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GBP/USD dropped to as low as 1.2865 last week but formed a temporary low there and recovered. Initial bias is neutral this week for some consolidations first. But upside should be limited by 1.3019 minor resistance to bring another decline. Current development suggests that rebound from 1.2391 has completed at 1.3381. On the downside, below 1.2865 will target 1.2773 support to confirm this bearish case. On the upside, however, break of 1.3019 resistance will dampen this bearish case and turn bias back to the upside for recovery first.

In the bigger picture, medium term decline from 1.4376 (2018 high) halted after hitting 1.2391. Rise from 1.2391 could have completed after just missing 50% retracement of 1.4376 to 1.2391 at 1.338. Such rebound could be a correction to fall from 1.4376 only. Break of 1.2773 support will affirm this bearish case and target 1.2391. Break of 1.2391 will resume the fall from 1.4376 to 1.1946 (2016 low).

In the longer term picture, consolidative pattern from 1.1946 (2016 low) is still in progress. For now, we'd expect any downside attempt to be contained by 1.1946 low first. But decisive break of 38.2% retracement of 2.1161 (2007 high) to 1.1946 at 1.5466 is needed to indicate long term reversal. Otherwise, an eventual downside breakout will remain in favor.

USD/CHF surged to as high as 1.0237 last week but formed a temporary top there and retreated. Initial bias remains neutral this week for some consolidations first. Downside should be contained by 1.0130 minor support to bring rise resumption. Prior break of 1.0128 resistance confirmed resumption of up trend from 0.9186. On the upside, above 1.0237 will target 100% projection of 0.9716 to 1.0124 from 0.9879 at 1.0287, and then 1.0342 key resistance. However, break of 1.0130 will indicate short term topping and bring deeper retreat first.

In the bigger picture, medium term up trend from 0.9186 is extending. Current rise should target 1.0342 resistance next. For now, we'd be cautious on strong resistance from there to limit upside, until we see medium term upside acceleration. On the downside, break of 0.9879 support is needed to indicate reversal. Otherwise, outlook will stay bullish in case of deep pull back.

In the long term picture, price actions from 0.7065 (2011 low) are not clearly impulsive yet. Thus, we'll treat it as developing into a corrective pattern, at least, until a firm break of 1.0342 resistance.

AUD/USD dropped sharply to as low as 0.6988 last week but formed a temporary low there and recovered. Initial bias remains neutral this week for some consolidations first. Upside of recovery should be limited by 0.7081 minor resistance to bring another decline. prior break of 0.7003 suggests resumption of whole fall from 0.7295. On the downside, break of 0.6988 will extend the fall from 0.7295 to 100% projection of 0.7295 to 0.7003 from 0.7205 at 0.6913. Decisive break there will indicate further downside acceleration.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

In the longer term picture, prior rejection by 55 month EMA maintained long term bearishness in AUD/USD. That is, down trend from 1.1079 (2011 high) is still in progress. Sustained break of 0.6826 will target 0.6008 low and then 61.8% projection of 1.1079 to 0.6826 from 0.8135 at 0.5507.

USD/CAD surged to as high as 1.3521 last week but formed a temporary top there and retreated. Initial bias remains neutral this week for some consolidations first. Downside of retreat should be contained by 1.3399 minor support to bring another rally. Prior break of 1.3467 resistance indicates resumption of rise from 1.3068. On the upside, break of 1.3521 will extend the rise to retest 1.3664 high.

In the bigger picture, USD/CAD is staying well inside medium term rising channel (support at 1.3235). Thus, the up trend from 1.2061 (2017 low) should be in progress. On the upside, decisive break of 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 will pave the way to 78.6% retracement at 1.4127 next. This will remain the favored case as long as 1.3068 support holds.

In the longer term picture, corrective fall from 1.4689 (2015 high) should have completed with three waves down to 1.2061, just ahead of 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. The development keeps long term up trend from 0.9406 and that from 0.9056 (2007 low) intact. For now, there is still prospect of extending the long term up trend through 1.4689.

GBP/JPY dropped to as low as 143.76 last week but recovered ahead of 143.72 key support. Initial bias stays neutral this week first. On the downside, decisive break of 143.72 will indicate near term reversal, after rejection by 149.48 key resistance. In that case, intraday bias will be turned to the downside for 141.00 support first. Meanwhile, rebound from current level will retain bullishness. Decisive break of 149.48 key resistance will carry larger bullish in implications and target 156.58 resistance next.

In the bigger picture, focus is staying on 149.98 key resistance. Decisive break there should confirm that medium term fall from 156.59 (2018 high) has completed at 131.51 already. Rise from 131.51 is then seen as the third leg of the corrective pattern from 122.36 (2016 low). GBP/JPY should then target 156.59 and above. However, rejection by 149.98 will retain medium term bearishness and could extend the fall from 156.59 through 131.51 to 122.36.

