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The Canadian dollar has edged lower in the Monday session. In North American trade, USD/CAD is trading at the 1.35 line. Canadian banks and stock markets are closed for the Victoria Day holiday. In the US, there are no economic releases. We'll hear from four FOMC members, and the markets will be looking for clues as to the Fed's plans with regard to future rate hikes. On Tuesday, Canada releases Wholesale Sales and the US will publish New Home Sales.

There are no economic numbers out of Canada or the US on Monday, so the markets will have a chance to focus on the Federal Reserve, with four FOMC members delivering speeches. The Fed has been keeping the markets guessing in recent weeks regarding a rate hike. The central bank is expected to announce a rate hike at its June 14 meeting, but the odds of a hike have shown strong volatility. In late April, a rate hike was priced in at just 50%. The odds jumped higher in May but continue to show movement. Currently, the markets have priced in a hike at 78%, up from 73% on Friday. If the likelihood of a June move continue to fluctuate, the US dollar could also show some movement, as a rate hike will make US-dollar assets more attractive to investors.

The Canadian dollar enjoyed strong gains last week, as the currency climbed 1.4%. Although Canadian consumer numbers were lukewarm last week, the Canadian dollar was buoyed by rising oil prices, as Brent crude soared 4.7% last week. However, investors are nervous about the ongoing political turmoil in Washington, and that could spell trouble for minor currencies like the Canadian dollar. President Trump must have been happy to head to the Middle East and Europe, as last week was perhaps his most difficult since taking office. Trump's administration was rocked by reports that he had asked former FBI director James Comey to end an investigation into connections between Russia and the Trump campaign team during the US election. If these claims are true, Trump could be charged with committing obstruction of justice. President Trump fired back last week, angrily denouncing this move as a "witch hunt". With Washington preoccupied with Trump's alleged connections with Russia, Trump's administration could find itself immersed with damage control, rather than moving ahead with its agenda of tax reform and increased fiscal spending.

Daily Pivots: (S1) 0.9694; (P) 0.9749; (R1) 0.9778; More.....

USD/CHF's fall extends to as low as 0.9694 so far today. Intraday bias remains on the downside. Current decline from 1.0342 should target 100% projection of 1.0342 to 0.9860 from 1.0099 at 0.9617. We'll start to look for bottoming signal again below there. On the upside, above 0.9765 minor resistance will turn intraday bias neutral again and bring consolidations first, before staging another fall.

In the bigger picture, USD/CHF is bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level.

Daily Pivots: (S1) 110.95; (P) 111.32; (R1) 111.62; More...

USD/JPY is staying in range above 110.23 and intraday bias remains neutral for the moment. Overall, the development suggests that whole corrective decline from 118.65 is going to extend lower. Below 110.23 turn bias back to the downside and send USD/JPY through 108.12 low. In that case, we'll look for bottoming signal again at 61.8% retracement of 98.97 to 118.65 at 106.48.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Daily Pivots: (S1) 1.2952; (P) 1.2995; (R1) 1.3075; More...

GBP/USD is still staying in tight range below 1.3047 and intraday bias remains neutral. With 1.2844 minor support intact, further rise remains mildly in favor. Nonetheless, as we are still viewing price actions from 1.1946 as a corrective move, we'd expect upside to be limited below 1.3444 resistance to bring near term reversal. On the downside, break of 1.2844 will indicate short term topping and turn bias back to the downside for 1.2614 resistance turned support first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There are signs of reversal, like breaking of 55 week EMA, weekly MACD turned positive, and monthly MACD crossed above signal line. But still, break of 1.3444 resistance is need to confirm medium term bottoming. Otherwise, outlook will remains bearish for extend the down trend through 1.1946 low.

USD/CHF - 0.9700

Original strategy :

Bought at 0.9700, Target: 0.9800, Stop: 0.9665

Position : - Long at 0.9700

Target :  - 0.9800

Stop : - 0.9665

New strategy  :

Hold long entered at 0.9700, Target: 0.9800, Stop: 0.9665

Position : - Long at 0.9700

Target :  - 0.9800

Stop : - 0.9665

Although dollar has fallen again after meeting renewed selling interest at 0.9766 and initial downside risk of marginal weakness from here cannot be ruled out, loss of downward momentum should prevent sharp fall to repeat again and bring subsequent rebound, above said resistance at 0.9766 would bring subsequent bounce to 0.9800 but reckon upside would be limited to 0.9825 and previous resistance at 0.9851 should remain intact, bring another decline later. 

In view of this, we are holding on to our long position entered at 0.9700. Below 0.9670-75 would risk weakness to 0.9650 but still reckon downside would be limited to 0.9620-25 and bring another rebound later. 

