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AUDUSD is recording its third day of losses with strong momentum, reaching a seven-week low at 0.7026 earlier today. The price plunged beneath the 23.6% Fibonacci retracement level of the downleg from 0.8135 to 0.6746, around 0.7070 and the Ichimoku cloud in the daily timeframe, suggesting a retest of the 0.7000. If the price pauses around the latter level this would confirm the sideways channel with upper boundary 0.7200 and lower boundary 0.7000.

The short-term bias looks negative as the MACD keeps losing ground below its trigger line, while the RSI seems to be making its way down below its 50-neutral mark. Moreover, the price is capped by the 20- and 40-simple moving averages (SMAs), which are ready to create a bearish cross.

The 0.7000 psychological level could be a trigger point for steeper bearish action and if there is a break of this significant line, investors could turn their attention on the 0.6825 support, taken from January 2016, turning the neutral outlook to bearish.

However, if the pair reverses back to the upside, immediate resistance is coming from the 23.6% Fibonacci of 0.7070 ahead of the lower surface of the Ichimoku cloud around 0.7100. If the price continues to rise, resistance could next be faced somewhere near the 0.7200 handle.

Overall, the strong sell-off over the last days did not change the neutral bias. Any drop below 0.7000 could resume long-term bearish structure.

The last time we celebrated a record high on U.S. equities was seven months ago. Back then the celebration did not last long as fears of tighter monetary policy, trade tensions, and risk of a recession dominated the news headlines which led to a deep dive in Wall Street with the S&P 500 declining 20% from peak to trough in the three months leading up to December 2018.

Since then, a lot haschanged. The Federal Reserve took a U-turn, interest rates fell sharply, valuations became more realistic, and trade talks between the U.S. and China are moving in the right direction. These factors encouraged investors to buy the dips and begin the round trip.

The S&P 500 closed at 2,933.68 on Tuesday registering an all-time high close, and sevenpoints away from the index’s intraday record achieved in September 2018. Yesterday’s rally was driven by a better than expected Q1 earnings performance with Coca-Cola, Procter & Gamble, United Technologies, Lockheed Martin and Twitter all beating estimates. With more than 78% of S&P 500 companies thus far surpassing Wall Street expectations, the chances of escaping an earnings recession is becoming more likely.

Many investors, especially those who remained on the sidelines may be asking whether the bull trend will resume, and thus participate in this bull run. Predicting the next move with certainty is a mission impossible. However, if you are a contrarian there are many indicators which lead us to believe that the current bull market may not last for long.

The current bull market was built on the assumption that the Federal Reserve will no longer raise interest rates in 2019 and in fact may even lower rates by the end of this year with investors expecting a 55% chance of a rate cut. If this assumption is proved to be wrong and higher energy prices boost inflationary pressures, we may gradually see the Fed changing its course. Such an outcome will lead to a significant repricing of risk assets.

Stimulus from China is also expected to be reduced after Q1 GDP data hasshown the economy is growing at healthy levels. Less stimulus measures from China will not likely help the global economy bounce back strongly as previously anticipated and therefore reduce appetite forequities.

Shares buybacks in 2018 werean important component of the equities rally. Last year S&P 500 companies spent more than $800 billion on buybacks compared to $519 billion in 2017. The passage of the tax reform package has been a key factor for many companies to repatriate cash and boost buyback activity last year. This component is no longer available and if share buybacks reduce significantly, investors may see it as a negative sign.

I’m not saying that markets may not go higher from current levels, in fact we may see equities posting new record highs if earnings continue to surprise to the upside. However, in my opinion, this is not the most loved bull run.

• Rates: Core bonds hold their ground in spite of surging stocks
  Core bonds remain resilient even if main US stock markets ended the trading day at record closing highs. Earnings (Caterpillar, Boeing, Microsoft, Facebook,…), German IFO business sentiment and crude inventories are today's eyecatchers. We still prefer to err on the side of caution which argues in favour of core bonds.
• Currencies: Dollar maintains 'by default' bid and nears short-term resistance
  The dollar extended its recent rebound yesterday. USD/CHF already cleared key resistance. EUR/USD and the trade-weighted dollar are nearing key support/resistance. We expect any further USD gains to develop very gradually as the Fed is firmly on hold. Even so, a poor German ifo confidence might push EUR/USD for a test of the 1.1177 range bottom.

