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WTI oil is consolidating above fresh multi-month low at $42.04, (the lowest since Aug 2016) posted on Wednesday. The price remains firmly in red, following limited upside overnight that was capped at $42.70. Strong bearish pressure on global oversupply fears offset the impact of better than expected US Crude Stocks data, released on Wednesday, which showed crude inventories falling more than expected (2.5 million barrels draw vs forecast for 1.2 million barrels draw). Oil price met its target at $42.19 (14 Nov 2016 low) and focus is turning towards $41.09 (11 Aug 2016 low) and $40.63 (50% retracement of larger $26.04/$55.22, Feb 2016/Jan 2017) rally). Oil may extend consolidation above new low, as daily studies are oversold, but so far without reversal signal that limits recovery attempts. Session high at $42.70 marks initial resistance, followed by $43.00 and first pivot at $43.74 (former low of 05 May / Fibo 38.2% of $46.46/$42.04). Sustained break here is needed to trigger stronger correction which is also signaled by daily RSI bullish divergence.

Res: 42.70, 43.00, 43.74, 44.40
Sup: 42.26, 42.04, 41.09, 40.63

Daily Pivots: (S1) 0.8774; (P) 0.8810; (R1) 0.8848; More...

EUR/GBP is staying in consolidation from 0.8865 and intraday bias remains neutral at this point. In case of another fall, we'd expect strong support from 0.8639 to contain downside and bring rise resumption. Decisive break of 0.8851 resistance will pave the way to retest 0.9304 high. However, break of 0.8639 support will now indicate near term topping and bring deeper pull back 0.8529 resistance turned support and below.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. The leg from 0.9304 should have completed after testing 0.8332 structural support. But it's too early to say that larger rise from 0.6935 is resuming. Rejection from 0.9304 will extend the consolidation with another falling leg. Meanwhile, firm break of 0.9304 will target 0.9799 (2008 high). In case of another decline, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside and bring rebound.

EUR/USD

Current level - 1.1169

The rebound above 1.1110 seems corrective in nature, so the overall bias remains bearish, for a slide towards 1.1020 area. Crucial on the upside is 1.1210.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 111.10

Yesterday's second test of 111.80 failed as well and the outlook is bearish, for a dip towards 110.30 area. Minor intraday resistance lies at 111.20.

GBP/USD

Current level - 1.2670

The reversal at 1.2580 signals a finale of the downtrend from 1.2810, but the slide on the senior frames is still intact, so my outlook is bearish, for a slide towards 1.2480 area. Initial intraday resistance lies at 1.2720, followed by the crucial 1.2825.

Daily Pivots: (S1) 1.4709; (P) 1.4747; (R1) 1.4822; More...

EUR/AUD's recovery argues that pull back from 1.5226 might be completed after drawing support from 38.2% retracement of 1.3624 to 1.5226 at 1.4614. Intraday bias is turned back to the upside for retesting 1.5226 high. However, sustained break of 1.4614 fibonacci level will pave the way to 61.8% retracement at 1.4236 and possibly below.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction should be completed at 1.3624 after defending 1.3671 key support. Rise from 1.3642 would extend to 61.8% retracement of 1.6587 to 1.3624 at 1.5455. Sustained break there will pave the way to retest 1.6587. However, sustained break of 1.4669 support will dampen this bullish view. We'll assess the outlook later after looking at the structure and depth of the pull back.

Daily Pivots: (S1) 140.05; (P) 140.90; (R1) 141.96; More....

GBP/JPY is staying in range of 138.65/142.75 and intraday bias remains neutral. On the downside, break of 138.65 will resume the decline from 148.09. In that case, we'd look for bottoming signal around 135.58, which is close to 135.39 fibonacci level, to bring rebound. On the upside, break of 142.75 should confirm completion of the fall from 148.09 and turn bias back to the upside for this resistance.

In the bigger picture, while the fall from 148.09 is deeper than expected, we're not bearish in the cross yet. Price action from 148.42 is possibly developing into a sideway pattern with fall from 148.09 as the third leg. Deeper decline could be seen but we're looking for strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside. Rise from 122.36 is still mildly in favor to resume at a later stage. However, sustained break of 135.58/39 will confirm reversal and target a retest on 122.36 low.

