Sample Category Title

Daily Pivots: (S1) 0.8387; (P) 0.8418; (R1) 0.8438; More...

Intraday bias in EUR/GBP remains neutral at this point. Overall outlook stay bearish as long as 0.8539 resistance holds. On the downside, break of 0.8392 temporary low will resume the decline from 0.8737 to 0.8221/8239 support zone.

In the bigger picture, current development suggests that price actions from 0.8221 medium term bottom are merely forming a corrective pattern. However, there is no clear momentum to break through 0.8201 key support (2022 low) yet. Hence, range trading is expected between 0.8221/8737 for now.

Daily Pivots: (S1) 1.7545; (P) 1.7590; (R1) 1.7643; More...

Intraday bias in EUR/AUD stays neutral at this point. On the upside, firm break of 1.7628 resistance will suggest that fall from 1.8554 as completed as a correction, and retain larger bullishness. Intraday bias will be back on the upside for stronger rebound. However, below 1.7245 will resume the fall to 61.8% retracement of 1.5963 to 1.8554 at 1.6953.

In the bigger picture, as long as 1.7062 resistance turned support (2023 high) holds, up trend from 1.4281 (2022 low) should still be in progress. Break of 1.8554 will target 100% projection of 1.4281 to 1.7062 from 1.5963 at 1.8744. However, sustained break of 1.7062 will confirm medium term topping and bring deeper fall back to 1.5963 support.

Daily Pivots: (S1) 0.9331; (P) 0.9349; (R1) 0.9368; More....

Intraday bias in EUR/CHF remains neutral as sideway trading continues. Price actions from 0.9218 are seen as either a corrective move or the third leg of the pattern from 0.9204. On the upside, break of 0.9419 will resume the rise from 0.9218 through 0.9445 resistance. However, break of 0.9296 support will bring retest of 0.9218 low.

In the bigger picture, prior rejection by long-term falling channel resistance (now at 0.9548) retains medium term bearishness. That is, down trend from 1.2004 (2018 high) is still in progress. Firm break of 0.9204 (2024 low) will confirm resumption. This will remain the favored case as long as 0.9660 resistance holds.

Markets

Yesterday’s House approval of Trump’s multi-trillion bill wraps up days of suspense going into the vote. The fiscal theme returned front-and-center since the 90-day US-Sino trade truce almost two weeks ago. Dire deficit and debt forecasts by the Committee for a Responsible Federal Budget and weak auctions in the UK, Japan and eventually in the US ($16bn 20-yr sale) all added to the negative sentiment and pressured the long end of the curve. The House vote delivered a final push, lifting the 30-yr to just 2 bps shy of the 5.17% 2023 high. But without a test, let alone break, some technical return action kicked in. Net daily changes eventually varied between -2.8 (2-yr) and -7.2 (20-yr) bps. Stronger-than-expected US PMI’s help explain the front-end’s underperformance. Both the services and manufacturing gauge rebounded to 52.3, driven by accelerating growth in new orders. Following the tariff pause, optimism for the year ahead recovered from April’s slump to its highest since January. Input costs rose sharply and was “overwhelmingly linked to tariffs”. That resulted in the sharpest rise in prices charged since August 2022. The contrasting mixed-to-weak European PMIs triggered some bull steepening and pushed EUR/USD lower, be it only marginally, to 1.128. EUR/GBP for similar reasons (UK PMIs were slightly less disappointing than the EMU ones) dipped back towards the 0.84 support area.

Those business confidence indicators were the only highlight on this week’s economic calendar. The ECB’s wage negotiations tracker scheduled for release today is worth mentioning but it’s unlikely to alter markets’ 100% conviction on a 25 bps June rate cut. With Trump’s bill now headed to the Senate, the fiscal theme is not at all gone but could move a bit to the background in a daily perspective and maybe even give way for the trade topic again (cf. below). Add to that long weekend ahead in the US (Memorial Day on Monday) and we’re set for a technical trading session. A weekly close of the 30-yr north of 5% would be an important signal, suggesting lingering fiscal worries. EUR/USD already recoups yesterday’s losses to trade around 1.132 but we don’t expect the move to run much further. UK retail sales for April were much stronger-than-expected, even considering the downward revisions for March. Sterling shrugs though. EUR/GBP holds steady north of 0.841. UK markets are also closed on Monday.

