Sample Category Title

Daily Pivots: (S1) 0.9885; (P) 0.9911; (R1) 0.9926; More...

No change in USD/CHF's outlook. Deeper fall could be seen as correction from 1.0056 extends. But we'd expect strong support from trend line (now at 0.9830) to contain downside and bring rebound. On the upside, above 0.9977 will suggest that the pull back is finished and bring retest of 1.0056 high. However, sustained break of the trend line will argue that it's a larger scale correction and will target 0.9724 fibonacci level.

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.

Daily Pivots: (S1) 1.3263; (P) 1.3327; (R1) 1.3359; More...

Intraday bias in GBP/USD remains on the downside for the moment. Current fall from 1.4376 should target 50% retracement of 1.1946 to 1.4376 at 1.3161. On the upside, break of 1.3568 resistance is needed to indicate short term bottoming. Otherwise, outlook will remain bearish in case of recovery.

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 1.4223). 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 1.3730) holds, even in case of strong rebound.

Daily Pivots: (S1) 1.1618; (P) 1.1676 (R1) 1.1707; More.....

EUR/USD's recovery today pulled 4 hour MACD above signal line again. A temporary low is in place and intraday bias is turned neutral for consolidations. Even in case of rebound, firm break of 1.1995 resistance is needed to confirm reversal. Otherwise, outlook will remain bearish for deeper decline. Below 1.1643 will resume the fall from 1.2555 and target 50% retracement of 1.0339 to 1.2555 at 1.1447 next.

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 55 day EMA (now at 1.2049) holds.

Euro rebounds strongly and broadly today as the markets cheer political turmoils in Italy. On the other hand, Swiss Franc and Japanese Yen are trading as the weakest as sentiments improved. There appears to be some breakthrough again between US and North Korea as South Korean President Moon Jae-in successfully pulled the two parties back to the table. The economic calendar is light today with UK and US on holiday. So trading could be relatively subdued. Nonetheless, a large batch of heavy weight economic data are lining up ahead to make it a jam packed week.

Technically, while EUR/USD rebounds, it's held below 1.1750 minor resistance so far. There is no indication of bottoming yet. This 1.1750 resistance will be watched ahead. USD/JPY despite last week's sharp pull back, was held above 108.82 near term support. Rebound above this level will help re-confirm near term bullishness. Meanwhile, USD/CAD, despite last week's rebound, is held below 1.2996 resistance. This have to be taken out firmly to confirm rally resumption.

Euro rebounds as formation of eurosceptic Italy government collapsed

Italy is in fresh political turmoil again as the formation of the new eurosceptic government collapsed. Nonetheless, the Euro is lifted mildly higher today as that's seen as a positive development for the common currency.

President Sergio Mattarella vetoed Paolo Savona as the as economy minister. Savona is an 81-year-old eurosceptic economist who's a vocal critic of the common currency. Mattarella said in a televised speech that "the uncertainty over our position (on euro) has alarmed investors and savers both in Italy and abroad." And, he emphasized that "membership of the euro is a fundamental choice. If we want to discuss it, then we should do so in a serious fashion." Mattarella added that "I asked for that ministry an authoritative political figure from the coalition parties who was not seen as the supporter of a line that could provoke Italy's exit from the euro."

Prime Minister-designate Giuseppe Conte promptly abandoned the effort to form a new government. The far-right League and anti-establishment Five Star Movement, accused Mattarella of abusing his authority and working under the orders of European powers. Five Star leader Luigi D Maio even demanded that parliament impeach Mattarella. League chief Matteo Salvini threatened mass protests unless snap elections were called.

Former IMF director of fiscal affairs Carlo Cottarelli was called in to head a stopgap government. But he's unlikely to have enough support from the parliament. So, that's only a short-term solution and an election is now likely to be held to solve the political crisis, possibly in September or October.

Abe to tell Trump Japanese carmakers made huge contributions to the US economy

Japan Prime Minister Shinzo Abe was asked in the parliament today about Trump intention to impose tariffs on car imports using national security as excuse. Abe said he would seek to convince Trump that Japan carmakers are important in boosting the US economy.

He noted that Japan auto makers have "created jobs and made huge contributions to the U.S. economy." And he added that the number of cars Japanese automakers produce in the US is double the number it exports to the country.

And he emphasized that "as a country that prioritizes a rule-based, multilateral trade system, Japan believes that any steps taken on trade must be in line with World Trade Organization rules."

Separately, he added that "Japan has explained to the United States its stance that TPP is the best format for both countries. We will continue to talk with the United States based on this view."

