or higher in the near term. Overall trend is up.

Nikkei (19252.13, -0.48%) is trading low and could re-test levels near 19000 before bouncing back from there towards 19400-19600 levels again.

Shanghai (3238.46, -0.12%) is slowly moving higher and heading towards our expected 3250-3275 levels. Near term looks bullish.

Nifty (8946.90, -0.18%) is at crucial juncture and could decide its further course of movement by the end of the week. A break on either side of the 8800-9000 region would give a directional confirmation for the near term.

COMMODITIES

Gold (1217)has moved lower in line with our expectation and trading at the lower band of its trading range of 1217-1274. The upward trend line support since Dec 16 has been broken. A close below 1217 could drag the price towards 1183. We will remain bearish until it is trading below 1250.

Silver (17.54) also broke its crucial support of 17.60.Immeidta supports are at 17.45 and 16.60. Bias will remain bearish until it is trading below 18.

Copper (2.71) is trading around its crucial support of 2.60. A close below that could open up 2.53 and 2.45 respectively.

Brent (56.61) and WTI (52.80) both are trading within their narrow ranges of 55-57.60 and 52.45-55. We have US Crude oil inventory data at 9.00 p.m IST. An increase in weekly inventory could open up lower levels for both Brent (53.54) and WTI(51 / 49.65) respectively.

FOREX

Very muted price action in all the majors before the ECB meet on Thursday, 9th March’17.

The Dollar Index (101.77) price action has narrowed down in the range of 101.50-102.00 in the last couple of sessions and may remain quiet till the ECB meet tomorrow. Uptrend remains intact above the major support at 101.20.

The volatility in Euro (1.0568) has been crashing down and it may keep the currency in the range of 1.0500-1.0630 till the ECB meet on 9th Mar’17 though no significant movement is expected even after the meet.

Dollar-Yen (113.81) is in a sleep mode just like the other majors and no immediate deviation from the range of 113-115 is expected.

Pound (1.2207) may consolidate in the wider range of 1.2150-1.2300 for a few sessions before resuming the major downtrend.

The RBA decision of maintaining the status quo had no visible impact on Aussie (0.7603). The next few sessions may see the currency stuck in the range of 0.7530-0.7630 with the volatility coming down.

Dollar-Rupee (66.67) may test the major support 66.50-40 in the near term in a gradual decline but an increase in volatility is expected on Friday with the Exit polls coming out.

INTEREST RATES

We need to keep a close watch on the yield spread between US, UK and Germany as they are moving in line with the movement in Euro and Pound and could give some clarity on immediate direction of the currency pairs.

Fresh fall in the German-US 2Yr (-2.22%) and increased momentum on the downside suggests that the fall could extend towards -2.25% to -2.30% in the near term. In that case we could see a fall in Euro (1.0566) towards 1.05 or even lower in the coming sessions.

Looking at the crashing US-UK 10Yr (-1.33%), it would not be a surprise if the yield spread falls towards -1.40/45% and drags Pound towards 1.21-1.20 levels in the medium term.

The US yields continue to rally and is on the verge of breaking above immediate resistances. . The 5Yr (2.05%), 10YR (2.51%) and the 30Yr (3.11%) are trading 2-3bps higher and looks bullish for the near term.

The UK 5YR (0.57%) continues to rise sharply, faster than the 10YR (1.19%) and the 20YR (1.72%) yields. The UK 10-5Yr spread (0.62%) has bounced a bit and could recover towards 0.70% in the near term.

While XAU/AUD continues to step higher from the last time we featured the commodity, price has dropped below the following 4 hour trend line:

XAU/USD 4 Hourly:

How often do we see trend lines break like this, only to hit the first short term area of support and ping back higher. Nothing in forex trading is 'textbook' and this push down through the trend line could well just be the market cleaning out any stops or weak longs before it bounces and properly runs higher.

I'm much more inclined to wait and see if this first level of horizontal resistance holds and then zoom into an intraday chart to find an opportunity to long any retests. You know that if it holds, you're likely to find support at the original trend line again.

