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For the 24 hours to 23:00 GMT, the EUR traded flat against the USD and closed at 1.1201.

In economic news, French business sentiment index remained unchanged at a level of 105.0 in May, at par with market expectations.

Separately, Italy's seasonally adjusted industrial production unexpectedly eased 0.4% on a monthly basis in April, defying market expectations for an advance of 0.2%. In the prior month, industrial production had registered a rise of 0.4%.

Macroeconomic data indicated that the US posted a budget deficit of $88.4 billion in May, while markets expected the nation to post a deficit of $87.0 billion. In the previous month, the nation had posted a budget surplus of $182.4 billion.

In the Asian session, at GMT0300, the pair is trading at 1.1194, with the EUR trading 0.06% lower against the USD from yesterday's close.

The pair is expected to find support at 1.1179, and a fall through could take it to the next support level of 1.1163. The pair is expected to find its first resistance at 1.1221, and a rise through could take it to the next resistance level of 1.1247.

Moving ahead, all eyes will be on the release of ZEW economic sentiment index for June across the Euro-zone, scheduled in a few hours. Additionally, the US NFIB small business optimism index for May, will attract market attention.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP declined 0.58% against the USD and closed at 1.2669, as investors were still spooked by the outcome of last week's snap election in the UK that resulted in a hung parliament.

Losses in the Pound deepened, after two of the most influential ratings agencies, Moody's and S&P, warned that the inconclusive outcome of Britain's snap election will probably delay Brexit negotiations and may also result in credit rating downgrade.

Meanwhile, the British Prime Minister, Theresa May, was seeking a deal with a small Northern Ireland's Democratic Unionist Party (DUP) in order to overcome the problems of a hung parliament.

In the Asian session, at GMT0300, the pair is trading at 1.2653, with the GBP trading 0.13% lower against the USD from yesterday's close.

The pair is expected to find support at 1.2605, and a fall through could take it to the next support level of 1.2556. The pair is expected to find its first resistance at 1.2736, and a rise through could take it to the next resistance level of 1.2818.

Ahead in the day, market participants will focus on UK's crucial inflation figures for May.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.39% against the JPY and closed at 109.85.

On the data front, Japan’s flash machine tool orders rose 24.4% on an annual basis in May, after recording a gain of 34.7% in the prior month.

In the Asian session, at GMT0300, the pair is trading at 109.98, with the USD trading 0.12% higher against the JPY from yesterday’s close.

Overnight data indicated that Japan’s BSI large manufacturing index fell to a level of -2.9 in 2Q 2017. The index had climbed 1.1 in the previous quarter.

The pair is expected to find support at 109.63, and a fall through could take it to the next support level of 109.29. The pair is expected to find its first resistance at 110.32, and a rise through could take it to the next resistance level of 110.67.

Going ahead, investors will await the release of Japan’s industrial production for April, scheduled tomorrow.

The currency pair is trading between its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD marginally declined against the CHF and closed at 0.9688.

In economic news, Switzerland’s total sight deposits inched up to a level of CHF576.4 billion in the week ended 09 June, from CHF576.1 billion recorded in the previous week.

In the Asian session, at GMT0300, the pair is trading at 0.9694, with the USD trading 0.06% higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9677, and a fall through could take it to the next support level of 0.9659. The pair is expected to find its first resistance at 0.9705, and a rise through could take it to the next resistance level of 0.9715.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.94% against the CAD and closed at 1.3319.

The Canadian Dollar gained ground, after hawkish comments by a senior Bank of Canada (BoC) official sparked hopes that the BoC could move to raise its benchmark interest rates for the first time in nearly seven years.

The BoC's Senior Deputy Governor, Carolyn Wilkins, stated that Canadian first-quarter growth was “pretty impressive” and would lead the central bank to consider whether current low rates would still be required.

In the Asian session, at GMT0300, the pair is trading at 1.329, with the USD trading 0.22% lower against the CAD from yesterday's close.

The pair is expected to find support at 1.3219, and a fall through could take it to the next support level of 1.3149. The pair is expected to find its first resistance at 1.3415, and a rise through could take it to the next resistance level of 1.3541.

