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Daily Pivots: (S1) 0.7559; (P) 0.7583; (R1) 0.7599; More...

Intraday bias in AUD/USD is turned neutral with today's sharp fall that drags 4 hour MACD below signal line. Price actions from 0.7411 is seen as a correction. Break of 0.7502 will argue that it's completed and bring retest of 0.7411 low. Firm break there will resume the fall from 0.8135 and target cluster support at 0.7328 (61.8% retracement of 0.6826 to 0.8135 at 0.7326). In case of another recovery, strong resistance should be seen at 38.2% retracement of 0.8135 to 0.7144 at 0.7688 to limit upside and bring decline resumption eventually.

In the bigger picture, medium term rebound from 0.6826 is seen as a corrective move. Break of 0.7500 key support suggests that such correction is completed at 0.8135. Deeper decline would be seen back to retest 0.6826 low. In case of another rise, we'd expect strong resistance from 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside to bring long term down trend resumption eventually.

Market movers today

In the US, Markit PMIs for May are due for release. We expect manufacturing PMI to fall this month from 56.5 down to 55.8, as we still believe we are beyond the peak, so manufacturing growth will be lower but still positive. We expect services PMI to come in at 55.0, up from 54.6.

Today also brings FOMC meeting minutes. We do not expect much news, as the Fed is continuing its gradual hiking cycle with two to three additional rate increases this year. However, we intend to keep an eye on why the Fed removed its phrasing about ‘monitoring inflation closely '.

In the euro area we expect the PMI, which has moderated recently, to yield another ‘softer' reading across countries. It will be interesting to follow the manufacturing PMI and see the potential impact of the spill over of the ongoing trade spat in the US. So far, we expect it to be relatively benign.

In the UK, CPI figures for April are due out . Inflation is falling back towards 2%, as the impact of GBP depreciation fades. How fast it falls back will be an important factor for how fast the Bank of England tightens monetary policy.

In the Scandi markets, Danish consumer confidence for May is due out (see next page).

Selected market news

US equity market futures are slightly weaker this morning, despite Congress passing a sweeping overall of US financial regulations, easing the regulatory burden on SME banks. Comments from President Trump yesterday that cast doubt over the upcoming meeting with North Korea's leader on 12 June might also have weighed on risk sentiment .

The political drama in Italy meanwhile continues: President Sergio Mattarella may announce his decision regarding the formal nomination of Giuseppe Conte as premier today or Thursday, after doubts about his suitability flared up. Markets will also focus on the choice of the finance minister, who sets the budget policy. The media reported yesterday that Paolo Savona, an economist and company executive who has repeatedly called on the Italian government to plan for a possible euro exit , is the front -runner for the posit ion. While the euro exit is not part of the Five Star-League government program me, the naming of Savona may st ill sound alarm bells in Brussels and will do nothing to improve the current market sentiment . Italian bonds st ill recovered somewhat yesterday, with 10-year yields falling 6bps.

While Italian turmoil is building, US and China trade tension seems to be easing. The recent developments in the US-China trade talks support our base case that the two parts will eventually make a ‘grand bargain', which is positive for both the global economy and risk. Aft er China agreed on Saturday to 'substantially reduce' its trade surplus in goods with the US, the media reported yesterday that China will cut its tariffs on cars to 15% from 25%. While the 'grand bargain' is moving closer, it is too early to declare victory. Commerce Secretary Wilbur Ross will visit Beijing in early June to work out details of China's commitment to purchase more American goods

Daily Pivots: (S1) 1.2761; (P) 1.2795; (R1) 1.2852; More.....

Intraday bias in USD/CAD remains neutral as it's staying in range of 1.2728/2996. No change in our view that price actions from 1.3124 as a corrective move that could be completed at 1.2526 already. Break of 1.2996 will turn bias to the upside and extend the rise from 1.2526 to 1.3124 key resistance next. However, break of 1.2728 will dampen this bullish view and bring deeper fall back to 1.2526 and possibly below.

In the bigger picture, we're favoring the case that that rebound from 1.2061 has not completed yet. Focus is back on 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Sustained trading above there will confirm medium term bullish reversal. That is, down trend from 1.4689 has completed at 1.2061 already. In that case, next target will be 61.8% retracement at 1.3685. However, break of 1.2526 support will dampen this bullish view again. And, focus will be back on 1.2061 key support level, which is close to 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048.

Daily Pivots: (S1) 1.1747; (P) 1.1788 (R1) 1.1820; More....

Intraday bias in EUR/USD remains neutral as it's staying above 1.1716 for consolidation. Another rise cannot be ruled out. But in that case, upside should be limited by 1.1995 resistance to bring fall resumption. On the downside, sustained break of 38.2% retracement of 1.0339 to 1.2555 at 1.1708 will pave the way to 50% retracement 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. Break of 38.2% retracement of 1.0339 to 1.2555 at 1.1708 will pave the way to 61.8% retracement at 1.1186. 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 1.2113) holds.