Daily Pivots: (S1) 123.87; (P) 124.16; (R1) 124.67; More...

Intraday bias in EUR/JPY remains neutral as the consolidation from 125.80 is still extending. In case of another fall, downside should be contained by 38.2% retracement of 114.84 to 125.80 at 121.61 to bring rebound and then rise resumption. On the upside, decisive break of 126.09 resistance will extend the whole rebound from 109.03 to 100% projection of 109.03 to 124.08 from 114.84 at 129.89.

In the bigger picture, focus is staying on 126.09 support turned resistance. Decisive break there will confirm completion of the down trend from 149.76. And in such case, rise from 109.20 is at the same degree and should target 141.04 resistance and above. Meanwhile, rejection from 126.09 and break of 114.84 will extend the fall from 149.76 through 109.20 low.

The ongoing fall in oil prices has driven risk-off sentiments across all asset classes. U.S. stocks closed mostly lower on Wednesday despite the unexpected rise in home resales. The U.S. Treasury yield curve flattened further to almost a decade-low ignoring the Fed policymakers' hawkish statements. Meanwhile, commodity currencies felt most of the pain with the Lonnie and Aussie falling against the U.S. dollar.

It's evident that oil prices are becoming the primary driver of the financial markets. After both benchmarks entered a bear market with Brent plunging below $45 for the first time since November, investors are becoming more concerned as to when the plunge will stop.

Back in November 2016, when OPEC and non-OPEC producers, including Russia, decided to cut production, most market participants believed that this would lead to a re-balancing of the market and the supply glut would come to an end. Eight months later, U.S. shale producers increased the rate of drilling, Libya is pumping oil at the highest levels in four years, and the amount of oil that's being stored in tankers jumped to a new high in 2017.

The key question most traders are asking is when oil will finally find support? At this stage, it's hard to say where prices will bottom out. Comments from Iranian oil minister, Bijan Zangeneh that Iran is in discussions with OPEC members for further production cuts fell on deaf ears, meaning that comments from OPEC members are unlikely to influence prices. With no hard data to encourage bulls to jump in, the risk to the downside will continue to persist. However, I believe at low $40 or below, U.S. shale producers will start to suffer and drilling activities will most likely take a U-turn, meaning that U.S. and global inventories will start declining at a faster pace.

Supply is not the only justification for lower prices. When looking at the other side of the equation we see that China's demand is slowing, and it's expected that 10% of the country's refining capacity will shut down during Q3, which is another factor to worry about in the next couple of months.

I'm still confident that prices will return to the $50 - $60 range on the longer run, but with no action from OPEC to deepen production cuts, it will take longer for markets to rebalance, and central banks, especially the Fed should reconsider the risks of disinflation.

Daily Pivots: (S1) 1.0846; (P) 1.0855; (R1) 1.0867; More...

Intraday bias in EUR/CHF remains neutral for the moment. On the downside, break of 1.0837 support will resume the correction from 1.0986 and turn bias to the downside. In that case, we'd continue to expect strong support from 1.0791/0872 support zone to bring rebound. On the upside, break of 1.0908 resistance will argue that such correction is completed and turn bias to the upside for retesting 1.0987/0999 resistance zone.

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Such correction could have completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.0999 resistance will target a test on 1.1198 high. For now, this will be the preferred case as long as 1.0791 support holds.

The US dollar index closed bearish yesterday after price rallied to the technical resistance level of 97.40 - 97.50. This gave a brief relief to its counterparts which managed to post a modest recovery. The economic calendar was light yesterday, and with not much of data, traders focused on central banker speeches.

The BOE 's chief economist Andrew Haldane was hawkish as he said that he was in favor of a rate hike as well as pointing out that the stimulus program should be removedby the second half of the next year. The British pound recovered only to give up some of the gains on the day.

Looking ahead, the economic data today will see Canada's retail sales numbers coming out. Retail sales are forecasted to rise 0.6% on the month on the core, reversing the 0.2% declines posted previously while headline retail sales are expected to rise 0.3%, following a 0.7% increase previously.

Among central bank speeches, BoE Member, Kristin Forbes, who voted for a rate hike will be speaking today while FOMC Member, Powell will be speaking in regards to the Fed's policies.

