Sample Category Title

Pivot (invalidation): 1.3070

Our preference Short positions below 1.3070 with targets at 1.3030 & 1.3005 in extension.

Alternative scenario Above 1.3070 look for further upside with 1.3090 & 1.3115 as targets.

Comment The upward potential is likely to be limited by the resistance at 1.3070

Pivot (invalidation): 1.1270

Our preference Short positions below 1.1270 with targets at 1.1245 & 1.1235 in extension.

Alternative scenario Above 1.1270 look for further upside with 1.1285 & 1.1300 as targets.

Comment The RSI is bearish and calls for further decline.

Asian equities are following US stocks lower, after the IMF downgraded its global growth forecastby 0.2 percentage points to 3.3 percent for 2019; the slowest rate since the global financial crisis. This was the International Monetary Fund’s third downward revision in six months.

The slowdown is expected to be felt by 70 percent of the global economy, including the US, EU and Japan, as well as major emerging economies, although China is a notable exception to the broader trend. With overall risks tilted to the downside, the gloomy outlook has sparked immediate responses in safe haven assets, with Gold finding comfort above the $1,300 mark.

A busy day ahead for the Dollar

The US Dollar may react to some near-term catalysts in the form of the pending March US inflation print, the minutes from last month’s surprisingly dovish Fed meeting, and Fed chair Jerome Powell’s speeches over the next three days.

Should any of these events support expectations of a Fed rate cut, with the Fed Funds Futures already expecting a 55 percent chance of a cut by December, that could see the Dollar Index (DXY) sink back towards 96.80. However, any drop would likely be mitigated by the worsening global outlook, which is offering support for the Greenback.

Euro awaits ECB decision…..

EURUSD bounced off the 1.12 support level in the lead up to the European Central Bank’s latest monetary policy decision due Wednesday.

Mario Draghi and his fellow policymakers are expected to sit on their hands this month, with little room to maneuver amid significant headwinds. While political tensions in France and Brexit uncertainties are beyond the central bank’s control, these factors have been highlighted by the IMF as putting downward pressure on growth, leaving the ECB to bide for time and watch how these risks manifest into the real economy.

Taking a look at the technical picture, the EURUSD remains in a bearish trend on the weekly charts. There have been consistently lower lows and lower highs while the Moving Average Convergence Divergence (MACD) trades to the downside. A solid breakdown below 1.120 has the potential to encourage a move lower towards 1.113 and 1.100, respectively. If 1.120 proves to be a reliable support, the technical bounce is seen taking prices back towards 1.135.

Pound complacent even as Brexit summit looms

Pound traders have narrowed the trading range for GBPUSD to between 1.30 and 1.31, even as markets remain on tenterhooks, awaiting the next development surrounding Brexit. The EU is set to hold an emergency Brexit summit on Wednesday, amid expectations that the UK will be told to delay its exit by up to a year.

It remains to be seen whether such a demand is palatable for UK lawmakers and Prime Minister Theresa May, whose request for a short extension to the 30th of Junewas rejected.While a longer extension may avoid stringing markets along with a series of cliff-edge dates, it still doesn’t remove the overall uncertainty as to how and when the UK will exit from the European Union. This implies that the dark clouds of Brexit won’t be clearing up anytime soon, which should continue weighing on the Pound throughout the rest of 2019.

Focusing on the technical picture, the GBPUSD is struggling to keep above 1.3000 on the weekly timeframe. A decisive breakdown and weekly close below this point is likely to open the gates towards 1.2800 in the short to medium term.

Daily Pivots: (S1) 1.3299; (P) 1.3316; (R1) 1.3350; More...

USD/CAD recovers after hitting 1.3284 and intraday bias is turned neutral again. On the downside, firm break of 1.3250 support will indicate completion of whole rebound from 1.3068. In that case, deeper fall would be seen back to 1.3068/3112 support zone. On the upside, firm break of 1.3467 resistance will resume rise from 1.3068. Further rally should be seen to retest 1.3664 next.

In the bigger picture, structure of the medium term rise from 1.2061 (2017 low) to 1.3664 is not clearly impulsive. Hence, we'd stay cautious on strong resistance from 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 and 1.3793 resistance to limit upside, and bring medium term topping. But in any case, medium term outlook will stay bullish as long as channel support (now at 1.3210) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high). However, firm break of the channel support should confirm reversal and target 1.2061 low again.

