Sample Category Title

On the hourly chart of DAX, we are looking at a possible reversal from the highs being made, with price now trading lower around the 12044 level. Well, we expect a sharp fall to follow from current levels, as we have been following an ending diagonal of a higher degree within the red wave 5). We know that ending diagonals are powerful reversal patterns, that tend to make sharp reversal, when they are completed. So we see a potential top at the 12178 level, and a breach beneath the 11946 level would indicate more weakness to follow.

German DAX, 1H

EUR/USD

Current level - 10776

The pair failed to break below 1.0712 support and the uptrend has been renewed, reaching new local high at 1.0780. The overall bias remains bullish above 1.0745, for a test of 1.0828 peak. Crucial on the downside is 1.0704 low.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 113.28

The bias is neutral within the tight range between 113.50 and 112.90, but a violation of the lower boundary will signal a bearish outlook for 111.60 static support.

GBP/USD

Current level - 1.2367

Yesterday's unsuccessful attempt at 1.2250 led to a renewal of the upmove and current bias remains positive, for a test at 1.2400 resistance, towards 1.2570 area. Initial intraday support lies at 1.2300 and crucial on the downside is 1.2250.

USD/CHF - 0.9959

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9967

Kijun-Sen level                    : 0.9979

Ichimoku cloud top                 : 1.0046

Ichimoku cloud bottom              : 1.0019

Original strategy :

Sell at 1.0020, Target: 0.9920, Stop: 1.0055

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0020, Target: 0.9920, Stop: 1.0055

Position : -

Target :  -

Stop : -

As the greenback has remained under pressure, suggesting recent decline from 1.0171 is still in progress and may extend further weakness to 0.9920-25, however, loss of near term downward momentum should prevent sharp fall below 0.9900 and reckon 0.9870-75 would hold from here, risk from there has increased for a strong rebound later.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as the lower Kumo (now at 1.0019) should limit upside and bring another decline. Only above previous support at 1.0060 (now resistance) would abort and signal low is formed instead, risk rebound to 1.0090-95 first.

GBP/USD - 1.2357

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2349

Kijun-Sen level                    : 1.2309

Ichimoku cloud top              : 1.2258

Ichimoku cloud bottom        : 1.2210

Original strategy :

Buy at 1.2300, Target: 1.2400, Stop: 1.2265

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2300, Target: 1.2400, Stop: 1.2265

Position : -

Target :  -

Stop : -

As cable has maintained a firm undertone after this week’s rally, adding credence to our view that the rise from 1.2109 low is still in progress for retracement of recent decline, hence further gain to previous support at 1.2384 would be seen, however, near term overbought condition should prevent sharp move beyond 1.2410-15 and reckon 1.2440-50 would hold, price should falter well below resistance at 1.2471, bring retreat later.

In view of this, we are looking to buy cable on pullback as 1.2300-10 should limit downside and bring another rise. Below 1.2265-70 would suggest top is possibly formed, risk test of said support at 1.2241 which is likely to hold on first testing.

EUR/USD - 1.0767

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.0768

Kijun-Sen level                  : 1.0744

Ichimoku cloud top             : 1.0705

Ichimoku cloud bottom      : 1.0674

Original strategy  :

Buy at 1.0675, Target: 1.0775, Stop: 1.0640

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0675, Target: 1.0775, Stop: 1.0640

Position : -

Target :  -

Stop : -

As the single currency has eased after rising to 1.0782, suggesting consolidation below this level would be seen and pullback to 1.0725-30 cannot be ruled out, however, reckon downside would be limited to support at 1.0706 and the lower Kumo (now at 1.0674) should hold, bring another rise later to resistance at 1.0799 but loss of near term upward momentum should prevent sharp move beyond another previous resistance at 1.0829, bring retreat later.

In view of this, would not chase this rise here and we are looking to buy euro on pullback as 1.0670-75 should limit downside. Below 1.0640-50 would signal top is formed, bring weakness to 1.0620-25 but said support at 1.0600 should remain intact.

USD/JPY - 113.36

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 113.38

Kijun-Sen level                  : 113.22

Ichimoku cloud top             : 114.18

Ichimoku cloud bottom      : 113.68

Original strategy  :

Sell at 114.00, Target: 113.00, Stop: 114.35

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 114.00, Target: 113.00, Stop: 114.35

Position :  -

Target :  -

Stop : -

Although the greenback recovered after falling to 112.90 yesterday and consolidation above this level would be seen for corrective bounce to 113.65-70, reckon 114.00 would limit upside and bring another decline later, below said support at 112.90 would extend recent decline from 115.51 to 112.76-77, then towards 112.50 but reckon downside would be limited to 112.00-10, bring rebound later.

In view of this, we are looking to sell dollar on subsequent recovery as 114.00 should limit upside. Only above previous support at 114.48-52 would abort and signal low is formed instead, risk a stronger rebound to 114.89 resistance first, break there would signal the retreat from 115.51 has ended, then gain to 115.20 resistance would follow.