In absence of any major economic releases in Canada today, trading trend in the CAD is expected to be determined by global macroeconomic news.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

Using a top-down approach this morning, we can see that the single currency remains trading around the underside of a major weekly supply at 1.1533-1.1278. Managing to cap upside since May 2015, this is certainly not an area one should overlook. Looking down to the daily timeframe, however, the candles are now seen sandwiched between supply coming in at 1.1327-1.1253 and support pegged at 1.1142.

Swinging over to the H4 timeframe, the buyers and sellers are currently battling for position around the 1.12 handle. Directly overhead we have June’s opening level at 1.1238, followed closely by the mid-level resistance at 1.1250. Below 1.12, there’s little support until price connects with the mid-level barrier at 1.1150.

Our suggestions: Based on the above notes our desk has shown interest around the 1.1150 neighborhood, due to the base converging with the following structures (green area):

• A H4 trendline support taken from the high 1.1268.
• A H4 trendline support etched from the low 1.1075.
• A H4 61.8% Fib support at 1.1155 drawn from the low 1.1074.
• A H4 78.6% retracement level pegged at 1.1147 penciled in from the low 1.1109.
• A daily support level seen at 1.1142.

Seeing as how this zone is rather small, we will not be placing pending buy orders here. Instead, we’ve chosen to wait for a reasonably sized H4 bull candle to form, preferably a full-bodied candle. This will help prove buyer interest exists here which IS needed due to where price is trading from on the weekly chart right now.

Data points to consider: German ZEW economic sentiment at 10am. US PPI at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: 1.1150 region ([waiting for a reasonably sized H4 bull candle – preferably a full-bodied candle – to form before pulling the trigger is advised] stop loss: ideally beyond the candle’s tail).
• Sells: Flat (stop loss: N/A).

GBP/USD

Beginning with the daily timeframe this morning, we’ve underlined a particularly interesting zone marked in pink. Comprised of a support level coming in at 1.2673, a 61.8% Fib support at 1.2625 (taken from the low 1.2365) and an AB=CD (black arrows) 127.2/161.8% ext. completion point seen at 1.2602/1.2698 (drawn from the high 1.3047), this is a possible zone of interest for the bulls. Below the area, nonetheless, is a demand located at 1.2499-1.2543, which happens to intersect beautifully with a weekly trendline support taken from the high 1.2774.

As we write, the H4 candles are bouncing off the mid-level support at 1.2650. This hurdle held nicely on Friday, despite the market’s bearish tone following the UK elections. Above this level we have the 1.27 handle, while below we see the 1.26 level (1.26 essentially denotes the lower edge of the daily zone highlighted above).

Our suggestions: This is a challenging market to trade at the moment. On the one hand we have the daily picture indicating that buying could be on the cards, and on the other hand the weekly chart shows room to move beyond the daily zone. So therefore, it’s hard to place trust in the H4 mid-level support at 1.2650 for a long trade.

Data points to consider: UK inflation figures at 9.30am. US PPI at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

AUD/USD

In view of weekly price recently shaking hands with supply coming in at 0.7610-0.7543, the sellers could very well make an appearance from here this week. In conjunction with weekly flow, daily action also recently whipsawed above supply formed at 0.7556-0.7523 and touched base with an AB=CD 127.2% completion point (see black arrows) at 0.7568 (taken from the low 0.7328). This move likely took out a truckload of buy stops from above the said supply and thus provided enough liquidity for the big boys to sell into.

Moving across to the H4 candles, price failed to reconnect with the support area formed at 0.75/0.7512 on Friday and instead found active bids nearby the 0.7520 neighborhood. With the higher timeframes indicating lower prices are likely on the cards, the supply base at 0.7571-0.7557 has been noted as a possible sell zone today given how well it held last week.

Our suggestions: Although the H4 zone essentially has the backing of higher-timeframe supplies, we would still highly recommend waiting for the H4 candles to show seller interest before pulling the trigger (a full-bodied bearish candle would be ideal). The first take-profit target, assuming a trade comes to fruition, would be the aforementioned H4 support zone.

Data points to consider: US PPI at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.7571-0.7557 ([waiting for a reasonably sized H4 bear candle – preferably a full-bodied candle – to form before pulling the trigger is advised] stop loss: ideally beyond the candle’s wick).

