Sample Category Title

Daily Pivots: (S1) 0.8504; (P) 0.8518; (R1) 0.8527; More...

Intraday bias in EUR/GBP stays neutral at this point. On the downside, below 0.8478 will target 55 D EMA (now at 0.8455). Sustained trading below there will suggest that whole rise from 0.8221 has already complete and turn outlook bearish. However, break of 0.8622 resistance will suggest that the correction from 0.8737 has completed, and retain near term bullishness.

In the bigger picture, down trend from 0.9267 (2022 high) should have completed at 0.8221, just ahead of 0.9201 key support (2024 low). Rise from 0.8221 is likely reversing the whole fall. Further rise should be seen to 61.8% retracement of 0.9267 to 0.8221 at 0.8867 next. This will remain the favored case as long as 0.8472 resistance turned support holds.

Daily Pivots: (S1) 1.7441; (P) 1.7514; (R1) 1.7565; More...

Intraday bias in EUR/AUD is turned neutral firs with current recovery. Another fall is mildly in favor as long as 1.7886 resistance holds. Sustained break of 55 D EMA (now at 1.7418) will target 61.8% retracement at 1.6953. On the upside, though, break of 1.7886 resistance will turn bias back to the upside for retesting 1.8554 high.

In the bigger picture, up trend from 1.4281 (2022 low) is in progress for 100% projection of 1.4281 to 1.7062 from 1.5963 at 1.8744. Firm break there will pave the way to 138.2% projection at 1.9806, which is close to 1.9799 (2020 high). Outlook will remain bullish as long as 1.7062 resistance turned support (2023 high) holds even in case of deep pullback.

Daily Pivots: (S1) 0.9279; (P) 0.9324; (R1) 0.9348; More....

Intraday bias in EUR/CHF stays neutral and outlook is unchanged. On the upside, above 0.9445 will resume the rebound from 0.9218, either as a corrective move or the third leg of the pattern from 0.9204. However, break of 0.9274 will suggest that that recovery has completed, and bring retest of 0.9204/18 support zone.

In the bigger picture, prior rejection by long-term falling channel resistance (now at 0.9555) 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) 1.3797; (P) 1.3814; (R1) 1.3840; More...

Further decline is mildly in favor with 1.3903 resistance intact, for 1.3727 fibonacci level next. However, considering bullish convergence condition in 4H MACD, firm break of 1.3903 resistance should indicate short term bottoming, and turn bias back to the upside for stronger rebound to 55 D EMA (now at 1.4068).

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4150 resistance turned support holds. Firm break of 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727 will pave the way back to 61.8% retracement at 1.3069.

Daily Pivots: (S1) 0.6437; (P) 0.6465; (R1) 0.6497; More...

AUD/USD's rise from 0.5913 is in progress. Intraday bias remains on the upside for 61.8% retracement of 0.6941 to 0.5913 at 0.6548. On the downside, though, break of 0.6364 support will indicate short term topping, and turn bias to the downside for 55 D EMA (now at 0.6325) and below.

In the bigger picture, as long as 55 W EMA (now at 0.6443) holds, the down trend from 0.8006 (2021 high) should resume later to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. However, sustained trading above 55 W EMA will argue that a medium term bottom was already formed, and set up further rebound to 0.6941 resistance instead.

Daily Pivots: (S1) 1.1285; (P) 1.1324; (R1) 1.1354; More...

Intraday bias in EUR/USD stays neutral as range trading continues above 1.1265. On the downside, below 1.1265 will resume the corrective fall from 1.1572 short term top. But downside should be contained by 38.2% retracement of 1.0176 to 1.1572 at 1.1039. On the upside, break of 1.1424 will suggest that the correction has completed and bring retest of 1.1572 high.

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 1.0808) holds.

Daily Pivots: (S1) 1.3258; (P) 1.3298; (R1) 1.3335; More...

