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The long Easter weekend brought…: another deadline rescheduling by US president Trump for Iran to comply to a deal with the US. The US President wants such a deal to include freedom of navigation through the Strait of Hormuz to be concluded by 8 PM US ET today (02 00 AM CET tomorrow). Otherwise the US might start destroying Iranian infrastructure, including energy facilities and bridges. At the same time, US president Trump indicated that talks are continuing. Iran warned that it might retaliate by new attacks on other energy infrastructure in the Gulf region. For markets, in the meantime, it has become almost impossible to assess the potential outcome of this ‘new’ development in the conflict. Even so, at least it only intensifies dislocations across the oil market. Brent this morning again trades well north of $110/b (111.5). The WTI contract was squeezed sharply higher already before the weekend now even trading above Brent ($115.6/b). Other indicators of immediate delivery (Dated Brent at $141/b) show signs of ever growing stress. The reaction on other (US) markets yesterday again was a bit mixed. Probably we again should label this as some kind of ‘agnosticism’ in the first place. The US yield curve yesterday bear flattened with yields rising between 5.2 bps (2-y) and 0.7 bps (30-y). US data, including a sharp rise in the services ISM price series and fears for multiple supply bottlenecks (see below) probably added to the rise in yields. Despite all the uncertainty regarding President Trump’s new deadline, US equity markets illustrated investors’ rather agnostic wait-and-see bias. The S&P even closed marginally higher (0.44%). On FX markets, the dollar trades near the top of established ranges (DXY 100.1, USD/JPY 159.8 & EUR/USD 1.1535), but currently lacks the power to force any convincing break higher.

Asian markets this morning also trade with a guarded bias as visibility with respect to the next step in the Middle East conflict remains close to non-existent. One can expect this pattern to continue in US and European markets going in the overnight deadline. Even so, especially interest rate markets currently further err to the side that supply disruptions in oil but also other commodities have reach a degree that force the likes of the ECB into defending their inflation credibility not only with words, but with hard action in the very near future. First indications this morning again point to higher EMU and also US yields. Eco data in the current context probably are second tier. Even so, we continue to keep a close eye on indicators of inflation expectations. Today, the NY Fed inflation expectations (one year ahead) are another reference in this respect (expected to rise from 3% to 3.5%).

News & Views

US Payrolls (Friday) and the services ISM (yesterday) were published during the long Easter break. The US economy added a consensus-smashing 178k jobs in March (vs 65k estimate), with only a minor 7k downward revision to the previous two months’ figures. The three-month moving average increased to 68k, the strongest since April of last year and taking into account 133k jobs cuts in February. The health care sector added 76k jobs after a 4-week, 31k-worker, strike by nurses and health professionals in California and Hawaï ended. Leisure and hospitality added 44k jobs and is expected to keep contributing in coming months as the US hosts the football world cup together with Mexico this summer. Construction, transportation and manufacturing all rebounded from job cuts in February. The unemployment rate ticked lower (4.2% from 4.3%), but it coincided with a shrinking labour force (61.9% from 62%). Wage growth surprised on the downside, rising by 0.2% M/M and 3.5% Y/Y.

Growth in the US services sector slowed in March according to the ISM which went from 56.1 to 54. Details were mixed, but show an impact from the war in the Middle East with concerns around employment and prices paid. New orders and businesses activity continued to point to growth in coming months, but the pace slowing further. The employment gauge fell to 45.2, the first contraction in four months. Prices paid surged to their highest level since 2022 (70.7) in the largest one-month increase in over 13 years. There were 20 commodities reported up in price, 0 reported down in price, and 7 reported in short supply. Both the ongoing war and the US eco data flipped US money market bets from erring on the side of a rate cut by year-end last Thursday to more even positioning/small rate hike bets by yesterday’s close..

Daily Pivots: (S1) 210.66; (P) 211.10; (R1) 211.80; More...

Intraday bias in GBP/JPY remains neutral and more consolidations could be seen above 209.58. Risk remains on the downside with 213.29 resistance intact. Corrective pattern from 214.98 should be in the third leg. Break of 209.58 will target 207.20 and below. However, firm break of 213.29 will bring further rise to retest 214.98 high.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Firm break of 214.98 will target 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. This will remain the favored case as long as 55 W EMA (now at 203.13) holds, even in case of another deep pullback.

Daily Pivots: (S1) 183.85; (P) 184.16; (R1) 184.62; More...

Intraday bias in EUR/JPY remains neutral for the moment. On the downside, firm break of 181.85 support should confirm that the correction from 186.86 is already in the third leg. Deeper fall should be seen to 180.78 and below. However, break of 184.75 resistance will bring stronger rally to retest 186.86 high instead.

In the bigger picture, a medium term top could be in place at 186.86 and some more consolidations would be seen. Nevertheless, as long as 55 W EMA (now at 176.21) holds, the larger up trend from 114.42 (2020 low) remains intact. Firm break of 186.86 will pave the way to 78.6% projection of 124.37 (2022 low) to 175.41 (2025 high) from 154.77 at 194.88 next.

