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Daily Pivots: (S1) 165.80; (P) 166.45; (R1) 167.66; More...

GBP/JPY's break of 168.40 resistance suggests resumption of larger up trend. Sustained trading above 167.93 fibonacci level will carry larger bullish implication. Next near term target is 100% projection of 150.95 to 168.40 from 155.57 at 173.02. On the downside, below 165.26 minor support will delay the bullish case and turn intraday bias neutral first.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Sustained break of 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 will be a long term bullish signal, and could pave the way back to 195.86 high. This will now remain the favored case as long as 155.57 support holds, even in case of deep pull back.

Daily Pivots: (S1) 132.00; (P) 132.50; (R1) 133.13; More...

USD/JPY's rally is still in progress and intraday bias remains on the upside. Next target is 61.8% projection of 114.40 to 131.34 from 126.35 at 136.81. Firm break there will target 100% projection at 143.29. On the downside, below 130.97 minor support will turn intraday bias neutral to bring consolidations first, before staging another rally.

In the bigger picture, current rally is seen as part of the long term up trend form 75.56 (2011 low). Next target is 100% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 149.26, which is close to 147.68 (1998 high). This will remain the favored case as long as 126.35 support holds.

Daily Pivots: (S1) 1.0665; (P) 1.0689 (R1) 1.0727; More...

Intraday bias in EUR/USD remains neutral for the moment. On the downside, break of 1.0626 minor support will indicate rejection by 55 day EMA, and turn bias back to the downside for retesting 1.0348. On the upside, break of 1.0786, and sustained trading above 55 day EMA (now at 1.0757) will target 1.0935 resistance next.

In the bigger picture, focus stays on 1.0339 long term support (2017 low). Decisive break there will resume whole down trend from 1.6039 (2008 high). Next target is 61.8% projection of 1.3993 to 1.0339 from 1.2348 at 1.0090. However, firm break of 1.0805 support turned resistance will delay this bearish case and bring medium term corrective rebound first.

Daily Pivots: (S1) 1.2483; (P) 1.2541; (R1) 1.2652; More...

Intraday bias in GBP/USD remains neutral for the moment. On the downside, break of 1.2429 support suggest that rebound from 1.2154 has completed. Intraday bias will be back on the downside for resting this low. On the upside, above 1.2666 will target 55 day EMA (now at 1.2706) and above.

In the bigger picture, fall from 1.4248 (2018 high) could be a leg inside the pattern from 1.1409 (2020 low), or resuming the longer term down trend. Deeper decline is expected as long as 1.2999 support turned resistance holds. On resumption, next target is 1.1409 low.

Daily Pivots: (S1) 0.9637; (P) 0.9675; (R1) 0.9745; More...

Intraday bias in USD/CHF stays mildly on the upside for retesting 1.0063 high. Firm break there will resume larger up trend. However, break of 0.9567 will extend the correction from 1.0063 with another leg, and turn bias to the downside for 61.8% retracement of 0.9193 to 1.0063 at 0.9525.

In the bigger picture, down trend from 1.0342 (2016 high) should have completed with three waves down to 0.8756 (2021 low) already. Rise from 0.8756 is likely a medium term up trend of its own. Next target is 1.0237/0342 resistance zone. This will remain the favored case as long as 0.9471 resistance turned support holds. However, sustained break of 0.9471 will extend long term range trading with another falling leg.

The euro is in positive territory on Wednesday. In the European session, EUR/USD is trading at 1.0727, up 0.20% on the day.

ECB to terminate QE, start rate-hike cycle

It has been a calm week for the euro thus far, but that could change on Thursday, as the ECB holds a key policy meeting. It is widely expected that the Lagarde & Co. will pivot to a tightening bias, which in itself is a dramatic development as the ECB has maintained an accommodative monetary stance for years.

