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Daily Pivots: (S1) 1.0694; (P) 1.0718; (R1) 1.0742; More...

Intraday bias in EUR/CHF remains neutral for the moment. Prior rejection from 55 week EMA mixed up near term outlook. But still, on the upside, break of 1.0823 resistance will re-affirm the case of trend reversal. And intraday bias will be turned back tot he upside for 1.0897 resistance for confirmation. However, break of 1.0683 minor support will turn bias to the downside for 1.0620 key support level again.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Decisive break of 1.0897 resistance should confirm that it's completed. And in that case, larger up trend is resuming for another high above 1.1198. Meanwhile, sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485.

Key Points:

• Dollar bulls largely disappointed by FOMC meeting.
• RSI Oscillator still has room to move on the downside.
• Continued depreciation likely but watch for a Dollar rebound in the near term.

The USD/JPY had a relatively torrid week as the pair was beset by a negative greenback sentiment swing following the FOMC decision. The central bank’s lack of hawkish guidance was the main culprit and this sent the pair sharply lower to close the week over 200 pips lower at 112.69. However, it remains to be seen how the pair will cope in the coming week as the veritable bevy of FOMC pundits hit the wires to shape the markets expectations.

Last week was highly negative for the USDJPY as the pair fell sharply as the U.S. Fed’s decision on interest rates hit the wires. Although the central bank followed through on the expectation of rate hikes, and raised the FFR 25bps to 1.00%, they failed to signal the start of the expected cycle of tightening. Subsequently, Dollar bulls were caught short footed and the appetite for the greenback immediately leaked out of the market. Subsequently, the USDJPY slipped over 200 pips to close the week well down at 112.69. The Fed decision also largely overshadowed a relatively poor JPY Core Machinery Orders result which fell into contraction at -3.2% m/m.

The week ahead is likely to focus sharply on a range of speeches that are due out from the U.S. Federal Reserve, with the market’s interest largely falling on what Janet Yellen has to say. Given the turmoil that the greenback has seen over the past few days, it’s all but assured that the Fed’s PR machine will be out in force to stabilise market expectations. Subsequently, expect to see plenty of volatility as the Fed moves into `Jaw Boning’ mode. On the Japanese side, the Trade Balance figures are also due out early in the week but are unlikely to provide much in the way of movement for the pair.

From a technical perspective, price action’s recent dip below the 100 day MA appears to be beckoning in a move to the short side. In addition, the RSI Oscillator is trending sharply lower and still remains firmly wedged within neutral territory suggesting that there is still room to move. Subsequently, our initial bias is bearish for the week ahead with the caveat to watch for a rebound around the 111.61 mark. Support is currently in place for the pair at 112.55, 111.61, and 110.61. Resistance exists on the upside at 113.74, 114.75, and 115.50.

Ultimately, the pair retains its bearish predilection and it will take a significant boost from all of the FOMC member speeches due out in the next week to stem the tide. However, note that the greenback is unlikely to stay depressed for long, so be prepared for a rebound at some stage lest you get caught out.

Daily Pivots: (S1) 1.0715; (P) 1.0748 (R1) 1.0770; More.....

With 1.0639 minor support intact, intraday bias in EUR/USD remains on the upside for 1.0828 resistance. Corrective rise from 1.0339 is still in progress and break of 1.0828 will target 100% projection of 1.0339 to 1.0828 from 1.0494 at 1.0983. Since such rise is viewed as a corrective move, we'd expect upside to be limited by 1.0983 to bring larger down trend resumption eventually. On the downside, break of 1.0639 minor support will turn bias back to the downside for 1.0494 support.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115.

Daily Pivots: (S1) 1.2342; (P) 1.2373; (R1) 1.2423; More...

GBP/USD's rebound from 1.2108 is still in progress and intraday bias remains on the upside for 1.2569 resistance. Current development suggests that consolidation pattern from 1.1946 is extending with another rising leg. And the larger down trend is not ready to resume yet. Break of 1.2569 will target .2705/74 resistance zone next. At this point, we'd expect strong resistance from 1.2705/2774 to limit upside to extend the sideway pattern. Break of 1.2240 minor support will turn bias back to the downside for 1.2108 support. Though, sustained break of 1.2774 will extend the rise towards 1.3444 key resistance level.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Daily Pivots: (S1) 0.9951; (P) 0.9969; (R1) 0.9995; More.....

With 1.0018 minor resistance intact, intraday bias remains downside in USD/CHF for 0.9860 support. Recovery from 0.9860 has completed at 1.0169 and whole decline from 1.0342 is likely resuming. Break of 0.9860 will target 100% projection of 1.0342 to 0.9860 from 1.0169 at 0.9687. On the upside, above 1.0018 minor resistance will turn bias neutral. But outlook will now stay bearish as long as 1.0169 resistance holds.