Daily Pivots: (S1) 0.8713; (P) 0.8724; (R1) 0.8733; More…

Intraday bias in EUR/GBP remains neutral and more consolidations would be seen below 0.8740. On the upside, above 0.8740 will resume the rebound from 0.8610 short term bottom to 0.8788 resistance next. However, break of 0.8675 will bring retest of 0.8610 low instead.

In the bigger picture, strong support was seen again from 38.2% retracement of 0.8821 to 0.8863 at 0.8618. Break of 0.8788 resistance will argue that larger rise from 0.8221 might be resume to resume through 0.8863. Nevertheless, sustained trading below 0.8618 should confirm reversal, and bring deeper fall to 61.8% retracement at 0.8466 at least.

Daily Pivots: (S1) 1.6649; (P) 1.6695; (R1) 1.6731; More...

Intraday bias in EUR/AUD remains neutral and more consolidations could be seen below 1.6842. On the upside, above 1.6842 will resume the rebound from 1.6125 to 38.2% retracement of 1.8554 to 1.6125 at 1.7053. However, break of 1.6561 minor support will argue that the rebound fro 1.6125 has completed, after rejection by 55 D EMA (now at 1.6742). Retest of 1.6125 low should be seen next.

In the bigger picture, fall from 1.8554 medium term top is seen as reversing the whole up trend from 1.4281 (2022 low). Deeper decline should be seen to 61.8% retracement of 1.4281 to 1.8554 at 1.5913, which is slightly below 1.5963 structural support. Decisive break there will pave the way back to 1.4281. For now, risk will stay on the downside as long as 55 W EMA (now at 1.7207) holds, even in case of strong rebound.

Daily Pivots: (S1) 0.9203; (P) 0.9219; (R1) 0.9228; More....

Range trading continues in EUR/CHF and intraday bias remains neutral. On the upside, sustained trading above 61.8% retracement of 0.9394 to 0.8979 at 0.9235 will pave the way to 0.9394 key resistance next. However, break of 0.9155 support will turn bias back to the downside for 0.8979 low.

In the bigger picture, as long as 55 W EMA (now at 0.9281) holds, the larger down trend from 0.9928 (2024 high) is still expected to continue through 0.8979 at a later stage. However, sustained break of 55 W EMA should confirm medium term bottoming, and bring stronger rise through 0.9394 resistance, even as a corrective move.

Daily Pivots: (S1) 1.3893; (P) 1.3921; (R1) 1.3940; More...

Range trading continues in USD/CAD and more consolidations could be seen below 1.3965. In case of another fall, downside should be contained above 1.3751 resistance turned support. On the upside, decisive break of 38.2% retracement of 1.4791 to 1.3480 at 1.3981 will argue that it's already reversing the whole down trend from 1.4791, and target 61.8% retracement at 1.4290. However, firm break of 1.3751 should indicate rejection by 1.3981, and keep the fall from 1.4791 intact. Bias will be back on the downside for retesting 1.3480 low.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen, as the pattern extends, to 61.8% retracement of 1.2005 to 1.4791 at 1.3069. However, decisive break of 1.3927 resistance will argue that the correction has completed with three waves down to 1.3480 already. Further break of 1.4139 will confirm and bring retest of 1.4791 high.

Daily Pivots: (S1) 0.6883; (P) 0.6910; (R1) 0.6945; More...

Range trading continues in AUD/USD above 0.6832 and intraday bias stays neutral. On the downside, below 0.6832 will extend the decline from 0.7187 to 38.2% retracement of 0.5913 to 0.7187 at 0.6700. However, firm break of 0.6978 will argue that the correction has completed, and bring retest of 0.7817 high.

In the bigger picture, as long as 0.6706 cluster support holds, rise from 0.5913 (2024 low) should still be in progress. Decisive break of 61.8% retracement of 0.8006 to 0.5913 at 0.7206 will solidify the case that it's already reversing the down trend from 0.8006 (2021 high). However, firm break of 0.6706 will dampen this bullish case, and bring deeper fall back to 0.6420 support, and possibly below.

Daily Pivots: (S1) 159.48; (P) 159.62; (R1) 159.81; More...

USD/JPY is staying in consolidations below 160.45 and intraday bias remains neutral for the moment. Another fall could be seen, but overall outlook will remain bullish as long as 157.49 cluster support (38.2% retracement of 152.25 to 160.45 at 157.31) holds. Firm break of 160.45 will resume the rise from 152.25 to retest 161.94 high.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 152.97) holds. Firm break of 161.94 will pave the way to 61.8% projection of 102.58 to 161.94 from 139.87 at 176.75.

Daily Pivots: (S1) 0.7956; (P) 0.7988; (R1) 0.8015; More….

Range trading continues in USD/CHF and intraday bias remains neutral for more consolidations. Further rally is expected with 0.7833 support intact. On the upside, break of 0.8041 will resume the whole rally from 0.7603, and target 38.2% retracement of 0.9200 to 0.7603 at 0.8213. However, decisive break of 0.7833 support will argue that the rebound has completed, and turn bias back to the downside for deeper fall.

In the bigger picture, a medium term bottom should be in place at 0.7603 on bullish convergence condition in D MACD. Rebound from there is seen as correcting the fall from 0.9200 only. However, decisive break of 55 W EMA (now at 0.8081) will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high). On the other hand, rejection by the 55 W EMA will setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage.