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No significant changes were introduced to EUR/USD's positioning on Monday, as it remained trading along the 55-hour SMA . The pair, however, provided the second confirmation of a three-day channel down (dashed lines). The bearish momentum took the upper hand early today, thus pushing the rate past the prevailing two-week channel up and below the 55– and 100-hour SMAs.

The pair is currently stranded between these lines and the 200-hour SMA. The same moving averages constrain the rate on the four-hour chart, as well. Thus, it is likely that large gains are limited today.

It is expected that the Euro remains tended south, setting the lower channel boundary and the 55– and 100-period (4H) SMAs near 1.17 as the daily low. In the meantime, gains should not exceed 1.19.

Bears dominated the GBP/USD exchange rate yesterday. After testing the monthly PP, disappointing data on the British Manufacturing Production pushed the Sterling 55 pips lower down to the 200-hour SMA and the bottom boundary of a three-week channel near 1.3360. The pair subsequently tried to regain some positions, but nevertheless failed to gain strength and fell below this support.

It is likely that the pair continues to edge lower in this session, as well. The nearest support is the weekly S1 at 1.3313, while no other support is located until the weekly S2 at 1.3215.

Meanwhile, the Pound is currently testing the 55– and 100-period (4H) SMAs. In case this support holds strong, it should target the aforementioned monthly PP and move even higher up to 1.3460.

The US Dollar gained 66 pips against the Japanese Yen on Monday. The rate breached the weekly R1 and the 61.80% Fibonacci retracement at 110.16 and has since fluctuating slightly between this and the 110.50 mark.

It is expected that upside risks still prevail until the weekly R2, the monthly R1 and the upper channel line are reached at 110.75. This point should provide strong resistance, thus forcing bulls to ease their upside momentum. The pair should subsequently reverse to the downside and target the combined support of the 55-, 100– and 200-hour SMAs and the weekly PP in the 109.60/85 area.

In case no fundamental events shake the market significantly in this session, the aforementioned support and resistance levels should force the pair to remain within the 109.60/110.75 range today.

Gold has been trading sideways against the US Dollar for a week now. Bullish gains have been limited by the 50.00% Fibonacci retracement and the monthly PP at 1.301.00, while support is set by the lower boundary of a six-day channel up and the 100-period (4H) SMA.

Technical indicators on the 1H and 4H charts flash mixed signals, while the those on the 1D time-frame point to further advance. In case the 100-period SMA is breached, it is expected that bears push the rate considerably lower, possibly down to the senior channel and the 61.80% Fibo at 1.285.00.

Meanwhile, gains are likely to be limited today, as the 1,310.00 area is restricted by the 200-day SMA.

The single European currency has continued to be trading in several channels against the Pound Sterling. Meanwhile, a new junior ascending channel has been spotted as can be observed on the chart.

Following a re-test of the lower boundary of the junior ascending pattern last week, bulls strengthen their position, as a result, the currency pair breached a strong resistance set by the weekly and monthly PPs at 0.8780.

As for near future, the EUR/GBP currency exchange rate is likely to continue its bullish momentum until the newly formed pattern is broken. In the meantime, technical indicators flash buy signals.

The US Dollar has been driven by strong downside movement against the Swiss Franc since early May and thus fell by 2.70%. This bearish sentiment began after the exchange rate hit the upper boundary of a dominant ascending channel.

This downside risk has resulted in the currency pair to reached April 25 low level. However, during the past few days, the USD/CHF exchange rate has bounced off the lower boundary of the dominant ascending channel and gradually moving north.

Given that the currency exchange rate has breached a resistance cluster formed by the 55– hour simple moving average and the weekly pivot point near the 0.98 mark, the pair is likely to target the 200– hour SMA at 0.99 during the following trading sessions.

The EUR/USD bounced at the 38.2% Fibonacci retracement level of wave 4 (pink) and is now testing key support trend lines (blue). A bearish breakout could indicate the restart the downtrend whereas a bullish bounce could see price develop an expanded WXY (purple) correction as shown in the image.

EUR/USD is building multiple ABC zigzags at the moment and is awaiting a bullish or bearish breakout. The trend lines are indicating a triangle chart pattern.