Daily Pivots: (S1) 1.3398; (P) 1.3445; (R1) 1.3478; More...

GBP/USD's fall resumed after brief consolidation and reaches as low as 1.3374 so far. Intraday bias is back on the downside for 50% retracement of 1.1946 to 1.4376 at 1.3161. On the upside, above 1.3490 minor resistance will turn intraday bias neutral and bring consolidation first, before staging another decline.

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, on bearish divergence condition in daily MACD, after rejection from 55 month EMA (now at 1.4249). 38.2% retracement of 1.1936 (2016 low) to 1.4376 at 1.3448 should now be firmly taken out. Next target will be 61.8% retracement at 1.2874 and below. Outlook will stay bearish as long as 55 day EMA (now at 1.3761) holds, even in case of strong rebound.

Daily Pivots: (S1) 0.9900; (P) 0.9945; (R1) 0.9973; More...

USD/CHF's corrective decline from 1.0056 extends to as low as 0.9892 so far. Intraday bias remains mildly on the downside for deeper fall to trend line (now at 0.9817). We'd expect strong support from there to contain downside and bring rebound. On the upside, above 0.9956 minor resistance will bring retest of 1.0056 high first.

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) 110.73; (P) 110.96; (R1) 111.13; More...

USD/JPY drops sharply to as low as 110.52 so far today but it's staying above 110.02 resistance turned support so far. And it's holding inside near term rising channel. Hence, intraday bias stays neutral and the consolidation from 111.39 should be relatively brief. Break of 111.39 will resume the rally from 104.62 to trend line resistance at 112.31. However, considering bearish divergence condition in 4 hour MACD, break of 110.02 will indicate short term topping. In that case, deeper pull back could be seen to 108.82 cluster support (38.2% retracement of 104.62 to 111.39 at 108.80) before completing the correction.

In the bigger picture, corrective decline from 118.65 (2016 high) has completed with three waves down to 104.62. Rise from 104.62 is possibly resuming the up trend from 98.97 (2016 low). This will be the preferred case as long as108.80 support holds. Decisive break of 114.73 resistance will confirm our view and target 118.65 and above.

Daily Pivots: (S1) 1.5498; (P) 1.5535; (R1) 1.5582; More....

EUR/AUD's recovery and break of 1.5593 minor resistance suggests temporary bottoming at 1.5487. Intraday bias is turned neutral for consolidations first. Upside of rebound should be limited well below 1.5773 support turned resistance to bring another fall. As noted before, prior break of 1.5621 support is taken as an indication of medium term reversal. Below 1.5487 will target 1.5153 key support next.

In the bigger picture, rally from 1.3624 (2017 low) should have completed at 1.6189 already, ahead of 1.6587 key resistance (2015 high). 1.6189 is seen as a medium term top. Deeper fall would be seen to 38.2% retracement of 1.3624 to 1.6189 at 1.5209 first. Decisive break there will pave the way to 61.8% retracement at 1.4604. In that case, we'll look for bottoming again below 1.4604. On the upside, break of 55 day EMA (now at 1.5849) is needed to indicate completion of the fall from 1.6189. Otherwise, further fall is expected in medium term, even in case of strong rebound.

Daily Pivots: (S1) 0.8756; (P) 0.8773; (R1) 0.8789; More...

Intraday bias in EUR/GBP remains neutral with mixed near term outlook. On the downside, break of 0.8679 support should confirm completion of the rebound form 0.8620. And intraday bias will be turned back to the downside for this support. Whole decline from 0.9305 will likely be resuming too. On the upside, above 0.8844 will resume the rebound from 0.8620 and target 0.8967 cluster resistance (50% retracement of 0.9305 to 0.8620 at 0.8963).

In the bigger picture, for now, the decline from 0.9305 is seen as a leg inside the long term consolidation pattern from 0.9304 (2016 high). Such consolidation pattern could extend further. Hence, in case of strong rally, we'd be cautious on strong resistance by 0.9304/5 to limit upside. Meanwhile, in another decline attempt, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 1.1721; (P) 1.1743; (R1) 1.1781; More....

EUR/CHF's decline resumed after brief consolidation and reaches as low as 1.1654 so far. Intraday bias is back on the downside. Sustained break of 61.8% retracement of 1.1445 to 1.2004 at 1.1659 will pave to way to key support level at 1.1445. We'd expect strong support from here to bring rebound, at least, on first attempt. On the upside, above 1.1705 minor resistance will turn bias neutral and bring consolidations first, before staying another fall.

In the bigger picture, current development suggests solid rejection by prior SNB imposed floor at 1.2000. Considering bearish divergence condition in daily MACD, 1.2004 could be a medium term top. And price action from 1.2004 is correcting the up trend from 1.0629. Hence, for now, deeper fall could be seen back to 1.1445, which is close to 38.2% retracement of 1.0629 to 1.2004 at 1.1479. We'd expect strong support from there to bring rebound to extend the medium term corrective pattern.