• Rates: Core bonds to hold positive momentum
  The ECB is expected to keep policy unchanged today following the drastic decision taken last month amid a gloomy eco outlook. Draghi will be grilled on conditions for new TLTRO's and on the possibility of tiering the deposit rate to stem side-effects from negative interest rates. Market conditions are expected to remain in favour of stronger core bonds.
• Currencies: Euro remains resilient despite risk-off
  EUR/USD initially gained further ground yesterday even as the US considered tariffs on EU imports and as IMF cut the global growth forecast. In the end the balance between the USD and the euro was restored. Today, the US CPI, the ECB policy meeting and the EU summit on Brexit will spice FX trading. For now, we don't see a big case for sustained further euro gains

The Sunrise Headlines

• US equity markets lost ground yesterday with losses over half a percentage point with the DJI underperforming (-0.72%). Asian equities are trading mixed this morning with Japanese indices underperforming.
• The EU decides today if Brexit will be postponed again and if it's the case, for how long. Most EU-members signalled the UK could remain in the EU for almost another year (at strict conditions), despite May seeking a delay until June 30.
• The EU and China agreed to work towards a deal in 2020 in which China opens its markets to foreign investors. China also signals willingness to discuss EU concerns on state support and IP rights, but nothing is concrete so far.
• Benjamin Netanyahu is close to winning the Israeli elections. With 95% of the vote counted, his right-wing bloc takes a narrow lead over the Blue and White party of Benny Gantz. It would be Netanyahu's 5th term as PM in a row, a record.
• US job openings declined to 7087k in February, 538k jobs less than the month before, accounting for the largest drop since 2015, but possibly reflecting temporary factors. The quits rate held steady at 2.3%.
• Australia's Westpac consumer confidence index rebounded to 100.7 in April, up from 98.8 a month before. The Australian dollar gained on the news, pushing AUD/USD back north of 0.713.
• The ECB meeting and Brexit Summit are key today. The eco calendar contains March consumer inflation data, a 10-yr Note auction and the Minutes of the previous Fed meeting. Norway prints CPI data (Mar) as well.

Currencies: Euro Remains Resilient Despite Risk-Off

Euro resilient despite global risk-off

The dollar initially declined further yesterday and the euro remained well bid. The move was a bit remarkable. Sentiment turned risk-off as the US indicated to prepare tariffs on EU imports to retaliate for EU aircraft subsidies. The IMF downgrading its global growth outlook was a potential euro negative, too. Still EUR/USD touched a ST top in the 1.1284 area. Later, the balance between the euro and the dollar was restored. EUR/USD closed unchanged at 1.1263. USD/JPY tested the 111-level intraday. The yen closed with a modest gain at 111.14.

Asian equities mostly show moderate losses this morning as uncertainty on global growth weighs. US yields are declining, but for now the negative impact on the dollar is modest. EUR/USD is little changed in the 1.1250 area. USD/JPY is trading in the 111.10 area. The Aussie dollar gains slightly on a better than expected consumer confidence and on balanced comments from RBA's Debelle (AUD/USD 71.40 area).

US CPI, the EU summit on Brexit and ECB policy meeting are scheduled today. At the ECB press conference, president Draghi will likely receive questions on the new TLTRO's (details) and on a tiered system to mitigate the impact of the negative deposit rate. We expect limited impact on FX trading. US headline CPI is expected to rise from 1.5% to 1.8% (core stable at 2.1%). Looking at this week's price action, the dollar is probably more sensitive to a negative rather than to a positive surprise. This evening, the EU will decide on a new Brexit delay. The process will probably result in avoiding a no-deal Brexit, but uncertainty on the future process remains as high as it was. In this respect, there is no reason for euro or sterling euphoria.

Last week, EUR/USD came close to the 1.1177/87 support, but a real test/break didn't occur. For that to happen, unexpected negative EMU news or surprisingly strong US data are needed. Recent data evidence doesn't support this scenario. We keep the view that a sustained EUR/USD break lower isn't evident as we don't expect the Fed to leave its wait-and-see bias anytime soon. For now, EUR/USD is locked in the 1.12 big figure. In a day-to-day perspective, we see no big case for sustained further euro gains.

EUR/GBP hovered up and down in the lower half of the 0.86 big figure yesterday. The EU will probably propose a long but flexible Brexit delay. Even if this scenario avoids the UK dropping out of the EU with no deal, political turmoil in the UK will probably persist. We maintain the view that this scenario is neutral for sterling at best. We expect the EUR/GBP 0.8500/0.8492 support to be tough to break short term.

