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The Euro holds positive tone in early Monday’s trading and probes again above cracked pivotal barriers at 1.1672 (10SMA) and 1.1695 (Fibo 38.2% of 1.1996/1.1509 bear-leg).

However, the pair is still holding within the range of past two days (1.1724/1.1616) and firm break above the range top is needed to confirm bullish signal on eventual close above 10SMA (the action of past two days failed to close above 10SMA despite repeated breaks higher).

Lift above congestion top would open next pivot at 1.1760 (falling 20SMA) break of which would generate stronger reversal signal.

Strengthening momentum supports the notion, with bullish bias to remain in play above north-turning 5SMA (1.1646) which contained dips in past two days and marks pivotal support.

Res: 1.1724, 1.1760, 1.1810, 1.1857
Sup: 1.1672, 1.1646, 1.1617, 1.1591

The Aussie dollar advanced strongly in Asia on Monday, driven by upbeat data. Australian corporate profits rose by 5.9% in Q1, beating forecast for 3.0% rise, while retail sales were up 0.4% in April vs 0.2% forecast.

Better than expected data today add to signals that economic growth is regaining traction after last year's slowdown.

Focus turns on Australian GDP report, due on Wednesday, which would provide more information about the Australian economic growth.

Today's rally generated bullish signal on break above pivotal barriers at 0.7605/15 (former high of 22 May/50% retracement of 0.7812/0.7412 bear-leg/55SMA) and pressures immediate resistance at 0.7641 (weekly cloud base) which guards key points at 0.7660/72 (Fibo 61.8%/base of falling daily cloud).

Daily MA's turned to bullish setup and attempt to form double bull-cross (5/10 and 20/30SMA) which would further support the advance, along with strong bullish momentum.

Overbought slow stochastic on daily chart warns that bulls may show hesitation on approach to 0.7660/72 pivots, with corrective dips to hold above 0.7560 (converged 5/10SMA's) and keep near-term bullish bias.

Strong bullish signal could be expected on break and close above 0.7660/72, which could spark bullish acceleration towards 0.7718 (Fibo 76.4%) and 0.7756 (daily/weekly cloud top, reinforced by 200SMA).

Res: 0.7641, 0.7660, 0.7672, 0.7718
Sup: 0.7615, 0.7605, 0.7560, 0.7537

The new week begins much the same as the old one ended, with markets in risk on mode, equities markets higher, while gold moved down. The USD is weaker against all currencies expect the yen. The mood is mainly positive due to better US job creation seen in the NFP data which has carried stocks higher despite headwinds such as escalating trade disputes between the US and a plethora of other countries. Canadian PM Trudeau has called the imposition of US trade tariffs on Canadian products an affront and announced retaliatory measures. China said it would tear up any trade deal with the US if they impose tariffs against China. The risk is that sentiment shifts and catches traders off balance as volatility increases. AUD outperformed today as data beat across the board with AUDUSD up 0.77% to 0.76230.

UK Markit Manufacturing PMI (May) came out at 54.4 against an expected headline number of 53.5 and 53.9 prior. The data beat the consensus and the previous number but remains weak following the high created in December at 58.2. New order inflows, strengthening job creation and demand were factors in the outperformance. EURGBP fell from 0.87996 to a low of 0.87854 following this data release.

US Non-Farm Payrolls (May) came in at 223K against an expected 188K from a prior 164K which was revised down to 159K. This measures the change in the number of employed people in May and shows a strong beat despite the revision in the prior data. The Unemployment Rate (May) was 3.8% against an expected 3.9% with a prior reading of 3.9%. Average Hourly Earnings (YoY) (May) was 2.7% against an expected 2.7% against 2.6% previously. Average Hourly Earnings (MoM) (May) was 0.3% against an expected 0.2% from 0.1% previously. Labour Force Participation Rate (May) was 62.7% against an expected 62.6% from a prior reading of 62.8%. This data shows that there has been an increase in earnings but it has still not accelerated past 0.3%. This would lead to an increase in inflation which markets have reacted negatively to recently. GBPUSD rallied from 1.32832 to a high of 1.33370 after these data releases.

