The USD was stronger yesterday as a correction at higher grounds took place yesterday after the drop caused by the FOMC interest rate decision on Wednesday. Investors seemed to favor USD long positions across the board as the market rebounded after the initial bearish shock. The USD also got a boost from unexpectedly stronger industrial data yesterday as well as US-Sino trade frictions. It would be characteristic that in a recent Reuters poll, Japanese companies do not expect the US and China to strike a deal anytime soon, which is in contrast of what the market had started to hope for in the past few weeks. We expect volatility to continue for USD pairs today, especially should there be any headlines about the US-Sino relationships, ahead of next week’s scheduled negotiations. EUR/USD dropped heavily yesterday rallied yesterday, breaking the 1.1390 (R1) support line (now turned to resistance) and bounced on the 1.1340 (S1) support level in the American session, aiming one again on the 1.1390 (R1) resistance line. We could see the pair rising as today’s financial releases could favor the EUR side of the pair. Should the pair find fresh buying orders along its path, we could see the pair breaking the 1.1390 (R1) resistance line and hover above it. On the other hand, should the market favour the pair’s short positions, we could see the pair breaking the 1.1340 (S1) support line.

Pound drops on Brexit uncertainty yet corrects higher upon Brexit delay.

The pound weakened yesterday as the Brexit uncertainty was running high, yet corrected higher late in the American session as it was announced that the EU had granted an extension to the Brexit date. EU Leaders yesterday, told Theresa May that should the UK parliament reject the Brexit deal once again next week, the UK would have until the 12th of April to decide whether to request a longer delay or leave without an agreement in place. It should be noted that should the UK ask for a prolonged delay, it is also expected to take part in the EU Parliament elections. It seems like the EU has temporarily stopped the Brexit clock as it tries to avoid any political blame for a hard Brexit, while at the same time wants to add pressure on the UK to make up its mind. We could see the GBP taking a breather for now, while attention turns once again in the inner UK political scene. Cable dropped yesterday breaking the 1.3175 (R1) support line (now turned to resistance) and at some point also broke the 1.3070 (S1) support line before correcting higher. Should the pound find itself once again under Brexit pressure, we could see the pair trading in a bearish market. Should the bears take over once again, we could see the pair breaking the 1.3070 (S1) support line and aim for the 1.2970 (S2) support barrier. Should the bulls dictate the pair’s direction, we could see the pair breaking the 1.3175 (R1) resistance line and aim for the 1.3265 (R2) resistance level.

Other economic highlights, today and early tomorrow

In today’s European session we get from Germany and the Eurozone the preliminary PMI’s for March. In the American session, we get Canada’s CPI rates for February and the retail sales growth rates for January. From the US we get the Baker Hughes active oil rig count. Also please note that ECB’s De Guidos will be speaking during today’s European session and Chicago Fed President Charles Evans will be speaking during Monday’s Asian session.

EUR/USD

• Support: 1.1340 (S1), 1.1300 (S2), 1.1260 (S3)
•Resistance: 1.1390 (R1), 1.1430 (R2), 1.1480 (R3)

GBP/USD H4

• Support: 1.3070 (S1), 1.2970 (S2), 1.2895 (S3)
•Resistance: 1.3175 (R1), 1.3265 (R2), 1.3350 (R3)