The Sunrise Headlines

• US equity markets spurred higher yesterday, driving S&P 500 (+0.88%) and Nasdaq (+1.32%) to record closing highs. Asian equities are trading mixed this morning with Japanese indices underperforming.
• UK PM May is considering a risky new attempt to deliver Brexit with a new Parliamentary vote on a bill that includes the original Withdrawal Agreement but with possible amendments. A passing of the bill could avoid EU elections.
• US Trade Rep. Lighthizer and Treasury Secretary Mnuchin will travel to Beijing on April 30 to continue trade talks with China, the White House confirmed. Thereafter, Chinese VP Liu He will travel to Washington on May 8.
• The US Treasury department missed the deadline to turn over President Trump's tax returns over constitutional and privacy concerns with a request by a US House of Representatives committee.
• N-VA remains the largest party in Flanders with 28%, according to a nationwide poll in Belgium. Four other parties (CD&V, Open VLD, SP.A and Groen) compete for the second place. The socialist party PS remains the biggest in Wallonia.
• Australia's Q1 consumer inflation rose 1.3% (YoY), down from 1.8% and below expectations (1.5%). The weaker than expected inflation raises expectations of a possible rate cut by the RBA next month. The Aussie dollar loses ground.
• Today's eco calendar contains the Bank of Canada policy meeting, German Ifo Business confidence (Apr) and the ECB's Economic Bulletin. Germany and the US tap the market while Q1 earnings season continues

Currencies: Dollar Maintains 'By Default' Bid And Nears Short-Term Resistance

Dollar nearing key resistance area

EUR/USD initially drifted sideways in the mid 1.12 area but the dollar gained traction early in US dealings. The move was mainly technical in nature. USD/CHF buying supported broader USD gains. A constructive Philly Fed services index, solid US new home sales and US corporate earnings mostly beating analysts' estimates were USD supportive too. EUR/USD tested the 1.12 area even as the US/German interest rate differential narrowed. EUR/USD closed at 1.1227. USD/JPY came again close to the 112 big figure, but still closed at 111.86.

Asian equities mostly show modest losses and fail to join the record race of WS yesterday evening. Australia Q1 CPI unexpectedly dropped to 1.3% Q/Q, raising speculation on an RBA rate cut. Yields nosedived and so does the Aussie dollar. AUD/USD is trading in the 0.7035 area. EUR/USD remains in the defensive (1.1220 area). USD/JPY shows no clear tend (111.85 area) even as sentiment on risk turn less buoyant.

Today, the German Ifo confidence is expected to improve slightly (headline 99.9). Other recent data evidence suggests an upward surprise might be difficult. There are no important eco data in the US, but the earnings season is in full swing. Also keep an eye at the Bank of Canada policy decision. Ongoing poor EMU data (PMI's) last week pushed EUR/USD back to the low 1.12 area. At the same time, the dollar enjoys some by 'default bid' as US data outperform most other developed economies. In a ST perspective, some further downward EUR/USD erosion might be on the cards. With the Fed firmly on hold, we don't expect a big leap higher of the dollar. That said, the trade weighted dollar and EUR/USD are near relevant short-term resistance/support respectively at 97.70 and 1.12/1.1177. A USD break, if so, probably will develop in a gradual way, but for now, the US currency retains the benefit of the doubt. The return of UK politicians after the Easter recess yesterday didn't bring much clarity on Brexit. UK PM May is said to prepare a vote on an alternative Brexit Bill as soon as possible. At the same time, her authority within her own party is ever more questioned. EUR/GBP temporary dropped to the mid 0.85 area but later returned to the 0.8675 area. Today, the public finance data will probably be ignored.

More technical trading in EUR/GBP might be on the cards. EUR/GBP 0.8700/0.8723 is a tough resistance, especially as the euro also shows a sluggish momentum.

