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Daily Pivots: (S1) 161.24; (P) 161.76; (R1) 162.18; More...

Intraday bias in EUR/JPY remains neutral as range trading continues. On the upside, above 164.16 will resume the rally from 154.77 to 164.89 resistance, and then 166.67. However, decisive break of 158.27 support will bring deeper decline back to 154.77 support. Overall, sideway consolidation pattern from 154.40 is still extending.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). Strong support should be seen from 38.2% retracement of 114.42 to 175.41 at 152.11 to contain downside. However, sustained break of 152.11 will bring deeper fall even still as a correction.

Daily Pivots: (S1) 0.8553; (P) 0.8584; (R1) 0.8640; More...

Intraday bias in EUR/GBP remains neutral for the moment. Consolidations from 0.8737 could extend but further rise is still expected as long as 0.8518 support holds. On the upside, break of 0.8737 will resume the larger rally from 0.8221.

In the bigger picture, down trend from 0.9267 (2022 high) should have completed at 0.8221, just ahead of 0.9201 key support (2024 low). Rise from 0.8221 is likely reversing the whole fall. Further rise should be seen to 61.8% retracement of 0.9267 to 0.8221 at 0.8867 next. This will now remain the favored case as long as 0.8472 resistance turned support holds.

Daily Pivots: (S1) 1.7772; (P) 1.7858; (R1) 1.7976; More...

EUR/AUD is still extending the consolidation pattern from 1.8554 short term top and intraday bias remains neutral. Downside of the pull back should be contained by 38.2% retracement of 1.5963 to 1.8854 at 1.7750. On the upside, firm break of 1.8554 will resume larger up trend.

In the bigger picture, up trend from 1.4281 (2022 low) is in progress, and in reacceleration phase as seen in W MACD. Next target is 100% projection of 1.4281 to 1.7062 from 1.5963 at 1.8744. Firm break there will pave the way to 138.2% projection at 1.9806, which is close to 1.9799 (2020 high). Outlook will remain bullish as long as 1.7417 resistance turned support holds even in case of deep pullback.

Daily Pivots: (S1) 0.9210; (P) 0.9255; (R1) 0.9317; More....

No change in EUR/CHF's outlook as consolidations continue above 0.9218. Intraday bias remains neutral for the moment. Outlook will remain bearish as long as 0.9408 resistance holds. On the downside, firm break of 0.9204 low will confirm larger down trend resumption.

In the bigger picture, rejection by long-term falling channel resistance (now at 0.9600) 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. Next target is 100% projection of 0.9928 to 0.9204 from 0.9660 at 0.8936.

Markets

Fed Chair Powell sent a clear signal to markets in a keynote speech for the Economic Club of Chicago. He started by pointing out that the level of the tariff increases announced so far by the new Administration is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth. The Fed’s obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem. As the central bank acts to meet that obligation, they will balance their maximum employment and price-stability mandates, keeping in mind that, without price stability, it cannot achieve the long periods of strong labor market conditions that benefit all Americans. The Fed may find itself in the challenging scenario in which their dual-mandate goals are in tension. If that were to occur, Powell suggests that they consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close. During the Q&A he stressed on multiple occasions that the Fed’s goals aren’t in tension right now with the labour market still being strong. That’s a very strong hint that the Fed is well positioned to wait for greater clarity before considering any adjustments to its policy stance. Over the course of the year, Powell thinks that both metrics (unemployment & inflation) will on balance move away from target. Taking in mind that they’ll see how far away each is from target, this also suggests in first instance a clear focus on inflation. We feel strengthened in our base case scenario of a long pause, stretching at least into September and probably even into December. US money and interest rate markets turned a blind eye to Powell’s message yesterday. The Fed fund futures forward curve still suggests a 75% probability of a 25 bps rate cut in June with a cumulative 100 bps of rate cuts discounted by March of next year. Daily changes on the US yield curve yesterday ranged between -8.6 bps (3-yr) and -3.9 bps (30-yr). Powell’s message did leave traces on stock markets, pushing key indices to losses of 1.75% (Dow) to 3% (Nasdaq). They already started on the backfoot after US President Trump threw in Nvidia as a bargaining chip with China in the trade war. EUR/USD closed at 1.1399 from a start at 1.1283.

Focus shifts to Frankfurt today where we expect the ECB to cut its policy rate by another 25 bps to 2.25% and dropping any reference to a restrictive policy rate. Those settings allow for the central bank to, like the Fed, turn into wait-and-see mode as the tariff story develops. The 90-day pause in the worst case reciprocal tariff narrative stretches beyond the central bank’s June meeting, arguing against extending the rate cycle. As in the US, inflation is above target with both tariffs and fiscal stimulus being deployed posing upside risks which in the short-run outweigh downside growth risks. We are aware that this view goes against current market thinking of multiple additional ECB rate cuts, bringing the deposit rate towards 1.5%-1.75% by year-end but stick with our call. This dovish positioning nevertheless calls for asymmetric risks today. The front end of European yield curves might underperform, further supporting the single currency.

