Daily Pivots: (S1) 1.3114; (P) 1.3147; (R1) 1.3211; More...

USD/CAD recovers notably today but stays in range of 1.2968/3211. Intraday bias remains neutral first. On the upside, break of 1.3211 resistance will argue that fall from 1.3598 has completed at 1.2968. And more importantly, rise from 1.2460 is still in progress. In that case, intraday bias will be turned back to the upside for 1.3598 and above. On the downside, below 1.2968 will revive the case that rise from 1.2460 is completed and turn outlook bearish for this low. Overall, choppy rise from 1.2460 is still seen as a corrective move.

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 could be completed at 1.3598 and fall from there is tentatively seen as the third leg. Break of 1.2460 will target 50% retracement of 0.9460 to 1.4689 at 1.2075 before completing the correction. In case of another rise, we'd look for reversal signal above 61.8% retracement of 1.4689 to 1.2460 at 1.3838.

Global Markets:

• Asian stock markets: Nikkei rallied 0.60 %, Shanghai Composite gained 0.30 %, Hang Seng rose 0.05 %, ASX 200 up 0.10 %
• Commodities: Gold at $1254 (-0.40 %), Silver at $18.35 (-0.40 %), WTI Oil at $54.20 (+0.30 %), Brent Oil at $56.65 (+0.40 %)
• Rates: US 10-year yield at 2.37, UK 10-year yield at 1.15, German 10-year yield at 0.20

News & Data:

• Japan Industrial Production (Jan Prelim) (MoM): 0.4% (prev 0.7%)
• Japan Industrial Production (Jan Prelim) (YoY): 4.3% (prev 3.2%)
• Australia ANZ Roy Morgan Weekly Consumer Confidence (Feb 26): 119.1 (prev 113.7)
• Australia New Home Sales Jan (MoM): -2.2% (prev 0.20%)
• Australia Current Account Balance (Q4): -A$3.9b (prev -A$11.4b)
• Australia Private Sector Credit Jan (MoM): 0.2% (prev 0.7%)
• Australia Private Sector Credit Jan (YoY): 5.4% (prev 5.6%)
• New Zealand Trade Balance (Jan): -285m (prev -41m)
• New Zealand Money Supply M3 Jan (YoY): 6.4% (prev 6.4%)
• Japan Vehicle Production Jan (YoY): 3.8% (prev 4.2%)
• PBoC Fixes USDCNY Reference Rate At 6.8750 (prev fix 6.8814)

Markets Update:

The markets have remained relatively quiet as traders and investors are looking forward to the speech by US President Trump this evening. Trump is expected to talk about his tax plan and infrastructure spending. His promises have helped to boost the equity markets in the past few months, and expectations are hence high.

Should tonight's outcome be positive – meaning that the expectations of the market have been fulfilled – stocks are likely to rally further along with the US Dollar. However, should Trump be too vague or disappoint the market in general, the both equities and the USD are likely to come under pressure.

USD/JPY rallied in yesterday's late NY session and reached a high of 112.80. Should it break above the resistance a 113, the next notable level lies at 113.80. EUR/USD consolidated in a 1.0565-90 range in Asia, while GBP/USD spent it in a 1.2420-40 range.

Upcoming Events:

• 07:45 GMT – French CPI
• 07:45 GMT – French GDP
• 10:00 GMT – Italian CPI
• 13:30 GMT – US GDP
• 14:45 GMT – US Chicago PMI
• 15:00 GMT – US CB Consumer Confidence
• 15:00 GMT – US Richmond Manufacturing Index
• 20:00 GMT – FOMC Member Harker speaks
• 20:30 GMT – FOMC Member Williams speaks
• 21:00 GMT – US President Trump speaks
• 22:30 GMT – Australian AIG Manufacturing Index

Key Points:

• Falling wedge being felt again.
• EMA bias still highly bearish.
• Market unease should help to increase downside risk.

The EURCHF had some strong buying pressure in the prior session but this may not be very sustainable given the pair’s overall technical bias. Specifically, aside from the long-term falling wedge, there are a number of signals indicating that we are liable to see a reversal in the very near-term. As a result of this, downside risks are present, even if the lower constraint is likely to cap losses around the 1.0620 handle.

Starting with the wedge, the presence of the structure on its own should be reason enough to suspect an impending slip for the EURCHF. Notably, the long-term pattern has weathered some fairly withering assaults yet remained firmly intact. As a result, we expect the outcome of this latest push higher to be met with a similar fate as both the December and January rallies which should mean a reversal is now imminent.

