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Crude oil has been down strongly yesterday but current leg up from 53.36 looks like a new impulse so resumption of a bullish trend has to be considered. That said, we labeled end of a regular flat formation in wave 2 which means that bulls may continue now above 55.00 area.

Crude OIL, 1H

Monday, Feb 20, 2017

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Tuesday, Feb 21, 2017

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Wednesday, Feb 22, 2017

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Thursday, Feb 23, 2017

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Friday, Feb 24, 2017

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EUR/USD is showing limited movement in the Thursday session. Currently, the pair is trading at 1.0540. its lowest level since January 11. On the release front, German numbers were a mixed bag. Final GDP came in at 0.4%, matching the forecast. This figure was unchanged from the Preliminary GDP gain of 0.4%. German GfK Consumer Confidence dipped to 10.0, shy of the forecast of 10.3 points. In the US, today’s highlight is unemployment claims, with an estimate of 242 thousand. As well, Treasury Secretary Robert Mnuchin will speak at an interview with CNBC.

The euro remains under pressure this week. On Wednesday, EUR/USD briefly dropped below the 1.05 line, for the first time since January 11. The euro has endured a rough February, losing 2.4% in value and wiping out the January gains. The struggling continental currency is unlikely to get a lifeline from the ECB, which recently extended its asset-purchase program until December 2017. Although the eurozone is enjoying a moderate spurt in growth and higher inflation, the central bank appears in no rush to tighten monetary policy, which would boost the euro. Analysts note that the ECB does not wish to make any dramatic moves close to crucial elections in Europe (France goes to the polls in April, followed by Germany in September). At the same time, the political turmoil in Europe is affecting investor confidence and appetite for risk. First, there was the stunning Brexit vote which has thrown Britain-EU relations into crisis mode. In France, Marine Le Pen, leader of the far-right National Front, is the front-runner in the first round and could conceivably be elected president. Le Pen wants to take France out of the eurozone and has promised a referendum on French membership in the EU. Germany’s Angela Merkel, a pillar of stability on the continent, is in a tough election fight and voters may choose change rather than hand her a fourth term in office. All of this “political risk” has made it difficult for the ECB to take action, and Mario Draghi could well choose to play it safe and stay on the sidelines for the remainder of the year.

On Wednesday, the Federal Reserve released the minutes of its January policy meeting. However, there were no dramatic nuggets in the minutes. The Fed stated that a rate hike “fairly soon” could be appropriate in order to head off an overheated economy. The minutes indicated that Fed policymakers remain confident that the central bank will raise rates gradually, given the strong performance of the US economy. At the same time, the minutes noted uncertainty about President Trump’s fiscal stimulus plan but little concern about the risk of inflation. Bottom line? Although pressure is slowly building towards a rate hike, there does not appear a sense of urgency to raise rates at the next meeting in March. According to the CME Group, the odds of a March hike are only at 17%, while the likelihood of a hike in either May or June stands above 40%.

News and Events:

Less hawkish Fed minutes confuse markets (by Arnaud Masset)

The minutes of the January FOMC meeting did not provide ground breaking information as the essence of the Fed’s message did not change since the previous meeting. Investors were left a little disappointed on reading the transcript as the minutes did not provide further clarity on the institution's thinking about the US outlook under Trump's presidency. The Committee reiterated its view that “it might be appropriate to raise the federal funds rate again fairly soon”, should the current trends in the both the labour market and inflation prove sustainable. Nothing new here. The Committee appeared concerned about the current strength of the dollar that could hamper a still fragile economic recovery.

All in all, the slight retracement of the dollar amid the release of the minutes suggests that investors are still unconvinced about a rate hike at the March meeting. In our opinion, the market is overly optimistic about the real state of the US economy. The election of Donald Trump has boosted confidence and sentiment across the board, sending equities to record levels. However, the true nature of this success has yet to reveal itself. The FX market treaded water on Thursday as market participants were still digesting the minutes. Given today’s light economic calendar, further dollar gains appear unlikely; the dollar index should continue to trade within the 101.00-50 area.

Crude prices are pushing higher on declining inventories (by Yann Quelenn)

The WTI crude oil price is still on the rise. The barrel price has gone up above $54 and is almost at its highest level in less than two years. Recent data has shown a decrease in US crude stocks due to less imports. Indeed, inventories have declined by 884k barrels when consensus expected an increase of 3.5M barrels.