EUR/USD

It was another quiet day across the FX board, with the Pound being the exception, as the Sterling plummeted against all of its major rivals. There were some minor macroeconomic releases that weren't enough to affect currencies. The EUR/USD pair ended the day pretty much flat in the 1.0580 region, having however, extended its weekly decline to 1.0557. During the European morning, news confirmed EU´s growth at 0.4% for the last quarter of 2016, while German data disappointed, as new orders in manufacturing fell by 7.4% in January, against a December advance of 5.2%. The annual reading resulted at -0.8%, from a previously revised 8.0%. In the US the trade deficit widened to $48.5B in January, as expected. Finally, the US IBD/TIPP Economic Optimism Index declined 1.1 points, or 2.0%, in March, posting a reading of 55.3 vs. 56.4 in February 2017.

The EUR/USD pair technical picture shows that Friday's upward potential kept fading, as the pair has moved further below its 100 DMA and closed the day below its 20 DMA for a second consecutive day, although barely. In the 4 hours chart, the price is barely holding above a bullish 20 SMA, and a few pips below a bearish 100 SMA, while the Momentum indicator head lower, still above its 100 level, and the RSI also turned south, but remains around 50. Market seems ready to resume dollar's buying, but will likely wait from macroeconomic confirmations, in the form of the ECB monetary policy announcement and the US Nonfarm Payroll report, to be unveiled later this week.

Support levels: 1.0565 1.0520 1.0470

Resistance levels: 1.0635 1.0660 1.0710

USD/JPY

The USD/JPY pair closed the day flat around 114.00, amid the absence of directional clues. Equities closed mixed around the globe, but not far from their opening levels, while US Treasury yields remained unchanged around Monday's levels. Japan will release the final version of its Q4 GDP during the upcoming Asian session, expected to be revised up to 0.4% from previous estimate of 0.2%, alongside with January trade figures, but seems unlikely the data could trigger some interesting moves. China will also release its trade figures for February, and will likely have a deeper effect over currencies than Japanese ones. From a technical point of view, the 4 hours chart shows that the price has held above its 100 and 200 SMAs that anyway remain flat, converging in the 113.30 region, while technical indicators lack directional strength, flat within neutral territory, reflecting the quietness around the pair.

Support levels: 113.50 113.25 112.90

Resistance levels: 114.55 114.95 115.30

GBP/USD

The GBP/USD pair extended its decline to a fresh 7-week low of 1.2169, to close the day around the 1.2200 figure. Early London, the Halifax house price index showed that house prices posted the slowest rate of growth in over three years in the three months to February, up 5.1% than in the same period a year ago, but down from a 5.7% gain in the three months to January. The lender, also said that it expects prices growth to keep easing due to lower consumer spending power. The House of Lords kept discussing the Brexit bill, and peers voted against the possibility of a second referendum, and agreed on a veto to the final Brexit deal, weighing further on Pound, as it´s another setback for PM May. From a technical point of view, the pair is at risk of falling further, as it extended its slide well below the 61.8% retracement of January's rally at 1.2260, and the 4 hours chart shows that the 20 SMA maintains its bearish slope, now below the mentioned Fibonacci level, while the Momentum indicator retreated from its mid-line, and the RSI indicator holds flat around 31, all of which supports some additional slides on a break below the mentioned daily low.

Support levels: 1.2170 1.2130 1.2085

Resistance levels: 1.2220 1.2260 1.2300

GOLD

Despite the limited action seen across the FX board, the greenback was firmer against other assets, with gold underperforming, plunging to $1,214.09 a troy ounce and finishing the day a few cents above it. Spot fell to a fresh 1-month low on hopes the US Federal Reserve will pull the trigger on rates as soon as next week. The daily chart shows that the price pulled further away from its 200 DMA, which now converges with the 61.8% retracement of post-US slide, also extending its slide below the 20 DMA, whilst technical indicators maintain sharp bearish slopes within negative territory, supporting additional declines with the market now targeting 1,204.50, the 38.2% retracement of the same rally. In the 4 hours chart, the bearish momentum is even stronger, as the RSI maintains its downward strength around 23, while the Momentum indicator retraced sharply after failing to overcome their mid-lines. In the same chart, the 20 SMA maintains a strong bearish slope, having already crossed below the 100 SMA, and poised now to break below the 200 SMA.