DXY (USD-TW): dollar retains benefit of the doubt and nears key resistance

Daily Pivots: (S1) 144.32; (P) 144.97; (R1) 145.36; More...

No change in GBP/JPY's outlook as it's staying in range of 143.72/148.87. Intraday bias remains neutral and more sideway trading could be seen. For now, further rise remains in favor as long as 143.72 support holds. Decisive break of 149.48 key resistance will carry larger bullish in implications and target 156.58 resistance next. However, on the downside, sustained 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.

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.

Daily Pivots: (S1) 125.23; (P) 125.64; (R1) 126.01; More....

EUR/JPY's fall from 126.79 extends further today and the development suggests completion of rebound from 123.56. Consolidation pattern from 127.50 is extending with another decline. Intraday bias is turned back to the downside for 124.78 support first. Break will target 123.65 and possibly below. On the upside, above 126.06 minor resistance will turn bias back to the upside for 126.79 instead.

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.

Daily Pivots: (S1) 1.5769; (P) 1.5799; (R1) 1.5841; More...

EUR/AUD rebounds strongly to as high as 1.5959 so far today. The strong break of 1.5853 resistance firstly indicate short term bottoming at 1.5683, on bullish convergence condition in 4 hour MACD. Secondly, corrective fall from 1.6765 could have completed with three waves down to 1.5683 too. Intraday bias is back on the upside for 1.6122 resistance first. Break will pave the way back to 1.6765 high. On the downside, however, below 1.5828 minor support will turn bias back to the downside for 1.5683 instead.

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.

Daily Pivots: (S1) 0.8643; (P) 0.8663; (R1) 0.8691; More...

EUR/GBP is still bounded in consolidation from 0.8474 and intraday bias remains neutral. Further rise cannot be ruled out but upside should be limited by 0.8722 resistance to bring down trend resumption. 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.

Daily Pivots: (S1) 1.1422; (P) 1.1450; (R1) 1.1479; More...

EUR/CHF retreats mildly after hitting 1.1476 and intraday bias is turned neutral for some consolidations first. Near term outlook stays bullish as long as 1.1366 minor support holds and further rally is expected. On the upside, decisive break of 38.2% retracement of 1.2004 to 1.1162 at 1.1484 should confirm completion of corrective fall from 1.2004. Further rally should then be seen to 61.8% retracement at 1.1682 and above. Nevertheless, break of 1.1366 would indicate rejection from 1.1484 fibonacci level and turn bias to the downside.

In the bigger picture, focus is back on 1.1444 resistance with current rebound. Decisive break there will indicate completion of the decline from 1.2004, with support from 61.8% retracement of 1.0629 to 1.2004 at 1.1154. In this case, further rise should be seen to 1.1713 resistance next. On the downside, firm break of 61.8% retracement of 1.0629 to 1.2004 at 1.1154 is now needed to confirm down trend resumption. Otherwise, medium term outlook will be neutral at worst.

Daily Pivots: (S1) 1.2905; (P) 1.2962; (R1) 1.2996; More....

Intraday bias in GBP/USD remains on the downside for the moment. Current development suggest that corrective rebound from 1.2391 has completed earlier than expected at 1.3381. Further decline should be seen to 1.2773 support. Firm break there will confirm this bearish case and target 1.2391 low again. On the upside, though, break of 1.3019 minor resistance will dampen this bearish case and turn bias back to the upside for rebound.

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).

Daily Pivots: (S1) 1.1192; (P) 1.1227; (R1) 1.1261; More.....

Intraday bias in EUR/USD remains on the downside for 1.1176 key support. Decisive break there will resume whole down trend form 1.2555. Next near term target will be 100% projection of 1.1448 to 1.1183 from 1.1324 at 1.1059. On the upside, above 1.1262 minor resistance will delay the bearish case and bring rebound first.

In the bigger picture, EUR/USD has been losing downside momentum around 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. But for now, there is no clear sign of medium term reversal yet. Down trend from 1.2555 is expected to resume sooner or later as long as 1.1569 structural resistance holds. Decisive break of 1.1186. could pave the way back to 1.0339 low.