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Our pivot (invalidation) point is at 5956.

Our preference rebound towards 6595.

Alternative scenario Below 5956, expect 5729 and 5593.

Comment The RSI is below 50. The MACD is negative and above its signal line. The configuration is mixed. Moreover, the pair stands above its 20 MA (6156) but below its 50 MA (6235).

Daily Pivots: (S1) 1.3220; (P) 1.3301; (R1) 1.3343; More...

Intraday bias in USD/CAD remains neutral for consolidation below 1.3381. Deeper pull back could be seen to 4 hour 55 EMA (now at 1.3200) and below. But downside should be contained above 1.2948 support to bring another rally. On the upside, firm break of 1.3381 should target 1.3685 medium term fibonacci level next.

In the bigger picture, current development solidify the view of bullish trend reversal. That is fall from 1.4689 (2015 high) has completed at 1.2061, ahead of 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. Further rally should be seen for 61.8% retracement of 1.4689 to 1.2061 at 1.3685 and above. This will now be the preferred case as long as 1.2916 resistance turned support holds, even in case of deep pull back.

Daily Pivots: (S1) 1.1614; (P) 1.1645 (R1) 1.1690; More.....

EUR/USD's consolidation pattern from 1.1509 is still in progress and outlook is unchanged. Intraday bias stays neutral first. Upside of recovery should be limited by 1.1851 resistance to bring fall resumption. On the downside, break of 1.1507/9 will resume the whole fall from 1.2555 through 50% retracement of 1.0339 to 1.2555 at 1.1447 to 61.8% retracement at 1.1186.

In the bigger picture, current development suggests that EUR/USD was rejected by 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. And, a medium term top was formed at 1.2555 already. Decline from there should extend further to 61.8% retracement of 1.0339 to 1.2555 at 1.1186 and below. For now, even in case of rebound, we won't consider the fall from 1.2555 as finished as long as 1.1995 resistance holds.

Daily Pivots: (S1) 1.3230; (P) 1.3273; (R1) 1.3307; More...

No change in GBP/USD's outlook as consolidation from 1.3101 is in progress. Further rise could be seen. But upside of recovery should be limited by 1.3471 resistance to bring fall resumption. On the downside, break of 1.3101 will resume the whole decline from 1.4376 and target 61.8% retracement of 1.1946 to 1.4376 at 1.2875 next.

In the bigger picture, current development suggests that whole medium term rebound from 1.1936 (2016 low) has completed at 1.4376 already, with trend line broken firmly, on bearish divergence condition in daily MACD, after rejection from 55 month EMA (now at 1.4177). 61.8% retracement of 1.1936 (2016 low) to 1.4376 at 1.2874 is the next target. We'll pay attention to the reaction from there to asses the chance of long term down trend resumption. For now, outlook will stay bearish as long as 55 day EMA (now at 1.3507) holds, even in case of strong rebound.

EURUSD has been underperforming over today’s session, after the bounce off the 20-day simple moving average in the short-term. The world’s most traded currency pair is trying to snap the two consecutive winning days, while it is in the process of forming a double bottom pattern with trough the 1.1510 barrier and with neckline the 1.1840 resistance level.

In the daily timeframe, the technical indicators seem to have lost some of their strong bullish momentum. The Relative Strength Index (RSI) is sloping slightly to the downside in the negative zone, while the MACD oscillator is rising marginally above its red-trigger line below the zero level.

If price action jumps above the 20-SMA of 1.1670 and the 38.2% Fibonacci retracement level of the upleg from 1.0340 to 1.2550, around 1.1710 and also, surpass the 40-SMA of 1.1750 at the time of writing, there is scope to test the aforementioned neckline of 1.1840. This is considered to be a strong resistance area which has been rejected a few times in the past. Rising above it would see a completion of the pattern and would drive the price towards the 1.2000 psychological hurdle, which overlaps with the 200-day SMA.

On the flip side, if 1.1510 support fails, then the focus would shift to the downside again towards the 50.0% Fibonacci of 1.1450. A break of this barrier would increase downside pressure and bring about a resumption of the bearish mode. From here, EURUSD would be on the path towards the 1.1300 handle.

Overall, the single currency has been trading in a reversal pattern against the greenback. Near-term weakness is expected to remain as long as price action takes place above 1.1510 and below the neckline of 1.1840.

Daily Pivots: (S1) 0.9856; (P) 0.9894; (R1) 0.9915; More...

