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EURUSD has reversed back up again after finding support at the 23-month low of 1.1110, achieved on April 26. The price is hovering within the 20- and 40-simple moving averages (SMAs) in the daily timeframe, remaining within the four-month descending channel. Momentum indicators are pointing to positive bias in the short term with the MACD just above the trigger line in the negative territory and the stochastic oscillator approaching the overbought zone.

Further gains should see the May 1 high around 1.1260 acting as a major resistance before flirting with the 23.6% Fibonacci retracement level of the dowleg from 1.1815 to 1.1110 near 1.1275. A break above this level could open the way towards the 1.1325 resistance and the downtrend line, while a successful jump above these lines could switch the bearish outlook to neutral.

In the event of a downside reversal, the 20-SMA currently at 1.1207 is coming into focus ahead of the 23-month trough of 1.1110. A drop below this hurdle would reinforce the bearish structure in the medium-term, hitting the 1.0900 psychological level, identified by the peak on March 2017.

In brief, EURUSD traders should wait for a jump above the 40-day average to continue the short-term positive orders. Only a clear violation of the downward sloping channel around 1.1325 could open the door for a switch to a longer-term bullish bias.

The US dollar has opened the trading week under pressure against the Japanese yen as Asian equity markets suffer early week losses. The USDJPY pair is likely to come under additional downside selling pressure if the 109.40 level is broken with conviction. If the USDJPY pair advances above the 110.00 level, buyers could force the price back towards the 110.30 technical level.

The USDJPY pair is bearish while trading below the 110.00, key intraday support is found at the 109.40 and 108.80 levels.

If the USDJPY pair trades above the 110.00 level, key intraday resistance is found at the 110.30 and 110.60 levels.

The euro has opened the new trading week with a bullish bias against the US dollar after the pair closed the former trading week well above the 1.1200 level. If EURUSD buyers can move price above the 1.1264 level the 1.1290 level is then key breakout technical resistance. If sellers can move price under the 1.1216 level the EURUSD pair may start to come under pressure.

The EURUSD pair is only bullish while trading above the 1.1216 level, key technical resistance is found at the 1.1264 and 1.1290 levels.

If the EURUSD pair moves below the 1.1216 level, key technical support remains at the 1.1190 and 1.1164 levels.

Bitcoin has broken through the $7,000 resistance level, with the number one cryptocurrency by market capitalization gaining nearly twenty percent since it moved above the $6,000 level. The $7,500 level offers strong technical resistance, although the $8,000 level is seen as formidable weekly resistance. The strong move higher has now created a large inverted head and shoulders on the daily time frame.

The BTCUSD pair is bullish while trading above the $6,500 level, key intraday resistance is found at the $7,500 and $8,000 levels.

If the BTCUSD pair trades under the $6,500 level, sellers may test towards the $6,300 and $6,000 support levels.

Asian markets were generally lower in early trading as investors continued to worry about the deteriorating trade ties between the United States and China. Last week, the US implemented additional tariffs on Chinese goods worth more than $200 billion. Today, the country is set to announce a further list of goods worth $300 billion that it will add tariffs on. As a result, China’s A50 index and Japan’s Nikkei declined by 1.30% and 0.40% respectively. The US futures too pointed to a lower open, with the Dow and S&P declining by 245 and 40 points respectively.

The Canadian dollar rose sharply against the USD on Friday after Canada released strong jobs numbers. The USD/CAD pair then rose slightly a few minutes before the markets closed for the weekend. Today, the pair was relatively unmoved. Friday’s data showed that the unemployment rate dropped to 5.7% from the previous 5.8%. The participation rate increased to 65.9% while the employment change rose to 106.5K.

The price of crude oil was relatively unmoved after a calm weekend for the oil market. On Friday, Baker Hughes reported that oil rigs in the US declined to 805 from the previous 807. The total oil rigs declined from 990 to 988. In addition to the weekly inventory data, investors will receive the EIA monthly report this week. The report will provide details about both supply and demand around the world.

