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The euro has moved higher against the US dollar index in early week trading, as Italian political woes subside and the greenback falls across the board. The EURUSD pair currently trades around the 1.1725 level, with intraday buyers firmly in control while price trades above the 1.1700 level. Market participants now look towards a break of the 1.1700 to 1.1750 trading range, and the release of US Factory Orders.

The EURUSD pair is intraday bullish while trading above the 1.1700 level. Key resistance is now located at the 1.1750 and 1.1800 levels.

If the EURUSD pair falls below the 1.1700 level, sellers may push price back towards the 1.1675 and 1.1640 support levels.

• A small bull signal has emerged
• Chinese President has backed blockchain technology for the first time

Investors are looking for fundamentals to support the price of Bitcoin. The Consensus 2018 event evidently failed to bring the kind of rally which many in the industry were expecting. Yes, it did bring some Lamborghini's in town, but if you are speaking of super and exotic cars, then NYC most definitely is the wrong place because Monaco's crypto event was far better (given that the event was during the Festival de Cannes and car enthusiasts brought their classic and super cars to test them on the formula one track ahead of the F1 racing week). Perhaps, next year, when the event takes place again, hopefully, speculators will not count on this event as a bullish factor.

Following today's surprise move by Donald Trump to impose steel and aluminium tariffs on Canada, Mexico and the EU, traders are bracing themselves for increased market volatility. This could provide the much-anticipated tailwind in the crypto-markets, as Bitcoin could once again become an ideal hedge opportunity.

During the month of May, central bankers and governments have further praised the adoption of the blockchain technology. Mark Carney, the governor of the Bank of England, has talked more positively about the importance of the Central Bank Digital Currency, CBDC, a complete U-turn compared to his speech back in February.

Xi Jinping, the Chinese President, also decided that it is about time to concur with the leading governments on the serious potential of the blockchain technology. This was the first time we have had anything positive from the Chinese President about blockchain. For investors, this is a welcoming initiative (adopted by the President) because it could be only a matter of time before the People's Bank of China echoes the same stance. However, this does not necessarily mean that the ban on cryptocurrencies is going to vanish, but the leash may start to loosen up.

In terms of jurisdiction, Malta remains an attractive place for exchanges to conduct their business and given that some major exchanges such as Binance and OKEx are already operating in Malta, the Mediterranean island has started to attract exchanges from less crypto-friendly jurisdiction. Friendly jurisdiction only means that exchanges have more support from government and banks. For instance, the biggest exchange in Poland decided that they are no longer happy in Poland and picked up Malta as their new destination. While in Tallinn, Estonia, at the Tokeneconomic conference, I was moderating a panel on this particular topic; choosing a favourite jurisdiction. I suggested Malta has become more popular because the process of setting such business there is much less burdensome and more time efficient.

Technical Perspective

From a technical analysis perspective, if we look at the monthly chart of the Bitcoin price, it's good news for the bulls that the previous month's low is holding. Also, Bitcoin's highest price ($9795) for the month of May is higher than the previous month (April's high $9755). In other words, a small bull signal. However, the closing price of Bitcoin at the end of the month is lower than the opening price of the month. This illustrates that the bears are still holding on to their ground. If the lowest price for the month of June is higher than the month of May (May low at $7051), we could say that things are looking good and it should boost the moral amidst traders.

Most importantly, March, April and May, are all advocating the bull case in terms of uptrend. This is because all three months (March, April and May) have respected the February's low.

The DAX has started the week in positive territory. In the Monday session, the DAX is at 12,749, up 0.20% on the day. In economic news, there are no major eurozone events. Eurozone Sentix Investor Confidence tumbled to 9. 3, well short of the estimate of 18.6 points. On Tuesday, Germany releases Final Services PMI and retail sales. This marked the lowest level since October 2016. On the inflation front, the Producer Price Index dropped to 0.0%, shy of the estimate of 0.1%. The last time that the indicator failed to post a gain was in August 2017.

There was some good news for investors on Friday, as Italy appears to have wrapped up months of political turmoil, as the country finally has a government. The new coalition is made up of two euro-sceptic parties, the League and the Five-Start Movement, which is likely to result in friction between Rome and the European Union. After President Sergio Matterella vetoed the choice for finance minister last week, it appeared that the country might be headed for another election and more political uncertainty, and Italian stocks and bonds dropped sharply. However, the crisis is over after the prime minister-elect, Giuseppe Conte, found another candidate for the key finance post. The new government has said it will drastically reduce immigration and raise spending, planks which could put it at odds with EU policy. Although the League and Five Star Movement have not issued any threats to withdraw from the EU or even hold a referendum, there is plenty of concern among investors that the fourth largest economy in the eurozone is being steered by a government with a populist, anti-establishment platform.

Is a new global trade war brewing? There are some ominous signs, after the Trump administration made good on its threats and slapped tariffs on the European Union, Mexico and Canada on Thursday. These include tariffs on the U.S had granted all three trading partners a temporary extension but cited insufficient progress on trade talks as the reason for the tariffs. This has triggered promises of retaliatory tariffs on US products, and tempers were short at the G-7 meeting of finance ministers in Canada on the weekend. US Treasury Secretary Steve Mnuchin faced sharp criticism from other finance ministers over the tariffs. There are fears that the escalating trade tensions could trigger a global trade war, which could have a devastating effect and lead to sharp losses on world stock markets.