EURUSD intraday analysis

EURUSD (1.1168): The EUR/USD was seen posting a recovery yesterday with price action likely to extend gains in the near term. Minor support is seen forming at 1.1129, which looks to be potentially turning out into a head and shoulders pattern neckline support. A near term bounce could push EURUSD towards 1.1120 - 1.1253 level, where we could expect a near-term reversal. A validation of the head and shoulders pattern on the daily chart will signal further downside when the support at 1.1129 breaks which will push EURUSD towards 1.1000. On the 4-hour chart, we can expect EURUSD to struggle near the resistance of 1.1171, with a breakout above this level pushing the currency pair towards 1.12290.

GBPUSD intraday analysis

GBPUSD (1.2669): The British pound extended the declines down to 1.2600 and confirmed the first downside target. Price immediately reversed the losses and rallied back up to test 1.2685 resistance level before giving up the gains here slightly. In the near term, GBPUSD could remain range bound within 1.2688 and 1.2600. The bias remains to the downside, but a break out from either of these levels will see further gains or losses coming its way. To the upside, above 1.2688, GBP/USD will likely aim for 1.2800 while to the downside, below 1.2600, the next support at 1.2400 will be in focus.

USDJPY intraday analysis

USDJPY (111.12):USDJPY remained subdued yesterday with price briefly testing the resistance at 111.61 once again. The resistance level is likely to hold out in the near term, meaning that USDJPY could be seen pushing down to the support at 110.78 - 110.52 region. Establishing support here could see USDJPY attempt to break past the resistance level to the upside. However, should USDJPY fail to establish support at 110.78 - 110.52, then further downside could see declines extending towards the lower support at 109.50 - 109.25.

Sunrise Market Commentary

• Rates: Core bonds remain resilient, partly because of oil sell-off
  Risk sentiment and oil prices could guide global trading. Core bonds can profit in a daily perspective if oil extends losses, but moves are expected to remain within narrow technical ranges. The technical picture for Brent deteriorated following the break below $46/barrel. The eco calendar only contains second tier eco data.
• Currencies: Oil price and low core yields weigh on dollar
  There is little eco news to guide USD trading this week and this won't change today. The decline of the oil prices keeps LT yields low and weighs slightly on the dollar. Sterling rebounded temporary on hawkish comments from BoE Haldane, but a test of the EUR/GBP 0.8854/66 resistance is still possible.

The Sunrise Headlines

• The S&P and Dow Jones performed weak yesterday, amongst others due to falling oil prices. Nasdaq was a clear outperformer, gaining 0.74%. In Asian markets, equity gains are modest overall.
• Brent oil is holding under $45/ barrel after yet another decline during US trading hours yesterday.
• The New Zealand Reserve Bank kept its interest rates unchanged at 1.75%. Markets interpret the NZRB statement slightly less dovish. This resulted in small gains for the Kiwi dollar versus the US dollar.
• Fed policymaker Harker said he prefers pausing rates while reducing the bank's balance sheet. He also stated that, despite low wage growth, there is very little slack left in the jobs market and wage acceleration will soon start.
• Senate Republicans plan to release a new health-care bill that would curtail federal Medicaid funding, repeal taxes on the wealthy and eliminate funding for Planned Parenthood as part of an effort to undo Obamacare.
• PM May will outline her approach to reassuring EU expatriates about their futures in the UK. The UK stance will likely disappoint EU-members as May faces a tough balancing act between the EU-wishes and the euro-sceptics at home.
• The eco-calendar contains mainly second tier releases like US jobless claims, UK CBI total orders, the Norvegian rate decision and EMU consumer confidence. In terms of events, the EU summit and Fed speaker Powell might be interesting

Currencies: Oil Price And Low Core Yields Weigh On Dollar

Oil price decline weighs on USD

Yesterday, there was nothing to inspire USD trading. EUR/USD was locked in the mid 1.11 area for most of the day. An uptick in core bond yields supported a temporary USD/JPY comeback, but the USD gain could not be sustained. USD/JPY finished the session at 111.38 (from 111.45). EUR/USD closed an uneventful session at 1.1168 (from 1.1134).