News & Views

National inflation in Japan rose slightly more than expected in April. Headline inflation held stable at 3.6% Y/Y. CPI inflation ex-fresh food, a measure closely watched by the BOJ, accelerated by from 3.2% to 3.5%. The index is touching the highest level since January 2023. Inflation ex fresh food and energy also rose from 2.9% to 3.0%. Food prices, while easing from 7.4% Y/Y in March to 6.4% remain in important source of upward price pressures. Rice prices even rose 98.4% Y/Y. Prices of utilities also accelerated (3.0% M/M and 8.4% Y/Y) due to the government phasing out support measures for gas and electricity. Service price inflation remained modest (1.3%), but this due to changes in education fees. Other topics suggest that private companies might further raise prices. Today’s CPI release is keeping the door open for the BOJ to continue is normalization process even as it currently has a wait-and-see bias to assess the impact of US tariffs on price and activity. Next BOJ policy meetings are scheduled on June 17 and July 31. Markets currently see only a very low probability of a next step at these meetings yet.

The Financial Times this morning reports that in the trade negotiations between the US and the EU, the US is urging the EU to make unilateral tariff concessions referring to people familiar with the discussions. These concessions are said to be necessary to make progress in talks to avoid additional 20% reciprocal tariffs. The US is said to be unhappy that the EU only offered mutual tariff reductions rather committing to lower duties alone. The EU apparently also didn’t give any indication that the digital tax may be discussed, a demand from the US. The US also wants the EU to reduce regulation and accepting US standards on food and other products, amongst other non-tariff requests. The report suggests that talks for now have made little progress in the run-up to the July 8 deadline when the reduced reciprocal tariffs expire.

Daily Pivots: (S1) 1.1242; (P) 1.1294; (R1) 1.1331; More...

Intraday bias in EUR/USD remains neutral and more consolidations could be seen below 1.1362 temporary top. Further rise is expected as long as 1.1216 support holds. Correction from 1.1572 could have completed at 1.1064 already. Above 1.1362 will bring retest of 1.1572 first. Firm break there will resume larger up trend. Next near term target will be 61.8% projection of 1.0176 to 1.1572 from 1.1064 at 1.1927. However, break of 1.1217 will turn bias back to the downside for 1.1064 support instead.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0818) holds.

Daily Pivots: (S1) 143.08; (P) 143.75; (R1) 144.68; More...

Intraday bias in USD/JPY is turned neutral with current recovery, and some consolidations would be seen above 142.79 temporary low. Risk will stay on the downside as long as 146.08 minor resistance holds. Rebound from 139.87 could have completed as a correction to 148.64 already. Below 142.79 will target a retest on 139.87 low.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 1.3393; (P) 1.3417; (R1) 1.3443; More...

Intraday bias in GBP/USD stays neutral and further rally is expected with 1.3333 support intact. Above 1.3468 will extend larger up trend to 61.8% projection of 1.2706 to 1.3442 from 1.3138 at 1.3593, and then 100% projection at 1.1.3874. However, break of 1.3333 will turn bias back to the downside for 1.3138 support instead.

In the bigger picture, up trend from 1.3051 (2022 low) is still in progress. Decisive break of 1.3433 (2024 high) will confirm resumption. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Nevertheless, sustained trading below 55 D EMA (now at 1.3124) will delay the bullish case and bring more consolidations first.

Daily Pivots: (S1) 0.8246; (P) 0.8277; (R1) 0.8319; More….

Intraday bias in USD/CHF remains neutral at this point. Risk will stays on the downside as long as 0.8475 resistance holds. Corrective rebound from 0.8038 should have completed already. Below 0.8208 will bring retest of 0.8038 first. Firm break there will resume larger down trend to 61.8% projection of 0.9200 to 0.8038 from 0.8475 at 0.7757 next.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8765) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

Daily Pivots: (S1) 0.6392; (P) 0.6425; (R1) 0.6444; More...

No change in AUD/USD's outlook as sideway trading continues. Intraday bias stays neutral and further rise is in favor with 0.6356 support intact. One the upside, break of 0.6511 will resume the rise from 0.5913 and target 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, firm break of 0.6356 will bring deeper pullback to 38.2% retracement of 0.5913 to 0.6511 at 0.6283 first.

In the bigger picture, as long as 55 W EMA (now at 0.6438) holds, down trend from 0.8006 (2021 high) should resume later to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA will argue that a medium term bottom was already formed, and set up further rebound to 0.6941 resistance instead.