USD/JPY

Weekly bears continue to remain in a relatively strong position after pushing aggressively lower from supply registered at 115.50-113.85. We know there’s a fair bit of ground to cover here, but this move could possibly result in further downside taking shape in the form of a weekly AB=CD correction (see black arrows) that terminates within a weekly support area marked at 105.19-107.54 (stretches all the way back to early 2014). In conjunction with weekly flow, daily price also shows a potential AB=CD correction in the works taken from the high 114.36, which could see price drive lower to 107.15-107.90: a support zone that’s glued to the top edge of the said weekly support area.

With the bigger picture in mind, the only thing we see of interest on the H4 timeframe at the moment is a short trade on any retest at the 110 handle.

Our suggestions: To prove seller interest around the 110 vicinity, however, we would advise waiting for a reasonably sized H4 bearish candle to take shape, preferably a full-bodied candle.

Data points to consider: US PPI at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 110 region ([waiting for a reasonably sized H4 bear candle – preferably a full-bodied candle – to form before pulling the trigger is advised] stop loss: ideally beyond the candle’s wick).

USD/CAD

In recent hours, we’ve seen the USD/CAD plummet, with little to no reaction seen over in the oil market. At the time of writing, H4 price is trading around March/April’s opening levels at 1.3310/1.3312 and the 1.33 handle. Should the bears continue to push south, the next downside target in range is the H4 support base coming in at 1.3263. Located nearby is also a daily support level pegged at 1.3272 that intersects beautifully with a trendline support etched from the low 1.2968. Also of interest is the weekly demand at 1.3223-1.3395. Although the zone is under pressure at the moment, there’s still a chance, technically speaking, that bids will hold this area steady.

Our suggestions: Given the bearish momentum in play right now, we feel it will not be too long before the H4 support level mentioned above at 1.3263 is in view. With this line being positioned deep within the current weekly demand and being located so close to daily support at 1.3272, our team will be looking to buy this market from this region.

Data points to consider: US PPI at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: 1.3263 region ([waiting for a reasonably sized H4 bull candle – preferably a full-bodied candle – to form before pulling the trigger is advised] stop loss: ideally beyond the candle’s tail).
• Sells: Flat (Stop loss: N/A).

USD/CHF

USD/CHF prices are effectively unchanged this morning, with the unit spending the majority of yesterday seesawing around June’s opening level at 0.9680. Before one can look ahead, however, there’s not only the nearby 0.97 handle to contend with, but also a H4 61.8% Fib resistance plugged at 0.9732, followed closely by the H4 mid-level resistance at 0.9750.

Having seen the weekly Quasimodo support level at 0.9639 hold steady, this could encourage further buying in this market, at least until we reach the daily supply pegged at 0.9825-0.9786.

Our suggestions: Despite the higher timeframes indicating that further buying may be at hand, the H4 chart, as we pointed out above, is just a minefield of resistances at the moment! Therefore, we have come to the conclusion that remaining on the sidelines may be the better bet for now.

Data points to consider: US PPI at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

DOW 30

For those who have been following our reports over the past few days you may recall that our desk had recently taken a small long position at 21164 and placed stops below the H4 support area (21139-21101) at 21097. The position is still active, but we have liquidated 50% of the trade around the 21234 neighborhood. We have also reduced risk to breakeven and are now looking for the index to punch to fresh highs sometime this week.

Our suggestions: Essentially, what we’re looking for here is trend continuation. Given that there are no higher-timeframe resistances ahead, we’re looking to trail the remainder of our current position behind H4 supports. Once/if H4 price advances north, we will look to place stops below Monday’s session low (21192) at 21188.

Data points to consider: US PPI at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: 21164 ([live] stop loss: breakeven).
• Sells: Flat (stop loss: N/A).

GOLD

In current trading, June’s opening level at 1269.0, shadowed closely by May’s opening level at 1270.5, did a fantastic job of holding price lower during yesterday’s segment. The next area of interest seen below comes in at 1259.1: a support level that’s located relatively close to two H4 trendline supports (1245.8/1260.0).

Over on the bigger picture, nevertheless, bullion continued to drive lower from an area comprised of two weekly Fibonacci extensions 161.8/127.2% at 1313.7/1285.2 taken from the low 1188.1 (green zone) last week. Bouncing down to the daily timeframe, the support area at 1271.0-1261.7 was recently brought into the picture, and is just showing signs of bullish interest. Having seen this area cap upside nicely between mid-May right up until the end of June, this base is likely to offer support.