South Korea Moon revived the Kim-Trump summit. He could join to make it three-way

South Korean president Moon Jae-in had a surprised meeting with North Korean leader Kim Jong-un on Saturday, regarding the summit with the US. Moon's office said after the meeting that the leaders "exchanged views and discussed ways to implement the Panmunjom Declaration and to ensure a successful US-North Korea summit."

Moon added in a press conference that "should the North Korea-US summit succeed, I would like to see efforts to formally end the (Korean) war through a three-way summit of the South, the North and the US." Moon added in a press conference that "should the North Korea-US summit succeed, I would like to see efforts to formally end the (Korean) war through a three-way summit of the South, the North and the US." Moon also sought agreement from Kim that the summit must be held.

A South Korean official said that "the discussions are just getting started, so we are still waiting to see how they come out, but depending on their outcome, the president could join President Trump and Chairman Kim in Singapore."

White House spokeswoman Sarah Sanders also said that "the White House pre-advance team for Singapore will leave as scheduled in order to prepare should the summit take place." Also, Trump himself tweeted that the US teams is now in North Korea to discuss the meeting.

BoC to stand pat, economic data to drive the week

Looking ahead, the calendar is very light today with no notable release. UK and US are on bank holiday so volatility could be subdued. But a jam packed week will start on Tuesday. BoC rate decision is a highlight but based on current uncertainties around trade, there is little chance for the central bank to act.

Economic data, on the other hand, will come back to spotlights. US will release consumer confidence, personal income and spending as well as PCE inflation, ISM manufacturing and non-farm payroll. We'll have a rather comprehensive look at the US economy on inflation, wage growth, manufacturing and job market.

May CPI will be the major focus in Eurozone. It's expected to bounce back from 1.2% to 1.6% yoy. Core CPI is also expected to rebound from 0.7% yoy to 1.0% yoy. Such development would give ECB policymakers more confidence to end the asset purchase program this year. But another miss will give them a lot of headaches.

For BoE, the chance of a rate hike in August got slimmer after last week's CPI miss. But a November hike is still on the table.
UK PMI manufacturing will show some lights on how the economy is bouncing back on Q2.

Here are some highlights for the week ahead:

• Tuesday: Swiss trade balance; Eurozone M3; UK S&P Case Shiller house price, consumer confidence
• Wednesday; New Zealand building permits, RBNZ financial stability report; Australia building approvals; Japan retail sales, consumer confidence; Germany retail sales, import prices, CPI, unemployment; French GDP; Swiss KoF; US ADP employment, GDP revision, trade balance, wholesale inventories, Fed's Beige Book; BoC rate decision, Canada current account, IPPI and RMPI
• Thursday: Japan industrial production, housing starts; China official PMIs, New Zealand ANZ business confidence; Australia private capital expenditure; Swiss retail sales; UK M4, mortgage approvals; Eurozone CPI flash, unemployment; Canada GDP; US personal income and spending, pending home sales, jobless claims
• Friday: New Zealand terms of trade; Japan capital spending; China Caixin PMI manufacturing; Swiss PMI manufacturing; Eurozone PMI manufacturing final; UK PMI manufacturing; US non-farm payroll, ISM manufacturing, construction spending; Canada PMI manufacturing

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1618; (P) 1.1676 (R1) 1.1707; More.....

EUR/USD's recovery today pulled 4 hour MACD above signal line again. A temporary low is in place and intraday bias is turned neutral for consolidations. Even in case of rebound, firm break of 1.1995 resistance is needed to confirm reversal. Otherwise, outlook will remain bearish for deeper decline. Below 1.1643 will resume the fall from 1.2555 and target 50% retracement of 1.0339 to 1.2555 at 1.1447 next.

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 55 day EMA (now at 1.2049) holds.

Economic Indicators Update

Traders were increasingly bullish over US dollar, as suggested in the CFTC Commitments of Traders report in the week ended May 22. USD Index (DXY) futures stayed in NET LENGTH for a second consecutive week. Rising speculative long positions and dropping shorts resulted in NET LENGTH of 2 586 contracts, up from 18 contracts in the prior week. During the week, the DXY index gained +0.42%, as the greenback strengthened against major currencies with the exception of Swiss franc and Canadian dollar.

NET LENGTH for EUR futures continued to trim, dropping -5 370 contracts for 109 744 for the week. The increase in speculative short positions (+12 013 contracts) almost doubled that of longs (+6 643 contracts). Bets on GBP futures dropped on both sides, leading to a slight increase (+80 contracts) of NET LENGTH to 5 701 contracts.