At 13:30 GMT, Canadian Markit Manufacturing PMI (May) was 56.2 against an expected 55.4 from the previous 55.5. This data has exceeded the peak from February of 55.9, when it matched the April 2017 number. The last four readings have shown a softening in the data setting expectation for this reading to fall again but the unexpected beat sent the USDCAD price lower to support at 1.29581 before recovering to 1.29842 after the data release.

EURUSD is up 0.33% overnight, trading around 1.16961.

USDJPY is up 0.13% in the early session, trading at around 109.639

GBPUSD is up 0.22% this morning trading around 1.33721.

Gold is down -0.11% in early morning trading at around $1,291.55

WTI is unchanged this morning, trading around $65.75

At 08:30 GMT, UK Construction PMI (May) will be out with an expected headline number of 49.7 from a prior number of 52.5. The consensus is for a drop in the numbers today after a recovery from the low created in April at 47.0. The industry slipped back under 50.0 from the high levels of 2014 at 64.6 showing contraction in the index but has recovered somewhat. GBP pairs may see an impact from this data release.

At 09:00 GMT, Eurozone Producer Price Index (YoY) (Apr) is expected to be 2.4% against the previous 2.1%. Producer Price Index (MoM) (Apr) is expected to be 0.4% against the previous 0.1%. The recovery in the Euro area is weaker but growing despite some sluggish economic data. PPI data is in danger of slipping under 0.0% signalling falling prices. EUR crosses can be impacted by this data release.

At 15:00 GMT, US Factory Orders (MoM) (Apr) are expected to be -0.3% from 1.6% previously. If the decrease in expectations comes to pass it represents a small drop as the recent range of this data point over the last three years has been between +3% and -3.5%. USD crosses can be moved by this data.

Major data releases for this week:

On Tuesday at 04:30 GMT, the RBA Interest Rate Decision and Rate Statement will be released.

On Wednesday at 01:30 GMT, Australian Gross Domestic Product data will be published.

On Thursday at 09:00 GMT, Eurozone Gross Domestic Product data will be released.

At 15:15 GMT, BOC Governor Poloz will speak at a press conference about the Financial System Review, in Ottawa.

On Friday at 13:30 GMT, Canadian Jobs data will be released.

The US dollar continues to move higher against the Japanese yen currency, with price earlier finding technical resistance from the 109.76 level. The USDJPY pair currently trades around the 109.60 level, with the US dollar index remaining well bid after a solid Non-farm payrolls number on Friday. Buyers will look for further upside towards the 110.00 level, while sellers will look for losses below the 109.30 level.

The USDJPY pair is intraday bullish while trading above the 109.30 level, further upside towards 110.00 and 110.40 remains possible.

If USDJPY pair moves below the 109.00 level, sellers may test towards the 109.00 and 108.70 support levels.

The British pound has started to recover upside momentum against the US dollar, with sterling now trading well above the key 1.3300 resistance level. The GBPUSD currently trades around the 1.3360 level, with the pair increasingly bullish while price holds above the 1.3340 level. Traders now look to the release of the United Kingdom Construction PMI this morning, and US Factory Orders later today.

The GBPUSD pair is bullish while trading below the 1.3300 level, key resistance is now located at the 1.3400 and 1.3450 levels.

If the GBPUSD pair falls below the 1.3340 level, we may see sellers once again testing towards the 1.3300 support level.

The EUR/USD is testing a resistance trend line (red) which is key for a bullish breakout and continuation higher within wave X (purple). A break above the 38.2% Fib makes this wave pattern most likely otherwise price could be building a bearish wave 4 which could lead towards a new lower low. A break below the support trend line (blue) and 1.15 round level could indicate an immediate bearish wave 5.