XTI/USD

The XTI/USD pair was relatively unmoved in the Asian session. It is now trading at 61.68, which is along the narrow channel that has been forming for the past few days. On the hourly chart, this price is along the 23.6% Fibonacci Retracement level. The price is along the 25-day and 50-day moving averages. At this point, the pair could break-out in either direction.

EUR/USD

The EUR/USD pair was relatively unchanged in the Asian session. The pair is trading at the 1.1230 level. On the hourly chart, the pair is along the 25-day moving averages and slightly higher than the 50-day moving averages. The accumulation/distribution indicator has eased a bit while the volumes too have eased. With no major economic data expected today, the pair could remain along these levels.

USD/CAD

The USD/CAD pair declined sharply on Friday after impressive jobs numbers from Canada. The pair then pared those losses. Today, the pair was relatively unmoved as traders continued to reflect on the jobs numbers. It is now trading at 1.3440, which is higher than Friday’s low of 1.3380. On the hourly chart below, this price is slightly above the middle line of the Bollinger Bands while the RSI has been relatively unmoved. The pair could continue moving higher, to test the upper line of the Bollinger Bands at 1.3470.

Daily Pivots: (S1) 0.8621; (P) 0.8633; (R1) 0.8651; More...

Outlook in EUR/GBP remains unchanged so far. Price action form 0.8472 is seen as a consolidation pattern. In case of further rise, upside should be limited below 0.8681 resistance. On the downside, decisive break of 0.8472 will confirm resumption of down trend from 0.9101 and target 61.8% projection of 0.9101 to 0.8472 from 0.8681 at 0.8292 next.

In the bigger picture, medium term decline from 0.9306 (2017 high) is seen as a corrective move. Current development suggests that it's extending through 0.8312 support towards 50% retracement of 0.6935 (2015 low) to 0.9306 at 0.8121. We'll look for strong support around there to contain downside to complete the correction. But for now, break of 0.8681 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of recovery.

Daily Pivots: (S1) 1.6009; (P) 1.6046; (R1) 1.6090; More...

Intraday bias in EUR/AUD remains neutral with focus on 1.6122 key resistance. Decisive break there will confirm the bullish view that correction from 1.6765 has completed with three waves down to 1.5683. In this case, further rise should be seen back to retest 1.6765 high. On the downside, break of 1.5905 support will indicate rejection by 1.6122 and turn bias to the downside for 1.5806 support and below.

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) 1.1345; (P) 1.1378; (R1) 1.1396; More...

EUR/CHF's fall from 1.1476 extends lower today and reaches as low as 1.1339 so far. Break of 55 day EMA now argues that rebound from 1.1162 has completed at 1.1476 already, just ahead of 38.2% retracement of 1.2004 to 1.1162 at 1.1484. Intraday bias is back on the downside for retesting 1.1162 low. On the upside, sustained break of 38.2% retracement of 1.2004 to 1.1162 at 1.1484 will confirm completion of corrective fall from 1.2004 and turn outlook bullish.

In the bigger picture, at this point, we're slightly favoring the case that corrective fall from 1.2004 has completed 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.

• Rates: US-China bickering supports core bonds
  Friday's uptick in risk sentiment weighed on core bonds, but losses got erased over the weekend. US President Trump gave China a one-month deadline to seal a deal or it faces tariffs on all its exports to the US. With today's empty eco calendar, the trade dispute continues to dominate trading, ensuring us to hold a positive bias towards core bonds.
• Currencies: How far will EUR/USD rebound go if trade tensions persist?
  Last week, the yen and the euro outperformed the dollar on the US-China trade dispute. On Friday, the dollar also suffered slightly from a soft US CPI. The US-China trade dispute probably won't be solved anytime soon. The dollar might lose further interest rate support but uncertainty will also affect the EMU. EUR/USD is nearing first intermediate resistance

