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Daily Pivots: (S1) 0.8414; (P) 0.8431; (R1) 0.8451; More...

No change in EUR/GBP's outlook and intraday bias remains neutral. On the upside, above 0.8448 will resume the rebound to 38.2% retracement of 0.8737 to 0.8354 at 0.8500. On the downside, however, break of 0.8401 minor support will bring retest of 0.8354 low.

In the bigger picture, price actions from 0.8221 medium term bottom are merely forming a corrective pattern. There is no clear momentum to break through 0.8201 key support (2022 low) yet. Hence, range trading is expected between 0.8221/8737 for now.

Daily Pivots: (S1) 1.7543; (P) 1.7574; (R1) 1.7624; More...

No change in EUR/AUD's outlook and intraday bias stays neutral. On the upside, firm break of 38.2% retracement of 1.8554 to 1.7245 at 1.7745 will solidify the case that fall from 1.8554 has completed as a correction. Next target is 61.8% retracement at 1.8054. On the downside, however, break of 1.7460 support will bring retest of 1.7245 instead.

In the bigger picture, as long as 1.7062 resistance turned support (2023 high) holds, up trend from 1.4281 (2022 low) should still be in progress. Break of 1.8554 is expected after the whole corrective pattern from there completes. However, sustained break of 1.7062 will bring deeper fall back to 1.5963 support.

Daily Pivots: (S1) 0.9347; (P) 0.9374; (R1) 0.9408; More....

No change in EUR/CHF's outlook and intraday bias stays neutral. Rise from 0.9218 might continue, either as a correction to fall from 0.9660, or the third leg of the pattern from 0.9204. On the upside, above 0.9419 will target 0.9445 resistance and above. Nevertheless, on the downside, firm break of 0.9291 will bring retest of 0.9218 low.

In the bigger picture, prior rejection by long-term falling channel resistance (now at 0.9527) retains medium term bearishness. That is, down trend from 1.2004 (2018 high) is still in progress. Firm break of 0.9204 (2024 low) will confirm resumption. This will remain the favored case as long as 0.9660 resistance holds.

Daily Pivots: (S1) 1.1401; (P) 1.1448; (R1) 1.1491; More...

EUR/USD's rebound from 1.1064 is in progress and intraday bias stays mildly on the upside. Strong resistance could be seen from 1.1572 to limit upside, at least on first attempt. On the downside, On the downside, break of 1.1356 support will indicate that the corrective pattern from 1.1572 has started the third leg, and target 1.1209 support. Nevertheless, decisive break of 1.1572 will confirm larger up trend resumption.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0856) holds.

Daily Pivots: (S1) 142.75; (P) 143.36; (R1) 144.20; More...

USD/JPY is still bounded in established range and intraday bias stays neutral. On the upside, above 146.27 will target 148.64 resistance first. Firm break there will resume the rebound from 139.87. Nevertheless, break of 142.10 will bring deeper fall back to 139.87 low.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 1.3536; (P) 1.3577; (R1) 1.3612; More...

Further rally is expected in GBP/USD with 1.3414 support intact. Current rise should target 100% projection of 1.2706 to 1.3442 from 1.3138 at 1.3874. However, break of 1.3414 will turn bias back to the downside for deeper pullback to 1.3138 support.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.2866) holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8174; (P) 0.8195; (R1) 0.8217; More….

Range trading continues in USD/CHF and intraday bias stays neutral. Fall from 0.8475 could extend lower, and break of 0.8156 will target 0.8038 low. But strong support should be seen from there to bring rebound, at least on first attempt. On the upside, break of 0.8346 resistance will extend the corrective pattern from 0.8038 with another rising leg.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8732) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

Daily Pivots: (S1) 0.6481; (P) 0.6510; (R1) 0.6533; More...

AUD/USD failed to break through 0.6536 resistance decisively and intraday bias stays neutral. With 0.6406 support intact, further rally is expected. On the upside, firm break of 0.6536 will resume the rally from 0.5913 to 61.8% retracement of 0.6941 to 0.5913 at 0.6548. However, decisive break of 0.6406 will turn bias back to the downside for 38.2% retracement of 0.5913 to 0.6536 at 0.6298.

In the bigger picture, AUD/USD is still struggling to sustain above 55 W EMA (now at 0.6441) cleanly, and outlook is mixed. Sustained trading above 55 W EMA will indicate that rise from 0.5913 is at least correcting the down trend from 0.8006 (2021 high), with risk of trend reversal. Further rise should be seen to 38.2% retracement of 0.8006 to 0.5913 at 0.6713. However, rejection by 55 W EMA will revive medium term bearishness for another fail through 0.5913 at a later stage.