However, due to the narrowing of the constraints of the wedge, one could argue that we might instead see the upside breakout that this pattern should eventually inspire. Unfortunately for the bulls, this would be at odds with a number of other technical readings that are currently evident on the charts.

Firstly, the current price level coincides with not only the upside constraint of the wedge but also the 50.0% Fibonacci retracement. This retracement has historically proven itself to be a reversal point and has been a rather stubborn zone of resistance over the past few weeks. Secondly, the EMA configuration remains highly bearish and is in little danger of reversing this bias any time soon. This is largely due to the stochastics which are on the cusp of moving into overbought territory and are preventing traders from seriously considering going against the trend.

From a fundamental perspective, any long-term upsides for any CHF cross are a fairly distant prospect. This largely stems from the persistent, if not consistent, level of unease that many market participants refuse to acknowledge is current at play. Indeed, with a VIX reading below 15, one can be forgiven for ignoring the role that the CHF’s safe haven status is playing in supressing pairs such as the EURCHF.

Ultimately, we could begin to see upside potential begin to rise as the world acclimatises to the Trump presidency and we get some firm details on his much talked about policies. However, in the near to medium-term, the technicals and the fundamentals seem to be in agreement that we are likely to see the downtrend extend for some time. But what does this mean for the next week or so? Well, as mentioned above, a reversal is now looking very probable and this will likely see the pair drift back towards the 1.0620 handle.

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

EUR/USD

In recent sessions, we can see that the single currency rose on both weak US core durable goods data and disappointing US pending home sales. Despite this, the rally was a short-lived one as price failed to sustain gains beyond the H4 supply area seen at 1.0632-1.0620 (located within daily supply coming in at 1.0676-1.0608). With the H4 candles now seen trading below December's opening level at 1.0590, the next downside objective, in our view, falls in at the H4 mid-level support drawn from 1.0550, shadowed closely by January's opening base at 1.0515.

Our suggestions: Personally, we would consider shorting at this time. The 1.05/1.0520 area, nevertheless, looks great for a bounce north (yellow rectangle). The zone comprises of: a round number at 1.05, a H4 trendline support taken from the low 1.0339, January's opening level at 1.0515, daily support at 1.0520 and let's not forget that all of this is further reinforced by the weekly support area at 1.0333-1.0502. This barrier, in our humble opinion, has sufficient confluence to justify a trade without the need for additional confirmation.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: 1.05/1.0520 ([an area one could possibly trade at market] stop loss: 1.0490).
• Sells: Flat (stop loss: N/A).

GBP/USD

The GBP/USD pair, as you can see, recently managed to find a pocket of bids around the H4 support area drawn in at 1.2383-1.2394. The unit eventually advanced north from here on weak US pending home sales and shook hands with the H4 mid-way resistance band at 1.2450. As of this time, we do not see much direction, at least from a structural perspective, coming in from the bigger picture. Weekly action remains trading mid-range between the 2017 yearly opening level at 1.2329 and a weekly Quasimodo resistance coming in at 1.2673. By the same token, a similar pattern is in motion on the daily chart. The daily candles are seen loitering between daily demand at 1.2252-1.2342 (houses the aforementioned 2017 yearly opening level) and a daily supply penciled in at 1.2728-1.2657 (also houses the above noted weekly Quasimodo resistance level).

Our suggestions: By and large, we still do not see much to hang our hat on at the moment, as price shows very little confluence. Without it, trading becomes a challenging task! Therefore, we'll continue to remain on the sidelines today and reassess going into Wednesday's session.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

AUD/USD

During the course of yesterday's sessions, the commodity-driven currency tapped the underside of 0.77 and sold off to lows of 0.7669. What is quite notable from a technical perspective this morning is the potential H4 AB=CD bullish pattern (black arrows) in process, terminating around the H4 mid-way support neighborhood at 0.7650. While this number boasts a H4 demand seen at 0.7649-0.7656 and a H4 channel support extended from the low 0.7605, we still remain hesitant. Our reasoning lies within the higher-timeframe structure. Both the weekly and daily charts show room to trade beyond the current H4 demand base to 0.76, as we have a daily support level planted around that area at 0.7609.