The Sunrise Headlines

• US equity markets managed to overturn initial weakness, to close the week on a positive note. Main indices gained up to 0.44%. The US-Sino trade conflict spoils sentiment again at the start of the week with Asian bourses losing around 1%.
• The US is expected to release details of additional Chinese goods ($300bn) subject to 25% import levies. Trump and Xi Jinping will meet at the end of June G20 Summit, but China wants to continue talks in Beijing in the meantime.
• UK PM May's office said they want to reopen Brexit talks with the EU. More specifically, they want to review the political declaration, the non-binding part that focuses on future ties, to get Labour on board for a cross-party deal.
• Greek PM's Tsipras' minority government survived a confidence vote. The vote was triggered by the opposition to censure an MP. The ruling Syriza party is lagging in polls, but last week's fiscal stimulus promises narrowed the gap.
• The final tallies of last week's South African elections showed that Ramaphosa's ruling ANC-party extended its political power by taking 57.5% of the votes and recovering from a record low 54.5% at municipal elections in 2016.
• The IMF warned that external risks to Ireland's strong growth rate are increasing. They point to the escalation in global protectionism, changes in international corporate taxation and of course Brexit.
• Today's economic calendar is extremely thin with only Norwegian Q1 GDP and Bank of France sentiment indicator. Fed governors Rosengren, Clarida and Kaplan are scheduled to speak.

Currencies: How Far Will EUR/USD Rebound Go If Trade Tensions Persist?

Is EUR/USD rally on trade tensions sustainable?

EUR/USD kept a cautious upward bias on Friday. After a slow start, the pair was propelled to the mid 1.12 area as US CPI data (slightly) missed market expectations. US-German interest rate differentials initially narrowed further, but this move was partially reversed at the end of the session even as uncertainty on the next steps in the US-China trade conflict persisted. EUR/USD closed the session at 1.1233 (from 1.1215). USD/JPY traded quiet resilient and finished at 109.95.

This morning, sentiment in Asia remains risk-off. China is still expected to take retaliatory action against last week's US tariffs' hike. Comments from US (and Chinese) officials this weekend suggest that the dispute probably will drag on for a while. Asian equites and US equity futures are losing further ground. US yields decline. The picture on FX markets is mixed. The yen gains a few ticks (USD/JPY 109.75 area). The yuan (USD/CNY 6.85) and the likes of the won (USD/KRW 1184) are enduring substantial losses. EUR/USD is trading little changed in the 1.1230 area.

There are no important EMU or US data today. So global FX trading will be sentiment driven as investors are awaiting the next steps in the US-China trade war. At least for now there is no indication that a de-escalation will occur anytime soon.

Last week, the trade dispute weighed more on the dollar than on the euro (and the yen). Markets saw a growing chance for Fed rate cuts if the trade tensions were to undermine US growth further down the road. Question is how long this trade might persist. EMU growth is also at risk and European markets will also be affected by the global risk-off. In this context, it isn't that evident to see sustained euro outperformance. We expect the EUR/USD 1.11/1.14 range to hold. Intermediate resistance is coming in at 1.1265 and 1.1324. Further EUR/USD gains might become less easy from here on.

On Friday, UK Q1 growth printed strong at 0.5% Q/Q. The details were constructive, too. However, the strong growth didn't help sterling to any sustained gains as the Brexit stalemate persists. Brexit negotiations are expected to continue today. However, the water between labour and the conservative government remains deep. Division within both parties make an agreement even less evident. For now, we don't see a trigger for a sustained sterling comeback. At the same time, upcoming EUR/GBP resistance (0.8683/0.8723) combined with a slowdown of the EUR/USD rebound might make EUR/GBP gains less evident.

EUR/USD: nearing first intermediate resistance

Daily Pivots: (S1) 1.1214; (P) 1.1234; (R1) 1.1254; More.....

Intraday bias in EUR/USD remains neutral for consolidation above 1.1111. Stronger rise and break of 1.1264 cannot be ruled out. But upside should be limited well below 1.1324 resistance to bring fall resumption. On the downside, break of 1.1111 will extend down trend to 100% projection of 1.1448 to 1.1183 from 1.1324 at 1.1059. Break will target 161.8% projection at 1.0895.

In the bigger picture, down trend from 1.2555 (2018 high) has just resumed. 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186 was also taken out. Current fall should now target 78.6% retracement at 1.0813. Sustained break there will pave the way to retest 1.0339. On the downside, break of 1.1448 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.