Markets

As expected, the ECB cut its depo rate by another 25 bps to 2.0%. More than ever, the question for markets was what to expect next. Admittedly subject to a persistent high degree of event risk, conclusion is that the ECB might do less than what markets were positioned for. Chair Lagarde indicated that the bank is getting closer to the end of its policy cycle as ‘at the current level of interest rates, we believe that we are in a good position to navigate the uncertain conditions that will be coming up’. In new forecasts, the ECB sees lower headline inflation this year (2.0% from 2.3%) and in 2026 (1.6% from 1.9%). This is however mainly due to lower energy prices and a stronger euro. Inflation is expected to return to the target over the medium term (2.0% in 2027). Growth is seen unchanged at 0.9% this year, result of a strong start of the year to be followed by weaker activity due to trade uncertainty later this year. 2026 growth was slightly downwardly revised to 1.1%, fiscal measures (mainly in Germany) and a further rise in real wages and employment will continue to support growth further out. With this base scenario, the ECB can switch to a reactive, data/event driven approach. This at least suggests a pause in the easing cycle with the possibility of ending it if trade-related uncertainty would turn out less negative than feared. Yields initially still dropped on the lower inflation forecast, but soon reversed course with German yields adding between 7.5 bps (2-y) and 2.6 bps (30-y). Money markets still see about 85 % chance of one additional cut in September. Even so there is ever little reason to push for sub 1.75% levels given yesterday’s communication. The euro during the press conference briefly spiked to just below the 1.15 mark on higher yields and Lagarde referring to earlier analyses on a bigger international role for the euro. However, a big part of this gain was returned later in the session. This was partially due to a dollar comeback and a rebound in US yields. Both initially suffered after higher (247k) US jobless claims. However, both US yields and the dollar later were supported, amongst others, by more constructive headlines on the US China trade conflict after a phone call between US president Trump and XI Jinping. Some Fed comments also reinforced the reigning wait and see bias. US yields in the end even finished between +6.8 bps (5-y) and unchanged (30-y). DXY close little changed at 98.74. The euro maintained a minor gain (1.1445).

Even as the mainstream Fed-communication still firmly holds the wait-and-see narrative, today’s US payrolls will have the potential to decide on the short-term momentum both in US yields and the dollar. Recently markets grew ever more sensitive to softer than expected activity, and particular, labour market data. A weak figure might make markets change their assessment on the timing (and the pace) of additional Fed easing later this year and early next year. Consensus still sees near 125k of additional jobs in May, but the ADP report earlier this week suggests downside risks. If those were to materialize, the US yield curve might bull steepen. The dollar in such an scenario would be vulnerable with a the potential for EUR/USD to try a new attack on the 1.1573 YTD top.

News & Views

The US Treasury in its semi-annual currency report yesterday, the first since Trump’s second presidency, said that no major trading partners have manipulated their currencies in 2024. It uses three criteria: a trade surplus with the US of at least $15bln, a global current account surplus above 3% of GDP and persistent, one-way net FX purchases. Only when the three are met the country is possibly (but not necessarily, eg. Switzerland in 2022) labeled as such. Meeting two of those criteria will get you on the so-called monitoring list. Ireland and Switzerland were added to that list in yesterday’s report, along with Germany, Japan, South Korea, Singapore, Taiwan, Vietnam and China.

The Reserve Bank of India (RBI) lowered the key interest rate by a more than expected 50 bps to 5.5%. With the cut comes a change in the monetary policy stance to neutral from accommodative. Economic growth remains slower than hoped-for against the backdrop of a challenging global environment. The RBI nevertheless kept its GDP forecast for the fiscal year 2026 at 6.5%, buoyed by domestic demand. Risks are tilted to the downside. The inflation outlook was revised downward to 3.7% from 4%, potentially explaining the RBI’s stance shift back to neutral. The RBI a bit later unexpectedly slashed the cash reserve ratio to 3% from 4%, releasing an estimated INR 2.5tn by the end of November, according to RBI governor Malhotra. The bigger rate cut, the unexpected cash reserve ratio cut and switch in policy stance caused wild swings in the bond market. The 10-yr yield tumbled 12 bps initially only to reverse course (twice) and trade virtually unchanged. The Indian rupee reacted way more calmly around USD/INR 85.8.