US President Trump and North Korean Leader Kin Jong Un met in Singapore overnight. Progress was made between the two leaders during this first meeting however market reaction is muted so far. It is not yet known what progress has been made on denuclearisation, with a press conference scheduled for 06:30 GMT. USDJPY advanced higher to 110.490 overnight with support at 110.125. Markets are positioning ahead of tomorrow’s FOMC and Thursday’s ECB meetings when volatility should pick up.

Markets were in a risk on mode yesterday with Stock markets higher following the G7 summit. The gains were small at the beginning of a busy week for markets. The FX markets painted a different story as USDCAD rose to the 1.30000 level with Canadian PM Trudeau saying that they are preparing retaliatory measures as the relationship between the allies breaks down. The USD strengthened as the G7 passed much as expected postponing the worst fears of the market.

UK Industrial Production (YoY) (Apr) was 1.8% against an expected 2.7% from a previous 2.9%. Industrial Production (MoM) (Apr) was -0.8% against an expected 0.2% from 0.1% previously. Last month this data was flat but it disappointed expectations and missed by around 1%. Manufacturing Production (YoY) (Apr) was 1.4% against an expected 3.1% from 2.9% previously. Manufacturing Production (MoM) (Apr) was -1.4% against an expected 0.3% from -0.1% previously. This figure has missed expectations and fallen under the zero mark showing a contraction on the monthly number. The negative impact from Brexit is continuing to plague the economy as orders are delayed and production postponed. GBPUSD fell from 1.34274 to 1.33602 pairs can move because of this data release.

• EURUSD is down -0.11% overnight, trading around 1.17689.
• USDJPY is up 0.24% in the early session, trading at around 110.302
• GBPUSD is down -0.07% this morning trading around 1.33639
• Gold is down -0.21% in early morning trading at around $1,297.70
• WTI is up 0.15% this morning, trading around $66.16

At 08:30 GMT, UK Average Earnings including Bonus (3Mo/Yr) (Apr) is expected to be 2.6% from 2.6% previously. Wage growth is holding steady in the same range for three years now. Any increase could indicate that there is a shortage of available participants to fill vacancies. ILO Unemployment Rate (3M) (Apr) is expected to be at multi decade low 4.2%. Claimant Count Change (May) is expected at 11.3K from a previous reading of 31.2K. The Claimant count has dropped after exceeding expectations and surprising to the upside last month. GBP crosses can be influenced by this data release.

At 08:30 GMT, UK Average Earnings including Bonus (3Mo/Yr) (Apr) is expected to be 2.6% from 2.6% previously. Wage growth is holding steady in the same range for three years now. Any increase could indicate that there is a shortage of available participants to fill vacancies. ILO Unemployment Rate (3M) (Apr) is expected to be at multi decade low 4.2%. Claimant Count Change (May) is expected at 11.3K from a previous reading of 31.2K. The Claimant count has dropped after exceeding expectations and surprising to the upside last month. GBP crosses can be influenced by this data release.

At 12:30 GMT, US Consumer Price Index (YoY) (May) data will be released with an expected reading of 2.8% against 2.5% previously. Consumer Price Index Ex Food & Energy (YoY) (May) data will be released with an expected reading of 2.2% against 2.1% previously. Consumer Price Index Ex Food & Energy (MoM) (May) data will be released with an expected reading of 0.2% against 0.1% previously. Consumer Price Index (MoM) (May) data will be released with an expected reading of 0.2% against 0.2% previously. Consumer Price Index Core s.a. (May) data will be released with an expected reading of 256.897 against 256.450 previously. These data points will allow an updated measure of the effect of inflation on consumers. Inflation is one of the main drivers of market sentiment in the US currently. The expectation is for consumer prices to remain generally the same. USD crosses can see an increase in volatility from this data release.

At 18:00 GMT, The US Monthly Budget Statement (May) will be released with an expected balance of $-135.5B from a previous $214.0B. This data is expected to show a $380B swing into negative territory as seasonal factors affect the calculation of this metric. The previous reading exceeded the high from April 2017 of $182.4B.

Rates: Positive 'mood' after US/North Korean Summit; watch US CPI numbers
The mood after the US/North Korean Summit is positive, but the outcome remains vague. An extensive press conference is due later today. Positive risk sentiment and a further increase in US CPI inflation above the Fed's 2% target are expected to keep core bonds under downward pressure going into key US and EMU central bank meetings later this week.