EUR/USD rebounds off 1.12 on USD softness

Daily Pivots: (S1) 0.7112; (P) 0.7132; (R1) 0.7147; More...

Intraday bias in AUD/USD remains neutral as it's bounded in range of 0.7052/7168. On the upside, decisive break of 0.7168 will suggest that the corrective decline from 0.7295 has completed at 0.7003 already. Intraday bias will be turned to the upside to resume the rebound from 0.6722 through 0.7295. On the downside, though, sustained break of 0.7052 will target 0.7004 first. Break will resume the fall from 0.7295 instead.

In the bigger picture, as long as 0.7393 resistance holds, fall from 0.8135 is still expected to extend. Such decline 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.

Daily Pivots: (S1) 1.1250; (P) 1.1268; (R1) 1.1280; More.....

Intraday bias in EUR/USD remains mildly on the upside for further rise. A short term bottom was formed at 1.1183, just ahead of 1.1176 low. Rebound from there would target 55 day EMA (now at 1.1309) first. Break will target 1.1448 resistance next. For now, we'd expect strong resistance between 1.1448/1569 to limit upside. On the downside, decisive break of 1.1176 will resume the down trend from 1.2555.

In the bigger picture, medium term weakness was revived as the weak rebound from 1.1176 was rejected well below 55 week EMA and failed to sustain above 55 day EMA. Focus is back on 1.1176 low, with 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. Decisive break there will resume whole down trend from 1.2555. Such decline target 1.0339 low next. On the upside, firm break of 1.1569 resistance is needed to be the first sign of medium term bottoming. Otherwise, downside breakout will be in favor.

Daily Pivots: (S1) 1.3015; (P) 1.3068; (R1) 1.3106; More....

GBP/USD is staying in consolidation from 1.3381 and intraday bias remains neutral for the moment. Further rise is still mildly in favor as long as 1.2960 support holds. On the upside, decisive break of 1.3381 will extend the rise from 1.2391 and target 61.8% retracement of 1.4376 to 1.2391 at 1.3618 next. However, on the downside, sustained break of 1.2960 will indicate that rebound from 1.2391 has completed earlier than expected. Deeper fall would then be seen to 1.2773 support for confirmation.

In the bigger picture, medium term decline from 1.4376 (2018 high) should have completed at 1.2391. Rise from 1.2391 is seen as the third leg of the corrective pattern from 1.1946 (2016 low). Further rise could be seen through 1.4376 in medium term. On the downside, though, break of 1.2773 support will dampen this view. Focus will be turned back to 1.2391 low and break will resume the fall from 1.4376 to 1.1946.

Daily Pivots: (S1) 0.9982; (P) 0.9996; (R1) 1.0012; More...

Intraday bias in USD/CHF remains neutral for the moment. On the upside, sustained break of 1.0010 will suggest that pull back from 1.0124 has completed. Intraday bias will be turned back to the upside for 1.0124/28 resistance zone. However, break of 0.9953 minor support will indicate rejection by 1.0010 and turn bias to the downside for 0.9879. Break there will resume the fall from 1.0124 to 0.9716 key support.

In the bigger picture, focus is back on medium term trend line (now at 0.9865). Decisive break there will argue that whole rise from 0.9186 has completed. Further break of 0.9716 will confirm reversal and target next support level at 0.9541. Nevertheless, there is still a chance that price action from 1.0128 are forming a consolidative pattern with fall from 1.0124 as third leg. If this is the case, stronger support should be seen between 0.9716 and the trend line to contain downside.

Daily Pivots: (S1) 110.89; (P) 111.24; (R1) 111.49; More...

Intraday bias in USD/JPY remains on the downside at this point. Fall from 118.82 is seen as the third leg of consolidation pattern from 112.13. Deeper decline would be seen to 109.71 and below. But downside should be contained by 104.69 to 112.13 at 109.28 to bring rebound. On the upside, above 111.58 minor resistance will turn intraday bias back to the upside for 112.13 resistance. Decisive break of 112.13 will resume whole rally from 104.69 and target 114.54 resistance next.

In the bigger picture, medium term outlook in USD/JPY remains a bit mixed as it's staying inside falling channel from 118.65, but there are signs of bullish reversal. On the upside, break of 114.54 resistance will revive the case the corrective fall from 118.65 has completed with three waves down to 104.69. And whole rise from 98.97 (2016 low) is resuming for 118.65 and above. But before that, outlook stays neutral first.