Will this Brexit Deal be Good Enough?

GBPUSD – technical overview

The major pair has put in an impressive recovery off the multi-month low in early January, helping to support the case for a longer-term developing uptrend off the 2016 low. Pullbacks are now viewed as corrective on the daily chart, with dips expected to be supported above the bottom of the daily Ichimoku cloud. Back above the 2019 high will strengthen the outlook.

• R2 1.3351 – 27Feb/2019 high – Strong
• R1 1.3290 – 12Mar high – Medium
• S1 1.3146 – 12Mar low – Medium
• S2 1.3100 – Figure  â€“ Medium

GBPUSD – fundamental overview

The Pound has been well bid into Tuesday, after the late Monday news the UK and EU agreed on a legally binding amendment to the Irish backstop. The change would prevent the EU from applying the backstop indefinitely and would give the UK an opportunity to challenge any such attempt in arbitration, which if proven, would allow the UK to suspend the backstop. In addition, the joint agreement lays out a commitment for both sides to work on a replacing the backstop with alternatives by the end of 2020. Theresa May will provide further details on the deal when the debate opens up later today ahead of the anticipated vote. Ahead of all of this, we’ll get some important UK data, in the form of GDP, industrial production, manufacturing production and trade. US CPI is also on the docket.

USDJPY – technical overview

The major pair is in the process of correcting within a bigger picture downtrend. Look for the recovery rally to be capped below 113.00 on a daily close basis, in favour of the next major downside extension below the 104.63, 2018 low. This would expose a very important psychological barrier at 100.00 further down, which guards against the 2016 low at 99.00. Ultimately, only back above 113.00 delays the bearish outlook.

• R2 112.15 – 5Mar/2019 high  – Medium
• R1 111.66 – 8Mar high – Strong
• S1 110.79 – 8Mar low – Medium
• S2 110.26 – 15Feb low – Strong

USDJPY – fundamental overview

Overall, the major pair should continue to track along with risk sentiment and yield differentials. Last week’s renewed declines in US equities had a notable impact, with the Yen rallying in response. Friday’s discouraging NFP print kept the US Dollar from recovering, while a dovish Fed Chair interview could fuel more Yen demand in the sessions ahead. Monday’s US retail sales was a wash, with the strong headline print offset by downward revisions. Today, US CPI is on the docket.

EURCHF – technical overview

The market has been in the process of consolidating off the 2018 low, which coincided with critical support in the 1.1200 area. However, at this stage, there is no clear directional bias, with the price action deferring to a neutral state. Back above 1.1500 would get some bullish momentum going for a push to 1.2000, while back below 1.1185 would be quite bearish.

• R2 1.1502– 22Oct high â€“ Strong
• R1 1.1445 â€“ 5Feb/2019 high – Medium
• S1 1.1300 – Psychological – Medium
• S2 1.1185– 7Sep/2018 low â€“ Strong

EURCHF – fundamental overview

The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of sustained risk liquidation in 2019, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we’re at in the monetary policy cycle.

AUDUSD – technical overview

The market has been very well supported since breaking down in early January to multi-year lows. The price action suggests we could be seeing the formation of a major base, though it would take a clear break back above 0.7400 to strengthen this outlook. Look for setbacks to continue to be well supported ahead of 0.7000.

• R2 0.7122 – 1Mar high – Strong
• R1 0.7092 – 6Mar high – Medium
• S1 0.7004 – 8Mar low â€“ Medium
• S2 0.6982 – 2Jan low â€“ Strong

AUDUSD – fundamental overview

Mild Aussie setbacks in early Tuesday trade on the back of softer Aussie confidence readings, have been well supported. Overall, the Australian Dollar has been bid back up off recent lows, with the currency getting a boost from broad based US Dollar declines in the aftermath of last Friday’s discouraging US NFP print. We’ve since heard from a dovish Fed Chair, while the trade outlook continues to point to a US administration that will make it difficult for China, given the administration’s desire to effectuate a weaker US Dollar. At the same time, Aussie also correlates with risk flow and any additional downside pressure on US equities this week, could prove to be offsetting. Looking at the calendar, US CPI stands out.

USDCAD – technical overview

Overall, the structure remains constructive, with dips expected to be well supported for fresh upside back above the 2018/multi-month high at 1.3665. Back below the psychological barrier at 1.3000 would be required to delay the outlook.

• R2 1.3496– 4Jan/2019 high – Strong
• R1 1.3468 – 7Mar high â€“ Medium
• S1 1.3350 – 6Mar low – Medium
• S2 1.3275 – 4Mar low â€“ Strong

USDCAD – fundamental overview

The Canadian Dollar has managed to recover in the early week, after taking a healthy hit in recent days. The primary driver behind the recovery has been the contrasting employment reports that were out this past Friday. While the US jobs report had discouraging components, the Canada report was decidedly more upbeat. The Loonie will continue to monitor developments on the OIL front as well. Looking at the calendar for the day, absence of first tier data out of Canada, will leave the focus on US CPI.