There is definitely a clear trend here. The US rigs count is now topping at 751 which is 46% higher than during the same week last year when it was at 597. It is the fifth consecutive straight week. Moreover, markets seem more optimistic since the OPEC confirmed that the output production deal was on track.

We should not forget that it is a plan of the United States to become energetically independent and that the shale gas industry will certainly benefit from upcoming protectionist measures. Trump seems to try to deliver what he promised, which will have a strong impact on crude oil prices.

We target the WTI to reach $60 within the next few months.

Today's Key Issues (time in GMT):

• 4Q Industry & Construction Output WDA YoY, last 1,10%, rev 1,00% CHF / 08:15
• 4Q Industrial Output WDA YoY, last 0,40%, rev 0,20% CHF / 08:15
• 4Q Total No. of Employees YoY, last 2,50% SEK / 08:30
• ECB's Praet Speaks in London EUR / 08:55
• Dec Retail Sales MoM, exp 0,20%, last -0,70% EUR / 09:00
• Dec Retail Sales YoY, exp 0,90%, last 0,80% EUR / 09:00
• Jan PPI MoM, exp 1,00%, last 0,50% ZAR / 09:30
• Jan PPI YoY, exp 6,60%, last 7,10% ZAR / 09:30
• Bundesbank Press Conference on Financial Accounts EUR / 10:00
• Feb 22 FGV CPI IPC-S, exp 0,41%, last 0,49% BRL / 11:00
• Feb FGV Inflation IGPM MoM, exp 0,01%, last 0,64% BRL / 11:00
• Feb FGV Inflation IGPM YoY, exp 5,30%, last 6,65% BRL / 11:00
• Feb CBI Retailing Reported Sales, exp 4, last -8 GBP / 11:00
• Feb CBI Total Dist. Reported Sales, exp 24, last 26 GBP / 11:00
• ECB's Praet Speaks in London EUR / 11:00
• Feb 17 Foreigners Net Bond Invest, last -$262m TRY / 11:30
• Feb 17 Foreigners Net Stock Invest, last $121m TRY / 11:30
• ECB's Praet Speaks in London EUR / 13:00
• Jan Outstanding Loans MoM, last 0,10% BRL / 13:30
• Jan Total Outstanding Loans, last 3107b, rev 3106b BRL / 13:30
• Jan Personal Loan Default Rate, last 6,00% BRL / 13:30
• Jan Chicago Fed Nat Activity Index, exp 0, last 0,14 USD / 13:30
• Feb 18 Initial Jobless Claims, exp 240k, last 239k USD / 13:30
• Feb 11 Continuing Claims, exp 2068k, last 2076k USD / 13:30
• Fed's Lockhart to Speak on His 10-Year Tenure at the Fed USD / 13:35
• 4Q House Price Purchase Index QoQ, last 1,50% USD / 14:00
• Dec FHFA House Price Index MoM, exp 0,50%, last 0,50% USD / 14:00
• Feb 19 Bloomberg Consumer Comfort, last 48,1 USD / 14:45
• Feb Kansas City Fed Manf. Activity, exp 9, last 9 USD / 16:00
• Feb 17 DOE U.S. Crude Oil Inventories, exp 3250k, last 9527k USD / 16:00
• Feb 17 DOE Cushing OK Crude Inventory, exp -50k, last -702k USD / 16:00
• Jan Central Govt Budget Balance, exp 7.9b, last -60.1b BRL / 17:30
• Fed's Kaplan Speaks in Fort Worth USD / 18:00
• Feb Consumer Confidence, last 93,3 KRW / 21:00
• RBA's Lowe Testifies to Parliament Committee in Sydney AUD / 22:30
• Jan Formal Job Creation Total, exp -35149, last -462366 BRL / 23:00

The Risk Today:

EUR/USD is back below 1.0600. Hourly resistance is given at 1.0679 (16/02/2017 high) while hourly support can be found at 1.0521 (15/02/2017 low). The technical structure suggests that the current underlying move is a bearish consolidation. 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 has exited symmetrical triangle. However, the pair is still lying below strong resistance given at 1.2771 (05/10/2016 high). Key support is given at 1.2254 (19/01/2016 low) while hourly support is given around 1.2400. 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's demand is fading after its increase from support given at 111.36 (28/11/2016 low). Bearish pressures arise around hourly resistance given at 115.62 (19/01/2016 high). The technical structure suggests further weakness around former resistance given at 112.57 (17/01/2017 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's short-term bullish momentum is definitely bullish. The pair lies within an uptrend channel. Hourly resistance is implied by upper bound of the uptrend channel. Key resistance is given at a distance at 1.0344 (15/12/2016 high). We believe that the pair is likely to strengthen again above parity. 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.