Support levels: 1,204.50 1,198.15 1,188.20

Resistance levels: 1,221.70 1,230.00 1,239.25

WTI CRUDE

US sweet, light crude continued to trade flat as WTI futures ended the day a few cents above $53.00 a barrel, retracing an early spike up to 53.78. Saudi Arabia's oil minister gave mixed messages on future OPEC production cuts, saying that the deal sealed last November has improved the oil market, but only because Saudi Arabia cut beyond its pledge. Ahead of US inventory data, the daily chart shows that the index is posting a second consecutive doji, with the early advance contained by selling interest around a horizontal 20 DMA, still around 53.70. In the same chart, the Momentum indicator continues to be flat around its 100 level, but the RSI indicator heads modestly lower around 45, leaning the scale towards the downside. In the 4 hours chart, the price remains trapped within horizontal moving averages, whilst technical indicators turned south, and are currently entering negative territory, in line with the longer term view.

Support levels: 52.50 51.90 51.40

Resistance levels: 53.70 54.20 54.80

DJIA

US indexes closed the day marginally lower, down for a second consecutive day. The Dow Jones Industrial Average settled at 20,924.76 down by 29 points, while the S&P lost 0.29%, to 2,368.39. The Nasdaq Composite closed at 5,833.93, down by 15 points. Energy and pharmaceutical equities were among the worst performers, with Verizon Communications leading Dow's decline, down by 1.32%, followed by Chevron that shed 1.23%. Boeing was the best performer after adding 0.55%. Technically, the daily chart for the Dow shows that the benchmark barely surpassed its Monday's low, and held within a well-limited range, as caution prevailed, with the Momentum indicator still holding horizontal above its 100 level, and the RSI indicator also heading nowhere around 70. In the shorter term, the 4 hours chart the benchmark is increasingly bearish, as attempts to advance were contained by a now bearish 20 SMA, at 20,957, whilst technical indicators head south within bearish territory, after being unable to re-enter positive territory.

Support levels: 20,892 20,849 20,800

Resistance levels: 20,957 21,017 21,064

FTSE 100

The Footsie closed at 7,338.99 down 11 points or 0.15%, despite continued Pound weakness. The decline was led by bookmaker Paddy Power Betfair that shed 5.86% as despite reporting an 18% raise in revenues, the company also informed that after last year's merge, losses accounted £5.7 million. Financial and mining-related equities were also under pressure, with Standard Life down 3.78% and Antofagasta shedding 2.6%. Intertek Group, on the other hand, was the best performer, advancing 4.76%. The daily chart for the index shows that it stands near the mentioned close, holding above bullish moving averages, but with technical indicators still retreating within positive territory, suggesting the index could fall further, particularly on a break below 7,299, the 20 DMA and the immediate support. In the 4 hours chart, the index extended below a bullish 20 SMA, whilst technical indicators present tepid downward strength within bearish territory, in line with the longer term perspective.

Support levels: 7,299 7,265 7,238

Resistance levels: 7,345 7,397 7,420

DAX

The German DAX advanced 7 points this Tuesday to settle at 11,966.14, with most major European indexes closing flat, as macroeconomic data came in line with expectations, failing to motivate investors ahead of the ECB and the US NFP. Among the German benchmark, automakers and pharmaceuticals led the advance, with Daimler leading advancers, up 0.91%, followed by Continental that added 0.43%. Financials remained under pressure, with Deutsche Bank adding 1.18% to its recent losses. Daily basis, the index remained within Monday's range, still developing above bullish moving averages, which indicate that the downward potential remains limited, whilst the Momentum indicator holds flat within neutral territory and the RSI indicator retreats from overbought readings. In the 4 hours chart, the index consolidated below a still bullish 20 SMA, whilst technical indicators have lost directional strength right below their mid-lines.

Support levels: 11,920 11,867 11,816

Resistance levels: 12,001 12,053 12,100