Our suggestions: Does this mean we are going to completely ignore the above noted H4 demand? No. Despite the area being positioned at somewhat of a disadvantage on the higher timeframes, our desk believes that a bounce could still be seen from here. But, before trading long from this region we would insist on seeing a reasonably sized H4 bull candle take shape. What this will do is show buyer interest within the walls of a high-probability reversal zone.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: 0.7649-0.7656 ([wait for a reasonably sized H4 bull candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

USD/JPY

Try as it might, the USD/JPY could not muster enough strength to break through the 112 handle yesterday, and ended the day topping around the underside of the H4 supply at 112.95-112.81/February's opening level at 112.70. Although this move is bolstered by a daily demand area coming in at 111.35-112.37, we would need to see the H4 candles close above the 113 neighborhood before considering becoming buyers in this market. Beyond 113 is a H4 supply sitting at 113.84-113.62, followed closely by the 114 handle.

Our suggestions: Given the structure seen from the daily timeframe at the moment, we will not be looking to sell this unit today. And, as mentioned above, it will take a H4 close above 113 to be seen before we look to buy. An ideal setup here would be a H4 close higher, followed by a retest of this number as support and a reasonably sized H4 bull candle!

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: Watch for a H4 close above 113 and look to trade any retest seen thereafter ([we would also advise waiting for a reasonably sized H4 bull candle to form following the retest before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

USD/CAD

Underpinned by a weekly demand base coming in at 1.3006-1.3115, the pair was able to touch gloves with a daily resistance area yesterday seen at 1.3212-1.3169. Any sustained move beyond this daily zone would likely place the daily supply base at 1.3387-1.3317 in the firing range.

Turning our attention to the H4 candles, the recent advance has brought the piece up to within striking distance of the 1.32 handle. Apart from price currently being supported by a weekly demand, H4 action is also in the process of forming a H4 AB=CD bearish D-leg, which terminates around the underside of a H4 supply at 1.3299-1.3265 (H4 127.2% Fib ext. at 1.3263). In addition to this, there's also an intersecting H4 upper channel resistance line coming in from the high 1.3171.

Our suggestions: In essence, we have two possible setups to consider:

• A decisive H4 close above 1.32, followed by a retest and a reasonably sized H4 bull candle would, in our opinion, be enough evidence to suggest price wants to test the above noted H4 supply area. Therefore, one may look to consider longs from here.
• The aforementioned H4 supply is not only a good take-profit target, it's also a fine place to look to sell from given the surrounding confluence. However, we would advise waiting for a H4 bearish candle to take shape before committing yourself to a position here. The reason simply comes down to the possibility of a fakeout through our H4 supply zone up to the underside of the nearby daily supply at 1.3317.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: Watch for a H4 close above 1.32 and then look to trade any retest seen thereafter ([we would also advise waiting for a reasonably sized H4 bull candle to form following the retest before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: 1.3299-1.3265 ([wait for a reasonably sized H4 bear candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle).

USD/CHF

Amid yesterday's US segment, the USD/CHF retested the H4 mid-way number coming at 1.0050 and gravitated north up to the H4 supply barrier seen at 1.0116-1.0099. As we mentioned in Monday's report, while this H4 supply zone could potentially hold the market lower today, we feel it is somewhat vulnerable since the more attractive zone (in yellow) is seen above! The area comprises of the following converging structures: both December and January's opening levels at 1.0170/1.0175, a H4 AB=CD 127.2% Fib ext. at 1.0185, an upper H4 channel resistance line pegged from the high 1.0044, a H4 Quasimodo resistance at 1.0197, a 1.02 psychological handle and let's not forget that all of this is seen housed within the daily supply zone coming in at 1.0248-1.0168.

Our suggestions: In light of this confluence, our team will, dependent on the time of day, look to sell from the H4 127.2% Fib ext. level with stops placed a few pips above 1.02. In addition to this, we see little reason not to look to buy any break of the current H4 supply zone up to our H4 sell area. However, we would insist on not only a clean H4 close above the supply, but also a retest of the zone as demand followed by a reasonably sized H4 bull candle before committing to a position.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: Watch for a H4 close above the current H4 supply area and look to trade any retest seen thereafter ([we would also advise waiting for a reasonably sized H4 bull to form following the retest candle before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: 1.0185 region ([an area one could possibly trade at market] stop loss: 1.0205).