Yesterday's fresh attempt above 0.7700 barrier was positive signal, as price continues to hold at the upper side of 0.7600/0.7700 congestion.

Overnight's dip on weaker than expected Australian data was so far contained, with 0.7700 pivot being attacked again on bounce.

Bullishly aligned near-term studies are supportive, along with daily MA's in firm bullish setup.

Rising daily 10SMA offers immediate support at 0.7678, followed by 20SMA that underpins the action and currently lies at 0.7645.

Caution on break of latter, as RSI / slow stochastic bearish divergence continues to weigh.

Stronger signal of pullback seen on break below 0.7600 handle that would risk fresh easing towards 200SMA (0.7509).

Sustained break above 0.7700 barrier and fresh high at 0.7730 (16 Feb high), to signal bullish continuation and expose key short-term barrier at 0.7776 (08 Nov peak).

Res: 0.7712, 0.7730, 0.7755, 0.7776
Sup: 0.7663, 0.7645, 0.7600, 0.7504

Repeated upside rejection (112.75) of recovery leg from 112.60 (17 Feb trough) and subsequent easing that reversed the largest part of strong 112.60/113.75 recovery, weakened near-term structure. Daily studies are in neutral / bearish mode and require break out of 112.60/113.75 range for stronger direction signal. Firm break below 113.00 support would confirm bearish near-term stance, with loss of 112.60 pivot to complete daily Failure Swing pattern for fresh extension of pullback from 114.94, as 15 Feb bearish candle with long upper shadow continues to weigh. Conversely, close above daily Tenkan-sen (113.75) would signal further retracement of 114.94/112.60 downleg.

Res: 113.43, 113.75, 114.05, 114.39
Sup: 113.06, 112.89, 112.60, 112.37

Cable remains within near-term triangle following yesterday's unsuccessful probe above upper pivot (10SMA / triangle resistance line at 1.2465).

Near-term studies remain neutral, while dailies are mixed and show no direction signals for now.

However, yesterday's spike higher that was capped by next pivotal barrier at 1.2506 (descending 20SMA) could be seen as initial signal of fresh strength.

Minimum requirement for this scenario is close above 10SMA (1.2465) with renewed attempts through 20SMA to confirm fresh bullish action towards upper breakpoints at 1.2550/80.

Initial supports at 1.2420/10 zone (yesterday's low / triangle support line) guard lower pivots at 1.2400 (100SMA) and daily cloud top at 1.2380.

Res: 1.2465, 1.2496, 1.2521, 1.2550
Sup: 1.2420, 1.2412, 1.2400, 1.2379

The Euro holding around daily cloud base (currently at 1.0557), after yesterday’s break lower that extended below psychological 1.0500 support, but failed to close below daily cloud.

Daily close below pivotal supports at 1.0557/1.0525 (cloud base/Fibo 61.8% of 1.0339/1.0827) is needed to signal bearish continuation towards next target at 1.0454 (Fibo 76.4% /11 Jan spike low) that would expose key support at 1.0339 (03 Jan low, the lowest since 2003).

Firm bearish setup of daily studies is supportive, with former strong support, now resistance at 1.0590 (55SMA) reinforced by falling 10SMA that is attempting to form bearish cross, expected to cap corrective attempts.

Break back above 1.0600 pivot would sideline immediate bears and signal stronger bounce that would risk attack at upper breakpoints at 1.0660/75 (20SMA/former double upside rejection).

Res: 1.0572, 1.0590, 1.0631, 1.0660
Sup: 1.0525, 1.0492, 1.0454, 1.0400

On the updated chart of USDJPY, we can see a nice and strong bullish turn taking place from around the 111.60 level, where we labeled end of a complex correction. As such, recent recovery gives us an indication for a completed double zig-zag correction and a suggestion that higher levels will now follow while market stays above 111.60. At the moment we see price trading up from black wave 2, that seems to have found a base at the 61.8 Fibonacci ratio. That said more strength could already be in progress within black wave 3, that may target area above the 115.60 region.

USDJPY, 4H