Intraday bias in USD/CHF remains on the downside for 0.9787 support. Current decline from 0.9989 is seen as the third leg of the corrective pattern from 1.0056. Hence, we'd expect strong support from 0.9720/4 cluster support (38.2% retracement of 0.9186 to 1.0056 at 0.9724, 100% projection of 1.0056 to 0.9787 from 0.9989 at 0.9720) to bring rebound. On the upside, above 0.9989 will bring retest of 1.0056 high first..

In the bigger picture, medium term decline from 1.0342 has completed with three waves down to 0.9186. Rise from there is currently viewed as a leg inside the long term range pattern. Hence, while further rally would be seen, we'd be cautious on strong resistance from 1.0342 to limit upside. For now, further rise is expected as long as 38.2% retracement of 0.9186 to 1.0056 at 0.9724 holds. However, sustained break of 0.9724 will dampen this bullish view and would at least bring deeper fall to 61.8% retracement at 0.9518.

The British pound remains under pressure against the US dollar in early week, after the pair performed a bearish weekly close below the key 1.3300 level. The GBPUSD pair currently trades around the 1.3260 region, after finding strong technical support from the 1.3222 level on Friday. Traders remained focused on the key 95.00 level on the US dollar index and the upcoming Bank of England policy decision this week.

The GBPUSD pair is strongly bearish while trading below the 1.3294 level, key technical support is now located at the 1.3222 and 1.3204 levels.

If the GBPUSD pair moves above the 1.3294 level, key technical resistance can be found at the 1.3307 and 1.3340 levels.

The euro remains under pressure against the US dollar, after suffering its worst one-day loss of the year last Thursday, following the ECB policy meeting. The EURUSD pair currently trades around the 1.1590 level, after bouncing strongly from the 1.1545 level on Friday. Euro traders await a scheduled speech from ECB President Mario Draghi at the ECB forum in Sintra, Portugal, during the European trading session.

The EURUSD pair is intraday bearish while trading below the 1.1615 level, further losses towards 1.1570 and 1.1510 remain possible.

If the EURUSD pair moves above the 1.1615 level, buyers may test towards the 1.1658 and 1.1715 resistance levels.

The final week of June begins on a lighter note Monday with only three potentially market-moving events scheduled for release. However, the releases will still provide important clues into the health of the US and German economies, the world’s first and fourth largest, respectively.

The European session will see its first and only economic data release at 08:00 GMT when the CESifo Group releases the monthly report on German business confidence. The IFO report contains three separate indicators tracked by the investment community: Expectations, Business Climate and Current Assessment. At the time of writing, analysts had reached a consensus about the Business Climate Index falling slightly to 101.7 in June compared with 102.2 the previous month.

Shifting gears to North America, the Federal Reserve Bank of Chicago will release the National Activity Index at 12:30 GMT. The May index is expected to dip to 0.09 from 0.34 the month before. Any reading above zero signifies expanding economic activity.

The Department of Commerce will issue its latest reading of new home sales at 14:00 GMT. The sale of new homes is projected to rise 3.3% in May to a seasonally adjusted 666,000.

At 14:30 GMT, the Dallas Federal Reserve Bank will release the June version of its manufacturing business index, which monitors conditions at both state and regional levels. The June index is projected to fall to 18.2 from 26.8 in May.

EUR/USD

Europe’s common currency is in recovery mode after prices plunged to their lowest levels in two weeks. EUR/USD is currently trading at 1.1655, having rebounded roughly 130 pips from last Thursday’s swing low. Bullish sentiment appears to be gradually returning for the common currency, with analysts eyeing a potential return to the 1.1700 level as early as this week.

GBP/USD

Like the euro, pound sterling is also in recovery mode after prices bottomed at their lowest levels of the year on Thursday. Cable is currently trading around 1.3260, having recovered 150 pips from the most recent swing low. GBP/USD faces immediate resistance at 1.3300. Above that level, the bulls will be eyeing 1.3315, which is the high from 22 June. On the opposite side of the ledger, the year-to-date swing low of 1.3101 offers immediate support.

USD/JPY

The dollar-yen exchange rate started the week in negative territory Monday. After briefly crossing the psychologically important 110.00 level, prices reversed all the way back down to the mid-109.00 region. At present, USD/JPY is trading at 109.48. The decline pulled USD/JPY below its initial support zone of 109.55, leaving 109.20 exposed. On the opposite side of the ledger, immediate resistance is located at 110.15, followed by 110.45.

