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Key points

• Elections in Europe come against the backdrop of the global business cycle looking to lose momentum.
• First round of French presidential elections too close to call.
• Relief rally expected if mainstream candidates go to second round.
• A run-off between Marine Le Pen and Jean-Luc Mélenchon cannot be precluded and could set off a major market correction.
• The UK election is likely to strengthen Theresa May's hand in the upcoming Brexit negotiations

This week is dominated by political headlines in Europe. The first round of the French presidential election is upon us on Sunday. It has been awaited (or feared) for months, or basically since last year's surprise Brexit outcome and Donald Trump's victory, which served as a reminder that populist movements are taking hold in western politics. Also, as if the political calendar was not crowded enough already, UK Prime Minister Theresa May has called a general election for 8 June. In the midst of this frantic European political calendar, economic data releases and central bank views are almost taking a backseat to political events. Hence, the title of our FX Forecast Update this week: Political risks are in charge. However, before turning to the likely outcome and market implications of these key political events, it is worth taking a look at our latest take on the global business cycle.

Our global business cycle model points to weakening growth momentum ahead

Our leading macroeconomic model MacroScope this week pointed to further weakening momentum in the global business cycle in the period ahead. The model paints a picture of the underlying macro environment on a three- to six-months horizon. While the underlying macro environment is getting more bullish, the market has already rallied and is in neutral to slightly overbought territory now. This points to a rising risk that we are moving into a scenario that tends to entail more frequent corrections in risk markets. In other words, the sensitivity to external shocks such as perceived adverse political events will increase

Stakes are high and outcomes unpredictable ahead of first round of the French presidential election

Although Macron seems set to be the likely winner of the French presidential elections, none of the leading four candidates can be written off at this time. The race between the four leading candidates Marine Le Pen, Emmanuel Macron, François Fillon and Jean-Luc Mélenchon has narrowed over the past month and the outcome is likely to be tight (see French Election Monitor No. 3: Markets hold their breath as first election round draws near, 21 April). Also, the terror event in Paris last night may swing some voters towards Le Pen. Recent weeks have seen a surge in the polls of the far left-wing candidate after a strong performance in the TV debates. Although a run-off on 7 May between Le Pen and Macron still seems to be the most likely outcome according to the polls, the other two major candidates cannot be written off, especially as almost a quarter of the voters are still undecided and the turnout is expected to be low due to widespread dissatisfaction with the established political class. Also, as we know from last year's elections, some caution should be taken with regard to polls.

The different election outcomes could have widespread implications for France and the EU more generally. Both Mélenchon and Le Pen share a similar EU-sceptic and antiglobalisation stance. Mélenchon wishes to renegotiate EU treaties and hold a subsequent EU referendum on the result as well as ending the independence of the ECB. Both candidates support expansionary fiscal policies with little regard to the EU deficit rules. They also liken a ‘France-first' to public procurement and investment policies. On the other hand, a victory by Fillon and to some extent Macron would be likely to be followed by a reform drive in the French economy and the EU more generally.

We have divided the range of possible outcomes into three scenarios: a ‘low-risk' scenario entailing no EU-sceptic candidates making it to the second round; a ‘mediumterm' risk scenario where an EU-sceptic candidate makes it to the second round but an established candidate looks likely to be the winner; and a ‘high-risk' scenario, where Le Pen and Mélenchon face each other in the second round or if one of them receives much stronger than expected support in the first round (30-49% of the votes), increasing the chances that they will beat either Macron or Fillon in the second round.

What is the initial market reaction following the first round likely to be? In the ‘lowrisk' scenario, we will probably see a relief rally, sending equities and the EUR up, while fixed income markets would be likely to see some sell-off. In the ‘medium-risk' scenario, we expect the market reaction to be fairly modest, as markets are most likely positioned for this already. However, in the high-risk scenario, we may easily see a sharp equity market sell-off given possible ramifications for the French economy and the EU as well as the euro. We think there will be a sell-off in French government bonds. We see the EUR/USD falling to the lower part of the current range of 1.04-1.10 in this scenario.