Popcorn sales will pop — that’s my best prediction for today — as the world watches the incredible escalation of tensions between Donald Trump and his – once – best buddy, Elon Musk. Musk joined the mounting chorus of critics regarding Trump’s Big and Beautiful Tax Bill. But because nothing is reasonable anymore, the tweet war between the two turned very ugly, very quickly, and ended with Trump saying that ‘the easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,’ while Musk claimed that Trump is involved in the ultra-sensitive ‘Epstein files.’

The latter exchange led to a 14% slump in Tesla’s stock price yesterday. The stock is still slightly above where it was just after Trump’s election, but we can now say that most of the gains have been given back. And of course, losing the White House’s support would be terrible for Tesla — which is being eaten alive in Europe and Asia by Chinese competition (and Elon Musk’s irritating involvement in politics) — especially since its self-driving cars and robotaxis need friendly legislation to thrive. Legislation is Trump. Q.E.D. The hype around Tesla is not looking good.

And Trump has a new friend! Well, maybe not friend friend, but apparently, Trump and Xi finally talked on the phone. They said nice things to each other. Xi agreed to relax export rules for rare earth metals that Trump’s America needs so badly to – Stay Great – while both leaders invited each other over, and both accepted. How nice! We’ll see how long this friendship lasts, but VanEck’s rare earth and metals ETF jumped nearly 4% yesterday, and close to 10% this week, climbing above the 50-DMA and leaving room to extend gains if tensions continue to ease.

Speaking of tensions, there is growing evidence — at least from this week’s job figures — that the US jobs market could be coming under pressure from trade uncertainties. While Tuesday’s job openings data hinted at more vacancies in April, Wednesday’s ADP data came in significantly softer-than-expected for May, and yesterday’s weekly update showed jobless claims rose to the highest levels since October. Today, all eyes are on the official jobs report. The US economy is expected to have added around 130K new nonfarm jobs in May, with average hourly earnings slightly higher month-on-month but slightly lower year-on-year. The unemployment rate is expected to remain steady around 4.2%.

A softer-than-expected report could further boost bets that the Federal Reserve (Fed) will cut rates sooner rather than later – if wage growth also remains soft. Another upside surprise would support optimism that the US economy is weathering the Trump shock quite well, and probably boost stock market sentiment. Fed funds futures currently price about a 1-in-3 chance of a rate cut in July. That probability — and the 2-year yield — are the ones to watch to see how investors digest today’s report. The US 2-year yield is sitting around 3.90%, well below the 4.40% level seen at the beginning of the year.

Either way, the pressure on the US dollar will likely continue amid expectations of weakening US growth and/or a dovish Fed. The EURUSD flirted with the 1.15 psychological level yesterday, after the European Central Bank (ECB) cut rates by 25bps — as widely expected — and signalled the end of its policy tightening cycle. The announcement significantly trimmed expectations of a summer cut but didn’t take the possibility of further support off the table, should trade tensions hit Eurozone economies. The ECB now expects inflation to ease to 1.6% next year and growth to stabilize around 1.1% — meaning it's giving itself room to do more if needed.

European equities welcomed the ECB decision: the Stoxx 600 added a meagre 0.16%, despite a sharp rise in short-term yields. Investors are ready to push the index higher if trade news sounds encouraging. Yesterday’s meeting between Trump and German Chancellor Merz went... not too bad. They still don’t agree on many things — starting with Ukraine — but Merz is being applauded for having ‘avoided public humiliation.’ That’s what diplomacy has come down to... avoiding public humiliation.

Elsewhere, the Nikkei is up and the yen is down this morning after data showed a much larger-than-expected decline in Japanese household spending, and a better-than-feared bond auction yesterday. In the UK, Cable traded above the 1.36 mark for the first time in more than three years, despite lingering nervousness about whether the ONS data is... accurate...

In energy, US crude has stalled around the $64.20pb mark for the fourth consecutive session and is slightly under pressure this morning. Inability to clear this resistance could trigger profit-taking into the weekend and send the barrel price below the 50-DMA, which stands near $62.40.

Elsewhere in commodities, silver rallied 10% this week. The sudden surge is being driven by ‘renewed interest from momentum traders’ as the price cleared a key resistance at $35/oz, touching a 13-year high. The mint ratio is being pulled lower due to silver's outperformance versus gold, which is stagnating near all-time highs. The mint ratio is around 93.50 right now. Historically, it has ranged between 60 and 80, and between 80 and 95 since 2022 — so there’s room for a further downward correction for the ratio to return to average levels.