The ECB has been signalling a more hawkish stance for months, as policy makers have scrambled to battle surging inflation in the eurozone, which has hit 8.1% in May. At tomorrow’s meeting, ECB President Lagarde is expected to take the formal step of announcing that the QE programme will wind up early in Q3, with the interest rate liftoff to continue in July. The markets will be looking for guidance with regard to the size of upcoming rate hikes. Any hints of a supersize 50bp increase would be bullish for the euro. The ECB will also release updated inflation and GDP forecasts, with inflation likely to be revised upwards and GDP downwards. This would indicate that the risk for eurozone growth remains tilted to the downside, which means the euro will have a tough time gaining on the dollar in the short to medium term.

The eurozone released employment and GDP data for Q1 earlier in the day, and the numbers were nothing to write home about. Employment and GDP both rose by 0.6%. Consumers are holding their purse strings tight, as household final consumption expenditure in Q1 came in at -0.7%, weaker than the -0.3% reading in Q4 2021. Weak consumer demand hurt GDP and with the ECB poised to hike rates, consumer spending could continue to decline which would be bad news for the fragile eurozone economy.

EUR/USD Technical

• EUR/USD is testing resistance at 1.0711. Above, there is resistance at 1.0796
• There is support at 1.0636 and 1.0551

Daily Pivots: (S1) 141.31; (P) 141.69; (R1) 142.38; More....

EUR/JPY roses to as high as 144.20 so far today. Sustained break of 144.06 could bring even further medium term upside acceleration. Next near term target is 100% projection of 124.37 to 139.99 from 132.63 at 148.25. On the downside, below 141.36 minor support will turn intraday bias neutral and bring consolidations first.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Such rise is seen as the third leg of the pattern from 109.30 (2016 low). Next target will be 100% projection of 114.42 to 134.11 from 124.37 at 144.06. Firm break there will indicate upside acceleration and target 149.76 long term resistance (2014 high). In any case, outlook will now remain bullish as long as 132.63 support holds, in case of deep pull back.

The main focus remains on Yen's selloff today, on the back of widening yield spread between Japan JGB and other major benchmark treasuries. Meanwhile, Euro appears to be strengthening in general too. Traders are probably buying up the Euro in anticipation on a hawkish ECB policy decision and press conference tomorrow. The central should without a doubt announce the end of asset purchases after June. The question is whether President Christine Lagarde would hint on a larger rate hike in July, or a conservative one.

Technically, however, Euro still has a lot to proof as it's range bound against most except Yen and Swiss Franc. Levels to watch include 1.0788 minor resistance in EUR/USD, 0.8617 resistance in EUR/GBP, 1.4965 minor resistance in EUR/AUD, and 1.3538 minor resistance in EUR/CAD. Break of these levels is needed to confirm underlying momentum in Euro.

In Europe, at the time of writing, FTSE is down-0.60%. DAX is down -0.73%. CAC is down -1.00%. Germany 10-year yield is up 0.061 at 1.357. Earlier in Asia, Nikkei rose 1.04%. Hong Kong HSI rose 2.24%. Chinas Shanghai SSE rose 0.68%. Singapore Strait Times dropped -0.18%. Japan 10-year JGB yield dropped -0.0019 to 0.248.

Eurozone GDP finalized at 0.6% qoq in Q1, EU at 0.7% qoq

Eurozone GDP grew 0.6% qoq in Q1, revised up from prior estimate of 0.3% qoq. EU GDP grew 0.7% qoq. Ireland (+10.8%) recorded the highest increase of GDP compared to the previous quarter, followed by Romania (+5.2%) and Latvia (+3.6%). Decreases were observed in Sweden (-0.8%), France (-0.2%) and Denmark (-0.1%).

Eurozone employment grew 0.6% qoq while EU employment grew 0.5% qoq. In the first quarter of 2022, Estonia (+3.5%), Latvia (+2.1%) and Portugal (+1.7%) recorded the highest growth of employment in persons compared with the previous quarter. Employment declined in Poland (-0.6%) and Croatia (-0.1%).