UK election likely to strengthen Theresa May's hand in the upcoming Brexit negotiations

The surprise of the week was the decision by UK Prime Minister Theresa May to call snap elections scheduled for 8 June. This move is no doubt an attempt to strengthen her powers both within and outside the conservative party, as the polls point to a solid victory for the Conservative Party. Such a victory, increasing the party's majority in parliament beyond the current 330 seats (32 seats required for majority), would make her less vulnerable during the upcoming Brexit negotiations to the threat from fractions within the Conservative Party that either want a tougher line in the Brexit negotiations (e.g. UKIP) or seeking to soften terms or even to reverse the Brexit decision. Such a scenario is by no means guaranteed, as the Conservative Party may fail to clinch as strong a victory as expected (leaving a status quo situation) or we could even see Labour, the Liberal Democrats and possibly the SNP forming some sort of a coalition that would allow them to reverse the Brexit decision. The market is clearly positioning for a weakening of the Brexit terms as the GBP has strengthened on the back of the news. Short term, the general election means there is one more uncertainty factor for the GBP, as the sample space for UK-EU relations has suddenly widened again, with a chance now that Brexit may be softened (or cancelled altogether should the May government be ousted). However, our base case remains that May will stay in power and negotiate a ‘decent Brexit' (neither too hard nor too soft). This would mean a level shift higher for EUR/GBP post the June election. However, the probability of other outcomes has clearly risen

EUR/JPY - 117.77

Recent wave: wave v of (C) ended at 94.12 and major correction in wave A has ended at 149.79

Trend: Near term down

Original strategy:

Sell at 118.40, Target: 116.40, Stop: 119.00

O.C.O.

Buy at 115.80, Target: 117.80, Stop: 115.20

Position: -
Target: -
Stop: -

New strategy :

Sell at 118.40, Target: 116.40, Stop: 119.00

O.C.O.

Buy at 115.80, Target: 117.80, Stop: 115.20

Position: -
Target:  -
Stop:-

As the single currency has finally retreated after rising to 117.82 yesterday, suggesting consolidation below this level would be seen and pullback to 116.00-10 cannot be ruled out, however, if our view that a temporary low formed at 114.85 is correct, downside should be limited to 115.70-75 and bring another rebound later, above said resistance would extend the rebound from 114.85 to 118.00-10 but reckon upside would be limited to 118.40-50 and bring retreat later.

In view of this, whilst we are looking to turn long on dips, we would also sell euro on subsequent rebound towards 118.40-50. Only below said support at 114.85 would signal recent entire fall from 124.10 top is still in progress and downside risk remains for further weakness to 114.40-50, then towards 114.00-10, however, near term oversold condition should prevent sharp fall below latter level and risk from there is seen for a much-needed rebound to take place later.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

AUD/USD – 0.7522

Recent wave: Wave 5 ended at 1.1081 and major correction has commenced for fall to 0.7000 and then towards 0.6500-10

Trend: Near term down

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Although aussie fell quite sharply this week and dropped to as low as 0.7491, the subsequent recovery from there suggests consolidation would be seen, above 0.7550 would bring another bounce to 0.7570-75 but price should falter well  below resistance at 0.7611, bring another decline later.

Below said support at 0.7491 would bring test of indicated previous support at 0.7473, however, break there is needed to retain bearishness and extend the fall from 0.7750 top to 0.7450-55 (50% Fibonacci retracement of 0.7158-0.7750) but oversold condition should limit downside to 0.7380-85 (61.8% Fibonacci retracement), risk from there is seen for a rebound later. As near term outlook is mixed, would be prudent to stand aside in the meantime.

On the 4-hour chart, the move from 0.8066 is the wave 5 with i: 0.8860, ii: 0.8315, wave iii is an extended move ended at 1.0183, iv: 0.9706 and wave v has ended at 1.1081 (also the top of entire wave 5). The subsequent selloff is the major correction which is unfolding as ABC-X-ABC and 2nd A leg has ended at 0.8848, followed by a-b-c wave B which ended at 0.9758, hence, 2nd C wave is now in progress and indicated downside target at 0.7000 and 0.6950 had been met, so further fall to 0.6710-20 cannot be ruled out.

EUR/USD is showing little movement in the Friday session. Currently, the pair is trading just above the 1.07 line. On the release front, Eurozone and German Manufacturing PMIs both beat their estimates, and the Eurozone current account surplus was much higher than expected. In the US, today's key event is Existing Home Sales, which is expected to climb to 5.61 million. On Saturday, US Treasury Secretary Robert Mnuchin will speak at the International Monetary Fund meeting in Washington. On Sunday, France goes to the polls for the first round of the presidential election.

Sunday is Election Day across France, which holds the first round of the presidential election. The election campaign has been divisive and charged, so perhaps it's fitting that the four front-runners (in a crowded field of 11) are all within a few percentage points of one another. Given the tightness of the race, final opinion polls have become market-movers. An opinion poll on Thursday showed centrist Emmanuel Macron with 25% of the vote, just ahead of far-right candidate Marie Le Pen with 22%. Le Pen's platform includes sharp curbs on immigration and a referendum on France's membership in the European Union. If Le Pen does better than predicted, investor sentiment could sour and send the euro sharply lower. A shooting in Paris on Thursday which killed a policeman and a tourist have stretched taught nerves even further, as security and the terrorism threat remain one of the key issues in the campaign. The markets are expecting more volatility ahead of and following the election, and French banks will be staffed throughout Sunday night in order to respond quickly to developments in the currency markets after the election results.

OANDA's Senior Currency Analyst Alfonso Esparza provides further analysis of the election in French Presidential Election Outcome Raising Market Anxiety.

PMI reports for March from the eurozone, France and Germany all pointed to expansion in the services and manufacturing sectors, underscoring an improving eurozone economy. Manufacturing data was particularly encouraging, as Eurozone and German Manufacturing PMIs came in at 56.8 and 56.2 respectively, as both readings beat their estimates. The strong PMI numbers have helped support the euro on Friday, as cautious investors keep a close eye on Sunday's vote in France. There was more positive news as the eurozone's current account surplus jumped to EUR 37.9 billion, well above the estimate of EUR 26.3 billion.

The Federal Reserve has broadly hinted that it will gradually raise rates in 2017, but it's unclear how many times Janet Yellen will press the rate trigger. Most analysts are expecting two more moves this year, but there have been calls from some Fed policymakers for three more hikes. However, soft retail sales and CPI numbers in March are likely to make the Fed more dovish, and on Tuesday, the Atlanta and New York Federal Reserve lowered their outlook for US economic growth for the first quarter. The Fed can point to a labor market that is close to capacity as well as strong consumer confidence, but surprisingly, this has not translated into stronger consumer spending, a key driver of economic growth. Will the Fed raise rates in June? The odds of a June move are showing a surprising amount of volatility, and the latest CME Group reading shows the likelihood a 1/4 point hike have jumped to 58%, up from 45% earlier this week.

Weekly

    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 19 Sep 2016
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Doji
    •    Time of formation: 28 Mar 2017
    •    Trend bias: Near term up



EUR/JPY – 117.65




As the single currency has finally rebounded after falling to 114.85 (a white candlestick with a long lower shadow was formed on the daily chart), suggesting consolidation above this level would be seen and another bounce to 118.00 cannot be ruled out, however, reckon upside would be limited to the Kijun-Sen (now at 118.56) and bring another decline later, below 115.75-80 would bring retest of 114.85 but break there is needed to signal recent decline has resumed and extend further weakness to 114.00 and possibly towards 113.40-50.

On the upside, whilst initial recovery to 118.00 cannot be ruled out, reckon upside would be limited to the Kijun-Sen (now at 118.56) and bring another decline later. A daily close above resistance at 118.80 would defer and risk a stronger rebound to previous support at 119.32 but resistance at 119.85 should remain intact, bring another decline later. Only above resistance at 120.44 would abort and signal recent decline has ended instead, bring further gain towards the Ichimoku cloud (now at 120.99-121.01).

Recommendation: Sell at 118.70 for 116.70 with stop above 119.70.