The selloff in US equities eased yesterday as pressure in the bond space declined. But the news is far from reassuring for a sustainable relief: US politicians continue to turn a blind eye to the stress building in the sovereign bond space. The House of Representatives passed Trump’s ‘beautiful’ tax bill yesterday—with just one vote. But one vote is all it takes to send the bill to the Senate, which is narrowly controlled by the same Republicans who proposed it.

In case you missed it, the bill aims to cut spending on social welfare and climate-friendly programs in order to fund tax cuts. The thing is, even if it gets through the Senate, it still has to pass the bond market test. Investors in US Treasuries are increasingly uncomfortable with the country’s ballooning debt, and may not be willing to finance Trump’s budget ambitions without demanding higher yields.

Unsurprisingly, appetite for US solar stocks is going from bad to worse. Enphase—the star of the 2020-2022 solar rally—plunged nearly 20% yesterday following the US vote to cut clean energy tax credits.

Meanwhile, US yields have eased slightly. The 10-year yield fell 10 basis points from its high of 4.62% to trade just above 4.50% this morning, likely on the back of dip-buying interest from investors keen to lock in a 4.5% return. The 30-year yield, on the other hand, expanded to 5.15% and is now consolidating around the 5% mark. Still, the crisis is far from over. The risk of another selloff lingers, as higher yields continue to pressure US equity valuations—mathematically, the higher the yields, the lower the present value of future cash flows.

The S&P 500 erased its early-session gains and closed slightly down. The Dow Jones ended the day flat, while small and mid-cap stocks recorded slightly deeper losses—likely weighed down by stronger-than-expected S&P Global PMI numbers, which showed improvement in both manufacturing and services activity in May. This may reflect the temporary relief to tariff pressures, though price pressures continued to rise.

As a result, the US dollar was better bid during the Thursday session, though selling pressure returned in Asia. In contrast, Europe’s PMI data disappointed. Both services and composite PMIs unexpectedly slipped below the 50 threshold—into contraction territory—possibly due to lingering tariff uncertainties. Bundesbank President Joachim Nagel warned earlier this week that the German economy could stagnate this year, with better prospects next year as government spending kicks in. But for now, the slow pace of recovery remains a concern for investors who were more optimistic at the start of the year.

Still, the euro is performing well against a basket of G7 currencies. It’s gaining against the dollar, the British pound (as the UK also grapples with budget issues), the Aussie, the Kiwi, the Canadian dollar, and even the Japanese yen—though not against the Swiss franc. This relative strength is partly because the euro is increasingly being seen as a reasonable alternative to the US dollar as a reserve currency.

Also, lower energy prices are a welcome relief for German economy, which has lagged due to the European energy crisis in recent years. A sustained decline in energy prices could help lift growth prospects and support the euro—especially if inflation remains under control and the European Central Bank (ECB) remains supportive. In this context, the widening yield differential between the US and the Eurozone is driving a rise in ‘reverse Yankee’ issuance—US companies, particularly those with European operations, are now issuing euro-denominated bonds to benefit from lower borrowing costs. According to Bloomberg, European corporate bonds are averaging around 3.18% in yield, compared to 5.3% in the US. This improving appetite for European debt adds another leg of support to the euro.

In commodities, crude oil prices took another hit yesterday after reports emerged that OPEC+ is considering a sizable production hike in July—reportedly 411,000 barrels per day—to meet growing demand. However, demand prospects remain uncertain amid ongoing trade tensions... So this move may be an attempt to appease Donald Trump, who has long lobbied for lower energy prices, or possibly to penalize member states that have repeatedly breached their quotas. Either way, OPEC appears less willing to cut supply to support prices. Consequently, US crude fell to $60.60 per barrel yesterday. While there is psychological support around the $60 level, the failure to breach the 50-day moving average earlier this week suggests that geopolitical tensions alone are not enough to push prices sustainably higher—unless they escalate into something far worse, which we obviously don’t hope for.

From a technical perspective, US crude remains in a bearish trend below $65.30 per barrel, the 38.2% Fibonacci retracement that marks the divide between a year-to-date downtrend and a potential medium-term bullish reversal. Any escalation in Middle East tensions could trigger a spike in prices. Such geopolitically driven rallies may present interesting tactical opportunities, but they are likely to be short-lived. If the weekend brings any bad news and Monday opens with a jump, it would be wise to set profit targets.