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Daily Pivots: (S1) 139.47; (P) 140.07; (R1) 140.60; More...

A temporary low is in place at 139.54 with today's recovery. Intraday bias is turned neutral first. Upside of recovery should be limited well below 143.72 support turned resistance to bring fall resumption. On the downside, break of 139.54 will resume the decline from 148.87 to retest 131.51 low.

In the bigger picture, current development suggests that GBP/JPY was rejected by 149.98 key resistance. And medium term fall from 156.59 is still in progress. Break of 131.51 will target 122.36 (2016 low). On the other hand, decisive break of 149.98 should confirm that medium term fall from 156.59 (2018 high) has completed at 131.51 already. Further rally would be seen back to 156.59 resistance and above.

Daily Pivots: (S1) 122.39; (P) 122.69; (R1) 123.11; More....

Intraday bias in EUR/JPY remains neutral for consolidation above 122.08 temporary low. In case of stronger recovery, upside should be limited by 124.09 support turned resistance to bring fall resumption. On the downside, break of 122.08 will target a test on 118.62 low.

In the bigger picture, current development argues that rebound from 118.62 is merely a correction and has completed at 127.50. EUR/JPY is staying in long term falling channel from 137.49 (2018 high). Decisive break of 118.62 will confirm resumption of this medium term fall and target 109.20 low. For now, this will be the favored case as long as 125.23 resistance holds.

Daily Pivots: (S1) 0.8742; (P) 0.8761; (R1) 0.8793; More...

Further rise is expected in EUR/GBP as long as 0.8681 resistance turned support holds. Next target is 0.8840 resistance. Decisive break there will target 0.9101 key resistance next. On the downside, though, break of 0.8681 resistance turned support will suggest completion of the rebound and turn bias back to the downside.

In the bigger picture, medium term decline from 0.9305 (2017 high) is seen as a corrective move. No change in this view. Current development argues that it might have completed with three waves down to 0.8472, just ahead of 38.2% retracement of 0.6935 (2015 low) to 0.9306 at 0.8400, after hitting 55 month EMA (now at 0.8511). Decisive break of 0.9101 resistance will confirm this bullish case. Nevertheless, as EUR/GBP is still staying inside long term falling channel, correction from 0.9305 could still extend to 0.8400 fibonacci level before completion.

• Sterling crumbles as no-deal Brexit risk returns
• Aussie gets a lift from politics, but outlook still grim
• Dollar continues to reign supreme as other currencies lack appeal

Pound dives as May's grasp on power weakens

Sterling took yet another hit on Friday, with Cable falling to its lowest level since January as the British political landscape darkened. Cross-party talks between Theresa May's Conservatives and the opposition Labour party collapsed, dashing hopes for a bipartisan compromise to break the Brexit deadlock.

More importantly, May's grasp on power seems to be weakening by the day, with many seeing her as a 'lame duck' Prime Minister now that she has all but confirmed she will step down come summer. The real question now is who will replace her, and whether her successor will be a 'hawk' that wants to deliver Brexit in October no matter what. This seems like a disaster in the making for the pound, as a no-deal Brexit is slowly becoming a realistic scenario again.

This week, the biggest risk for sterling are the EU Parliament elections on Thursday. Opinion polls suggest the Conservatives will get crushed, with many of their voters defecting to the new Brexit Party. Such a poor showing could add even more pressure on the Tories to rebrand their image by replacing May with a more 'Leave friendly' leader, like Boris Johnson, consequently keeping the pound under pressure.

Politics lift the aussie, but risks still loom

The Australian currency is recovering ground on Monday, after the nation's federal election produced an upset victory for incumbent PM Scott Morrison, defying opinion polls that had predicted a win for the opposition. Morrison has promised a fiscal boost for the economy, mainly via tax cuts, which is probably what has lifted the aussie today.

Alas, this doesn't change much in the near term. Any tax package is months away at best, and the risks that have pushed the aussie lower lately haven't abated. US-China trade tensions are still heightened, and may even escalate further in the summer as Trump threatens to impose more tariffs. Meanwhile, markets appear convinced that the RBA will ease soon, with a rate cut being fully priced in by July. Hence, the risks surrounding the aussie still seem tilted to the downside, and this relief rally may prove relatively short lived.

'King dollar' continues to reign supreme

The lack of appeal in most major currencies continues to translate into broad dollar strength. The euro is plagued by growth concerns, the pound by Brexit uncertainty, and trade tensions have taken the shine off of commodity currencies like the aussie and kiwi. The yen is the only real contender to the dollar at this point given the risk aversion of recent weeks, and the prospect for that to continue. Of note, Japan's GDP growth for Q1 smashed estimates overnight, but the yen did not react.

