• The pair built on the previous session's strong rebound from near three-week low and continued gaining positive traction through the mid-European session on Tuesday.

• The fact that the pair managed to sustain above 100-day SMA was seen as a key trigger for bullish traders and follow-through strength beyond the 1.3200 handle.

• A subsequent up-move lifted the pair through over one-week-old descending trend-line resistance, with bulls now eyeing to extend the momentum beyond 200-hour SMA.

• The set-up points to some additional near-term gains, though traders are likely to wait for a decisive breakthrough 50% Fibo. level of the 1.3340-1.3113 recent downfall.

USD/CAD 1-hourly chart

USD/CAD

Overview:
Today Last Price: 1.322
Today Daily change %: 0.20%
Today Daily Open: 1.3194
Trends:
Daily SMA20: 1.3209
Daily SMA50: 1.3341
Daily SMA100: 1.3264
Daily SMA200: 1.3159
Levels:
Previous Daily High: 1.3198
Previous Daily Low: 1.3112
Previous Weekly High: 1.3294
Previous Weekly Low: 1.3134
Previous Monthly High: 1.3664
Previous Monthly Low: 1.3118
Daily Fibonacci 38.2%: 1.3165
Daily Fibonacci 61.8%: 1.3145
Daily Pivot Point S1: 1.3138
Daily Pivot Point S2: 1.3083
Daily Pivot Point S3: 1.3053
Daily Pivot Point R1: 1.3223
Daily Pivot Point R2: 1.3253
Daily Pivot Point R3: 1.3309

KBC Bank analysts suggest that the easing of the risk rally might slow the EUR/USD rebound, after it rebounded off recent lows last week, but with no strong momentum.

Key Quotes

“Today’s USD specific news (consumer confidence & Powell’s assessment on Fed balance sheet) might also weigh on USD.”

“Any EUR/USD rebound will probably develop a slow pace as long as EMU data remain unconvincing. Still a break beyond 1.1370 might open the way for further gains in the 1.12/1.15 ST consolidation pattern.”

  • The pair eases from tops and returns below the 111.00 handle.
  • US Consumer Confidence next of relevance in the docket.
  • Chief J.Powell will testify before Congress later in the session.

The greenback came under downside pressure on Tuesday and is now forcing USD/JPY to recede from recent yearly peaks beyond 111.00 the figure.

USD/JPY upside capped by 200-day SMA

Spot continues to navigate within the multi-day consolidative range, so far limited on the upside by the critical 200-day SMA, today in the 111.30 region.

A better mood in the risk-associated complex has been weighing on the safe haven appeal of the Japanese currency, in turn sustaining the recent up move to fresh 2019 tops further north of the 111.00 milestone.

Looking ahead, US Consumer Confidence by the Conference Board is due along with housing sector figures and all ahead of the testimony of Chief J.Powell before the Senate Banking Panel.

What to look for around JPY

The main driver behind the price action around the Japanese Yen is expected to come from the risk appetite trends and their effects on the safe haven flows. In this regard, prospects of slowdown in the global economy are seen supporting the JPY on the back of increasing nervousness among investors. On the soft side for JPY, the Bank of Japan has once again reiterated its strong commitment to the QQE plan, which should limit the upside potential in the currency.

USD/JPY levels to consider

As of writing the pair is down 0.17% at 110.87 facing immediate contention at 110.72 (10-day SMA) seconded by 110.25 (low Feb.15) and then 110.19 (21-day SMA). On the other hand, a breakout of 111.23 (2019 high Feb.25) would open the door to 111.30 (200-day SMA) and finally 111.40 (high Dec.26 2018).

Analysts at Bank of America Merrill Lynch, are increasingly bearish on NZD/USD pair, while they maintain their bullish outlook on USD/CAD pair.

Key Quotes

“These signals are supported by medium-term valuation and monetary expectations.”

“Bullish USD/CAD is further supported by flows, positioning and momentum, a potentially powerful mix of signals rarely aligned together.”

“Bearish NZD/USD is also supported by seasonals.”

MUFG analysts are expecting that the main focal point for markets this week will be on Wednesday’s votes in UK parliament on fresh Brexit amendments.

Key Quotes

“Most notably, the updated Cooper-Letwin amendment which seeks to force the government to extend Article 50 if they can’t pass a Brexit deal by the 13th of March.”

“Reports indicate more optimism that Cooper-Letwin amendment may pass this time, after having been rejected at the end of Jan in its first iteration.”

“It could help lift cable towards 1.3300 level if passed. But, if MPs pass up opportunity to “take No Deal off the table” for the second time by voting down the amendment, market participants may not as forgiving with time quickly running out. It could see cable quickly falling back towards support from its 55-day moving average at 1.2850.”

Morgan Stanley analysis team suggest that in order to create easier financial conditions for businesses and the economy, the US Fed decided to pause its plans to keep hiking short-term rates as this was the message in its January meeting minutes.

Key Quotes

“It also decided to slow its effort to shrink its balance sheet by letting the proceeds from maturing bonds run off, a process known as quantitative tightening.”

“Here’s the counterintuitive part: While these are dovish monetary policy moves, which typically lead to lower interest rates, my analysis suggests they could lead instead to higher long-term rates.”

“That’s because investors will likely be quick to price in the potential that, thanks to the dovish policy, economic growth will improve and inflation rise. That could cause longer-term rates to drift higher, even as short-term rates stay low.”