GBP/USD is still bounded in range below 1.3442 and intraday bias stays neutral. On the downside, firm break of 1.3232 support will indicate short term topping and rejection by 1.3433 key resistance. Intraday bias will be back on the downside for deeper pullback to 55 D EMA (now at 1.3030) and possibly below. On the upside, firm break of 1.3433 key resistance confirm larger up trend resumption.

In the bigger picture, price actions from 1.3433 are seen as a corrective pattern to the up trend from 1.3051 (2022 low). Rise from 1.2099 could either be resuming the up trend, or the second leg of a consolidation pattern. Overall, GBP/USD should target 1.4248 key resistance (2021 high) on decisive break of 1.3433 at a later stage.

Daily Pivots: (S1) 143.16; (P) 144.08; (R1) 144.61; More...

Range trading continues in USD/JPY and intraday bias remains neutral. While rebound from 139.87 could extend higher, near term outlook will stay bearish as long as 38.2% retracement of 158.86 to 139.87 at 147.12 holds. Break of 141.96 support will argue that the rebound has completed as a corrective move. Retest of 139.87 should then be seen next in this case.

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.

Markets

Markets took a slow start to the trading week as the risk rally fizzled and with UK markets closed for May Day holiday. The German Dax’s outperformance (+1.1%) was exception to the rule. The index is just a session away from breaking the previous all-time high set in March, implying full retracement on the 20% (!!) hit from the build-up to and aftermath of US President Trump’s Liberation Day. At least according to this metric, it’s becoming clear that the impact of the new German government’s policies (announcements on fiscal/defense spending expected before summer) will offset the damaging impact from tariff wars. Yesterday’s sole data point was a consensus-beating April Services ISM (51.6 from 50.8 vs 50.2 expected). It’s a welcome sign after last month’s sudden collapse in the ISM (53.5 to 50.8). Details showed lower business activity (53.7 from 55.9), but an acceleration in new orders (52.3 from 50.4). Businesses cut jobs for a second month straight, though at a slower pace (49 from 46.2). The prices paid index rose to its highest level since January 2023 (65.1 from 60.9). The ISM triggered some underperformance of US Treasuries vs German Bunds. The intraday bear flattening isn’t reflected in the daily close because of performance in the run-up to the release. Daily changes on the US curve eventually ranged between 0.8 bps (2-yr) and +4.6 bps (30-yr). German yields closed between flat (30-yr) and 2 bps lower (5-yr). The US dollar erased earlier losses following the ISM with EUR/USD dipping from an intraday high at 1.1360 back to opening levels just above 1.13. Short term, we expect more underperformance of US Treasuries in combination with a stronger dollar (testing EUR/USD 1.1276/74 support). The ISM further reduced Fed rate cut bets at the June meeting, from around 33% to 25%. The US central bank is expected to keep rates steady at tomorrow’s meeting and signal no intent to break the deadlock any time soon. The trade-off between downside risks to the maximum employment goal and upside risks to price stability clearly tilt to the latter. Not only because of the expected impact from tariffs on already above target inflation, but also from the self-fulfilling risk coming from surging inflation expectations for consumers and companies. We stick to the view that the Fed rate cut pause will last at least over summer. The Powell Fed has a track record of wanting to be very sure and then going fast. If the labour market breaks, they’ll be inclined to use the ample policy room towards neutral levels as soon as possible. They showcased that last September by kicking off with a 50 bps rate cut. That contrasts hugely with the US money market view of pre-emptive 25 bps rate cuts. Today’s eco calendar is razor thin apart from a $42bn 10-yr Note auction. The success will be indicative on the return of market calm following last month’s violent sell-off at the long end of the curve (US risk premium). The real test comes on Thursday with a $25bn 30-yr bond auction. Yesterday’s $58bn 3-yr Note sale was solid.