DOW 30

Although price managed to clip fresh a fresh record high of 20843 yesterday, trade was quiet on Monday with price ranging a mere 74 points. Due to this lackluster performance, much of the following report will echo similar thoughts put forward in Monday's analysis…

As can be seen from the weekly chart, another healthy round of buy orders flowed into the market last week, consequently registering a third consecutive weekly gain. With equities now trading at record highs, where do we go from here? Well, given that there is absolutely no weekly resistance levels in sight, the best we can do for the time being is continue looking to ‘buy the dips'. The closest higher-timeframe area can be seen at 20527-20626: a daily demand zone.

Over on the H4 chart, price respected the H4 support area at 20690-20720 beautifully on Friday and rallied to a high of 20816. Although this zone boasts no higher-timeframe (structural) convergence, the buyers have already proved its value. Therefore, it remains of interest to our desk today.

Our suggestions: Just to be clear here though, placing pending orders at this zone is not advised, since there's little stopping price from ignoring this area and heading to the H4 demand zone below at 20621-20650, which happens to be positioned around the top edge of the current daily demand base. Waiting for additional confirmation such as a lower-timeframe buy signal (see the top of this report) or a reasonably sized H4 bull candle is, at least in our opinion, the safer, more logical, path to take.

Data points to consider: US prelim GDP at 1.30pm, CB consumer confidence at 3pm GMT.

Levels to watch/live orders:

• Buys: 20690-20720 ([waiting for additional confirmation is advised before looking to execute a trade] stop loss: dependent on how one chooses to confirm the zone).
• Sells: Flat (stop loss: N/A).

GOLD

For those who read Monday's report on gold you may recall our desk talking about shorting from the H4 161.8% Fib ext. at 1260.4, which is sited within a H4 supply at 1264.7-1254.6. As you can see, bullion sold off beautifully from this line and is on course to test the H4 demand coming in at 1247.6-1249.8. Well done to any of our readers who managed to jump aboard this move!

While the H4 candles are currently reflecting a bearish tone, as well as daily action recently kissing the underside of a daily resistance seen at 1262.1, where do we go from here when weekly price, only last week, closed above a weekly resistance at 1241.2?

Our suggestions: There is a chance that price could very well continue selling off this week, with price taking out not only the current H4 demand, but also the H4 support area seen below it at 1244.5-1242.4, since weekly movement may retest the recently broken weekly resistance as support.

With this in mind, we are looking to short from the H4 Quasimodo resistance at 1260.0 today. Not only is it located within the above noted H4 supply, it also sits just below the H4 161.8% Fib ext. at 1260.4 and daily resistance at 1262.1. However, we must stress that we would pass on this setup if price connects with the H4 demand beforehand since this is our first take-profit target.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1260.0 region ([an area one could possibly trade at market] stop loss: above the H4 supply at 1264.7-1254.6).

Key Points:

• Price action trading near key reversal zone.
• RSI Oscillator close to overbought.
• FOMC rate hikes likely to start a significant slide in the gold price.

Gold has seen a resurgence over the past few months as the metal has seemingly rallied from the December $1122.75 low as it clawed its way back above the key $1200 handle. Subsequently, price action has proved fairly robust as it has climbed higher in a relatively clear ABCD pattern that looks close to completing around the 61.8% Fibonacci level. However, the momentum has started to stall and we could be seeing the first stages in a retreat back towards the key $1200 handle.

In fact, a cursory review of the underlying technical indicators provides some illuminating information. In particular, the RSI Oscillator is currently flirting with overbought levels and has been for some time despite price action having continued to climb. In addition, price action is nearing a key reversal point at the 61.8% Fibonacci level at $1280.10. This level also happens to coincide with the end of the potential ABCD pattern. Subsequently, the pressures are building for a significant pullback.

Additionally, gold faces another important battle as the FOMC continues to ratchet up the rhetoric for a March interest rate hike. The last decade has seen a relatively impressive correlation between the price of Gold and interest rates (Treasury Yields). The seemingly depressed rates of return, due to economic malaise, has seen capital flood into the precious metal. However, with a new cycle of tightening ahead of us the spectre of looming falls could be very real indeed.

Subsequently, the medium term is likely to see the precious metal fall further to form new lows well below the $1046 mark. In the short run, the most likely scenario involves price action continuing to rise back towards the $1280 mark before a breakout failure sends the metal sharply lower towards the key $1200 handle over a period of weeks.

Ultimately, the upside is likely to be relatively limited for the precious metal by a range of fundamental factors. Subsequently, the most likely contention is the bearish one which may explain some of the current short side positioning that has been evident. Regardless, Gold is in for a rough few weeks given the mounting risk of short term interest rate hikes.

