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• Dollar steady as markets await economic releases for more clues on outlook amid signs of green shoots
• China GDP will be the week's highlight and key in building on the current risk-on tone
• Market mood to also be determined by US earnings season as banks' results underwhelm
• Aussie worst performing currency after RBA sets condition for rate cut

Dollar off lows ahead of important data

The positive risk sentiment from Friday continued to ease slightly on Tuesday as investors preferred to err on the side of caution ahead of potentially market-moving economic releases starting today. UK employment and US industrial production numbers will be the main highlights. But the ZEW economic sentiment out of Germany will be closely watched too for signs that conditions in the Eurozone's powerhouse economy are improving.

The euro has recovered to around the $1.13 level as some of the pessimism surrounding the Eurozone economy has receded and could extend its gains if the incoming data this week point to a possible rebound. But the same might not be true for sterling as the cost of the prolonged period of Brexit uncertainty may have already done more damage to the British economy than what many traders have priced in. So even in the absence of Brexit headlines, the pound may lose ground if new data diminish the odds of a Bank of England rate hike.

As for the US dollar, solid economic indicators may provide support at best should the improving risk appetite continue to dent demand for safe haven assets. The greenback was off recent two-week lows against basket of currencies on Tuesday, while versus the yen, it was trading slightly below the 112 level.

All eyes on China GDP as markets unconcerned about US-Japan trade talks

China will publish first quarter GDP growth figures on Wednesday, along with monthly industrial output and retail sales numbers. Investors are hoping to find more evidence of a turnaround in the Chinese economy from the data, which will likely set the market tone in the near term.

Sentiment was lifted on Friday from encouraging trade and credit growth data, with positive trade headlines further boosting risk appetite. However, even as trade talks between the US and China appear to be nearing their conclusion, markets may be underestimating the risk of more trade tensions, this time with Japan and the European Union. Japan's economy minister held preparatory talks with the US Trade Representative Robert Lighthizer on Monday, saying the discussions were “frank and good”.

While it may be too early to speculate whether the US would end up imposing tariffs on Japanese and European products, markets are, for now at least, not too concerned about such prospects.

Mixed US earnings cap S&P 500 below all-time high

Instead, much of the focus this week is on the US earnings season. After getting off to a positive start on Friday, there was some disappointment yesterday from banks earnings. Goldman Sachs missed its earnings estimates and saw its stock falling by almost 4%.

As a result, the S&P 500 was unable to break above its all-time high and closed slightly lower at 2905.58 (-0.1%). But that didn't stop Asian bourses from posting strong gains on Tuesday and European indices were also headed for a positive day.

Aussie under pressure after RBA minutes

The risk-on mood wasn't of much help for the Australian dollar, which is underperforming its peers today. The aussie tumbled by about 0.5% after the minutes of the RBA's April policy meeting revealed significant alterations to policymakers' language and their discussions. The RBA signalled that if “inflation did not move any higher and unemployment trended up” than a rate cut would be “appropriate”.

The aussie last stood at $0.7146, while the kiwi was also trading lower at $0.6754 following some dovish remarks by the Reserve Bank of New Zealand's governor, Adrian Orr, earlier today. The kiwi will likely remain in focus as the latest bi-weekly dairy auction is due later today and first quarter inflation numbers out of New Zealand will be published at 22:45 GMT.

Meanwhile, in commodities, oil prices were steadier following Monday's sharp losses on reports that Russia could soon begin raising its oil production. WTI was marginally higher at $63.42 a barrel.

UK unemployment rate was unchanged at 3.9% in February, matched expectations. Average weekly earnings including bonus rose 3.4% 3moy, matched expectation. Average weekly earnings ex-bonus rose 3.4% 3moy, also matched expectations. Claimant count rose 28.3k in March, above expectation of 20.0k.

Full release here.

GBP/USD is steady after the release, extending recent sideway consolidation.

European Council President Donald Tusk "on both sides of the Channel, everyone, including myself, is exhausted with Brexit, which is completely understandable." However, he emphasized it's not an excuse to say "let's get it over with, just because we're tired."

He explicitly responded to a leader of a EU state who had warned "dreamers" not to think "Brexit could be reversed". Tusk said: "At this rather difficult moment in our history, we need dreamers and dreams. We cannot give in to fatalism. At least I will not stop dreaming about a better and united Europe."

European Commission Jean-Claude Juncker said it was not his working assumption that Brexit could be reversed or extended beyond a new Oct. 31 deadline.

The EUR/USD is using the 21 ema zone as support. If price manages to stay above the support trend line (blue), then a bullish trend continuation is the mostly scenario. In that case, the Fibonacci targets could be in vision as the main levels to aim for.

The EUR/USD seems to have completed an ABC correction within wave 4 (blue). As long as price respects the Fibonacci retracement levels of wave 4 vs 3, then a bullish continuation is likely within the wave 3 (purple) momentum.

Pivot (invalidation): 63.60

Our preference Short positions below 63.60 with targets at 63.05 & 62.75 in extension.

Alternative scenario Above 63.60 look for further upside with 64.00 & 64.30 as targets.

Comment The RSI is bearish and calls for further decline

Pivot (invalidation): 15.0300

Our preference Short positions below 15.0300 with targets at 14.8300 & 14.7800 in extension.

Alternative scenario Above 15.0300 look for further upside with 15.1000 & 15.1600 as targets.

Comment As Long as 15.0300 is resistance, expect a return to 14.8300.

Pivot (invalidation): 1290.00

Our preference Short positions below 1290.00 with targets at 1282.50 & 1279.00 in extension.

Alternative scenario Above 1290.00 look for further upside with 1291.75 & 1295.00 as targets.

Comment The RSI advocates for further downside.

Pivot (invalidation): 2910.50

Our preference Short positions below 2910.50 with targets at 2896.00 & 2888.25 in extension.

Alternative scenario Above 2910.50 look for further upside with 2920.00 & 2931.00 as targets.

Comment The RSI is mixed to bearish.

Pivot (invalidation): 11955.00

Our preference Long positions above 11955.00 with targets at 12029.00 & 12112.00 in extension.

Alternative scenario Below 11955.00 look for further downside with 11890.00 & 11845.00 as targets.

Comment The RSI is around its neutrality area at 50%

Pivot (invalidation): 5.7830

Our preference Long positions above 5.7830 with targets at 5.8230 & 5.8460 in extension.

Alternative scenario Below 5.7830 look for further downside with 5.7500 & 5.7290 as targets.

Comment The RSI lacks downward momentum.