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Here are the latest developments in global markets:

FOREX: The US dollar index – which tracks the greenback's performance against a basket of six major currencies – was 0.3% higher on Monday, touching a fresh high for 2018. Meanwhile, the safe-haven Japanese yen continued to lose ground, weighed on by signs that trade tensions between the US and China are easing.

STOCKS: Wall Street closed lower on Friday, for the most part. While the S&P 500 and the Nasdaq Composite declined by 0.26% and 0.38% respectively, the Dow Jones closed practically unchanged. That said, risk sentiment looks to have recovered as futures tracking the S&P, Dow, and Nasdaq 100, are all currently pointing to a much higher open today, following comments over the weekend suggesting the US and China will put their trade war “on hold”. In Asia, Japan's Nikkei 225 rose by 0.31%, but the Topix edged down 0.08%. Meanwhile in Hong Kong, the Hang Seng climbed by 0.82%. In Europe, futures tracking the major indices were a sea of green, with the sole exception being Italy's FTSE MIB, which is expected to open lower.

COMMODITIES: Oil prices were higher on Monday, buoyed by the broader pickup in risk sentiment following news the US and China trade war is “on hold”. WTI and Brent crude are both up by 0.8%. Signs that trade frictions are deescalating reduce the downside risks surrounding global economic growth and by extent, those surrounding global oil demand, thereby boosting prices. The precious liquid may have also received a helping hand by news Nicolas Maduro won another six years as Venezuela's President. This increases the probability of fresh US sanctions on Venezuela, which may curtail even further the nation's dwindling oil supply. In precious metals, gold was down by 0.6%, touching a new 2018 low of $1282. The safe-haven is being weighed down by a combination of diminishing risks on the trade front, as well as the continued surge in the US dollar.

Major movers: Risk appetite bolstered as US & China call a ceasefire in trade war

The US and China will hold off from imposing the tariffs they had announced in recent months. Over the weekend, US Treasury Secretary Steven Mnuchin said that negotiations with Chinese officials last week had borne fruit, with the Asian nation agreeing to buy more American goods in an attempt to narrow the trade imbalances between them. Mnuchin said: “We are putting the trade war on hold, right now, we have agreed to put the tariffs on hold while we try to execute that framework”.

Markets reacted in classic “risk-on” fashion, as investors placed bets that the worst may be behind us, and that the situation will most likely be resolved through further negotiations. Futures tracking the major US stock markets are well-into positive territory, pointing to a much higher open today, while safe haven assets like gold and the Japanese yen are markedly lower.

Dollar/yen is more than 0.5% higher, currently trading a few pips below 111.40, having powered through the round figure of 111.00 overnight. The US currency was stronger across the board, with the dollar index touching a fresh seven-month high of 93.97. Both euro/dollar and sterling/dollar dipped by 0.4%, to new six-month lows.

Elsewhere, the loonie came under renewed selling interest on Friday, following relatively soft economic data out of Canada. Strangely enough, the implied probability for a rate hike by the Bank of Canada (BoC) at next week's meeting barely budged, staying at around 32%. Although the BoC has caught markets by surprise before, 32% still seems a little exaggerated – especially since there are no more data releases or speeches by BoC officials in the meantime.

In Italian politics, the two anti-establishment parties trying to form a coalition government have reportedly agreed on a Prime Minister. While these parties have dropped some of their more radical plans – like exiting the euro – they are still in favor of ramping up government spending, which would directly contradict the EU's current fiscal rules. This suggests the new administration and Brussels may soon “face off” as Italy attempts to renegotiate EU treaties. Uncertainty around this prospect has likely been among the key reasons behind the euro's recent underperformance, particularly against the safe-haven Swiss franc.

Day ahead: Trade & political headlines to dominate attention

Monday's economic calendar does not have much to offer in terms of data releases, with trade and political developments probably attracting the most attention interest.

On the trade front, investors will be focused on news confirming that talks between China and the US over import metal tariffs are indeed heading to a peaceful solution, reducing further the risk for a tit-for-tat escalation. Progress in negotiations could ensure simultaneously that a crucial summit between the US President and the North Korean leader on June 12 may run smoothly. Should risk-off sentiment ease further, the dollar could gain additional demand ahead of the FOMC meeting minutes due on Wednesday.

Later in the day, speeches by Atlanta's Fed President Raphael Bostic (1615 GMT) and Philadelphia's Fed President Patrick Harker (1815 GMT) are likely to move the greenback as well.

Meanwhile in the Eurozone, the two populist parties, the anti-establishment Five-Star movement and the right-wing League are due to brief the Italian President on their plans to form a new government, while an announcement on who will be the next Prime Minister is also expected. Note that last week, a leak of information stating that the two parties could ask for a debt relief brought Italian stocks and the euro under pressure.