On the weekly chart, euro’s rebound after falling to 114.85 looks set to form a white candlestick this week, hence consolidation with mild upside bias is seen for retracement to 118.00, then test of the Kijun-Sen (now at 118.47) but reckon renewed selling interest should emerge around the Tenkan-Sen (now at 118.87) and bring another decline later. Below 115.50-55 would bring retest of 114.85 but break there is needed to signal recent decline from 124.10 has resumed and extend further weakness to 114.00, then 113.70-75. Looking ahead, below the latter level is needed to signal the rebound from 109.49 has ended at 124.10, bring further fall to 113.00 and then 112.50-60.

On the upside, expect recovery to be limited to the Kijun-Sen (now at 118.47) and the Tenkan-Sen (now at 118.87) should hold, bring another decline later. Only above previous support at 119.32 would defer and suggest low is possibly formed instead, risk a stronger rebound to 120.00 but break of resistance at 120.44 is needed to confirm and suggest recent decline from 14.10 has ended instead, bring a stronger rebound to 121.15-20 but resistance at 121.84 should remain intact.

The pair is back to red in early Friday's trading, after two day recovery rally showed signs of stall after peaking at 109.47 and being unable to close above falling 10SMA (currently at 109.16).

Near-term risk is turning again towards 200SMA (108.88), return below which would weaken near-term structure.

Overall bias remains shifted lower as daily technicals are negative and last week's long bearish candle weighs heavily on the market.

The pair may hold in extended consolidation before fresh attack at this week's low at 108.11 and extension of broader downtrend an break below 108.11 and next target at 107.84 (Fibo 61.8% retracement of Jun/Dec 2016 101.17/118.65 rally).

Alternative scenario requires strength through psychological 110.00 barrier at 110.20 (falling 20SMA) to neutralize immediate downside threats and signal stronger correction of 111.56/108.11 downleg.

Res: 109.47, 109.84, 110.00, 110.20
Sup: 108.88, 108.63, 108.30, 108.11

Weekly

    •    Last Candlesticks pattern: Bullish engulfing
    •    Time of formation: 02 May 2016
    •    Trend bias: Up

Daily

    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 19 Oct 2016
    •    Trend bias: Up



USD/CAD – 1.3395




The greenback found decent demand at 1.3223 early last week and has staged a strong rebound (a hammer and a long white candlestick bullish patterns were formed on the daily chart), the subsequent breach of previous resistance at 1.3456 confirms the correction from 1.3535 has ended at 1.3223, bring retest of this level later. Looking ahead, a break of the level would retain bullishness and extend early erratic upmove from 1.2461 low to 1.3599, then 1.3660-70 but still reckon upside would be limited to 1.3700 and risk from there is seen for a retreat later. 

On the downside, whilst pullback to 1.3400 cannot be ruled out, reckon the Kijun-Sen (now at 1.3362) would contain weakness and bring another rise later. A daily close below the upper Kumo (now at 1.3339) would defer and prolong consolidation, risk weakness to 1.3262 support but last week’s low at 1.3223 should remain intact, bring another rebound later. In the event the pair drops below said support at 1.3223, this would shift risk back to the downside for the erratic fall from 1.3535 to bring correction of early upmove to 1.3200, then 1.3160-65 but reckon downside would be limited to 1.3100 and price should stay well above support at 1.3056, bring rebound later.

Recommendation: Buy at 1.3400 for 1.3590 with stop below 1.3300.


On the weekly chart, as the greenback has staged another strong rebound after finding good support at 1.3223 last week, suggesting the pullback from 1.3535 has ended there and consolidation with upside bias is seen for further gain towards said resistance, however, break there is needed to retain bullishness and extend the rise from 1.2969 to indicated previous resistance at 1.3599 but only a break of this resistance would signal upmove from 1.2461 (2016 low) has resumed for headway to 1.3700 and later towards 1.3835-40 (61.8% Fibonacci retracement of 1.4690-1.2461) which is likely to cap upside.

On the downside, expect pullback to be limited to 1.3400-10 and 1.3360-65 should hold, bring another rise later. Below the Kijun-Sen (now at 1.3284) would bring test of said support at 1.3223 should remain intact, bring another rebound later. A weekly close below this support would signal top has been formed at 1.3535 and test of previous resistance at 1.3210 would follow, however, break there is needed to add credence to this view, bring further fall to 1.3150-60, break there would signal the rebound from 1.2969 has ended, bring subsequent decline towards 1.3083 but indicated support at 1.3056 should hold from here, risk from there has increased for a rebound later.