Market movers today

In the US, we are due to get preliminary University of Michigan consumer confidence data (one of the soft economic indicators) for March today.

The Donald Trump and Angela Merkel meeting, initially scheduled for this Monday but postponed due to the blizzard in the north eastern part of the US, is set to take place at the White House today. This will be the first meeting between the German Chancellor and the new American President. Likely topics on the agenda are the future of the transatlantic alliance but also funding for NATO and relations with Russia.

In the euro area, S&P is scheduled to update its rating and outlook on Portugal, Finland, Austria and Cypress, while Moody's will be reviewing Estonia.

In Denmark, the Association of Danish Mortgage Banks is due to release its housing market statistics for Q4 16.

Selected market news

Different camps of the Governing Council within the ECB seem to be forming, both when it comes to how the 'normalisation' of monetary policy should start and regarding when it is time to embark on a clearer adjustment to the forward guidance. Overnight Ewald Nowotny (Hawk) was quoted in a Handelsblaat interview as saying that the 'deposit rate could rise before [the] main rate', while Peter Praet said during a speech in Brussels that 'inflation dynamics haven't yet become self-sustained'. It will be interesting to see how this 'gorge' continues to develop.

Donald Trump's first budget outline was presented yesterday. As expected, it had heavy emphasis on infrastructure spending without further detail and an increased defence budget, which he plans to fund with deep cuts to diplomatic and foreign aid programmes. Also, the Environmental Protection Agency is set to see its budget cut by 31%. The full 2018 budget is due to be released later this spring and it will include 'our specific mandatory and tax proposals, as well as a full fiscal path'.

Yesterday's Norges Bank meeting did not bring any surprises, as the sight deposit rate was left unchanged at 0.50% and the Board maintained the 'neutral bias' introduced in September. The rate path was revised 'postponing' the expectation of when the first rate hike will occur and stating 'the key policy rate will most likely remain at today's level in the period ahead'.

The Bank of England meeting did not surprise much either, as it made no policy changes and reiterated its neutral stance by repeating it could move 'in either direction'. However, the meeting was not completely uneventful, as Kristin Forbes (a known hawk) voted for a March hike and the statement disclosed that 'some members noted that it would take relatively little further upside news...for them to consider that a more immediate reduction in policy support might be warranted'. See more in Bank of England Review: Maintains neutral stance with hawkish twist,

The overnight session was very quiet, with the Asian equity indices seeing marginal gains and losses, no big FX moves and slightly higher yields of Japanese government bonds.

Sunrise Market Commentary

• Rates: ECB doesn't have to follow Fed's playbook
  ECB Nowotny said after European trading that the ECB doesn't have to follow the Fed's playbook when normalizing monetary policy. He suggests that the ECB could hike (deposit) rates before ending QE. This could weigh on the Bund in the opening. Today's eco calendar only contains second tier US eco data, suggesting consolidation ahead of the weekend.
• Currencies: From dollar softness to euro strength
  The dollar initially stabilized yesterday after the post-FOMC setback. Later in the session, hawkish comments from ECB's Nowotny propelled EUR/USD to the highest level in one month. We look out how far the post-FOMC USD correction has to go. Will today's US consumer confidence be strong enough to block the USD correction?

The Sunrise Headlines

• US equities returned part of the FOMC-gains and closed slightly lower on the day. Overnight, most Asian stock markets trade positive with Japanese stocks underperforming (-0.4%).
• The ECB might move away from loose monetary policy in a different way than the Fed, ECB Nowotny said. The US model was to finish bond purchases first, but this model might not transfer well to Europe.
• Moody's improved to outlook on Brazil's Ba2-rating from negative to stable driven by expectation that downside risks are abating and macroeconomic conditions stabilizing, with the economy showing signs of recovery, inflation falling and the fiscal outlook clearer.
• The Czech central bank is likely to end a regime to keep the crown weak around the middle of the year, Vice-Governor Hampl was quoted as saying, adding a later exit was also possible.
• Greece and its international creditors remain divided over the terms of a review of the country's bailout programme, a senior euro zone official said, a gap that will prevent Athens from getting fresh financial aid at Monday's Eurogroup.
• Conservatives in Congress are pushing Donald Trump to block the IMF from participating in a European-led bailout of Greece, as his administration signalled it would take a tougher line with global institutions.
• Today's eco calendar is uneventful with only US industrial production and University of Michigan consumer confidence. G20 finance chiefs gather in Germany and Donald Trump meets Angela Merkel

Currencies: From Dollar Softness To Euro Strength

Euro extends gains on Nowotny comments

Yesterday, the dollar initially stabilized versus euro and yen, following substantial losses in the aftermath of the FOMC decision. European equities started strongly, but gave back half of the initial gains. So, no full-blown risk-on session. Late in the session, the euro was propelled by comments ECB's Nowotny who said rates could be raised before the end of the APP. The comments were soon dismissed by ECB's Praet, but the euro maintained its gains. EUR/USD closed the session at 1.0766 (from 1.0734). The swings in USD/JPY were much more modest. USD/JPY finished the session at 113.31 (from 113.38).