Elsewhere, Brexit negotiations will resume this week in Brussels, with the potential to bring fresh volatility to the pound.

Technical analysis – USDJPY breaks 111 key resistance; bullish in short-term

USDJPY broke above the 111 handle on Monday, unlocking a fresh four-month high at 111.36 as fears over an escalation in US-China trade relations continued to recede. The market is now increasing its distance above its moving averages and the Ichimoku cloud in the four-hour chart, pointing to a continuation of the current bullish trend in the short-term. Momentum indicators provide positive signals as well, with the MACD picking up speed above zero and its red signal line. The RSI, though, warns there is not much room left for gains as the index has already entered overbought levels above 70.

Should the pair stretch upwards, the 112 round-level could attract attention. A break above this level could then turn focus to 112.80, a frequently congested area in January before traders seek resistance at the 113 key-level.

On the flip side, a move lower could retest the 111 round-level, while steeper decreases could reach the 20-period SMA, currently at 110.65. A leg below could also open the way towards the 110 area, a stronger support that was challenged by the market several times since the start of the year.

At 12:30 GMT, Chicago Fed National Activity Index (Apr) is expected to be 0.14 from a previous 0.10. This data has held above the zero level for 2018 with a spike higher to 0.88 in the February reading.

This shows a healthy economy with the 2018 average at a higher level than previous years. Slip under zero can cause a market reaction but is not a worry in itself with the normal range re-establishing itself. USD crosses can see spikes in volatility during this time.

At 16:15 GMT, FOMC Member Bostic is due to speak about the economic outlook and price-level targeting at the Atlanta Economics Club. Audience questions are expected afterwards. USD volatility can increase during this event.

Major data releases for this week:

On Wednesday at 08:30 GMT, UK Consumer Price Index data will be released.
At 18:00 GMT, The FOMC Meeting Minutes will be released.

On Thursday at 11:30 GMT, ECB Monetary Policy Meeting Accounts will be published.

On Friday at 13:00 GMT, Fed Chairman Powell will be speaking.

US Treasuary Secretary Steve Mnuchin gave an interview on NAFTA over the weekend where he said that President Trump is “more determined to have a good deal than he’s worried about any deadline”. He spoke about the US acceptance of the deadline slipping into 2019 once the right deal for the US is achieved.

USDCAD is trading around 1.28735 with USDMXN trading around 19.90000.

There is an element of “Risk on” this morning as equity markets moved up and USDJPY pushed to new highs.

Gold has slipped lower while WTI Oil is higher, trading around $71.89.

Canadian Consumer Price Index (MoM) (Apr) was 0.3% versus an expected 0.4% against 0.3% previously. Consumer Price Index (YoY) (Apr) was 2.2% versus an expected 2.3% against 2.3% previously.

Canadian Retail Sales ex Autos (MoM) (Mar) were -0.2% versus an expected 0.5%. Retail Sales (MoM) (Mar) were 0.6% against an expected 0.3% from 0.4% previously which was revised up to 0.5%. Retail sales exceeded expectations after missing expectations for the December and January readings with a higher revision welcome. USDCAD moved higher from 1.27961 to 1.28838 after the data release.

Baker Hughes US Rig Count numbers matched the previous release last Friday, which showed that there were 844 Oil rigs in operation. With Oil at the highest levels in recent times, on the back of a bigger than expected draw in inventories on Wednesday; this data can set the tone for traders as they look to the week ahead.

Japanese Exports (YoY) (Apr) were released, coming in at 7.8% against an expected 8.1% from 2.1% previously. Imports (YoY) (Apr) were also released, coming in at 5.9% against an expected 9.6% from -0.6% previously. Merchandise Trade Balance Total (Apr) came in at ¥626.0B against an expected ¥405.6B. This data shows a fall in both Imports and Exports but an increase in the Trade Balance.

EURUSD is down -0.18% overnight, trading around 1.17475.

USDJPY is up 0.55% in the early session, trading at around 111.343

GBPUSD is down -0.14% this morning trading around 1.34378.

USDCAD is down -0.07% overnight, trading around 1.28715

Gold is down -0.49% in early morning trading at around $1,286.41

WTI is up 0.60% this morning, trading around $71.89

Forex Forecast and Cryptocurrencies Forecast for May 21 - 25, 2018

First, a review of last week’s forecast:

EUR/USD. Recall that about 70% of experts expected that the pair would rise at least to the height of 1.2050. However, the bulls' strength dried up before it approached the level of 1.2000, where the initiative was intercepted by the bears. Trend indicators on D1 and 15% of the oscillators sided with them, giving signals that the pair was overbought. As expected, the pair was quick to reach the horizon 1.1800, and then moved further down, having touched the local bottom at the level of 1.1750;