In the bigger picture, USD/CHF is staying in medium term sideway pattern between 0.9443/1.0342. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of another fall, we'd expect strong support from 0.9443/9548 support zone.

Daily Pivots: (S1) 112.29; (P) 112.89; (R1) 113.22; More...

Intraday bias in USD/JPY remains on the downside for the moment as fall from 115.49 continues. As noted before, consolidation pattern from 111.58 has completed with three waves up to 115.49. And decline from 118.65 is likely resuming. Further fall should be seen through 111.58 to 111.12/13 cluster support. This level represents 61.8% projection of 118.65 to 111.58 from 115.49 at 111.12 and 38.2% retracement of 98.97 to 118.65 at 111.13. At this point, we'd tentatively expect strong support from 111.12/13 cluster support to contain downside. On the upside, above 113.53 minor resistance will turn bias to the up for 115.49 resistance. However, sustained break of 111.12/13 will bring deeper decline to 100% projection of 118.65 to 111.58 from 115.49 at 108.42.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Nonetheless, sustained trading below 55 week EMA (now at 111.19) will extend the consolidation from 125.85 with another fall through 98.97 before completion.

Daily Pivots: (S1) 1.3304; (P) 1.3341; (R1) 1.3379; More...

Intraday bias in USD/CAD remains neutral as it's staying in the consolidation from 1.3275 temporary low. Decline from 1.3534 might extend lower and below 1.3275 will turn bias to the downside. But such fall is still seen as a corrective pattern. Hence, we'd expect downside to be contained by 1.3211 cluster level (61.8% retracement of 1.3008 to 1.3534 at 1.3209) and bring rebound. On the upside, above 1.3420 minor resistance will indicate that the pull back is completed and turn bias back to the upside for 1.3534 resistance and then 1.3598. However, sustained break of 1.3211 will dampen this view and target 1.2968 key support level next.

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. The second leg is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. Break of 1.2968 wold at least bring at retest of 1.2460 low. However, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Daily Pivots: (S1) 0.7671; (P) 0.7694; (R1) 0.7725; More...

Intraday bias in AUD/USD remains on the upside as the rise from 0.7490 is extending to as high as 0.7728 so far. As noted before, the whole rally from 0.7158 is likely resuming. Break of 0.7740 resistance will confirm this case and target 61.8% projection of 0.7158 to 0.7740 from 0.7490 at 0.7850 next. That coincides with key long term retracement level at 0.7849. At this point, we'd expect strong resistance from 0.7849/50 to limit upside and bring reversal. On the downside, below 0.7662 minor support will turn bias neutral first. But break of 0.7490 is needed to indicate reversal. Otherwise, outlook will stay bullish in case of retreat.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seek to 55 month EMA (now at 0.8169) and above.

The financial markets have mixed, or probably just little reaction, to the outcome of the G20 meeting in Germany over the weekend. Markets in Australia, South Korea traded mildly lower. Meanwhile, stocks in Hong Kong jumped. Japan is on holiday today. In the currency markets, Sterling is paring back some of last week's gain while Dollar stays generally weak. On the other hand, commodity currencies are trading broadly higher as led by Kiwi and Aussie. In other markets, Gold breaches last week's high and is extending rebound to as high as 1235 so far. WTI crude oil dips back to 48.3 as last week's recovery failed below 50. While RBNZ will meet this week, the main focus will turn back to economic data in most countries.

G20 dropped pledge on protectionism and climate change

In the communique released by the G20 countries during the weekend, they dropped the pledged to "avoid all forms of protectionism." Instead, they toned down to a much tamer version of "working to strengthen the contribution of trade to our economies." This is seen as a response to the protectionist approach of US president Donald Trump's administration. Yet, Trump didn't get the pledge to ensure "fair" trade neither. Meanwhile G20 also dropped the pledge on climate change. Regarding global recovery, G20 noted that "the pace of growth is still weaker than desirable and downside risks for the global economy remain. We reaffirm our commitment to international economic and financial cooperation."

US Mnuchin: past communique not necessarily relevant

US trade secretary Steven Mnuchin described the meeting as "incredibly productive". And, he emphasized that "what was in the past communique is not necessarily relevant from my standpoint." He said that "I understand what the president's desire is and his policies and I negotiated from there." He also said that the US believes in "free trade" but "we want to re-examine certain agreements".

French FM Sapin: there was disagreement within the G-20 between a country and all the others.

On the other hand, EU Economic Affairs Commissioner Pierre Moscovici said that "it is not the best meeting we've had, but we avoided backtracking." He hoped that "the wording will be different" at the July G20 meeting in Hamburg. German finance minister Wolfgang Schaeuble tried to talk down the changes and said it's untrue that officials failed to find the common ground. And Schaeuble said that "it's completely clear we are not for protectionism. But it wasn't clear what one or another meant by that."