Traditional safe-haven currencies lost ground. JPY futures returned to NET SHORT of 2 767 contracts last week, due to quite a sharp increase in speculative short positions (up +15 357 contracts). On the other hand, CHF futures deepened into NET SHORT of 37 311 contracts, increasing +918 from the prior week.

On commodity currencies, NZD futures drifted to NET SHORT of 1 363 contracts, thanks to a drop in speculative long positions (down -1 677 contracts) and a gain in shorts (up +1 639 contracts). NET SHORT for AUD futures, however, dropped by -1 994 contracts to 21 112. NET SHORT for CAD futures rose by +2 556 contracts to 26 212 for the week.

Today were going to have a look at the NZDUSD weekly chart. We can see that for close to 2 years price has been ranging in between our areas of support and resistance, or you could say it’s a rectangle pattern. However you like to call it, we’re seeing a long term consolidation of price between the upper and lower boundaries.

As price is currently at our support zone, one could potentially trade a convincing rejection of support looking to target at least the .72 levels, or alternatively a convincing breakout below or above our S&R zones could provide a long-term trend trade.

If we jump down to the H4 timeframe, we haven’t really got a lot to go off at this point. We can see the makings of a potential ascending triangle forming, however as a personal preference, I prefer to see levels tested 3 or more times. This is certainly a pair to watch for either a range trade or if you’re more patient, a breakout trade.

Key Highlights

• The Euro failed to recover this past week and declined below 1.1700 against the US Dollar.
• There is a major bearish trend line in place with current resistance at 1.1710 on the 4-hours chart of EUR/USD.
• The pair remains at a risk of more losses if it fails to recover above 1.1700 and 1.1710.
• The US Durable Goods Orders in April 2018 declined 1.7%, more than the market expectation of -1.4%.

EURUSD Technical Analysis

The Euro extended declines this past week below the 1.1700 support level against the US Dollar. The EUR/USD pair is now trading in the red zone with the next support at 1.1600.

The 4-hours chart of EUR/USD suggests that the pair attempted a recovery on a couple of occasions. There were ascending channels formed, but the Euro buyers failed to gain traction. As a result, the pair moved down and it recently settled below the 1.1700 support level.

It seems like the pair may well accelerate declines towards the next major support at 1.1600. Below this, the pair could test the 1.1550 support zone. On the upside, there is a major bearish trend line in place with current resistance at 1.1710 on the 4-hours chart of EUR/USD.

A proper break and close above the trend line resistance and 1.1700 is required for a substantial recovery in the near term. Above 1.1710, the next resistance awaits at 1.1840.

Recently in the US, the Durable Goods Orders for April 2018 was released by the US Census Bureau. The market was looking for a decline in orders by 1.4%, compared with the last increase of 2.6%.

However, the result on the lower side as there was a decline in orders by 1.7%. The last reading was revised up to 2.7%. Looking at the Durable Goods Orders ex transportation, there was a rise of 0.9%, more than the forecast of 0.5%.

Overall, the EUR/USD pair may correct a few pips in the near term, but upsides are likely to remain capped by 1.1710.

STOCKS

Most Equity markets, except the Indian market, fell a little more on Friday. Yet, the markets remain a little indecisive from a medium term perspective.

The Dow (24753.09, -58.67, -0.24%) dipped a bit more despite fresh hopes of Trump and Kim Jong meeting up on the one hand and a sharp dip in Crude on the other. However, it still remains inside the "No Man's Land" of 24600-25100.

The DAX (12938.01, +82.92, +0.65%) saw an uptick on Friday but needs to rise past 13100 (at least) to pick up bullishness afresh. At the same time, it has Support at 12800 which prevents further immediate bearishness.

Possibly, the Nikkei (22445.27, -0.025%) appears relatively more bearish than the others, especially while below 22600, but also needs to break below 22200 to confirm bearishness towards 21900 and lower.

The Shanghai (3147.62, +0.20%) dipped some more on Friday and might be able to test the bearish target of 3125-00.

Only the Nifty (10605.15) and Sensex (34925) seemed to snap their losing streak of the last 7-8 trading days, which again puts them into a kind of "No Man's Land". Watch Resistances at 10700 and 36000 respectively and Supports at 10300 and 34000 respectively.

