Most currencies were range‐bound on Tuesday with Australian dollar and Japanese yen being the most volatile currencies of the G10‐basket. The currency markets were generally choppy, but without too much direction on Tuesday. The single currency has an additional impetus to rise as Eurozone’s unemployment continues to drop on stable pace but contrariwise ended the day with slight losses against its major peers. The greenback was traded mixed while the US residents are concentrated in the coming presidential elections.

Better than expected manufacturing data couldn’t support the dollar Despite the optimistic manufacturing figure came out on Tuesday, the greenback was traded marginally lower and unchanged against most of G10 currencies. The ISM Manufacturing PMI surpassed expectations in February, rose by 49.5 from 48.2 before, while the Markit Manufacturing PMI by 51.3 versus 51.0 expected.

Daily Technical Analysis And Forecasts

Eurozone’s unemployment declined for the 3rd month but euro remained subdued
The single currency failed to pick‐up despite the record low unemployment rate that surprised once again. Contrariwise, euro ended the day lower against the other G10 currencies with the only exception the Japanese yen. The 19‐nation jobless claim dropped to 10.3% in January, below market expectations, reaching the lowest since August 2011. The rate has declined for the third consecutive month, as strong improvement sign for Eurozone’s labour market. The Markit Manufacturing PMI for February revealed an expansion in both Germany’s and Eurozone’s sectors.

Daily Technical Analysis And Forecasts

The EUR/USD pair has been choppy the last couple of days and remains pretty much unchanged. The pair plunged below the psychological level of 1.1000 few days ago, which coincides with the daily 200‐SMA, following the positive economic data on Friday that saw the U.S. Q4 GDP growth revised up to 1.0%, compared to the expectation of 0.4%. Furthermore, the euro continued to trade in a red territory against the dollar following another weak inflation reading. The pair crossed below the 50‐SMA and the 200‐SMA on the daily chart and it found a temporary support around 1.0860. The short‐term and the medium‐term indicators, both suggest that further downside momentum is on the cards. Therefore, another run to the downside the bulls would find support to the 1.0775 – 1.0800 zone (suggested target in our weekly strategic report). Beyond this look unlikely, but if wrong, look for a move towards the significant level of 1.0700.

Pound mixed after weak fundamental data
The British pound was traded mixed against the other major currencies while the manufacturing sector was slowed down according to the Markit PMI. The survey came out at 50.8 despite expectations of 52.2 and 52.9 the previous month.

Daily Technical Analysis And Forecasts

The pound was little changed on the greenback at 1.3965, pinned near a one‐week high. The GBP/USD pair has bounced off the brief move of 1.3845 to currently sit back above the key level of 1.3900. To the topside, the psychological level of 1.4000 will be the first hurdle, above which would see a run towards the 26 Feb high at 1.4040 and perhaps to 1.4060. Alternatively, given how aggressive the correction has been over the last three days, above the 1.3845 barrier, we could see a brief period of consolidation, above the 1.3900 before a continuation of the move towards the 1.3800 hurdle.

Dairy Prices Picked up along with New Zealand dollar
The New Zealand dollar recorded gains against both the U.S. dollar and the euro as the dairy prices surprised positively on Tuesday. The Global Dairy Trade (GDT) auction send the kiwi up after an initial weakness. The prices increased by 1.4% for the first time since mid‐December, as the prices were keep falling in all the auctions since then.

Daily Technical Analysis And ForecastsDaily Technical Analysis And Forecasts

The New Zealand dollar moved quietly during yesterday’s session maintaining its gains against the U.S. dollar. The NZD/USD pair is trading in a tight range between 0.6550 and 0.6750 with the 50‐SMA testing the 200‐SMA on the daily chart, confirming the disagreement between the two market forces, the bulls and the bears. The tops and the bottoms of trading ranges are very difficult to identify, as well as support and resistance levels inside the channel. Unfortunately, trading ranges are very difficult to trade profitably. Therefore, as long as the price is trading between the aforementioned levels, we remain neutral as we expect the pair to continue trading in this range for the coming days.

A series of optimistic macro‐economic updates kept up the Australian dollar
The Australian dollar kept to the top after a series of optimistic fundamental data. On Monday, the RBA policy meeting that kept the interest rates on hold pushed the currency higher and it managed to preserve its gains until Tuesday’s macro‐economic data that pushed it even higher. The Chinese manufacturing PMI rose to 49.4 from 49 before and boosted the currency while the domestic GDP for the 4Q showed an unexpectedly strong increase of 3.0% yoy, the highest since Q3 of 2012. The market consensus was to slow down to 2.6% from 2.7% the quarter before. The qoq indicator also surpassed the market expectations.