NZDUSD – technical overview

While the bigger picture outlook still shows the market in a downtrend, as per the weekly chart, there’s a case to be made for a meaningful low in place at 0.6425. As such, look for setbacks to be well supported ahead of 0.6500 in anticipation of additional upside, with only a break back below 0.6500 to put the focus back on the multi-month low from October at 0.6425. A push through 0.6970 will strengthen the constructive outlook.

• R2 0.6854 – 28Feb high – Strong
• R1 0.6829–  4Mar high – Medium
• S1 0.6745 – 7Mar low â€“ Medium
• S2 0.6720 â€“ 12Feb low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been bid back up off recent lows, with the currency getting a boost from broad based US Dollar declines in the aftermath of last Friday’s discouraging US NFP print. We’ve since heard from a dovish Fed Chair, while the trade outlook continues to point to a US administration that will make it difficult for China, given the administration’s desire to effectuate a weaker US Dollar. At the same time, Aussie also correlates with risk flow and any additional downside pressure on US equities this week, could prove to be offsetting. Looking at the calendar, US CPI stands out.

US SPX 500 – technical overview

There have been legitimate signs of a major longer term top, with deeper setbacks projected in the months ahead. Any rallies should now continue to be very well capped ahead of 2825, in favour of renewed weakness that targets an eventual retest of strong longer-term resistance turned support in the form of the 2015 high at 2140. The projection is based off a measured move extension derived from the previous 2018 low from February to the record high move.

• R2 2824 – 17Oct high â€“ Strong
• R1 2820 – 4Mar/2019 high – Strong
• S1 2722 – 8Mar low – Medium
• S2 2681 – 8Feb low – Strong

US SPX 500 – fundamental overview

Investor immunity to downside risk is not as strong into 2019. The lag effect of Fed policy normalisation, US protectionism, ongoing White House drama and geopolitical tension are all warning of deeper setbacks ahead. The Fed has also finally acknowledged inflation no longer running below target, something that could very well result in even less attractive equity market valuations this year, given the implication on rates. US hourly earnings are starting to move up, which could be a warning of a jump in inflation. Although we have seen attempts to push the market higher in early 2019, on the Fed’s more cautious outlook, exhausted monetary policy tools post 2008 crisis suggest the prospect for fresh record highs at this point in the cycle are not a realistic prospect. We recommend keeping a much closer eye on the equities to ten year yield comparative going forward, as the movement here is something that will continue to stress the market in 2019.

GOLD (SPOT) – technical overview

There are signs that we could be seeing the formation of a more significant medium to longer-term structural shift that would be confirmed if this latest recovery can extend back through big resistance in the form of the 2016 high at 1375. Look for setbacks to be well supported, with only a close back below 1250 to compromise the constructive outlook. The latest push through 1300 strengthens the outlook.

• R2 1347– 20Feb/2019 high – Strong
• R1 1316 – 1Mar high – Medium
• S1 1281 – 7Mar low â€“ Medium
• S2 1277 â€“ 4Jan/2019 low â€“ Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, political uncertainty, systemic risk and trade war threats. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

BTCUSD – technical overview

At this stage, any upside moves are classified as corrective ahead of what could be the next downside extension and bearish continuation. It would take a break back above the December high at 4385 to take the immediate pressure off the downside. Next critical support comes in the form of the July and September 2017 lows, around 2,000 and 2,975 respectively.

• R2 4,480 â€“ 29Nov high – Strong
• R1 4,380 â€“ 24Dec high – Strong
• S1 3,400– Round number –Medium
• S2 3,212 â€“ 15Dec/2018 low  â€“ Strong

BTCUSD – fundamental overview

Bitcoin is showing signs of stability after an abysmal performance in 2018. At the moment, the market still faces headwinds in the form of regulatory uncertainty and front end application, though looking out, there continue to be many encouraging signs the market is here to stay and will be seeing increased adoption.

BTCUSD – Technical charts in detail

ETHUSD – technical overview

The latest recovery rally has stalled out into a meaningful previous support zone, to keep the pressure on the downside, with risk for a bearish continuation to next critical support in the 50-75 area. At this point, it would take a sustained break back above 170 to take the immediate pressure off the downside.

• R2 200 â€“ Psychological – Medium
• R1 170 – 24Feb high – Strong
• S1 100 â€“ Psychological – Medium
• S2 83 â€“ 7Dec/2018 low  â€“ Strong

ETHUSD – fundamental overview

Ongoing regulatory challenges, technological obstacles and a global economic downturn are some of those headwinds that need to be considered in the months ahead. At the same time, longer term prospects are looking quite bright and valuations are increasingly attractive with adoption showing signs of ramping up over the longer term.