COMMODITIES

Although we have been bearish on Crude for the last few days, Brent (74.94) and WTI (66.21) fell more sharply on Friday than expected, on continued talk from Russia of increase in output. Brent has broken support near 76-75 today while WTI broke support near 67. WTI is now very close to support near 65.5 which could hold in the near term. However, if this support breaks as well, it could prove to be very bearish for Crude in the weeks ahead.

As expected, Gold (1297.83) has come off a bit from Resistance just below 1310 and could test 1290 in the near term. It will become bullish if it bounces strongly again from 1290. we need to watch for that.

Copper (3.0835) contiunues to trade sideways between 3.05-15, as suggested. Which way the current sideways range will break is unclear.

FOREX

Dollar index (93.986) saw a high near 94.16 on Friday and is trading slightly lower today. Since US markets are closed, there might be limited movement in the Index today. However, looking at the next 1-2 sessions, it could test support on daily candles near 93.80 and then, if it stays above 93.8, it could again see a rise beyond 94 and towards 94.25. A break of 93.8 could lead to a test of 93.5 in the days ahead. The upside in the next 1-2 weeks might be capped by 95.00-95.65.

Euro (1.1704), exactly as we had expected, saw a low near 1.165 on Friday and has now risen back up from there. It could rise a little more till 1.173. We expect it to dip from there back towards 1.165. If it breaches 1.173, it could test levels near 1.178. In the next 1-2 weeks, the Euro should test 1.155-1.145 as the Dollar Index tests 95.00-95.65.

Dollar Yen (109.39), after breaking support on daily candles near 110.5 last week, tested a low near 108.9 and is now rising from horizontal support near 109. It could rise up till 110.5 in this week. After testing 110.5, it might again be pushed down, or else, it could breach that level to test resistance on weekly candles near 111.5-112.0 in the next week. We have been expecting Dollar Yen to turn bearish over the medium term in the weeks to come.

Euro Yen (128.04): Support near 127-128 on weekly line chart for Euro Yen is holding for the time being. It could see some ranging between 129.5-128.0 this week, after which, it could break the support on weekly lines and turn bearish towards 125.

Pound (1.3317): In this week, Pound might move down the channel which it is forming on daily candles. The upside might be capped by 1.335 and levels near 1.32 could be tested later in the week.

Dollar Rupee (67.78) : Watch Support at 67.65 and Resistance at 68.00.

INTEREST RATES

US yields have seen a dip towards supports on medium term charts after the Fed minutes last week were perceived to be dovish. We expect a rise in yields from these levels. An important question now is whether the June rate hike has already been factored in by traders. If that is so, we might not see as quick a rise towards 3.2% for the 10 Year yield as we had been expecting.

US 10 Yr Yield (2.93%), 30 Yr (3.09%), 5 Yr (2.77%), 2 Yr (2.48%):

The US 30 year and 5 year yields have dipped slightly below respective supports near 3.11% and 2.80% on medium term chart. However this could be a false break and the yields could rise back up from here. The 10 year yield is close to the support near 2.91% and could test it in the next 1-2 sessions before rising again.

The German 10 Year yield (0.41%) has seen a break of immediate support near 0.45% on short term chart and could now find support near 0.4%.

According to the CFTC Commitments of Traders report for the week ended May 22, traders apparently turned less bullish on crude oil with the reduction of speculative long positions nearly doubling that of shorts. This resulted in a decrease in Net LENGTH, by -11 058 contracts, to 633 386 contracts. However, traders were increasingly bullish for petroleum products. NET LENGTH for heating oil futures added +512 contracts to 42 582 while that for gasoline rose +12 427 contracts to 108 346. Net SHORT for natural gas decreased -30 603 contracts to 62 825 for the week

Speculators were also mixed over the precious metal complex last week. Net LENGTH for gold dropped -1 489 contracts to 90 957 while that for Silver soared +14 567 contracts to 15 225 for the week. For PGMs, net LENGTH for platinum fell -6 734 contracts to 1 462 while that for palladium added +31 contracts to 10 715.

Japan Prime Minister Shinzo Abe was asked in the parliament today about Trump intention to impose tariffs on car imports using national security as excuse. Abe said he would seek to convince Trump that Japan carmakers are important in boosting the US economy.

He noted that Japan automakes have "created jobs and made huge contributions to the US economy." And he added that the number of cars Japanese automakers produce in the US is double the number it exports to the country.

And he emphasized that "as a country that prioritizes a rule-based, multilateral trade system, Japan believes that any steps taken on trade must be in line with World Trade Organization rules."

Separately, he added that "Japan has explained to the United States its stance that TPP is the best format for both countries. We will continue to talk with the United States based on this view."