EUR holds ground ahead of busy week-end

The Asian session was extremely calm on Friday as traders adjusted their positions ahead of the first round of the French presidential election that will take place on Sunday. The single currency edged slightly higher against most of its peers with the exception (obviously) of the Swiss franc. EUR/CHF was trading sideways at around 1.07.

On the surface, there is no evidence to suggest that the market is worried: the yellow metal is down 0.15%, the Japanese yen edges down 0.05% against the EUR and equities are treading water. However, in the option market it is a complete different story. The 1-week implied volatility (ATM) on EUR/USD hit 18% overnight, compared to 6.37% a week ago. The 1-week 25-delta risk reversal measure (the difference between the volatility of a call and a put) collapsed to -3.90%, indicating that investors rushed to buy insurance against further downside in EUR/USD. The same phenomenon happened to USD/JPY as traders braced themselves for a massive flight to safe-haven in case of pro-business candidates get squeeze out. Indeed, if none of Emmanuel Macron and François Fillon make it to the second round, and assuming that Benoît Hammond is already out, the EUR will take a wild ride. The worst scenario for the euro would be Le Pen and Mélenchon at the second round.

In EUR/USD, the key support stands at around 1.06-1.0630 (previous low and bottom of uptrend channel). Lower, a support can be found at 1.0341 (low from January 3rd). Investors will react violently to a squeeze out of pro-business candidates and we won’t be surprise to see EUR/USD free falling toward the 1.03 threshold. On the other hand, we’ll see a relief rally should Macron or Fillon make it to the second round (a Fillon/Macron second round would be a blessing for the EUR and French bonds). In any case, be ready for some opening gap on Monday morning.

Short JPY

The EURJPY remains the currency to watch for the market view on the French Presidential elections. Recent polls that suggest market friendly Macron has a slight lead gave Euro a boost however, terrorist acts in Paris reintroduced uncertainty (Fillon and Le Pen have suspended campaigning). Developments in European also support our short JPY call. We had anticipated a pullback in USD demand but that downwards correction in USDJPY has outpaced our expectations. We anticipate a recovery to resistance at 112.15. The JPY has been supported less by growing inflation expectations but rather weakening in global risk environment. JPY remains the dominate risk aversion trade above gold, USD and CHF (however, we are not seeing significant JPY buying on fluctuations in French polls). Clearly rising geopolitical worries have caused investors to rotating out of risky asset and into JPY. We suspect tensions have reached a peak and suspect that the historically customary path of diplomacy with takeover. IMM positioning indicates that the JPY is well overbought suggesting room for readjustments. This week BoJ meeting will bring no bring meaningful adjustment to the current strategy as policy board member are likely to shift focus on personal changes rather than monetary policy. Last week the BoJ nominated two very dovish member show support aggressive balance sheet expansion to its committee. For now the realization that the BoJ ¥80trn annual balance sheet expansion was unstable leading to a switch to yields curve control will dictate strategy. While the ECB inches towards tapering and Fed contemplate the next 25bps hike the BoJ policy continue to be the loosest. This strategy should remain supportive of USDJPY.

Yet, it is not the BoJ that will drive USDJPY higher but the reactions of the US economy and interest rate. US economy seems to have slipped into a period of cyclical softness which should organically pick-up in early summer. However, while investors have all but thrown the Trump-reflation trade always there is still the probability that that the Trump administration gets a pro-growth win (tax reform remains the clearest). IMM data indicates that USD is oversold indicating room for additional demand. In addition implied yields on Fed Futures for 2017 are near the lowest they have been in 2017 and 2018 suggesting it would not take much for markets to quickly reprice the pace of Fed interest rates hikes. Sending USDJPY higher.

We have seen this week, that during risk-off as a result of uncertainty from the French elections that Equities has fallen, the JPY has strengthened and the Japanese Trade Balance has fallen. Despite this, PMI data in both the EU and Japan has been solid. Perhaps the EUR has already priced the French election risk, and the JPY has strengthened accordingly. Depending on first election results, we might see renewed volatility and possible spike.