Currencies: EUR/USD awaits the Fed and ECB meetings
The euro couldn't sustain early gains. Today's eco calendar is interesting, with the US CPI in focus. However, FX investors apparently aren't inclined to place big bets in EUR/USD as they await guidance from the Fed and the ECB meetings. Sterling remains in the defensive. UK labour data and the Brexit vote probably won't change fortunes for the UK currency.

The Sunrise Headlines

• The US stock markets closed around 0.2% higher with the Trump – Kim Jung Un summit in prospect. Asian stocks reacted positive with the CSI 300 (+ 0.82%) and NIKKEI (+0.60%) outperforming.
• Donald Trump and Kim Jung Un have spoken privately close to an hour at their historical meeting in Singapore. After delegations joined in, both leaders signed a 'very comprehensive' letter, stating that the result goes far beyond anyone's expectations.
• France has taken steps to impose their banks with higher capital ratios to make its financial system more resilient against future crashes or credit crunches (a countercyclical capital buffer). French banks were not impressed by the move.
• IMF's MD Christine Lagarde says that 'the clouds over the global economy have darkened', especially after the G7 summit of last weekend, causing business confidence to decline due to measures that disrupt trade.
• Brexit Secretary David Davis has said to be supporting the 'compromise customs amendment' when UK lawmakers vote on amendments to the European Union withdrawal bill later today.
• Japanese PPI numbers were higher than expected with YoY reading of 2.7% (2.1% expected) and a MoM outcome of 0.6% (0.2% expected). The increase in inflation continues, after a cooling down in the first months of 2018.
• On today's eco agenda we see for the US the NFIB Small Business Optimism and CPI MoM/YoY for May, in the UK the Average Weekly Earnings 3M/YoY (Apr), ILO Unemployment Rate 3M (Apr) and in Germany the ZEW Survey Exp. (Jun).

Currencies: EUR/USD Awaits The Fed And ECB Meetings

EUR/USD awaiting Fed/ECB balance

Yesterday, the euro rallied temporary as Italian FM Tria confirmed Italy's commitment to the euro. The rally gradually petered out as investors looked forward to the Fed and the ECB later this week. Markets are uncertain which way the balance between both CB's will go, leaving EUR/USD in an indecisive pattern. EUR/USD closed the day at 1.1784, little changed from Friday's close (1.1769). A positive risk sentiment (despite a tumultuous G7 meeting) was negative for the yen. USD/JPY closed the session just north of 110. EUR/JPY tested the 130 barrier but retreated later in line with EUR/USD. Overnight, the global media focus is on the meeting between president Turmp and North Korea's Kim Jong Un. The dollar outperforms the euro and the yen as markets await details the signed statement between the two leaders. EUR/USD trades in the 1.1770 area. USD/JPY extends is trip north of 110.

Today, the data calendar heats up with German ZEW confidence, US NFIB small business confidence and the US May CPI. ZEW sentiment is expected to ease as investors ponder the impact of the Italian crisis and of trade tensions. US headline CPI is expected to rise to 2.8%. Core CPI is seen at 2.2% (from 2.1%). If CPI expectations are met, it supports the case for the Fed to continue/even slightly step up policy normalisation.

Yesterday, the euro initially rallied on a further easing of tensions on Italy. We also assume(d) that risk for a hawkish surprise from the ECB meeting might be bigger than for the Fed meeting. If so, it could be euro supportive. For now, FX investors are apparently not inclined to place big bets on the relative balance between the Fed and ECB meetings. So, more EUR/USD consolidation might be on the cards today. Further out, we keep the view that the ECB preparing markets for the end of APP might be more important for (FX) markets than the Fed holding course. If so, the EUR/USD downside should be rather well protected.

Yesterday, sterling suffered from poor production and trade data. Today, the UK labour data have market moving potential. However, a substantial positive surprise (especially on wages) is probably needed to support sterling. Markets will also keep a close eye on handling of the ‘withdrawal bill' in the House of Commons. UK PM May ‘surviving‘ the votes might be a ST sterling supportive. However, it is unlikely to change the broader picture. For now we expect, more consolidation around current levels, with no meaningful rebound for sterling as long as there is no clear progress toward a consistent UK Brexit strategy.

EUR/USD in wait-and-see modus as markets await Fed/ecb policy decisions