Daily Pivots: (S1) 0.7654; (P) 0.7681; (R1) 0.7699; More...

AUD/USD is still bounded in range of 0.7605/7740 for the moment. Intraday bias stays neutral at this point. Another rise cannot be ruled out. However, considering bearish divergence condition in 4 hour MACD, upside should be limited by 0.7777/7833 resistance zone and bring near term reversal. On the downside, break of 0.7605 support will indicate that rise from 0.7158 has completed already and turn bias back to the downside for 55 day EMA (now at 0.7559) first.

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 0.8186) and above.

The talk of a March rate hike by Fed is heating up this week. It's reported that based on Bloomberg's world interest rate probability tool, the markets are pricing over 50% chance for a March hike. Sharply higher than around 34% a week ago. This is seen as a reaction to recent hawkish comments from Fed officials. However, reactions in markets in general are not that apparent. US equities stayed cautious with DJIA closing up 15.68 pts or 0.08% at 20837.44. S&P 500 rose 2.41 pts or 0.1% to close at 2369.75. Treasury yields recovered with 10 year yield closing up 0.052 at 2.369, but stays near to bottom of recent range. Dollar index also rose slightly, back above 101 handle but stays far enough from 101.79 near term resistance. Dollar is also trading mixed, down against Euro and Aussie for the week.

Dallas Fed Kaplan: Don't overread market expectations

Dallas Fed president Robert Kaplan said that interest rate should rise "sooner rather than later". And "sooner rather than later means in the near future" but without reference to a specific time frame. He also urged to "guard against a situation where we get behind the curve". However, Kaplan also emphasized not to "overread or overreact" to market expectations. And "market probabilities can change very rapidly".

Trump to increase military spending by USD 54b

It's believed that fiscal policies of US president Donald Trump would play a great role in Fed's rate path. So far, as some Fed officials noted, with no details, fiscal policies are not taken into consideration in their projections yet. Trump will address the Congress for the first time today. Markets are eagerly awaiting for his speech for details on economic policies, in particular the tax reform and infrastructure spending. However, speaking to governors at the White House yesterday, Trump called for an increase of USD 54b in military spending. Meanwhile, budget for non-military programs will be lowered by the same amount. And that would be the core of the speech to Congress to day.

BCC urged "practical" Brexit

In UK, the British Chambers of Commerce published a report based on feedback from more than 400 businesses. It urged the government to give "solutions and certainty" to business before Brexit. BCC director general Adam Marshall said that "business communities across the UK want practical considerations, not ideology or politics, at the heart of the Government's approach to Brexit negotiations". Meanwhile, the report also urged the government to "aim to minimise tariffs, seek to avoid costly non-tariff barriers, grandfather existing EU free trade agreements with third countries, and expand the trade mission programme".

On the data front, New Zealand trade deficit widened sharply to NZD -285m in January. NBNZ business confidence tumbled to 16.6 in February. Australia current account deficit narrowed to AUD -3.9b in Q4. Japan industrial production dropped -0.8% mom in January, retail sales rose 1.0% yoy in January. UK Gfk consumer confidence dropped to -6 in February. French GDP and Swiss KOF are the only feature in European session. Canada will release IPPI and RMPI later today. US will release Q4 GDP revision, wholesale inventories, S&P Case-Shiller house price, Chicago PMI and consumer confidence.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7654; (P) 0.7681; (R1) 0.7699; More...

AUD/USD is still bounded in range of 0.7605/7740 for the moment. Intraday bias stays neutral at this point. Another rise cannot be ruled out. However, considering bearish divergence condition in 4 hour MACD, upside should be limited by 0.7777/7833 resistance zone and bring near term reversal. On the downside, break of 0.7605 support will indicate that rise from 0.7158 has completed already and turn bias back to the downside for 55 day EMA (now at 0.7559) first.

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 0.8186) and above.

Economic Indicators Update

STOCKS

Dow (20837.44, +0.08%) could face immediate resistance on the 3-day candle charts and pause for some time. But looking at the weekly and daily charts, there could be some more room on the upside. Overall long term trend is up but we could see small dip in the coming sessions before rallying upwards.

Dax (11822.67, +0.16%) is testing daily trend support and could bounce back in the near term towards 12000-12100 levels. Near term looks bullish.

