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USDJPY (109.06): The USDJPY currency pair was seen extending the declines earlier today with prices briefly testing lows of 108.91 before pulling back. A further retest of this support level is expected. A rebound off the support at 108.90 could potentially keep the USDJPY range bound within the resistance level of 109.43 and the mentioned support. An upside breakout above 109.57 could signal further gains in price toward 110.85. To the downside, a close below 108.90 could trigger declines to push price to test 108.00 level of support.

EURUSD (1.1630): The euro currency fell to a fresh 6-month low on Monday at 1.1607 before slightly pulling back higher. The decline below the 1.1672 level of support is likely to pave way for further declines down to 1.1500. This comes following a brief rebound in prices close to the level of 1.1730 where resistance has been formed following the reversal on Monday. Any scope of a recovery in price action can be expected only on a close above 1.1730 level.

The U.S. and the UK markets were closed yesterday on account of their respective bank holidays. However, that didn't stop investors from selling the euro currency. Ongoing developments from Italy on the political front push the euro lower on the day despite gapping higher on the open.

Looking ahead, the economic calendar for the day will see the release of the trade balance figures from Switzerland. Later in the day, the U.S. Conference Board's consumer confidence index is expected to show a modest decline to 128.2 in May, down from 128.7 in April. Despite the anticipated lower reading on the index, consumer confidence in the U.S. is hovering near all-time highs.

The RBNZ will be releasing its financial stability report later in the day.

The pair cracks pivotal support at 108.81 (Fibo 38.2% of 104.63/111.39 ascend) on Tuesday and looks for strong bearish signal on break, which would open way for extension of pullback from 111.39 (21 May peak).

Fresh extension lower also eyes 108.64 (04 May trough), with close below 108.81/64 pivots needed to confirm bearish continuation.

Bears could extend towards 108.19/05 (converging 100/55SMA’s) and could travel towards 107.60 (top of rising and widening daily cloud ).

Formation of 10/200SMA Death-cross and south-heading momentum in the negative territory, maintain bearish pressure.

Broken 30SMA (109.41) marks solid resistance which is expected to cap upticks and keep bears in play.

Res: 108.95, 109.41, 109.78, 110.08
Sup: 108.64, 108.19, 108.05, 107.49

EUR/USD

Current level - 1.1618

The downtrend is absolutely intact, heading for a break through 1.1570, en route to 1.1480 target area. Initial intraday resistence  lies at 1.1650 and crucial on the upside is 1.1750.

USD/JPY

Current level - 108.95

The slide below 109.12 signals a completion of the consolidation pattern above 108.90 and the outlook is bearish, for a slide towards 108.20-107.90 zone. Minor intraday resistance is projected at 109.20 and crucial on the upside is 109.50.

GBP/USD

Current level - 1.3302

The downtrend is intact, ready for a break through 1.3300, towards 1.3040 area. Minor intraday resistance lies at 1.3350, followed by the crucial peak at 1.3421.

The market turmoil continues as Oil reached a six week low yesterday after backing away from strong resistance at $73.00 early last week. The Inventory data on Wednesday, showing an unexpected build of 5.778M, compounded the pressure followed by increases in US Oil Rig counts to 859 on Friday and reports of Saudi Arabia and Russia agreeing to ease output cuts ahead of the next OPEC meeting next month in Vienna. The rumour is that the easing of cuts will add an additional 1 million bps to the market which could see further falls in the price which is currently at $66.77. USDTRY fell to 4.55475 as lower prices would ease inflation worries.'

German IFO – Current Assessment (May) was 106.0 against an expected 105.5 from 105.7 previously. IFO – Expectations (May) was 98.5 against an expected 98.5 from 98.7 prior. IFO – Business Climate (May) was 102.2 against an expected 102.0 v 102.1 previously. The data shows a steadying business climate in Germany after the fall in the March data but with a lot of work to do to regain the previous highs. This data cannot be ignored as it surveys 7,000 businesses and is a leading indicator of economic direction. EURUSD moved up from 1.16841 to 1.17285 after the data was released.

US Durable Goods Orders ex Transportation (Apr) were 0.9% against an expected 0.5% from 0.0% previously which was revised up to 0.4%. Durable Goods Orders (Apr) were -1.7% against an expected -1.4%% from 2.6% previously which was revised up to 2.7%. This data series diverged last month with ex-transports missing expectations and the headline data exceeding its consensus. This divergence continued but the data showed a fall in headline data and a rise in ex-transports. EURUSD moved up from 1.16650 to 1.16865 after this data release.

EURUSD is up 0.05% overnight, trading around 1.16297.
USDJPY is down -0.30% in the early session, trading at around 109.081
GBPUSD is up 0.04% this morning trading around 1.33138.
USDCAD is down -0.06% overnight, trading around 1.29859
Gold is up 0.03% in early morning trading at around $1,298.00
WTI is up 0.21% this morning, trading around $66.77

At 10:30 GMT, ECB’s Mersch is due to speak at a scheduled event today. EUR pairs can move in reaction to comments made during this event.