“Since bond prices move inversely to interest rates, I don’t think this is a good time for investors to buy longer-term bonds. However, financial firms typically benefit from a steepening yield curve, making that potentially a sector worth adding to.”

The Bank of England governor Mark Carney said during the Treasury Select Committee's February Inflation Report on February 26:

  • Given the exceptional circumstances of Brexit, I would expect the Monetary Policy Committee (MPC) to provide whatever monetary support it can consistent with the price stability remit.
  • In no-deal Brexit scenarios, MPC’s tolerance for sustained overshoot of inflation target could be breached and some tightening would be required.
  • We are possibly entering a period of de-globalization that will bring an inflationary bias.
  • A no-deal, no-transition Brexit would be an extreme example of this.
  • We are not seeing any liquidity stresses in the market.
  • Usage of BOE liquidity facilities around 9 bln Sterling, below levels at the time of 2016 referendum.
  • We stand ready to provide liquidity in all major currencies.
  • The current outlook is clouded by uncertainty around the UK’s economic relationship with the EU.
  • Judging the appropriate stance of monetary policy requires focusing on the more persistent factors affecting inflation.
  • Economic conditions evolve in line with our projections, limited and gradual rate rises are likely to be needed.
  • Monetary Policy Committee has made clear that the response of monetary policy to Brexit is not automatic and could be in either direction.
  • We will provide all the stimulus we can after no-deal Brexit, subject to delivering price stability.

The People's Bank of China (PBoC) – the central bank of the People's Republic of China, was out with some comments in the last hour and said:

• Fending off financial risks is still a difficult task.
• Will deepen supply-side structural reform of the financial sector.
• Will maintain stable operation of the bond market.
• Will implement guidance on macro-credit policies and financial market innovation this year.

• The pair continued gaining strong positive traction the mid-European session on Tuesday and climbed further beyond the 1.3200 handle, hitting the highest level since mid-October.

• Hope for either a Brexit extension or that the UK PM May might rule out a no-deal Brexit outcome turned out to be one of the key factors fueling the ongoing strong positive momentum.

• Meanwhile, a sustained move beyond the 1.3100 handle was seen as a key trigger for intraday bullish traders and behind a strong 140-pips intraday up-move to levels beyond the 1.3200 mark.

• However, slightly overstretched technical indicators on hourly charts kept a lid on any strong follow-through ahead of the UK PM Theresa May's statement in the parliament later today.

• Any positive headlines might be enough to provide an additional boost and easily lift the pair further beyond the 1.3250-60 intermediate hurdle towards reclaiming the 1.3300 handle.

GBP/USD 1-hourly chart

GBP/USD

Overview:
Today Last Price: 1.3199
Today Daily change %: 0.75%
Today Daily Open: 1.3101
Trends:
Daily SMA20: 1.2986
Daily SMA50: 1.2877
Daily SMA100: 1.2879
Daily SMA200: 1.2993
Levels:
Previous Daily High: 1.3115
Previous Daily Low: 1.3051
Previous Weekly High: 1.3109
Previous Weekly Low: 1.2891
Previous Monthly High: 1.3214
Previous Monthly Low: 1.2438
Daily Fibonacci 38.2%: 1.309
Daily Fibonacci 61.8%: 1.3075
Daily Pivot Point S1: 1.3063
Daily Pivot Point S2: 1.3025
Daily Pivot Point S3: 1.3
Daily Pivot Point R1: 1.3127
Daily Pivot Point R2: 1.3153
Daily Pivot Point R3: 1.3191

  • Prices of the WTI move higher following Monday’s sell off.
  • President Trump’s comments led the drop yesterday.
  • API weekly report on US crude oil supplies next on tap.

The barrel of West Texas Intermediate is posting some decent gains above the $55.00 handle today following yesterday’s deep pullback.

WTI vigilant on Trump, looks to API

Prices of the barrel of the American reference for the sweet light crude oil have regained some shine today and are recovering part of the sharp Trump-sponsored sell off at the beginning of the week.

It is worth recalling that crude oil prices plummeted on Monday after President Trump criticized the OPEC for its policy of higher prices.

Despite the ongoing recovery, prices are expected to remain under pressure, as US lawmakers could invoke the NOPEC bill, exposing the oil cartel to anti-trust laws in the US.

Later in the day, the American Petroleum Institute will report on the weekly US crude oil inventories ahead of tomorrow’s DoE report.

What to look for around WTI

Monday’s attack from President Trump to the OPEC’s policy of intervening in oil prices could open the door for extra effervescence in the coming days, including the probable resurrection of an anti-trust law in the US. On the bright side, optimism around a US-China trade deal should remain supportive of crude oil as well as Saudi Arabia’s (so far) commitment to curb its oil production more than expected (the so-called ‘Saudi put’). Also putting a floor on oil prices emerges the ongoing US sanctions on Iranian and Venezuelan oil exports.

WTI significant levels

At the moment the barrel of WTI is gaining 0.21% at $55.24 facing the next hurdle at $55.91 (100-day SMA) followed by $57.45 (2019 high Feb.22) and finally $58.00 (high Nov.16 2018). On the other hand, a breach of $54.73 (low Feb.26) would aim for $54.54 (21-day SMA) and finally $51.15 (low Feb.11).