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GBP gains on data, EUR on the rise
The UK’s retail sales, excluding autos, grew 1.3% month-on-month, printing a yearly expansion of 4.1% versus 3.2% expected by analysts. The solid data underpinned the GBP-bulls. The pair hit 1.2520 as a reaction to the data and gathers momentum for a further rise toward 1.2565 (minor 76.4% retracement on February – March decline), before attempting to 1.2609, the 200-day moving average.

On the downside, the pound defended its strength following a terrorist attack in London’s Westminster on Wednesday. The GBPUSD saw a solid support at the 50-day moving average (1.2423). More buyers are eyed at 1.2412/1.2408 (100-day moving average, a former resistance turned to support / Fibonacci 50% retracement on February – March decline) and 1.2337 (major 38.2% retracement).

The FTSE 100 opened downbeat. Further appreciation in the pound, softening oil and commodity prices and uncertainties around the US health-care vote could encourage a deeper pullback to 7275p (50-day moving average). Resistance is eyed at 7360p (200-day moving average).

ECB’s TLTRO is a downside risk to the euro’s uptrend

The French political picture turns in favour of the single currency. The independent candidate Emmanuel Macron is now given 26% probability to win the first round of the French presidential election following his convincing debate earlier this week; Front National’s Le Pen and UMP’s Francois Fillon are assessed 24.5% and 17% respectively. In the second and the final round of the election, Macron would make his way to the Elysée with 65% probability, versus 35% for Marine Le Pen. We remind that the polls are subject to wild swings, as nearly half of French voters said they haven’t fully made up their minds. Risks persist as the recent London attack could bring some voters to revise their decision in favour of the anti-European and anti-immigrant Le Pen.

The European Central Bank (ECB) will offer its last TLTRO (Targeted Long-Term Refinancing Rate) today at 11:30am CET. Expectations are very unclear; analysts expect a take-up between 30 to 750 billion euros. Higher the take-up, greater the impact on the monetary base and the euro. A solid TLTRO is a downside risk on the euro's positive trend.

The EURUSD retreated below the 1.08 mark following the failure to clear resistance at 1.0820/1.0830 (50% level on post-Trump decline / 2017 resistance). We do not rule out the possibility of a renewed attempt toward the 200-day moving average (1.0853) given that the trend and momentum indicators remain comfortably positive.

However, a short-term profit taking could pull the EURUSD’s quotation down to 1.0750/1.0700 (minor 23.6% and major 38.2% retracement on the March rise).

US markets are holding their breath on the run up to the health-care vote

The US is preparing to vote on the critical health-care bill to replace the Obamacare.

Today’s vote is seen as an important test for the Trump administration, as it would signal Donald Trump’s ability to push through his fiscal plans, such as tax reforms and large infrastructure spending.

The reflation rally in the US stock markets appeared to have topped in March, causing a pullback in the US stocks after four months of unprecedented rise. Donald Trump’s failure to push his plans through Congress dented investors’ appetite. Any positive news from today’s vote has the potential to revive the stock bulls.

The US stocks are set for a mixed open in New York.

Trump-favourable trading would also include a recovery in the US yields, the US dollar and the banking shares across the global markets, given that renewed reflation purchases would also halt the Federal Reserve (Fed) hawks’ withdrawal. At the moment, the US 10-year yields sit on the 2.40% support. The rising demand in Treasuries could continue weighing on yields, should the risk-off sentiment deepen and the Federal Reserve (Fed) hawks loose further ground.

Gold gains as Treasury yields retreat

Gold traded at $1251 on the back of risk-off trades and lower US yields. Stronger trend and momentum indicators suggest a further recovery toward $1261, the 200-day moving average.

The positive trend is at Trump risk before the health-care vote. Any Trump-positive news could trigger an early profit taking and pull the yellow metal down toward $1230 (minor 23.6% retracement on December – February rise).