GBP/USD. This pair moves in a fairly narrow side corridor for the second week in a row. Most analysts (60%) voted for its growth last week. But, having gone 65 points to the north, the pair turned around and, as was expected by the remaining 40% of experts, dropped to the support of 1.3450, near which it met the end of the session, having lost only 75 points during the week;

70% of experts predicted that the pair USD/JPY would rise to 110.00 by the end of May. But it was much ahead of expectations, having reached this level of resistance already on Tuesday, May 15. After that, turning it into a support, the pair went another 100 points higher. Then it lost 25 points and finished the five-day period at the level of 110.75;

Cryptocurrencies. Some analysts believed that the BTC/USD pair should return to the borders of the three-week side corridor 8,620-9,955, and on May 14 it reached the level of 8,850. However, it didn't manage to gain a foothold at this level, and soon the pair retreated to the values of the beginning of the week in the zone 8,000. In general, the week was quite calm for other major cryptopairs: the Litecoin as well as the Ethereum and the Ripple completed it almost in the same place where they started.

As for the forecast for the coming week, summarizing the opinions of a number of analysts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:

EUR/USD. 60% of experts predict the movement of the pair to the east along Pivot Point 1.1800. Graphical analysis on D1 also draws a side channel, indicating the boundaries as 1.1750-1.2000. 15% of the oscillators also indicate a certain growth of the pair, giving signals that it is oversold.

The remaining 40% of analysts expect the continuation of the downtrend. Support is at the levels of 1.1700, 1.1665 and 1.1585.

Talking about important events of the upcoming week, we should pay attention to the meeting of the FRS Committee on Open Markets on Wednesday, May 23, the ECB meeting on monetary policy on Thursday, May 24 and the speech of the head of the US Federal Reserve, J. Powell, on Friday, May 25.

GBP/USD. The experts' opinions are divided almost equally: 35% are for the growth of the pair, 35% are for its fall and 30% vote for the continuation of the lateral trend.

As for graphical analysis, it also predicts lateral movement in the range 1.3450-1.3615 on both H4 and D1, after which a powerful collapse and the transition of the pair to 1.3300 zone is expected to follow.

USD/JPY. 65% of experts, 95% of trend indicators and 90% of oscillators, as well as graphical analysis on D1 expect the continuation of the uptrend. The nearest goal is the height of 112.00, the next one is 100 points higher.

35% of analysts have voted for a decline, supported by 10% of the oscillators, which signal that the pair is overbought. Graphical analysis on H4 does not exclude the possibility of temporary correction down to the horizon of 109.85;

Cryptocurrencies. The main forecast of stock exchange experts on the BTC/USD pair assumes the growth of bitcoin in an effort to reach $10,000. Support is at the levels of 8,100 and 7,900.

As for the oscillators, there is no unity among them. For example, MACD on H4 demonstrates a small divergence with a price chart, which indicates the possibility of the growth of the pair. On the other hand, the indicator of trading volumes MFI (Money Flow Index) on H4 is in the overbought zone and looks to the south. On D1, the picture is exactly the opposite.

As for other cryptopairs, analysts believe that their correction is completed, and now they will strive up, following the bitcoin. Ethereum (ETH/USD): the nearest target is 740.00, the next one is 835.00, the support is 635.00. Litecoin (LTC/USD): the goals are 150.00 and 180.00, the support is in the area of 130.00. Ripple (XRP/USD): the target is 0.8850, the main support is 0.6140.

Copper rose on Monday on easing concerns about US/China trade war, but recovery was so far limited by strengthening US dollar. Fresh rally today pared losses of last Friday when copper dipped to $3.0545 and briefly probed below daily cloud base but shows signs of stall on approach to key barriers at $3.1000/33 (200SMA/daily cloud top/daily Kijun-sen). Break and close above these barriers would generate strong bullish signal and expose next key barriers at $3.1295/$3.1335 (14 May high/100SMA). While the price remains within daily cloud (currently spanned between $3.0605 and $3.1040 and narrowing later this week) extended consolidation could be expected before the price establishes in fresh direction. Mixed signals from daily studies (MA's in bearish setup/14-d momentum rallies in positive territory) adds to unclear near-term direction. Cloud boundaries mark pivotal points.

Res: 3.0965, 3.1000, 3.1033, 3.1245
Sup: 3.0815, 3.0635, 3.0605, 3.0430

Trade war on hold -for now

Asian stocks gained on Monday morning as investors learned that the U.S. and China agreed to drop the tariff threats against each other while they continue to work out an agreement. This was the second round of trade negotiations withoutclearly defined targets, suggesting that there's still a long way to go. Today, a trade war may have been averted, but according to the joint statement from both countries, nothing is being guaranteed apart from Chinapromisingto increase American imports. It seems that tensions will remain for the foreseeable future and investors will have to live with it; unless the U.S. officially announces that it is imposing tariffs on China, the noise in the background will have little impact on sentiment.