Euro showdown coming

The 14 June meeting of the European Central Bank will be critical in signalling further QE tapering and interest rate hikes. Board members have been quiet on “normalization” in light of the rapidly shifting scenery. One issue is weak growth, illustrated by a broad fall in May's flash purchasing managers' index. Another is weak inflation. Given the soft patch, no one would be surprised by an ECB pause in hawkishness. With economic worries haunting, the risk is increasing that an anticipated June or July message of a tapering (to end quantitative easing) might be delayed.

Meanwhile, political risk and hype is building in Italy, Spain and Greece that might change the ECB's mind. A recent, sharp rise in interest rates on the periphery suggests tighter financial conditions for the region's weaker nations. This might warrant delay in “normalization”, however, we suspect it will only strengthen the ECB's desire to get rates off the bottom. The bank has few options to manage a crisis. Interest rates are already negative and bond buying is already running into supply issues. We suspect markets are under pricing the ECB's commitment to “normalization.”

Trade war discussions take centre stage

The positive dollar sentiment that followed the publication of the solid May job report did not last long. On Monday morning, the greenback fell across the board and lost ground against all its G10 peers amid mounting trade war concerns. Commodity currencies rose the most with the NOK and the AUD rising 0.86% and 0.75%, respectively. The single currency climbed back above the 1.17 threshold, while the Swiss franc showed modest gains with USD/CHF sliding to 0.9550, down 0.30% on the session.

In spite of the publication of key economic data this afternoon, the focus will remain on political developments. April factory orders is expected to have contracted 0.5%m/m, compared to an extension of 1.6% in the previous month. The final figures for April durable goods orders are also due later today (first estimate of 1.7%m/m).

Even though market participants will pay more attention to the trade war developments, and especially potential retaliation measures from European Union, we do not rule out a dollar reversal should the data come well above first estimates. However, the G7 summit in Quebec could potential be the biggest market driver, as trade tariffs discussions will take centre stage.

Long rupee

Despite expectation that higher oil prices would force the Reserve Bank of India to increase interest rates, the banks will hold at its June meeting. Economic growth has accelerated to 7.7% in Q1, significantly stronger than expected. Momentum at this early stage of recovery indicates further improvement due to consumption and investment growth. The monetary policy committee will likely highlight risks of higher commodity prices and widening current account deficits (forcing INR weakness against USD). The call will be close, given the bank's inflation-fighting mandate, but it will opt to watch further before tightening. With US yields reaching an inflection point and global tensions decelerating, we are constructive on INR. USD/INR's strong break of its 21-day moving average indicates a bearish corrections toward 66.

Bitcoin is rising, trading above 7600 and heading along 7750. The pair is further contained between support and resistance given at 7051 (29/05/2018 low) and 8583 (21/05/2018 high). The technical structure suggests shortterm increase.

In the long-term, the digital currency has had an exponential growth but also presented important downturns. There is decent likelihood that the currency could stabilize between 7'000 - 12'000 in 2018. Bitcoin is trading below its 200 DMA (8800 range).

AUD/USD strong bounce from 0.7556(03/06/2018 low) continues, trading above 0.76and heading along 0.7640. A break of the strongresistance at 0.7917 (14/03/2018 high) is neededto invalidate the current short-term bearish bias.Hourly support remains at 0.7412 (09/05/2018low).

In the long-term, the upward trend slows downafter failing to reach key resistance at 0.8164(14/05/2015 low). Key support stands at 0.6011(28/10/2008 low). A break of the key resistance at0.8164 (14/05/2015 high) is needed to invalidateour long-term bearish view.

USD/CAD is decreasing after reaching 1.3008(01/06/2018 high), heading along 1.29. Hourlysupport and resistance are located at 1.2621(23/02/2018 low) and 1.3125 (19/03/2018 high).The technical structure suggests short-termdecrease.

In the longer term, the pair is trading betweenresistance point at 1.3805 (05/05/2017 high) andsupport at 1.2128 (18/06/2015 low). Strongresistance is given at 1.4690 (22/01/2016 high).The pair is likely to head lower. The pair istrading above its 200 DMA.

USD/CHF weakness continues, currentlytrading below 0.9880 and heading along 0.9860.The bearish pattern started in May 2018 ismaintained. Key support and resistance given at0.9755 (10/01/2018 low) and 1.01 (11/05/2017high) are maintained. The technical structuresuggests short-term downward moves.

In the long-term, the pair is still trading inrange since 2011 despite some turmoil when theSNB unpegged the CHF. Key support lies at0.9072 (07/05/2015 low) while resistance at1.0344 (15/12/2016 high) is distanced. Thetechnical structure favours a long term bullishbias since the unpeg in January 2015.

Crude oil weakness continues, breaking hourly support at 65.56 (17/04/2018 low) and trading sideways. Hourly support and resistance are given at 61.81 (06/04/2018 low) and 72.83 (22/05/2018 high). The technical structure suggests short-term sideways trading moves.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness is very likely. For the time being, the pair lies in an upside trend since June 2017. Support lies at 42.20 (16/11/2016) while resistance is located at 77.83 (20/11/2014). Crude oil is trading largely above its 200 DMA.

Silver has bounced. The short-term succession of higher lows continues to favour a bullish bias as long as uptrend floor holds. Hourly support and resistance are given at 16.05 (01/05/2018 low) and 17.35 (19/04/2018 high).

In the long-term, the trend remains negative/ sideways. Further downside is very likely. Resistance is located at 21.58 (10/07/2014 high). Strong support can be found at 11.75 (20/04/2009). The pair is trading below its 200 DMA.