News & Views

The European Commission will today announce a plan to fully end gas imports from Russia. European officials familiar with the matter said companies will have to stop all spot market gas contracts with Russian suppliers by the end of the year while long-term contracts are due to be severed by 2027. Doing so would wean the bloc off almost fully from Russian fossil fuels. Before the invasion of Ukraine in 2022, the EU imported more than 40% of its pipeline gas imports and almost 30% of crude oil from Russia. Both significantly decreased on face value since then but in the case of gas, there has been a shift from pipeline transit to LNG. The EU last year imported a record amount of Russian LNG. The Commission’s plan is also intended as a signal to Washington that the EU stands ready to buy more US LNG as a way to reduce its trade deficit.

China’s services sector barely grew in April, the Caixin private sector PMI suggests this morning. The headline index retreated from 51.9 to 50.7, the lowest in seven months. Weak details included the slowest rise in business orders since December 2022 and staff reduction for a second month straight. Concerns over the negative impact of shifting trade policies also weighed on sentiment. Business confidence among service providers slipped to the second-lowest level recorded since data collection began in November 2005. This concerning outlook for sales led service companies to reduce their charges again despite stronger cost inflation. Despite the poor PMI, China’s onshore yuan rallies nevertheless during the first session of the month this morning. It’s mostly a catch-up move with the offshore CNH’s performance over the last couple of days, in turn linked rising trade deal hopes.

In focus today

Today, focus turns to the final euro area PMI data for April. Revised manufacturing data has already revealed manufacturing rising to 49.0 from the preliminary print of 48.7. The index thus stands at the highest level since August 2022, which is much better than feared given the trade uncertainty that mainly affects sales of goods. Overshadowing this however, preliminary services PMI dipped into contraction territory for the first time since November, as it declined to 49.7 from 51.0, so it will be interesting to see whether this is also revised up in the final print.

In Sweden, at 8.30 CET we will receive the services and composite PMIs for April. As for the manufacturing sector, both the PMI and the NIER survey for April posted gains, while the services sector indicator in the NIER survey was more or less unchanged in April (98.0 vs 97.7). Thus, the overall impression from these surveys is that a marked downturn in today's PMI figures seems unlikely.

Economic and market news

What happened yesterday

In the euro area, the Sentix investor confidence index clawed back above expectations to -8.1 from -19.5 in April (cons: -12.5). While the index remained in negative territory, this also underlines that investors view the recent movements in the trade war as less aggressive compared to a month ago.

In the US, the ISM report on US non-manufacturing sector revealed a PMI of 51.6 in April up from 50.8 in March (cons: 50.6). The non-manufacturing business activity index declined to 53.7 from 55.9, but continued to remain well above 50, while new orders, prices and employment all moved higher. Overall, a hawkish data print that moved EUR/USD somewhat lower.

In Switzerland, inflation surprised significantly to the downside with headline inflation at 0.0% y/y (prior: 0.3%, cons: 0.2%) in April and core at 0.6% y/y (prior: 0.9%, cons: 0.8%). This comes while the SNB has an expectation 0.3% for Q2. EUR/CHF jumped higher on release and markets are increasingly pricing a cut of 50bp for the upcoming meeting in June, currently pricing in 30bp. We continue to expect a cut to 0% in June with the SNB commencing on FX intervention to weaken the CHF before negative territory is reached. After today's release however, the risk of a move to negative rates has definitely increased.

Equities: Yesterday, we saw a decline in equity markets, breaking the recent upward streak that has persisted over the past couple of weeks. Notably, this movement occurred without any significant changes in the news flow. It is worth highlighting that US equities underperformed relative European equities, where cyclical stocks continued to lead. In contrast, defensives outperformed in the US. In the US yesterday, Dow -0.2%, S&P 500 -0.6%, Nasdaq -0.7%, Russell 2000 -0.8%. Turning to Asia this morning, markets are generally in positive territory, while futures in both Europe and especially the US are pointing lower.

FI&FX: Stronger-than-expected US economic data sent bond yields higher while the USD is stabilising versus EUR and JPY. The oil price continued to decline as OPEC keeps raising output. In Asia there has been a weakening of the USD relative to some of local currencies such as the Taiwan dollar.