French finance minister Michel Sapin said that he regretted that the discussions "didn't end in a satisfactory manner." But he noted that "there wasn't a G-20 disagreement, there was disagreement within the G-20 between a country and all the others." Canadian finance minister Bill Morneau said that "the Americans were doing what any new administration would do -- they were looking at the language through their lens." And, "their lens is: how can trade benefit the U.S.? Everyone else has the same lens, but every other country has the advantage of being at the previous meeting."

NZD/USD heading higher ahead of RBNZ

New Zealand dollar is trading high ahead of RBNZ rate decision later in the week. The central bank is widely expected to keep the OCR unchanged at 1.75%. Technically, NZD/USD formed a short term bottom at 0.6888 and rebounded strongly. The development argues that price actions from 0.7484 are merely forming a consolidation pattern. And that is, medium term rise from 0.6102 low is not completed yet. Further rise would now be seen back to 0.7128 near term resistance first. Break will pave the way for at least a test on 0.7374/7484 resistance zone.

Looking ahead...

Released today, New Zealand Westpac consumer confidence dropped to 111.9 in Q1. UK Rightmove house price rose 1.3% in March. Germany will release PPI while Canada will release wholesale sales later today. For the week ahead, RBA and BoJ will release meeting minutes. UK CPI could be a market moving data considering the hawkish BoE minutes last week. New Zealand will also face the test from trade balance. Meanwhile, Euro traders will look into Friday's PMIs.

• Monday: German PPI; Canada wholesale sales
• Tuesday: Australia house price, RBA minutes; UK CPI; Canada retail sales
• Wednesday: BOJ minutes; Japan trade balance; US house price index, existing home sales
• Thursday: RBNZ rate decision; German Gfk consumer sentiment; ECB bulletin; US jobless claims, new home sales
• Friday; New Zealand trade balance; Eurozone PMIs; Canada CPI; US durable goods orders

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7671; (P) 0.7694; (R1) 0.7725; More...

Intraday bias in AUD/USD remains on the upside as the rise from 0.7490 is extending to as high as 0.7728 so far. As noted before, the whole rally from 0.7158 is likely resuming. Break of 0.7740 resistance will confirm this case and target 61.8% projection of 0.7158 to 0.7740 from 0.7490 at 0.7850 next. That coincides with key long term retracement level at 0.7849. At this point, we'd expect strong resistance from 0.7849/50 to limit upside and bring reversal. On the downside, below 0.7662 minor support will turn bias neutral first. But break of 0.7490 is needed to indicate reversal. Otherwise, outlook will stay bullish in case of retreat.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seek to 55 month EMA (now at 0.8169) and above.

Economic Indicators Update

Key Points:

• Downtrend seems to have halted for now.
• Ranging phase now likely.
• RBNZ in focus in the week ahead.

The Kiwi Dollar finally began to stage a bit of a comeback last week which now begs the question, what's next for the embattled pair? To answer this, it's worth taking a quick look at what actually drove last week's price action and what the technical bias could have to say about the week to come.

Starting with the week that was, the Kiwi Dollar ended last week much where one would expect given the rather strong reaction to the Fed's decision to raise rates whilst also not offering a strong hawkish outlook moving ahead. However, things weren't all smooth sailing as things progressed and the NZ GDP figures came in at 2.7% y/y and 0.4% m/m, both of these being short of expectations. Initially, this saw the NZD slip back below the 0.70 handle before it found its footing again which had some worried that the FOMC gains would be short-lived. Luckily, the pair recouped these losses as the US Unemployment Claims put a dampener on USD sentiment as the week began to wind down.

As for the technical readings, the NZDUSD now has an overall bearish bias but a solid zone of support could help to limit losses and lead to a neutral week. Specifically, the 12, 20, and 100 day moving averages are in a highly bearish configuration which will be helping to encourage selling. Conversely, the pair has also peaked at a historical zone of resistance which could limit its ability to push higher. Meanwhile, the parabolic SAR has inverted to bullish and the current support has proven to be a robust low on multiple prior occasions.

As for the impending fundamental news, the key development to keep an eye on will be the RBNZ's announcement of the OCR. Currently, expectations are that the rate is held steady as the bank has proven reluctant to alter monetary policy. However, chances of a hike have been improving due to the admittedly slow, yet still notable, recovery of dairy prices. Moreover, the NZ government is coming under increasing pressure to cool off the red-hot housing market which could mean that Wheeler has a bit of a greenlight to follow the US example and tighten policy.

Ultimately, we should see the Kiwi Dollar range this week, likely, between the 0.6982 and 0.7047 levels. However, as mentioned above, don't discount the chances or a surprise breakout to the upside if the RBNZ decides to have a surprise rate hike. This being said, in the wake of last week, the central bank could be taking a rather cautious approach that might also be dependent on the GDT numbers released immediately before the OCR announcement.