Rates: Risk-off at start of new trading week

Core bonds will profit from their safe haven status at the start of the new trading week with political event risk looming large. US President Trump doesn’t back down on his trade rhetoric/action while German Chancellor Merkel’s political life hangs in the balance. This week’s eco calendar is rather thin apart from Friday’s inflation readings.

Currencies: Euro rebound shows no convincing momentum

EUR/USD rebounded off the 1.1510 support area last week. However, for now, follow-through gains remain modest. A soft German IFO release might weigh on the single currency today. Rising trade tensions mostly are euro negative , too. So, last week’s rebound might be short-lived. USD/JPY is further easing below the 110 mark

The Sunrise Headlines

• US equity markets remain resilient, with only the NASDAQ going into the weekend with losses Asian stock markets lose ground this morning with also US equity futures recording losses of more than 0.5%.
• US President Trump threatened on Friday to impose 20% levies on the EU car industry. The EU has stated in an internal memo, ahead of June 28-29 summit, this trade war could lead to a 20-year step backward in global economics.
• The Chinese central bank has eased its deposit rules for its banks, to free up to $100bn to be deployed in the economy. While not explicitly stated, it is to help cushion a slowing economy and the effects of the trade war.
• Turkey’s president Recep Tayyip Erdogan has won the Turkish elections. With 52.5% of the votes and a majority in parliament, he now has another 5 years in office, with a presidential system that gives him more (and absolute) power.
• Yesterday, 16 of 28 EU leaders already met in Brussels, ahead of the migration top on Thursday. The ‘mini-top’ was meant for Merkel to find a solution, but Italy’s Conte disrupted with a new plan to “rip up the current system”.
• OPEC’s initial agreement, with a real output increase of 700k b/d, will be raised to close to 1 million b/d, Saudi Arabia said. The statement pushed the price for Brent crude oil temporary below the $74 a barrel mark.
• US May Chicago Fed Nat Activity Index and German IFO business sentiment for June are released today. Next to that, no other important events on our economic calendar.

Currencies: Euro Rebound Shows No Convincing Momentum

Risk-off to favour USD more than euro?

On Friday, EUR/USD profited temporarily from stronger than expected EMU PMI’s. However, there were no follow-through gains. EUR/USD basically hovered in the 1.16 big figure. Political noise in Germany and Italy caused ongoing investor caution on euro. Uncertainty on next steps in the US-China trade conflict also prevented investors to place directional bets in the USD or the euro. EUR/USD closed at 1.1651 (from 1.1604). USD/JPY finished the day little changed at 109.97.

Overnight, Asian markets mostly trade with a moderate risk-off bias. China outperforms slightly after the PBOC cut the reserve requirement ratio for some banks. The Yuan weakens further (USD/CNY 6.5320). At the same time, the trade conflict might move to a next phase. US officials and press reports indicate that the US will take action to prevent US technology transfers to China. Chinese companies might be blocked from buying US tech companies and the US might install controls on technology exports to China. USD/JPY is drifting further below the 110 mark (currently 109.50). EUR/USD stabilizes in the mid 1.16 area.

Today, German IFO sentiment will be published. A further decline might be a euro negative. Europe also still has to cope with several issues (migration) going into this week’s EU summit. Next steps in the US-China trade conflict will continue to affect global market sentiment. Of late, rising trade tensions were often a negative for the euro rather than for the dollar (except for USD/JPY). In this context (data, European politics and trade tensions) we don’t see much further upside fur EUR/USD. Last week, we advocated that any sustained EUR/USD comeback would be difficult for now, as investors still adapt positions to the ‘new’ policy divergence between the Fed and the ECB as it became clear after the Fed and ECB meetings. End last week, EUR/USD rebounded of the 1.1510 support. This gave some temporarily relief to the euro, but we don’t expect this move to go really far.

In technical trade sterling stayed in the defensive on Friday. EUR/GBP closed the session in the high 0.87 area. Thursday’s ‘hawkish BoE voting’ didn’t help sterling much. There are few really important UK eco data this week. Assuming a cautious risk-off context, we expect no sustained sterling gains. Brexit noise will also likely persist. On the other hand, several BoE members (mostly ‘hawks’) will speak this week. We assume more sideways trading in EUR/GBP near the 0.88 pivot.

EUR/USD: rebound off 1.1510 support lacks convincing momentum