GBP/USD - 1.3010

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite staging a strong rebound from 1.2889 to 1.3040 on Friday, the subsequent retreat after faltering below last week’s high of 1.3048 suggest further choppy trading below this level would be seen and pullback to 1.2950-55 cannot be ruled out, however, reckon downside would be limited to 1.2920-25 and said support at 1.2889 should remain intact, bring another rebound later.

On the upside, expect recovery to be limited to 1.3025-30 and price should falter below said resistance at 1.3048, bring retreat later. Only a bream of said resistance at 1.3048 would confirm recent upmove has resumed an extend further gain to 1.3075-80 and possibly towards 1.3100-10 later. As near term outlook is mixed, would be prudent to stand aside in the meantime.

EUR/USD - 1.1244

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the single currency has surged again after brief pullback to 1.1161 and initial upside bias remains for recent upmove to extend gain to 1.1260-65, reckon upside would be limited to 1.1280-85 (61.8% projection of 1.0839-1.1172 measuring from 1.1076) and loss of near term upward momentum should limit upside to 1.1300-10, risk from there is seen for a retreat later. 

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below the Kijun-Sen (now at 1.1206) would bring pullback towards said support at 1.1161 but break there is needed to signal top is formed, bring retracement of recent rise to 1.1125-30 first. 

Last week USD had its biggest weekly fall since the US presidential election, caused by Trump's Russia leak scandal.

This week markets' risk-off sentiment has been slightly eased.

On May 18th USD/JPY hit a low of 110.22, last seen on April 25th.

Notably, the downtrend has held above the significant support line at 110.00.

Bulls have further recovered to the the next psychological resistance level at 111.00, indicating bullish momentum has been increasing.

The daily Stochastic Oscillator is around 30 which suggests a rebound.

The resistance level is at 111.70 followed by 112.00 and 112.20.

The support level is at 111.00 followed by 110.70 and 110.50.

If there are further adverse findings from the FBI's investigation on Trump's Russia leak scandal it will likely restrain the bullish momentum of USD/JPY.
Conversely, without further adverse findings, we will likely see a rebound of USD/JPY.

Keep an eye on the US economic data on Tuesday at 15:00 BST and the FOMC Minutes on Wednesday at 19:00 BST as it will likely affect USD and USD crosses.

USD/JPY - 111.23

Original strategy  :

Sell at 112.05, Target: 110.85, Stop: 112.40

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 112.05, Target: 110.85, Stop: 112.40

Position :  -

Target :  -

Stop : -

As the greenback found support at 110.24 last week and rebounded, retaining our view that further consolidation above this level would be seen and corrective bounce to 112.00-05 (50% Fibonacci retracement of 113.85-110.24) cannot be ruled out, however, reckon upside would be limited and bring another decline later, below 110.70-75 would suggest the rebound from 110.24 has ended, bring retest of this level first.

In view of this, would be prudent to sell dollar on further subsequent recovery as 112.05-10 should limit upside and bring another decline. Above 112.35-40 would defer and signal low is formed instead, risk a stronger rebound to 112.65-70.

The DAX index has ticked lower in the Monday session. Currently, the DAX is trading at 12,596.50. On the release front, it's a quiet start to the week, with no economic events on the schedule. There are a host of events on Tuesday, highlighted by Manufacturing PMIs in Germany and the eurozone, as well as German Ifo Business Climate.

The political turmoil in Washington has had a chilling effect on global stock markets. The DAX dropped 1.4% last week, as nervous investors have sought out safe-haven assets such as gold and the Japanese yen. Will the downward spiral in the stock markets continue? If the crisis atmosphere in Washington continues, stocks could be headed lower. It's been a rocky few months for President Trump, but last week was perhaps his most difficult since taking office. Trump's administration was rocked by reports that he had asked former FBI director James Comey to end an investigation into connections between Russia and the Trump campaign team during the US election. If these accusations are true, Trump could be charged with committing obstruction of justice. President Trump fired back on Thursday, angrily denouncing this move as a "witch hunt". The media and the Democrats have had a field day with Trump's woes, and many Republicans are expressing unease with an administration that appears rudderless and is staggering from crisis to crisis.

The markets are keeping a close eye on Monday's meeting of EU finance ministers, which will be discussing Greece's debt. Greece has undergone a severe austerity plan and understandably, the Greek government is reluctant to adopt further painful measures. However, Greece could be headed on a collision course with the EU, if the latter insists that the further reforms are needed. German Finance Minister Wolfgang Schaeuble praised the reforms implemented by Greece as "remarkable", but insisted that Greece must take further steps before the EU provides further financial aid. Greek's debt woes once resulted in the country almost leaving the eurozone, and if the EU holds up aid, European stock markets could drop sharply.