What is particularly striking is that the dollar has continued to outperform even in an environment of growing Fed rate-cut bets. A quarter-point rate cut by December is now fully priced in, which seems quite pessimistic considering that the US economy is still in good shape. Therefore, anything that alters this gloomy narrative going forward – for instance a sanguine tone in the upcoming Fed minutes on Wednesday – could benefit the dollar further as some rate cut bets are unwound.

Daily Pivots: (S1) 1.6214; (P) 1.6238; (R1) 1.6270; More...

EUR/AUD's sharp fall and break of 1.6127 suggests temporary topping at 1.1626. Intraday bias is turned neutral for some consolidations first. Downside of retreat should be contained by 38.2% retracement of 1.5683 to 1.6262 at 1.6041 to bring rise resumption. Current development argues that correction from 1.6765 has completed with three waves down to 1.5683. On the upside, break of 1.6262 will target retest of 1.6765 high.

In the bigger picture, as long as 1.5346 support holds, outlook will still remain bullish. Up trend from 1.1602 (2012 low) is expected to resume sooner or later. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal, with bearish divergence condition in weekly MACD, and turn outlook bearish.

Daily Pivots: (S1) 1.1267; (P) 1.1283; (R1) 1.1298; More...

EUR/CHF is staying in consolidation above 1.1264 temporary low and intraday bias remains neutral first. On the downside, below 1.1264 will extend the corrective fall from 1.1476 towards 1.1162 key support. We'd expect strong support above there to bring rebound. On the upside, break of 1.1350 resistance will suggest that the pull back has completed. Intraday bias will be turned back to the upside for 1.1484 again.

In the bigger picture, at this point, we're slightly favoring the case that corrective fall from 1.2004 has completed at 1.1162 after being supported by 61.8% retracement of 1.0629 to 1.2004 at 1.1154. Decisive break of 1.1501 resistance should confirm and target 1.1713 resistance next. On the downside, firm break of 1.1154 is needed to confirm down trend resumption. Otherwise, medium term outlook will be neutral at worst.

Gold prices extended declines into Friday’s close. Economic data from the US saw the preliminary consumer sentiment rising to 102.4. The CB’s leading index gained 0.2% on the month matching estimates, while inflation expectations grew 2.8%, up from 2.5% previously.

XAUUSD Could Consolidate, Trading Flat in the Short Term

The precious metal closed at 1277.67 on Friday. Price was supported once again by the 200-day moving average. Now comes the question of whether price can bounce to the upside. In the near term, a retracement back to the 1285 handle could potentially mark a retest of this level as resistance. A reversal from the 1285 level could indicate a possible move lower in the near term.

Lawmakers in the UK called for Theresa May to resign by June 30th as she prepares to deal with a fourth vote later in the month. But the opposition Labor party has vowed to block the deal as the ruling Tory party prepares for potential candidates vying for the seat at 10 Downing.

Can the GBPUSD Continue the Declines?

The GBPUSD fell to a 4-month low on Friday. The steep declines saw prices testing the lower support at 1.2716. The Stochastics oscillator indicates oversold levels currently. While it is too early to tell, watch for a higher low to form near the current levels. To the upside, the initial target is seen at 1.2895 followed by 1.2975.

The final inflation figures for the eurozone showed that headline consumer prices grew at a pace of 1.7% while core inflation was up 1.3%, beating estimates. The gains in consumer prices came due to higher airfare and transportation costs. The euro was muted as among other things, Italy’s prime minister brushed aside concerns of breaking the fiscal rules.

EURUSD Likely to Fall Further

The common currency could possibly continue to extend the declines as price tests the 1.1140 support. There is scope for price to correct from this support in the near term. The upside could see the euro testing the minor resistance level at 1.1182. A successful break above this level could see the euro extending the correction to test 1.1250 resistance

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The Australian dollar rallied in early Monday's trading, boosted by unexpected election victory of country's center-right coalition.

The pair opened on Monday with gap-higher and advanced above 0.6900 barrier, recovering last week's 1.8% fall.

Recovery from new 4 ½ month low at 0.6864 broke above initial resistance at 0.6910 (5SMA and eyes more significant barriers at 0.6942/48 (Fibo 38.2% of 0.7068/0.6864 / falling 10SMA) break of which would signal stronger recovery.

Rising momentum and daily RSI/stochastic reversing from oversold territory, support scenario.

On the other side, rising odds for rate cut continue to weigh on Aussie and traders focus on Tuesday's speech of RBA governor Lowe for more information.

Market expectations for June rate cut rose to 68%, while July's rate cut is fully priced in.

Sustained break above 10SMA would expose 0.6966 (50% retracement) and risk test of pivotal barrier at 0.6990 (Fibo 61.8% of 0.7068/0.6864 / falling 20SMA).

Failure to break above 10SMA would keep immediate risk shifted lower as overall picture is bearish.

Res: 0.6948, 0.6966, 0.6990, 0.7020
Sup: 0.6910, 0.6890, 0.6864, 0.6845