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Cable broke above 1.34 handle in extension of recovery from new five-month low at 1.3305, boosted by upbeat UK retail sales (Apr sales rose 1.6% m/m, vs 0.8% f/c and downward revised March figure to 1.1%).

Strong UK data and weaker dollar could help recovery and keep larger bulls sidelined for a while.

Rising 14-momentum and north-turning slow stochastic add to positive near-term bias.

Falling 10SMA marks strong obstacle (1.3469) which may limit recovery for extended consolidation before fresh push lower.

Break of 10SMA would sideline bears for stronger recovery towards key near-term barriers at 1.3564 (200SMA) and 1.3617 (10 May former congestion top).

Res: 1.3442, 1.3469, 1.3491, 1.3533
Sup: 1.3339, 1.3305, 1.3250, 1.3205

The Aussie dollar holds in narrow range, consolidating after strong dip on Wednesday on renewed concerns about US tariffs.

Strong downside rejection on Wednesday (20SMA contained spike to 0.7522) keeps alive hopes for fresh upside, as 5/10/20SMA in bullish configuration underpin and helped by positive momentum.

On the other side, falling 30 SMA capped upside attempts and caps today's action for now (0.7576).

Sustained break above is needed to open way for retest of pivotal barrier at 0.7605 (Tuesday's high).

Initial negative signal could be expected on return below 10SMA (0.7535) while close below 20SMA (0.7523) would confirm lower top and 0.7605 and risk further easing.

Res: 0.7576, 0.7605, 0.7647, 0.7660
Sup: 0.7535, 0.7523, 0.7502, 0.7488

EUR/CHF is trying to bounce after the breach of the key support at 1.1675 (03/09/2018 low), confirming increasing selling pressures. Monitor the test of the key support at 1.1463.

In the longer term, the technical structure has reversed. Strong resistance at 1.20 (level before the unpeg) is now at reach. The ECB's slowing QE program is likely to cause buying pressures on the euro, which should weigh in favour of the EUR/CHF. Support and resistance can be found at 1.0624 (24/06/2016 low) and 1.2097 (18/12/2014 high)

EUR/GBP bounce has shifted into a sideways pattern. Hourly support and resistance are given at 0.8668 (22/03/2018 low) and 0.8838 (23/02/2018 high). The technical structure suggests short-term upward moves.

In the long-term, the pair has largely recovered from 2015 lows. The technical structure suggests further upside pressure. Strong resistance can be found at 0.9500 (psychological level) while support remains at 0.8304 (05/12/2016 low). The pair is trading below its 200 DMA.

Italy got its prime minister, now what?

The Swiss franc took a big hit on Wednesday afternoon after Sergio Mattarella names Giuseppe Conte as Prime Minister as USD/CHF rose more than 0.6% to 0.9978. Similarly, EUR/CHF climbed from 1.1581 to 1.1660, up 0.68%. However, the Swissie’s losses were proved to be short-lived as the greenback resumed its debasement.

In the short-term, we expect that the franc appreciation against the euro will ease as the uncertainty generated by the Italian situation becomes of secondary importance. Nevertheless, the League and the 5-star Movement have promised to take a bunch of measures that will eventually widen the country’s budget deficit (cancellation of pension reform, flattening tax, increase spending, etc.), which will raise the hairs of investors’ back. Therefore, we believe that over the medium-term, we may see some renewed buying pressure on the Swiss on the franc against the euro.

However, for USD/CHF this is a complete different story, as fundamentals are not supportive for further dollar appreciation. US interest rates have started to move lower recently with the 2-year yield easing to 2.51%, while the 10-year one slid below the 3% threshold. The trade tension between China and the USA have eased recently, as the Trump administration is backpedalling. Moreover, the latest Trump geopolitical manoeuvres have affected negatively the relationship between the US and most of its allies.

TRY in wild swings

Volatility in EM FX continues to fuel speculation of a wider risk unwind. This time its events in Turkey, which are driving traders into safe-haven trades. Investor are dumping the Try as years of poor financial managements, crony-capitalism, less independent CBT and political uncertainty are now in play. Rising US yields are clearly the catalyst but weak fundamentals make short TRY trade simpler. USDTRY 1 month atm volatility has spiked above 30. In an attempt to stem the outflows the Turkish central banks unexpectedly jacked interest rates.

Unexpectedly because Present Erdogan recently communicated that the central banks independence would be in jeopardy should he win and expand executive powers on 24th June general election. He express that Turkish interest rate should be lower to support weak growth, rather than higher to target inflation. Wednesday after markets had closed, in an emergence session CBT hiked late liquidity lending rate by 300 basis points to 16.5%. The statements was short highlighting higher inflation fears and weak TRY as primary reason for monetary policy tightening. The immediate reactions in TRY was a relief rally however since then the Try has continued its march higher. We don’t see any relief in TRY sell until after the 24th elections and even then the failure to address key fundamental issues and attractive US rates will likely keep TRY weak.

Crude oil is holding after, breaking 72 psychological level. The road is wide opened for further rise. The bullish pattern started in mid- February 2018 is strengthens. Hourly support and resistance are given at 65.56 (17/04/2018 low) and 73.56 (28/11/2014 high). The technical structure suggests further short-term upward 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 is consolidating. Hourly support and resistance are given at 16.05 (19/12/2017 low) and 16.87 (06/03/2018 high). The technical structure suggests short-term decrease.

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.

Gold remains weak below resistance at 1300, indicating persistent selling pressures. Hourly support and resistance are given at 1263 (21/12/2017 low) and 1329 (08/03/2018 high). The technical structure suggests short-term downward moves.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1'392 (17/03/2014) is required to confirm it. A major support can be found at 1'045 (05/02/2010 low). The pair is trading below its 200 DMA.

AUD/USD is trying to bounce after the break of the supports at 0.7652 and 0.7502. Hourly support and resistance remain at 0.7412 (09/05/2018 low) and 0.7813 (19/04/2018 high). The technical structure suggests short-term increase.

In the long-term, the upward trend slows down after failing to reach key resistance at 0.8164 (14/05/2015 low). Key support stands at 0.6009 (31/10/2008 low). A break of the key resistance at 0.8164 (14/05/2015 high) is needed to invalidate our long-term bearish view.

USD/CAD is still swinging. Hourly support and resistance are given at 1.2621 (23/02/2018 low) and 1.3001 (05/03/2018 high). The technical structure suggests short-term upward moves.

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