Our suggestions: This market is a challenge to trade at the moment with neither a long nor short looking attractive right now. The weekly picture indicates further selling could be upon us, while daily price is trading within a buy zone. All of this coupled with H4 price currently loitering between May and June’s opening levels and the said H4 support, makes this, at least for us, a difficult market to read at this time.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

Currency pair EUR/USD

The EUR/USD seems to be slowing turning from an uptrend to a downtrend. A break above the 100% Fib resistance level at 1.13 (red line) however would invalidate the reversal whereas a break below support (blue) would increase the chance of a wave 3 (blue) indeed unfolding.

The EUR/USD invalidates wave 2 (orange) if price manages to break above the 100% Fib level.

Currency pair GBP/USD

The GBP/USD is now challenging a key support trend line (blue). A bounce in this zone could see an expansion of wave 2 (blue) whereas a bearish breakout could confirm wave 3 (blue/red).

The GBP/USD wave 2 is invalidated if price breaks above the 100% Fibonacci level.

Currency pair USD/JPY

The USD/JPY is testing both support Fibonacci levels of wave 2 (orange) and resistance trend lines (red). A break above resistance could see price challenge the Fibs of wave 3 (orange).

The USD/JPY would invalidate the wave 2 (orange) if price breaks below the 100% Fibonacci level.

Global Markets:

• Asian stock markets: Nikkei up 0.05 %, Shanghai Composite gained 0.40 %, Hang Seng rose 0.60 %, ASX 200 rallied 1.15 %
• Commodities: Gold at $1268 (-0.05 %), Silver at $16.86 (-0.50 %), WTI Oil at $46.25 (+0.40 %), Brent Oil at $48.50 (+0.40 %)
• Rates: US 10-year yield at 2.21, UK 10-year yield at 0.96, German 10-year yield at 0.25

News & Data

• Australia NAB Business Confidence 7.0 vs 13.0 previous
• Australia NAB Business Survey 12.0 vs 14.0 previous
• Japan Large Manufacturing Conditions -2.9 vs 1.5 expected
• Asia stocks shake off U.S. tech slump, loonie jumps on rate hike prospect – RTRS
• Dollar steadies ahead of central bank meetings; C$ hits two-month high – RTRS
• Oil edges up on Saudi pledge to make real supply cuts – RTRS

Markets Update:

Asian stock markets recovered overnight, despite the sell-off in Europe and the US yesterday. USD/JPY followed stocks higher, and rose from 109.80 to 110.10. Further consolidation seems likely ahead of the FOMC, with strong resistance at 110.50 and solid support at 109.40/50. Generally, volatility in FX is likely to remain low ahead of the Fed rate decision.

EUR/USD is consolidating around 1.12. The ECB was not really dovish enough last week to push the Euro lower, and the pair remains well bid on dips. The charts suggest further gains are ahead, but much depends on the Fed now.

The British Pound remains under pressure amid the political uncertainty in the UK, and that is unlikely to change soon. After the break below 1.27 support, a move towards 1.25 is likely in the near-term.

The Canadian Dollar rallied yesterday, following surprisingly hawkish comments from a senior Bank of Canada official. USD/CAD is likely to test 1.32 soon. Should it break below that support level as well, the pair will likely reach 1.30 soon.

Upcoming Events:

• 07:00 BST – German WPI
• 09:30 BST – UK CPI
• 10:00 BST – German ZEW Economic Sentiment
• 10:00 BST – Euro Zone ZEW Economic Sentiment
• 13:30 BST – US PPI
• 23:45 BST – New Zealand Current Account

Daily Pivots: (S1) 1.3271; (P) 1.3371; (R1) 1.3422; More....

USD/CAD's decline from 1.3793 resumed by taking out 1.3387 and reaches as low as 1.3273 so far. Intraday bias is back on the downside for 1.3222 support next. We'd holding on to the view that whole choppy rise from 1.2460 has completed at 1.3793. Break of 1.3222 will affirm our bearish view and target 1.2968 key support for confirmation. On the upside, above 1.3387 support turned resistance will turn intraday bias neutral. But recovery should be limited well below 1.3537 resistance to bring fall resumption.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and could have completed at 1.3793, ahead of 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should indicate the start of the third leg while further break of 1.2968 should confirm. Nonetheless, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Canadian Dollar jumps sharply overnight as boosted by comments from a top BoC official that raises prospect of a rate hike. Senior Deputy Governor Carolyn Wilkins said in a speech that adjustment to lower oil prices was "largely behind us" with help of the rate cuts in 2015. And, there are "encouraging signs" of broadening growth across regions and sectors. Meanwhile, there is "significant monetary policy stimulus in the system". And, she noted that "as growth continues and, ideally, broadens further, Governing Council will be assessing whether all of the considerable monetary policy stimulus presently in place is still required." This is seen by the markets as an indication that the door for further rate cut from the current 0.50% is closed. And the next move would be a hike.