During yesterday’s session, the Australian dollar surged above the suggested target of 0.7215 to either the China Manufacturing PMIs or to the GDP data, which came better than expected. According to the Australian Bureau of Statistics, the Australian economy grew 0.6% last quarter, beating the market forecast of a 0.4% expansion. It should be noted, that the RBA left its benchmark interest rate unchanged at 2% on early Tuesday.

Technically the next obstacle for the bulls will be the significant level of 0.7258, a level that has been retested in the past but without any success to break above it. Therefore, if the bears win the battle near that level, could take it back to the ascending trend line, near 0.7150. On the other hand, a decisive break above 0.7260, could open the way towards 0.7300 and then to 0.7385.

Daily Technical Analysis And Forecasts

Canadian above estimations GDP boosted the currency
The Canadian dollar recorded slight gains against the majors as the country’s GDP rose more than expected in the fourth quarter. The annualised GDP for 4% came out 0.8% from 0.0% expected while the economic expansion for December also surpassed predictions by 0.1%.

Not much movement in USD/CAD with prices trading within 1.3500 – 1.3600 in the past four days. This is in stark contrast to what we’ve seen in the previous week where pair traded sharply lower. The downward move from 1.4690 can be translated as a technical correction of the trend in the medium term. Naturally, adding a Fibonacci retracement to the chart can give an idea about where the pair will retrace to. We can see that the pair is finding support at the 23.6% Fibonacci level, near 1.3520. Technically, the daily indicator still points lower and if the aforementioned Fibonacci level fails to hold, then I would expect the pair to reach 1.3450. Below here, would look towards the psychological level of 1.3400, which coincides with the 200‐SMA on the daily chart. From there, I would expect the pair to retrace towards 1.3650, before turning to the downside again towards the key support level of 1.2800, which includes the 38.2% Fibonacci Retracement level.

Gold – Technical Analysis
On the 4‐hour chart, the precious metal continues to be confined within a symmetrical triangle – ascending formation ‐ which is a continuation pattern of the uptrend from December 2015. The metal is nearing the apex of the triangle and a breakout is expected anytime soon. There are strong expectations for an upside move, given the fundamentals surrounding the U.S. dollar. Therefore, a break above the $1,253 ‐ $1,262 would open the way towards the psychological level of $1,300. The medium‐term indicators look quite positive for the metal, but a return to the downside would see some bids inside the formation, which could add further pressure to the yellow metal that would allow a return to the significant level of $1,200.

UK Brent and WTI Crude Oil – Technical Analysis
The UK Brent and the U.S. WTI, both had a good day ending yesterday’s session with some gains. The WTI is now testing a critical level around $34.37, January 29 high. Both, the 50‐SMA and the 200‐ SMA on the 4‐hour chart, are providing a significant support to the bulls above the important level of $32.00. Therefore, the level to watch today will be the $34.37. On the other hand, the Brent Crude oil surged above the significant level of $36.15 and further gains could take it back to $38.17, January highs.

U.S. Indices Climbed more than 2%
The U.S. indices surged on Tuesday more than 2%, a rise we haven’t seen the last days. The Dow Jones jumped my 2.11%, almost 350 points higher with major banks and Apple the most gainful stocks. JPMogan Chase & Co (NYSE: JPM) added 5.15% to its value, followed by Apple Inc. (Nasdaq: AAPL) and Goldman Sachs Inc. (NYSE: GS) that rose by 3.97% and 3.42% respectively. The S&P500 surged by 2.39% with all the stock sectors positive expect the utility shares. Nasdaq recorded gains of 2.89%, 131.65 points up.

Daily Technical Analysis And Forecasts

What to watch today
Today, the UK Construction PMI for February will be out and is expected to increase to 55.5 from 55.0 before; while not market affecting, should be worth looking at it. During the European day, Eurozone’s PPI rate for January is forecast to have remained unchanged at ‐3.0% yoy; also not market affecting.

In U.S., the ADP Employment data is forecast to show that companies added 185k employees in February vs 205k in January. That would be in line with the consensus forecast of around 195k for Friday’s Non‐Farm Payrolls. Fed’s Beige book will be published as well.

Finally, Ministry of Japan releases the foreign bond investment report as well the foreign investment in Japan stocks (Feb 19) report.

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