In the longer term picture, the rise from 122.36 (2016 low) to 156.59 (2018 high) doesn't display a clear impulsive structure. Thus, we're treating price actions from 122.36 as a corrective pattern. In case of an extension, strong resistance is likely to be seen at 50% retracement of 195.86 (2015 high) to 122.36 at 159.11 to limit upside. On the downside, break of 131.51 support will bring 122.26 low back into focus.

EUR/JPY dropped sharply to 124.09 last week but formed a temporary low there and recovered. Initial bias is neutral this week for some consolidations first. Current development suggests corrective pattern from 127.50 is extending with fall from 126.79 as the third leg. Upside of recovery from 124.09 should be limited by 125.28 resistance to bring another fall. On the downside, below 124.09 will target 123.65 support. Nevertheless, break of 125.28 will turn bias back to the upside.

In the bigger picture, there is no confirmation of completion of the down trend from 137.49 (2018 high) yet. In case of an extension, break of 118.62 will target 109.03/114.84 long term support zone. However, break of 127.50 will solidify the case of medium term bullish reversal. Further decisive break medium term channel resistance will affirm reversal and target 133.12 key resistance and above.

In the long term picture, EUR/JPY is staying in long term sideway pattern, established since 2000. Fall from 137.49 is seen as a falling leg inside the pattern. Break of 118.62 will extend this falling leg through 109.03 low. On the upside, break of 133.12 resistance bring retest of 149.76 (2014 high).

EUR/GBP's consolidation from 0.8474 is still in progress and outlook remains unchanged. Initial bias stays neutral this week for more sideway trading. In case of another rise, upside should be limited by 0.8722 resistance. On the downside, firm break of 0.8474 will resume larger down trend for 0.8416 long term projection next. On the upside, though, sustained break of 0.8722 will suggest near term reversal and bring stronger rise back to 0.8840 resistance and above.

In the bigger picture, EUR/GBP is seen as staying in long term range pattern started at 0.9304 (2016 high). Current fall from 0.9305 (2017 high) is a falling leg inside the pattern. Such decline could extend to 100% projection of 0.9305 to 0.8620 from 0.9101 at 0.8416 and possibly below. But for now, we'd expect strong support around 0.8312 support to contain downside and bring rebound.

In the long term picture, we're holding on to the view that rise from 0.6935 (2015 low) is resuming the up trend from 0.5680 (2000 low). As long as 50% retracement of 0.6935 to 0.9304 at 0.8120 holds, further rise should be seen through 0.9305 to 0.9799 and above down the road.

EUR/AUD's strong rebound was limited by 1.5959 last week but was limited there. Near term outlook is mixed up by the deep retreat from there. Initial bias is mildly on the downside this week for retesting 1.5683 low. At this point we're still slightly favoring the bullish case that correction from 1.6765 has completed with three waves down to 1.5683. Thus, downside of current retreat should be contained above 1.5683 to bring rise resumption. On the upside, above 1.5959 will target 1.6122 resistance to confirm our bullish view.

In the bigger picture, as long as 1.5346 support holds, outlook will still remain bullish. Uptrend 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.

In the longer term picture, the rise from 1.1602 long term bottom (2012 low) is still in progress for 61.8% retracement of 2.1127 to 1.1602 at 1.7488. Firm break there will pave the way to 100% projection of 1.1602 to 1.6587 from 1.3624 at 1.8069. This will remain the favored case as long as 1.5346 remains intact.

EUR/CHF surged to as high as 1.1476 last week and breached 1.1444 resistance. However, it was rejected below 38.2% retracement of 1.2004 to 1.1162 at 1.1484. With a short term top formed, intraday bias is now mildly on the downside this week for 55 day EMA (now at 1.1324) first. Sustained break will pave the way back to 1.1162 low. On the upside, break of 1.1484 fibonacci resistance will confirm completion of corrective fall from 1.2004. Further rally should then be seen to 61.8% retracement at 1.1682 and above.

In the bigger picture, at this point, we're slight 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. And, firm break of 1.1154 is needed to confirm down trend resumption. Otherwise, medium term outlook will be neutral at worst.

In the long term picture, current development suggests that medium term fall from 1.2004 is merely a corrective move. That is, up trend from 0.9771 is not completed yet. Nevertheless, there is little prospect of up trend resumption yet. More range trading should be seen in medium term.

Yen and Dollar were the biggest winners last week on worsening inflation outlook, dovish central banks and falling treasury yields. Australian Dollar was the weakest one as CPI just rose 1.3% yoy in Q1 versus expectation of 1.5% yoy. The added heavy weight to the case of RBA rate cut later in the year. Euro was the second weakest as German Ifo business climate dropped again to 99.2 in April. Comments from ECB officials also suggested that interest rate could be held at current level way beyond end of 2019. BoC also dropped tightening bias and expected to keep interest rate below neutral at 1.75 for longer. But Canadian Dollar just ended mixed.

Economic data from US were generally solid, including March durable goods orders. Q1 GDP expanded strongly by 3.2% annualized, versus expectation of 2.2%. Some economists were quick to point out that growth was largely driven by temporary factors like inventory build. The details were as strong as the headline suggested. But they were not bad a set of numbers. Except that, core PCE dropped to 1.3% only, way below Fed's target of 2.0%.