USD/CAD finally resumed recent fall from 1.3793 by breaking 1.3273 so far. The pair should test 1.3222 support in near term. We're favoring the case of medium term reversal in USD/CAD and break of 1.3222 will affirm our view and target 1.2968 support next. EUR/CAD also drops sharply to as low as 1.4856, comparing to this month's high at 1.5257. But EUR/CAD has been rather resilience due to strength in Euro. And outlook in EUR/CAD will stay mildly bullish as long as 1.4823 support holds. CAD/JPY also rebounds strongly but it's held in range above 80.55 short term bottom. Outlook is a bit mixed and we'll stay neutral on the cross first. Break of 81.49 will indicate near term reversal for 88.90. Meanwhile, break of 80.55 will pave the way to test 74.80 low.

US Treasury recommends over 100 changes to financial regulation

In US, the stock markets some what stabilized. NASDAQ dipped initially to as low as 6110.66 but pared back much losses to close at 6175.46, just down -0.52%. DOW closed down -0.17% at 21235.67 while S&P 500 closed down -0.1% at 2429.39. 10 year yield rose slightly by 0.014 to 2.213 but is kept well below near term resistance at 2.297. It is reported that US President Donald Trump's Treasury is calling for scaling back some of the post 2008 financial crisis regulations. A near 150-page report was produced and there were recommendations of over 100 changes to financial rules. But the report stopped short of calling for the repeal of the so called Dodd-Franck financial regulation law, which Trump called a "disaster". Treasury Secretary Steven Mnuchin said that the focus of the report was "what are the things that we can do to unlock burdensome regulations and overlapping regulations and work with the regulators?"

Conservative and Labour in private talks for softer Brexit

In UK, it's reported that Conservative and Labour MPs have met in closed door talks regarding the country's Brexit negotiation stance. The Cabinet ministers are believed to be trying to secure support from Labour MPs for a softer Brexit that gives UK access to the Single Market. Also, the Parliament would try to assert its maximum influence to shape the negotiation with EU, rather than letting the Government to do it on its now. Meanwhile, some centrist Labours are believed to be willing to put aside party differences to get the best Brexit deal. But in any case, it's now believed that Prime Minister Theresa May's "no deal is better than a bad deal" stance won't be adopted after the disastrous election.

BoJ official said slower bond purchase due to falling yields

In Japan, BoJ's executive director on monetary policy told the Parliament that the pace of bond purchases slowed since US yields have fallen. Masayoshi Amamiya said that "the slowdown came as a result of our policy of guiding yields at appropriate levels:. And BoJ will "continue to take necessary steps to stabilize prices, while keeping an eye on how they affect its financial health". BoJ will announce monetary policy decision on Friday and it's widely expected to keep everything unchanged.

On the data front

Japan BSI large industry index dropped to -2.9 in Q2. Australia NAB business confidence dropped to 7 in May. UK CPI will be the major focus in European session. Downside surprise there could build up selling pressure in Sterling again ahead of BoE meeting. Eurozone will also release ZEW economic sentiment. From US, PPI is the only major data release.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3271; (P) 1.3371; (R1) 1.3422; More....

USD/CAD's decline from 1.3793 resumed by taking out 1.3387 and reaches as low as 1.3273 so far. Intraday bias is back on the downside for 1.3222 support next. We'd holding on to the view that whole choppy rise from 1.2460 has completed at 1.3793. Break of 1.3222 will affirm our bearish view and target 1.2968 key support for confirmation. On the upside, above 1.3387 support turned resistance will turn intraday bias neutral. But recovery should be limited well below 1.3537 resistance to bring fall resumption.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and could have completed at 1.3793, ahead of 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should indicate the start of the third leg while further break of 1.2968 should confirm. Nonetheless, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Economic Indicators Update