News & Views

The Bank of Canada left its policy rate unchanged at 2.75% yesterday. It’s the first pause since it embarked on an easing cycle in June 2024. The central bank offered no guidance for future policy, only that it will proceed carefully. The BoC considers two scenarios. In the first one, uncertainty is high but tariffs are limited in scope. Canadian growth weakens temporarily and inflation (2.3% in March) remains around the 2% target. In the second scenario, a protracted trade war causes a recession this year and inflation rises temporarily above 3% in mid-2026 before returning to target. Some 40% of a rate cut was priced in going into the meeting yesterday, triggering minor CAD appreciation after the status quo decision. Money markets expect less than two additional rate cuts for this year.

Australian labour market numbers for March were strong but slightly underwhelming. Employment grew by 32.2k (vs 40k expected) after February’s 57.5k drop, almost equally split in full time and part time jobs. The 2.2% annual employment growth was slightly above the 20-year pre-pandemic average of 2. The unemployment rate barely budged with rounding effects pushing the figure up from 4% to 4.1%. The same effects lifted the participation rate 1bp to 66.8%. First quarter inflation in New Zealand rose by 0.9% q/q to 2.5% y/y, up from 2.2%. Both were slightly above consensus but remain within the 1-3% central bank target range for a third consecutive quarter. Rent was the largest contributor. The 3.7% increase was the first sub 4% reading since 2021. Non tradeable CPI, a gauge for domestic price pressures, accelerated from 0.7% to 1.1% q/q, as did tradeable CPI from 0.3% to 0.8%. Despite the inflation quickening, markets expect the central bank to further cut rates at the May meeting (to 3.25%).

Daily Pivots: (S1) 1.1314; (P) 1.1363; (R1) 1.1449; More...

Intraday bias in EUR/USD remains neutral for the moment. Consolidation from 1.1472 is still in progress and deeper retreat cannot be ruled out. But downside should be contained by 1.1145 resistance turned support to bring another rally. On the upside, break of 1.1472 will target 161.8% projection of 1.0358 to 1.0953 from 1.0731 at 1.1694.

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 1.0745) holds.

Daily Pivots: (S1) 141.25; (P) 142.30; (R1) 142.95; More...

Intraday bias in USD/JPY is back on the downside with breach of 142.05 temporary low. Current fall from 158.86 should extend to 139.57 support. On the upside, above 144.07 minor resistance will turn intraday bias neutral again. But overall outlook will stay bearish as long as 151.20 resistance holds.

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) 1.3205; (P) 1.3249; (R1) 1.3285; More...

A temporary top is formed at 1.3291 after GBP/USD failed to break through near term channel resistance and retreated. Some consolidations would be seen first, but further rally is expected as long as 55 4H EMA (now at 1.3078) holds. Above 1.3291 will resume the rise from 1.2099 to 61.8% projection of 1.2099 to 1.3206 from 1.2706 at 1.3390, and possibly further to 1.3433 high. However, sustained break of 55 4H EMA will turn bias back to the downside for deeper pullback.

In the bigger picture, price actions from 1.3433 are seen as a corrective pattern to the up trend from 1.3051 (2022 low). Rise from 1.2099 could be the second leg. Overall, GBP/USD should target 1.4248 key resistance (2021 high) on break of 1.3433 at a later stage.

Daily Pivots: (S1) 0.8092; (P) 0.8163; (R1) 0.8206; More…

Intraday bias in USD/CHF remains neutral as consolidations continues above 0.8098. While stronger recovery might be seen, upside should be limited by 55 4H EMA (now at 0.8329) to bring another fall. On the downside, break of 0.8098 will resume recent down trend to 200% projection of 0.9196 to 0.8757 from 0.8854 at 0.7976 next. Nevertheless, sustained break of 55 4H EMA will confirm short term bottoming, and turn bias back to the upside for stronger rebound.

In the bigger picture, the break of 0.8332 (2023 low) confirms resumption of long term down trend from 1.0342 (2017 high). Next target is 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9196 at 0.8075. Firm break there will target 100% projection at 0.7382. In any case, outlook will now stay bearish as long as 55 W EMA (now at 0.8821) holds.

Daily Pivots: (S1) 0.6332; (P) 0.6362; (R1) 0.6401; More...

AUD/USD edged higher to 06309 but failed to break through 0.6407 resistance and retreated again. Intraday bias stays neutral for the moment. Further rally is expected as long as 55 4H EMA (now at 0.6239) holds. Firm break of 0.6407 resistance will extend the rise from 0.5913 to 61.8% retracement of 0.6941 to 0.5913 at 0.6548, even still as a corrective move. Nevertheless, sustained break of 55 4H EMA will turn bias back to the downside for deeper pullback.

In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA (now at 0.6441) will argue that a medium term bottom was already formed, and set up further rebound to 0.6941 resistance instead.