In the wake of the first round of French elections, the EUR/JPY has been bought on dips, although the daily chart still shows a downtrend so this up-move might be just a correction. The POC is 116.20-35 (ATR low, D L4, 50.0) and it is the last POC zone for bulls. Rejection from POC should get the price to 116.80, 117.00 and 117.80 on higher volatility. Breakout should happen only above 117.85. If the price gets below 115.85 (D L5 support), 115.50 might be tested as the last line of defense for bulls. Be careful.

On Sunday, French citizens are called to elect their government leader, but the final outcome is unlikely to be sealed on that day. According to the opinion polls, there is no candidate gaining the absolute majority, so a second round between the two leading candidates is very likely to be held on the 7th of May.

A couple of weeks ago, the leading candidates were three: Emmanuel Macron, Marine Le Pen, and Francois Fillon. Nevertheless, following a strong performance in the TV debates, left-wing candidate Jean-Luc Melenchon enjoyed a stellar rise of support. His program displays a similar Eurosceptic stance to Le Pen’s. He advocates for holding a 'Frexit' referendum as well. Therefore, a run-off between him and Le Pen seems to be the biggest risk scenario for the financial world.

If something like that takes flesh and bones, we expect the euro to sink as investors will likely price in a much greater risk of European disintegration. A general risk-aversion mood is likely to dominate as well. Safe-havens like the yen are likely to benefit, while equity markets, especially European indices, could take the down road. The other side of the coin is a Macron - Fillon second round. In this case, the opposite market reaction may be observed, as this run-off combination may eliminate the risk for any 'Frexit' referendum.

However, at the moment, polls suggest that the most likely outcome is for Macron and Le Pen to make it to the second round, with the former winning by a large margin. In general, Macron is seen as the winner against any other of the candidates. So if Macron makes it on Sunday, this could cause a market relief and the common currency may open Monday with a gap up. In the less likely scenario of him being kicked out, the only combination that could be seen as relatively pro risk is a Fillon - Le Pen run off, given that polls give the final victory to Fillon. In a Fillon - Melenchon race, Melenchon is preferred.

EUR/JPY is one of the best proxies to play this election in our view. At the time of writing, the pair is trading near the support level of 117.00 (S1). We believe that due to the elections on Sunday, the pair may enjoy a quiet Friday session in the absence of any surprise news. If Sunday’s combination favors a risk-averse mood in the financial community, the pair is possible to tumble and perhaps challenge the psychological territory of 115.00. On the other hand, a pro-risk result could cause the pair to rally and break the downtrend line taken from the peak of the 13th of March. This could be the trigger for a short-term trend reversal.

Of course, much will depend on who gets the first place in the aforementioned combinations, and by how much margin.

As for today’s events:

During the European morning, we get the preliminary Markit manufacturing and services PMIs for April from several European nations and the Eurozone as a whole. Given that investors are likely to be on the edge of their seats for Sunday’s outcome, we don’t expect a major euro reaction from these releases.

In the UK, retail sales are forecast to have fallen somewhat in March, which could cause the pound to erase some of the gains it posted after PM Theresa May called for snap elections.

From Canada, we get CPI data for March. Expectations are for the headline rate to have declined somewhat, while no forecast is available for the core rate. The nation’s Markit manufacturing PMI for the month indicated that manufacturers raised the prices on final products at the steepest rate in three years.

So, although temporary factors may have dragged down the headline rate, the core rate may have remained unchanged or even ticked up, which could prove CAD-positive. USD/CAD could correct back below the 1.3455 (S1) support and perhaps challenge as a support the prior downside resistance line taken from the peak of the 9th of March.

From the US, we get the preliminary Markit manufacturing and services PMIs for April, and existing home sales for March.

We have several speakers at the G20 meeting and the IMF/World Bank conference, including ECB President Mario Draghi and ECB Board member Benoit Coeure.

EUR/JPY

Support: 117.00 (S1), 116.45 (S2), 115.75 (S3)

Resistance: 117.85 (R1), 118.45 (R2), 119.00 (R3)

USD/CAD

Support: 1.3455 (S1), 1.3425 (S2), 1.3345 (S3)

Resistance: 1.3500 (R1), 1.3535 (R2), 1.3600 (R3)