Overnight, risk sentiment in Asia remains constructive. The tech sector rebound outweighs the impact of a decline of the oil price. Brent oil is holding below the $45/barrel level. USD/JPY trades with a slightly negative bias. The dollar also trades marginally softer against the euro (EUR/USD 1.1170 area). The Reserve bank of New Zealand, as expected, left its policy rate unchanged at 1.75%. The RBNZ maintained a positive economic outlook. It also wasn't worried about the recent rise of the kiwi dollar. NZD/USD strengthened to currently trade in the 0.7250 area.

The eco calendar is again only little interesting. In EMU, consumer confidence is expected to improve slightly further. In the US, the jobless claims and some second tier data will be published. The data might have some intraday significance for the dollar at best, but won't set a clear directional trend. The decline in oil prices and the equity performance remain wildcards. The usual inverse correlation between the dollar and oil currently doesn't work. Sometimes this turns out to be USD negative as well. USD/JPY is currently more sensitive to the low level of core interest rates rather than to the swings in the equities. In this context, a further decline of oil might continue to weigh on USD/JPY. The impact on EUR/USD is less obvious. We maintain a neutral stance on EUR/USD today.

Global context. After last week's relatively hawkish Fed statement, the topside in EUR/USD is better protected and a cautious sell-on upticks approach is advised. However, sustained USD gains need better US eco data, supportive Fed comments and/or higher US yields. With few high profile US data this week, it is doubtful that the US currency will receive this support. If the equity rally slows, so might be the USD rebound. Oil is also a wildcard

Technical picture

The USD/JPY rally ran into resistance in early May. A mini sell-off mid-May made the short-term picture negative, driving the pair further down in the 108.13/114.37 range. The post-Fed USD rebound pushed the pair beyond a first minor resistance at 110.81. A break beyond the 112.13 correction top would improve the ST-picture. The day-to-day sentiment improved slightly of late, but we remain cautious to forecast a U-turn.

Early May, EUR/USD failed to break below the 1.0821/1.0778 support (gap). Poor US data and US political upheaval propelled EUR/USD north of the 1.1023 range top. The pair tested the 1.1300 area going into the FOMC decision, but the test was rejected. So the Trump top/correction top at 1.1300/1.1366 proved to be a solid resistance. USD sentiment will have to become really negative to clear this hurdle. EUR/USD 1.1110 is a first minor support. A return below 1.1023 would indicate that the upside momentum has eased

EUR/USD: test off 1.1300/66 resistance rejected, but correction remains modest. First support at 1.1110 holds

EUR/GBP

Sterling haunted by BoE comments

Comments from BoE governors continue to haunt UK interest rate markets and sterling. On Tuesday sterling was hammered as BoE governor Carney said that it is too early for a rate hike. EUR/GBP yesterday even came within reach of the 0.8854/66 key resistance. However, sterling fortunes changed again as BoE chief economist Haldane said that it could be prudent to withdraw some policy stimulation in the second half of the year. At last week's BoE meeting, Haldane was the in the camp of the MPC members who voted to leave rates unchanged. So, the division within the BoE is profound. The outcome of the next BoE meetings might be a close call. Sterling jumped sharply higher on the Haldane comments but returned part of the gains later. EUR/GBP closed the session at 0.8814. Cable finished the day at 1.2671.

Today, the CBI Trends orders will be published. A modest decline (7 from 9) is expected. It is interesting to see whether the recent turmoil might affect the economy going forward. However, the CBI data are usually no market mover. The political developments remain a wildcard. The interest debate with the BoE could in theory support sterling. However, at the end of the day, we still see no rate hike short-term as political and economic uncertainty remains really high. We maintain a sterling negative bias.

From a technical point of view, EUR/GBP extensively tested the 0.8854 area (2017 top), but a real break didn't occur. BoE comments caused some intraday volatility recently. In the end, the 0.8854/66 resistance remains within reach. A break would open the way to the 0.90 area. A return below the 0.8655 correction low would indicate easing pressure on sterling. Such a break lower will be difficult. A EUR/GBP buy-on-dips approach remains favoured

EUR/GBP: sterling rebounds temporary on BoE comments but the 0.8854/66 resistance stays within reach

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