Overall, while last week's data from US indicated the economy remain in good place. Low inflation could just keep Fed's interest rate policies unchanged for longer, but probably not as long as ECB. It's premature to call for a rate cut despite political pressures from Trump's administration. Also, federal funds rates are now considered in neutral rate, while monetary policy of other major central banks remain accommodative. There are even prospects for rate cuts like RBNZ and RBA. The situation will remain Dollar supportive ahead. Though, Yen has the prospect to outperform further on falling yields.

The string of upcoming economic data will be important to solidify the current outlook. US will release March PCE inflation, April ISM indices and non-farm payrolls. There is also prospect of more Dollar strength should Fed chair Jerome Powell dismisses the chance of rate cut in the post FOMC press conference. Eurozone GDP will confirm how deep the slowdown was in Q1 while CPI will also be featured. China April PMIs will be watched to confirm if positive signs in March were just seasonally affected false dawn. New Zealand employment and Canada CPI would be market moving. UK will release PMIs and and BoE rate decision but they could be shrugged by the markets.

Dollar index resumes medium term up trend, 98.58 a test on upside momentum

Dollar ended as the second strongest last week, mainly thanks to dovish central bank expectations elsewhere. Technically, EUR/USD broke 1.1176 key support to resume the down tend from 2018 high at 1.2555. Dollar index was pushed through 97.71 key resistance finally. And up trend from 2018 low at 88.25 has resumed. Further rise is expected in near term to 100% projection of 95.74 to 97.51 from 96.81 at 98.58. Decisive break there will be a strong sign of upside acceleration and would solidify the momentum of the medium term up trend. Next target will be 161.8% projection at 99.67 first.

From medium term point of view, 61.8% retracement of 103.82 to 88.25 at 97.87 was taken out. Next target will be 78.6% retracement at 100.48. Firm break of above mentioned 98.58 projection level would solidify the momentum through this 100.48 retracement level. And in that case, we'd likely see a retest on 103.82 high later in the year.

US 10-year yield completed near term rebound, resuming down trend?

Yen was even stronger as the best performer last week. That's mainly due to falling global treasury yields. German 10-year yield turned negative again on gloomy economic outlook. US yield was, at the same time, weighed down by weak inflation outlook. 10-year yield dropped sharply to close at 2.505, just barely held on to 2.5 handle. But technically, recovery from 2.356 is likely completed after rejection by 55 day EMA. 2.463 support will be the immediate focus. Break should at least break retest on 2.356 low, with prospect of resuming the decline from 3.248.

In the medium term picture, TNX was also rejected by long term channel support turned resistance, and held well below 55 week EMA. Break of above mentioned 2.463 near term support will likely send TNX to 50% retracement of 1.336 to 3.248 at 2.292. We'll then see if bullish convergence condition in daily MACD could contain downside there.

Stocks at records but reversal could be imminent

US stocks were very strong last week with S&P 500 and NASDAQ making record highs. Underlying momentum in the US is still seen as solid, despite moderation. Low inflation would at least keep Fed's hand tight on more rate hikes. It should be noted again that Fed monetary policy normalization has largely completed. Thus, it's in a wait-and-see mode unless incoming data point to persistent trend in inflation or employment that could trigger a policy action. Stocks were strong because of these factors naturally.

However, we continue to have heavy doubt on the claim that US stocks markets are resuming the long term up trend. Strong resistance is expected around 2940.91 high to limit upside to bring near term reversal. We'll hold on to this until we see sustained break of 2940.91, or a pickup in momentum as seen in daily MACD. Meanwhile, break of 2891.90 support will be the first sign of reversal and should bring deeper fall to 55 day EMA (now at 2829.77) at least.

Chinese stock market a big risks to global sentiments

Upcoming development in Chinese stock market will be the biggest risks to global risk sentiment. With last week's steep fall, China Shanghai SSE should have formed a short term bottom top at 3288.45. That's slightly ahead of 78.6% retracement of 3587.03 to 2440.90 at 3341.75. There are various interpretation on the nature of the rise from 2440.90 long term bottom. The most bullish case is that it's starting a new up trend. But even so, the first wave is likely completed already. Corrective from 3288.45, as the second wave, is anticipated to be deep. That is, it could extend to 61.8% retracement of 2440.90 to 3288.45 at 2764.66 before completion. We'll see how it reacts to 38.2% retracememt at 2964.68 first.

EUR/USD Weekly Outlook

EUR/USD dropped sharply to as low as 1.1111 last week before forming a temporary bottom and recovered. Initial bias is neutral this week for some consolidations first. Recovery 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.

In the long term picture, the rejection from 38.2% retracement of 1.6039 to 1.0339 at 1.2516 argues that long term down trend from 1.6039 (2008 high) might not be over yet. EUR/USD is also held below decade long trend line resistance, 55 month and 55 week EMA. Break of 1.0339 will resume the down trend to 100% projection of 1.3993 to 1.0339 from 1.2555 at 0.9501