Financial Market Research and Analysis

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GBP trades south as Brexit talks loom
EURUSD tanked to 1.1077. The break of.1120 support (Fib 50% on Aug-Dec decline) suggests a further decline toward the critical 200-day moving average (1.1050). Resistance is eyed at 1.1160, Fib 38.2% retrace on Jan 29 – Feb11 rise, only a break above should signal an improvement in sentiment for a recovery to 1.1243 (minor 23.6% retrace) and 1.1376 (Feb 11 peak).

USDJPY cleared support at 113.51 (minor 23.6%) and extended losses to 112.71 along with Nikkei and Topix (-1.42% and -1.48% respectively). Trend and momentum indicators remain comfortably negative, suggesting a further slide toward the next critical level at 110.99 (Feb 11 dip). On the upside, resistance is seen at 113.50/113.75 (former support turn resistance / 200-hour moving average). The Fibonacci level of 115.08 (major 38.2% retrace off Jan 29 high 121.69) should keep the bias on the downside and keep the pair in the bearish consolidation zone. Only surpassing 115.08 could signal a potentially sustainable recovery to 116.34 and 117.60 (Fib 50% and 61.8% retrace).

GBPUSD remained offered into the 1.4354 (minor 23.6% retrace on Dec-Jan fall) despite a solid 2.3%m/m surge in retail sales in January. Failure to clear resistance at 1.4354 keeps the possibility of further extension toward 1.4150 (Jan 29 low and 1.4080 (Jan 21 dip). From a mid-term perspective, we watch 1.4523 (major 38.2%) to distinguish between a re-test of 1.4080 (January dip) and a further correction to 1.4660/1.4797 (Fib 50%/61.8% respectively).

AUDUSD slipped below the 0.71 mark in Sydney as the RBA’s Edward revived fears over AUD strength. Next resistances are eyed at 0.7140 (Fib 61.8% retrace on Feb 4 – 9 decline) before 0.7180/0.7200 zone. A weekly close below the 0.7105 (major 38.2% retrace on Feb 9-Feb 16 rise) could encourage a further slide to 0.7080 (Fib 50%), 0.7055 (Fib 61.8%) before 0.7020 mid-term support.

Gold bounced higher as risk aversion vis-à-vis the world economy keeps investors seated on cash and increasingly on gold. The $1200 should give some support for a recovery toward 1250/1260 (Feb 11 peak). The Fib 38.2% retrace on Dec-Feb rally should continue lending support to the current bullish development.

WTI continues testing the $32 (four-month downtrend channel top) for a possible extension to $32.85 (50dma) before $34.50/35.50, mid-term resistance. Failure to break above $32 keeps the WTI within the down-trending channel, with decreasing conviction however that the price of a barrel could fall to $25.

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