The EUR/USD seems to have completed an ABC (purple) correction and the Fibonacci levels of wave B are acting as a support zone. Price has turned back upwards at the 50% Fib but a break below the previous bottom (blue line) invalidates the current expected zigzag pattern within wave X (purple). A break above the resistance trend line (red) could also indicate a breakout towards the Fib targets of wave X (purple).

The USD/JPY has broken above the resistance trend line (dotted red) which indicates that the bearish ABC has been completed. The USD/JPY could be ready for a bullish move within wave D.

The uptrend channel could provide support for a bullish continuation. A bearish break below the channel could be a warning sign for bulls but if price manages to break above 110 (orange), then a new bullish continuation is expected.

The USD/JPY could be building an expanded bullish correction via a WXY (pink). A bearish retracement could see price test the Fibonacci support levels of wave X (pink).

The GBP/USD is building a higher high but the overall pattern remains bearish. The bullish correction could easily be a wave 4 (purple) correction after a strong bearish wave 3.

The Fibonacci levels of wave 4 vs 3 could act as resistance spots if the wave 4 pattern plays out as expected. A break above the 38.2-50% Fib zone indicates that the wave 4 is not likely anymore and price could be making a larger bullish pullback within wave 2.

The GBP/USD broke above a key resistance trend line (dotted red) after failing to break below the support at 1.3250. Price could be building another ABC pattern within wave Y (blue) which could take price up to the Fibonacci levels and targets.

The global financial markets will once again turn to the economic calendar on Monday with headline reports from Europe and the United States set to take precedence.

Action begins a 07:00 GMT with a report on Spanish unemployment. Spain’s unemployment levels plunged by nearly 87,000 for April. A similar reading for May would signal to investors that Spain’s economy is gradually improving.

Switzerland’s government is also expected to report on employment Monday, although no schedule has been announced.

Sentix will release its monthly investor confidence index at 08:30 GMT. The report is based on a survey of more than 1,600 financial analysts and institutional investors across the euro area.

At 09:00 GMT, the European Commission’s statistical agency will report on producer inflation for the month of April. Factory-gate prices are forecast to rise 0.4% month-on-month, which translates into an annualized rate of 2.4%.

Shifting gears to North America, NAPM-New York will release the ISM New York business conditions index for the month of May. The monthly report provides a snapshot of business conditions in the New York region.

At 14:00 GMT, the US Department of Commerce will report on factory orders, which is used to gauge overall demand for durable and non-durable goods. Orders for factory goods are projected to fall 0.3% in April after rising 1.6% the month before.

Economic data was a major catalyst for currencies and stocks on Friday after US nonfarm payrolls came in much better than expected. The US economy added 223,000 jobs for May as the unemployment rate dipped to a new multi-decade low of 3.8%.

The economic calendar heats up later this week with reports on Eurozone GDP, Chinese trade and Canadian employment.

EUR/USD

Europe’s common currency edged higher on Monday, picking up where it left off last week. EUR/USD is trading at 1.1674, having gained 0.1% from the previous close. The pair touched a high near 1.1730 last Thursday but has been unable to replicate those levels. Immediate support is located at 1.1642, the low from 1 May. On the opposite side of the ledger, Thursday’s swing high represents the first line of resistance.

GBP/USD

Cable was off to a positive start on Monday, as prices rose 0.1% to 1.3363. The currency pair is trading at its highest level since 24 May, though underlying momentum remains weak. GBP/USD faces immediate support at the 1.3300 level. On the opposite side of the ledger, the 22 May swing high of 1.3472 is likely to provide strong resistance.

USD/CAD

The USD/CAD exchange rate stabilized on Friday following a series of volatile moves. The pair is currently trading in the mid-1.2900 range. The loonie is heavily influenced by commodity prices, whereas the greenback is still benefiting from expectations of rising interest rates.