Overnight, Asian equities are mostly slightly higher. Post-Fed dollar correction and expectations that Fed policy normalisation will continue in a very gradual way is supporting regional equities ex-Japan. USD/JPY is holding yesterday's post-Fed consolidation pattern (lower half of the 113 big figure). EUR/USD maintains the gains recorded on the Novotny comments and trades in the 1.0775 area, near a one month high.

Today, there are only second tier eco data in Europe. In the US, production and Michigan consumer sentiment have some market moving potential. US February industrial production is expected to have rebounded (0.2% M/M) following a weather-related 0.3% M/M drop. Michigan consumer sentiment is expected slightly higher at 97 from 96.3. A strong labour market, strong equities and lower gasoline prices support sentiment. So, we see upside risks. Yesterday, the dollar stabilised after the post-Fed correction, but failed to regain ground. On the contrary, the US currency lost further ground against euro as markets ponder the chances of an early change in the ECB policy. In a longer term perspective, policy divergence between the Fed and the ECB will probably remain big enough to support further USD gains. Yellen suggested that, considering the eco developments, the Fed policy might be relatively close to the ‘dot-path'. The dayto- day USD momentum remains soft though and the euro is in better shape. So we look out/wait for strong enough US data that might put a floor on the current USD correction. Interesting to see whether a strong consumer confidence can help this process

Global context. EUR/USD 1.0874 resistance remains the line in the sand with intermediate resistance at 1.0829. We maintain the view that a sustained break of EUR/USD above this area will be difficult, even after Wednesday's Fed message. The US/German (EMU) interest rate differential remains at an absolute high level. Especially at the short end of the curve, the differential might even rewiden. The fundamentals/ interest rate differentials are also supportive for USD/JPY, but of late the momentum/technical picture is not really convincing. We maintain the working hypothesis that the 111.60 range bottom should hold.

EUR/USD extends post-Fed rebound on hawkish comments from ECB's Nowotny

EUR/GBP

EUR/GBP: Balance of sterling rebound and euro strength

EUR/GBP and cable held very tight ranges yesterday as investors awaited the BoE's policy decision. The BoE as expected left its policy unchanged. However, Kristin Forbes dissented in favour of a rate hike and the Minutes contained a note of concern on inflation. 'Some members noted that it would take relatively little further upside news on the prospects of activity or inflation for them to consider that a more immediate reduction in policy support might be warranted.” This took sterling traders awry and triggered some frenetic sterling buying. EUR/GBP dropped from 0.8740 to about 0.8680/70. Later in the session, EUR/GBP regained some ground on the Nowotny comments. EUR/GBP closed the session at 0.8710 (from 0.8732). The combination of USD softness and GBP strength propelled cable to close the session at 1.2360 (from 1.2291).

There are no important eco data in the UK today. Both sterling and the euro were in good shape yesterday. This balance might persist and some EUR/GBP consolidation might be on the cards. Despite yesterday's somewhat more hawkish BoE approach, we don't see a real risk for BoE tightening anytime soon. So, any rebound of sterling shouldn't go too far.

Over the previous day, the decline of sterling took a breather. EUR/GBP cleared 0.8592 resistance, improving the MT technical EUR/GBP picture. We don't expect a sustained EUR/USD rebound, but a combination of temporary euro consolidation and ongoing sterling softness, as the Brexit negotiations are nearing, might trigger some more ST EUR/GBP gains. The 0.8854 correction top is the next key resistance. The nervous swings over the previous days suggest that a clear break beyond 0.8854 will be difficult without important (UK negative) news.

EUR/GBP: euro strength and sterling rebound keeping each other in balance

Download entire Sunrise Market Commentary

Daily Pivots: (S1) 0.7655; (P) 0.7686; (R1) 0.7708; More...

Intraday bias in AUD/USD remains on the upside for 0.7740 resistance. Current development suggests that rise from 0.7158 is likely resuming. Break of 0.7740 will target 61.8% projection of 0.7158 to 0.7740 from 0.7490 at 0.7850 next. That coincides with key long term retracement level at 0.7849. On the downside, outlook will stay bullish now as long as 0.7490 support holds, in case of retreat.

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

Daily Pivots: (S1) 1.3279; (P) 1.3315; (R1) 1.3355; More...

Intraday bias in USD/CAD remains on the downside as the pull back from 1.3534 could extend lower. We'd expect strong support at 1.3211 cluster level (61.8% retracement at 1.3209) to contain downside and bring rebound. At this point, we'd still expect larger rise from 1.2460 to extend through 1.3598 resistance. However, sustained break of 1.3211 will dampen this view and target 1.2968 key support level next.

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