Also released, Germany industrial production rose 0.7% mom in April, below expectation of 1.0% mom. France trade deficit was at EUR -12.2B in April, versus expectation of EUR -11.1B. Italy retail sales was unchanged, below expectation of 0.3% mom. Swiss unemployment rate was unchanged at 2.2% in May.

UK PMI construction dropped to 56.4, optimism deteriorates

UK PMI Construction dropped from 58.2 to 56.4 in May, below expectation of 56.9. S&P Global said total activity expanded at the slowest pace since January. Housing remained worst-performing category. Optimism was lowest since August 2020.

Tim Moore, Economics Director at S&P Global Market Intelligence: "May data signalled a solid overall rise in UK construction output as resilience across the commercial and civil engineering segments helped to offset weakness in house building. Residential construction activity was close to stagnation... New order volumes expanded at the slowest pace since the end of 2021...

"Concerns about the business outlook were signalled by a fall in construction sector growth projections to the lowest for more than one-and-a-half years in May. Around 19% of construction firms predict an outright decline in business activity during the year ahead, up from just 5% at the start of 2022."

BoJ Kuroda: Various models show weak yen is positive

BoJ Governor Haruhiko Kuroda said today that Yen's depreciation is "positive to the economy as long as the moves are stable". He added, "various macroeconomic models show weak yen is positive.. But he also reiterated that it's important for exchange rate to move "reflecting fundamentals".

Kuroda also retracted the remain made earlier on inflation which triggered massive social media backlashes. He told reporters at the Prime Minister's Office, "I did not mean that consumers are voluntarily accepting the price increases. I apologize if my words led to a misunderstanding."

Japan Q1 GDP finalized at -0.1% qoq, -0.5% annualized

Japan's GDP was finalized at -0.1% qoq in Q1, better than earlier estimate of -0.3% qoq. In annualized term. GDP contracted -0.5%.

Private consumption, which accounts for more than half of the GDP, was revised up to 0.06% qoq rise, from -0.03% decline. Capital expenditure dropped -0.7%, down graded from -0.5%. Exports grow was unchanged at 1.1% while imports rose 3.3%, downgraded from 3.4%.

GDP deflator was finalized at -0.5% yoy, revised form -0.4% yoy.

EUR/JPY Mid-Day Outlook

Daily Pivots: (S1) 141.31; (P) 141.69; (R1) 142.38; More....

EUR/JPY roses to as high as 144.20 so far today. Sustained break of 144.06 could bring even further medium term upside acceleration. Next near term target is 100% projection of 124.37 to 139.99 from 132.63 at 148.25. On the downside, below 141.36 minor support will turn intraday bias neutral and bring consolidations first.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Such rise is seen as the third leg of the pattern from 109.30 (2016 low). Next target will be 100% projection of 114.42 to 134.11 from 124.37 at 144.06. Firm break there will indicate upside acceleration and target 149.76 long term resistance (2014 high). In any case, outlook will now remain bullish as long as 132.63 support holds, in case of deep pull back.

Economic Indicators Update

• USDJPY broke resistance level 131.20
• Likely to reach resistance level 135.00

USDJPY continues to rise after the earlier breakout of the resistance level 131.20 (top of the previous impulse waves (iii) and (1)).

The breakout of the resistance level 131.20 accelerated the active sharp upward impulse wave (3).

USDJPY can be expected to rise further toward the next resistance level 135.00 (the target price for the completion of the active impulse wave (3)).

• Silver reversed from key resistance level 22.40
• Likely to fall to support level 21.50

Silver recently reversed down from the key resistance level 22.40 (which has been reversing the price from the end of May).

The resistance level 22.40 was further strengthened by the upper daily Bollinger Band and by the 61.8% Fibonacci correction of the downward impulse from the start of May.

Silver can be expected to fall further toward the next support level 21.50 (low of the previous corrective wave (b)).