Nikkei (19235.13, +0.67%) has bounced back from support at 19000 and could now move higher towards 19400. Clear contraction is visible on the 3-day candles and while that may continue for some more sessions, we should be ready to see a sharp break out on either side. This could provide some cues for direction in Dollar-Yen for the near term.

Shanghai (3226.46, -0.07%) came down yesterday, contrary to our expectation of a rise towards 3275-3300. In case it fails to bounce back above 3250 just now, it could be indicating a sideways movement in the near term within the 3275-3225 region.

Nifty (8896.70, -0.48%) closed just above the daily channel support at 8889 and while that holds there could be some chance of seeing another 1-2sessions of movement within the 8960-8900 region. While crucial resistance near 8960 holds, near term bias is bearish. We could see a fall towards 8800 or lower in the near term while the resistance holds.

COMMODITIES

Gold (1254) was almost unchanged after last couple of days gain and may approach the pivot at 1230 of the entire range of 1210-1265.

Similar kind of chart has been formed in silver (18.31) also as it is trading within a very significant resistance around 18.35. The possibility of a decline towards 18 levels can’t be ruled out.

Absolutely no movement has been seen in Copper (2.68), trading within the range of 2.60-2.83. It is still holding its crucial support of 2.60 and a close above 2.72 could open up 2.83 as well.

Brent(55.98) and WTI(54.13) spent a quiet session in the narrow range of 55-57.60 and 53-55 with no directional bias.

Trump-speech tonight along with US Prelim GDP q/q data at 7.00 pm IST and US CB Consumer Confidence data at 8.00 pm IST may add volatility across all the commodities .

FOREX

All eyes on the Trump’s speech tonight. Major currencies remain quiet and range-bound, but could possibly see some volatility over today and tomorrow.

Dollar Index (101.16) has been quiet and could trade within the 100.85-101.85 today also. Fresh volatility may be seen after the Trump’s speech. We need to see if it breaks above 102 to move higher or come off towards 100. Equal chances of movement on either side just now.

Euro (1.0585) is holding well below 1.0650 and while that holds, movement could be ranged within 1.065-1.050 region for the next couple of sessions. But keep an eye on the German-US 2YR yield differential which if moves lower could indicate a fall in Euro below 1.05. (Refer to Interest Rates section below)

Dollar-Yen (112.56), could be trading within the 113.50-112.00 region in the next 2-sessions. Clear contraction in Nikkei could possibly keep the Dollar-Yen ranged for some more time before a sharp movement on either side is seen. We need to keep a close watch on Nikkei.

Pound (1.2418) is trading near immediate support at 1.2382 and while that holds, we could possibly see some rise towards 1.25. Near term could be range bound within 1.2335-1.2382/50.

Aussie (0.7679) is holding above the 21-day MA support near 0.76610 and while that holds, we could see some up move towards 0.7700-0.7780. Overall ranged movement expected in the near term.

Dollar-Rupee (66.70) has been trading in the 66.65/75 region for the last 2sessions and has a fair possibility of testing important support near 66.50 before bouncing back from there. Trump’s speech tonight is going to be an important event to watch.

INTEREST RATES

The German-US 2Yr (-2.14%) is headed downwards and if continues to move towards -2.15% to -2.20%, could turn very bearish for Euro and could take the currency below 1.05 in the near term. Keep a close watch on the yield differential to get better directional cue on the Euro. However, we prefer a pause in the yield spread and expect a bounce back towards -2%.

he US yields have risen a bit. But overall the medium term looks bearish. The 5Yr (1.87%), 10YR (2.36%) and the 30YR (2.98%) are trading higher than previous levels of 1.83%, 2.34% and 2.97% respectively.

The US10-5Yr yield spread (0.50%) has fallen sharply and could move lower towards 0.475% in the near term.

EUR/USD

Major pairs were confined to tight intraday ranges this Monday, with the dollar closing the day mixed after Trump's comments during the American afternoon, saying that there is "no choice" but to spend on infrastructure. Trump will address the Congress this Tuesday, and present the first federal budget proposal, expected to call for a $54 billion increase in defense spending, to be offset with a similar cut in domestic programs. The EUR/USD pair retreat from a daily high of 1.0630 and settled a few pips below the 1.0600 level, having trimmed half of its daily gains, on renewed hopes that the US economy will get a boost from the new administration.

In the data front, the EU Economic Sentiment Indicator for February increased from 107.9 to 108.0, the highest reading in almost six years. Industrial confidence rose to 1.3 from 0.8, while sentiment in the services sector improved to 13.8 from previous 12.8, in line with data released since last December, indicating sustained growth in the region. In the US, orders for durable goods recovered in January, up 1.8% after a 0.8% decline in December, although the core reading, which excludes transportation, fell by 0.2% from a previous advance of 0.9%. Also, the Pending Home Sales Index unexpectedly decreased by 2.8% in the month.

The EUR/USD pair broke above a daily descendant trend line coming from February high at 1.0828, with a limited upward potential according to the 4 hours chart, as the recovery stalled around a bearish 100 SMA, whilst technical indicators have lost upward strength, with the Momentum having turned sharply lower within positive territory, and the RSI indicator losing upward strength within positive territory. Political woes have kept the upside well-limited in the common currency, but that doesn't mean that the pair can't run higher if the dollar keeps weakens. Still any advance should be contained by selling interest around 1.0700/20, the region that capped the upside for most of this February.

Support levels: 1.0520 1.0470 1.0440

Resistance levels: 1.0590 1.0635 1.0660

USD/JPY

The USD/JPY pair flirted with Friday's low at the beginning of the day, falling down to 111.93 before recovering up to 112.48 mid London morning. The pair retreated at the beginning of the US session, as US data was generally disappointing, with the advance in the Durable Goods Orders' headline, being offset by the core reading that came in negative, and pending home sales that fell well beyond expected. The pair, however, broke higher ahead of Wall Street close as stocks recovered their early losses, while Treasury yields advanced following comments from US President Trump, pointing to large infrastructure investment. The 10-year note benchmark jumped to 2.36% after plummeting to 2.32% on Friday, backing the advance in the pair. Holding near a daily high of 112.72, the 4 hours chart shows that technical indicators have turned sharply higher from oversold readings and are currently entering positive territory, not enough at this point to confirm a stronger advance, whilst the 100 and 200 SMAs maintain bearish slopes above the current level, with the shortest around 113.05. The advance could extend, should the positive sentiment persist, although investors may turn cautious and wait for Trump's speech before the Congress before giving the pair another directional push.

Support levels: 112.50 111.95 111.60

Resistance levels: 113.05 113.45 113.90

GBP/USD

The GBP/USD pair fell at the beginning of the day, extending its slide down to 1.2383 early London, on reports released by the Times, saying that the UK government is preparing for a potential independence referendum in Scotland next March. The news also reported that PM May agreed to such referendum, on the condition that it is held after the UK leaves the EU. The pair recovered from the mentioned low, advancing up to 1.2478 during the American session, on broad dollar's weakness. The UK will release its GFK Consumer Confidence Survey this Tuesday, expected to have fallen in February by 6 against January -5, while the House of Lords is expected to give a final verdict on the Brexit bill next Wednesday. From a technical point of view, the GBP/USD pair maintains a negative bias, as the intraday recovery stalled around a flat 20 SMA, while technical indicators have failed to surpass their mid-lines, and resumed their declines. The pair has bounced multiple times from the 1.2380 region, an immediate strong support, although it will take a break below 1.2345, February low and the 50% retracement of the latest bullish run, to confirm a steeper decline for the upcoming sessions.

Support levels: 1.2380 1.2345 1.2300

Resistance levels: 1.2480 1.2530 1.2565

GOLD

Gold prices extended their advance at the beginning of the day, with spot reaching a fresh yearly high of 1,263.79 before ending the day in the red, a few cents below $1,255.00 a troy ounce. The safe-haven metal eased on hopes US President Trump will unveil his infrastructure investment' plans this Tuesday, when he will address a joint session of Congress. From a technical point of view, the daily chart shows that the price surged briefly above its 200 DMA before reversing course, whilst technical indicators keep retreating within positive territory, yet at the same time, its holding at multi-month highs while developing above a bullish 20 DMA, this last at 1,236.98. Additionally, the pair is consolidating around the 61.8% retracement of the post-US election decline, indicating a limited downward potential at the time being. In the 4 hours chart, technical indicators have turned sharply lower from overbought readings, still holding within positive territory, while the price is well above all of its moving averages, with the 20 SMA heading sharply higher at 1,250.20, providing an immediate support.

Support levels: 1,250.20 1,242.50 1,230.00

Resistance levels: 1,263.80 1.273.20 1,281.70

WTI CRUDE

West Texas Intermediate crude oil prices closed the day unchanged, at $54.04, trimming its modest daily gains on news that a pipeline in Kirkuk, Iraq, was blown-up killing at least one and injuring several members of the Kurdish security forces. The pipeline is a focus of conflict, as it will allow Iraq to export oil through Iran, and diversify away from Kurdistan. Also, fears that increasing US production will offset OPEC's efforts to push prices higher, limited gains in the commodity. Technically, oil maintains the neutral stance seen on previous updates, with the price still developing above a horizontal 20 DMA, and technical indicators heading nowhere around their mid-lines. In the 4 hours chart, the price continued to move back and forth around a directionless 20 SMA, whilst technical indicators are standing within negative territory, but lacking directional strength.

Support levels: 53.40 53.00 52.50

Resistance levels: 54.75 55.30 56.00

DJIA

Another day, another record high for the Dow. The US index advanced 15 points or 0.08% to close at 20,837.44, its 12th consecutive record high. The Nasdaq Composite added 16 points and ended at 5,861.90, while the S&P closed at 2,369.73, up by 0.10%. Industrial and energy-related equities led the advance within the Dow, after US President Trump said that there is "no choice" but to spend on infrastructure. Caterpillar was the best performer, up 2.03%, followed by Chevron, which added 1.50%. The last time the Dow advanced for twelve days in-a-row was back in 1987, right ahead of the Black Monday and the market crash. Gains have been quite limited in the last four trading sessions, reflecting investors are hesitant to push equities too much higher. In the daily chart, the index remains well above a healthy bullish 20 DMA, while the RSI indicator hovers around 83, and the Momentum indicator retreats modestly from near overbought territory, still far from suggesting a downward move. In the 4 hours chart, the index still holds above a bullish 20 SMA, while technical indicators head lower within positive territory, lacking strength enough to confirm a bearish breakout.

Support levels: 20,794 20,742 20,695

Resistance levels: 20,855 20,900 20.940

FTSE 100

The FTSE 100 managed to add 9 points or 0.13% to close at 7,253.00 this Monday, helped by a weaker Pound that helped offset losses in the insurance sector. News that the Ministry of Justice changed the way of calculating personal injury claims affected insurance companies' equities, on speculation that payouts will be increased and affect companies' profits. Direct Line plunged 7.16%, while Admiral Group shed 2.46%. Financial-related equities also closed in the red, with Royal Bank of Scotland down 2.02%. The daily chart shows that the Footsie settled above its 20 SMA, currently at 7,239, while technical indicators present modest upward slopes within positive territory, indicating that the downside potential remains limited. In the 4 hours chart, however, the index is holding right below a bearish 20 SMA, while the Momentum indicator is unable to surpass its 100 level. The RSI indicator in this last time frame advances around 50, not enough to confirm further advances for this Tuesday.

Support levels: 7,238 7,195 7,160

Resistance levels: 7,285 7,315 7,342

DAX

European equities ended the day pretty much flat in a dull trading session, with the German DAX settling at 11,822.67, up by 18 points or 0.16%. An early advance in oil prices kept the energy sector up, preventing the index from ending lower, while financials underperformed, following the lead of their Asian counterparts. In Germany, Adidas was the best performer, closing up 3.88%, followed by E.ON that added 2.62%. Deutsche Boerse topped losers' list, ending down 3.93%, while Volkswagen shed 1.17%. DAX's daily chart shows that an early decline as contained by buying interest around a horizontal 20 DMA, currently at 11,744, while the Momentum indicator heads nowhere within positive territory and the RSI indicator turned flat within positive territory after correcting overbought conditions, all of which limits chances of a steeper decline. In the 4 hours chart, the index broke below its 20 SMA, but bounced from a bullish 100 SMA, while technical indicators also lack directional strength, but hold within negative territory, indicating that the index needs to regain the 11,900 level to confirm that the bullish trend remains firm in place.

Support levels: 11,828 11,781 11,737

Resistance levels: 11,865 11,902 11,945

GBPUSD - The pair continues to consolidate leaving directional move a challenge. However, it should head lower nearer term. Support lies at the 1.2400 level where a break will turn attention to the 1.2350 level. Further down, support lies at the 1.2300 level. Below here will set the stage for more weakness towards the 1.2250 level. Conversely, resistance stands at the 1.2500 levels with a turn above here allowing more strength to build up towards the 1.2550 level. Further out, resistance resides at the 1.2600 level followed by the 1.2650 level. On the whole, GBPUSD continues to face consolidation threats.