At 12:00 GMT, US S&P/Case Schiller Home Price Index (YoY) (Mar) is expected to come in at 6.4% from a prior 6.8%. This measure has been holding a steady improvement since the late 2014 low, with today’s data expected to be largely in line with expectation if slightly weaker.USD crosses may be heavily traded as a result of this data.

At 13:15 GMT, ECBs Lautenschlager is expected to speak today at a scheduled event. EUR crosses can be moved by comments made during this speech.

At 21:00 GMT, RBNZ Financial Stability Report is expected to be released at this time. NZD crosses can see spikes in volatility as a result.

At 22:45 GMT, New Zealand Building Permits s.a. (MoM) (Apr) is expected to be released after coming in at 14.7%. This data is within a range from 20.0 to -12.0. NZD crosses can see spikes in volatility during this time.

Major data releases for this week:

On Wednesday at 07:00 GMT, German Harmonized Index of Consumer Prices (YoY) (May) is expected to be released.

At 12:30 GMT, US Gross Domestic Product and Personal Consumption Expenditures data will be released.

At 14:00 GMT, Bank of Canada Rate Statement and Interest Rate Decision will be published.

On Thursday the G7 Meeting will take place in Canada.

At 09:00 GMT, Eurozone Consumer Price Index data will be released.
At 12:30 GMT, US Personal Income and Expenditure data will be coming out.
At 12:30 GMT, Canadian Gross Domestic Product data will be released.

On Friday the G7 Meeting will continue for a second day.
At 12:30 GMT, US Nonfarm Payrolls and Average Hourly Earnings data will be released.

On Saturday the G7 Meeting will continue for a third day.

Cable hit new six-month low on Tuesday, signaling continuation of larger downtrend after brief consolidation on Monday which was shaped in tight daily Doji.

Weakening Euro weighs on pound which eyes target at 1.3207 (weekly cloud top).

Daily MA’s are in full bearish setup, while 14-d momentum is turning south and 20-d Bollinger bands expand, maintaining bearish environment for further losses.

Penetration of weekly cloud would expose 1.3153 (50% retracement of 1.1930/1.4376, post-Brexit recovery phase) and open way towards next strong supports at 1.3038/26 (Oct/Nov 2017 higher base).

Falling daily 5SMA offers initial resistance at 1.3324 (session high), while descending 10SMA (1.3396) is expected to cap stronger upticks and keep bears intact.

Res: 1.3324, 1.3353, 1.3396, 1.3421
Sup: 1.3250, 1.3207, 1.3153, 1.3100

EURUSD has been in the red over the past six weeks, moving within a descending channel to reach six-month lows marginally below the 1.1600 round level on Tuesday. The technical picture now supports that the downside pattern not looking like ending soon, as the price continues to trend far below the Ichimoku cloud and its moving averages.

Momentum indicators are also in bearish territory, with the MACD trapped below zero and its red signal line since the end of April, showing no sign of turning up at the moment. The RSI adds to the negative view as well by fluctuating below 30 in the oversold area. At the same time though, the RSI index hints that further downside movements might not be sustainable, and the market might be on track to make a correction to the upside.

Should the price head lower, a strong support could come at 1.1553, taken from the low on November 7, since any substantial close below that level could confirm further downside pressure, probably towards the 1.1500 key-mark, near the bottom of the channel. Even lower, the next target could be the 1.1400 key-mark

On the other hand, if the price bounces up, the roof of the channel seen around 1.1700 could offer nearby resistance. A break above this area could then open the door for the 20-day simple moving average, currently at 1.1819 before the focus shifts to 1.1920, a previously congested level.

Regarding the medium-term picture, the outlook is likely to hold bearish as long as the market trades below 1.2153, the bottom of the previous trading range that held from mid-January to late April.

The Euro accelerated lower at the beginning of the European session on Tuesday, after holding within tight consolidation in Asia and hit new nearly seven-month low just under 1.16 mark.

The single currency maintain firm bearish tone and looks for further extension lower after Monday’s gap-higher opening and recovery attempts that stalled at 1.1728, offered better selling opportunities.

Political turmoil in Italy keeps the Euro under pressure, as markets fear that Italian elections, which could take place in August, could again raise questions about Italy’s role in the European Union.

Last Friday’s penetration and close within weekly Ichimoku cloud, as well as close below 1.1709 (Fibo 38.2% of 1.0340/1.2555 rally) were negative signals, as bearish daily/weekly techs maintain pressure, but oversold conditions suggest bears may take a breather ahead of next target and another key support at 1.1553 (07 Nov trough).

Violation of 1.1553 pivot would risk extension towards 1.1431/12 zone (converging weekly 200/100SMA’s).

Broken weekly clout top marks initial resistance at 1.1681, with falling 10SMA (1.1722) which tracks descend for over one month, expected to cap stronger upticks.

Res: 1.1656, 1.1681, 1.1722, 1.1750
Sup: 1.1585, 1.1553, 1.1500, 1.1747