Nicolás Maduro wins Venezuelan elections

As was widely anticipated,Nicolás Maduro won another six years in office in Sunday's elections. The Venezuelan economy, which has been struggling for several years, may enter adeeper crisis if the U.S. and other western countries stepup sanctions against the nation. Brent crude, up 0.7% at the time of writing,might benefit further fromthe increasingly grave outlook for Venezuela if proposed sanctions result in a steeper decline in output.

FOMC minutes

The dollar climbed to a new 2018 high on Monday, with overall gains of more than 6.3% from its lowest point in February. The U.S. currency has been benefiting mainly from improved economic prospects and higher interest rates. Whether the upward trajectory will resume in the short run, is likely to depend on the FOMC minutes scheduled for release on Wednesday. The Fed has changed its language with respect to inflation and become slightly more bullish, but itslatest statement didn't indicate a faster tightening in monetary policy. Whether the Fed is prepared to fight inflation, or whether it will be more cautious about raising rates too quickly, will be reflected in the minutes. However, with a number of speeches scheduled from Fed officials this week, it will be interesting to hear their thoughts on how oil above $80 may impact policy.

Italy's new government

Italy's new government is likely to be formed within the next few days and provide a new headache for Brussels,sincepopulists will be leading it. Italian borrowing costs rallied sharply over the past several days, as investors sold Italian debt after a leaked draft showed the new coalition'sintentions to request the cancellation of €250bn of Italian government debt. How things go from here depends on whether the new government follows through on its promises, that include a massive spending spree that conflicts with the EU's budgetary rules, or whetherit starts to gradually scale back.

The USD/JPY is building a smaller bullish channel in the larger uptrend channel. Recently price made a retracement to the bottom of that channel at 110.50 which could be a potential bouncing spot for a trend continuation towards the next Fibonacci target at 111.80. This could complete a larger WXY (pink) correction within wave D (purple).

The USD/JPY seems to have completed a wave 3 (green) momentum and price could be building a bearish retracement within wave 4 (green). A bullish bounce seems to be taking place at the 50% Fibonacci level and could occur if price stays above the 61.8% Fibonacci level, otherwise a different wave pattern becomes more likely. At this moment though, price is most likely in a wave 4 and it could soon start a bullish wave 5 continuation within wave C (blue) towards the Fibonacci targets.

The US and China trade war is on 'On Hold'
China would have to import more agricultural commodities
S&P500 index has climbed above an important level of 2700.

'On Hold' is the term driving the markets today and investors over in Europe are optimistic as trade war tensions have eased off. The US and China trade war is on 'On Hold', both countries have decided that making threats to each other isn’t going to yield any positive outcome. Both countries have decided to work towards a long-term agreement, in other words, there may be no solution to this at all and both countries may just continue to trade with each other under the same old terms. Although, the US Treasury secretary is more optimistic about this and his view is that the new framework set up by him would address the imbalance in trade in future.

Perhaps this entire mess could have been avoided if a framework was established before and the tweets were done after that. Nonetheless, one thing is clear, China would have to import more agricultural commodities in order to help the US trade balance. Both sides have retracted from their threatening behaviour and the US has suspended $150bn worth of tariffs on Chinese imports. Let's see if the US hopes about China buying a substantial amount of US goods become true.

European markets are set to pick up the momentum where they left off last week. Not all European markets have seen buyers jumping on the risk on side. Italian markets experienced more selling pressure because of the unrest in the political situation of the country. A new populist coalition government is the last thing that you want to see after the Brexit mess. The Italian ten-year yield soared as a result of this and crossed the 2.2% mark.

Yes, surely, the rising Italian 10-year bond yield and the dire political situation would also an impact on other countries as well but for now, the weaker euro effect is stronger. The Euro has retraced from 1.2555 to 1.1739, a huge bearish move which has been behind the bull rally for the European markets.

Over in the US, despite the strong dollar, the S&P500 index has climbed above an important level of 2700. This sends the bull signal to the market especially when rising oil prices and the higher dollar are both adverse. Higher oil prices are going to impact the US consumers which is always very sensitive to oil prices. The upcoming FOMC minutes this week could fuel the dollar rally even further if the Fed doesn't tame its hawkish stance.

Higher oil prices and a shortage of pilots are going to be the two major factors which Ryanair wasn’t fully prepared to tackle. The airline firm had to give in to keep the pilots as there is a massive shortage of pilots around the world- there are more planes than pilot and airlines are fighting hard to get them.

This made the company to issue a warning to its investors and it wants to prepare them for the first slump in its annual earning since 2014. Ryanair had to accept unionization and increase in pay, this has left a 100 million euro hole and the sharp increase in oil prices have made things only worse. The scrapping of over 20K flight back in September 2017, refunding clients for their tickets and failing to engage the union in time, are just some of the few factors that made the stock price to feel the pressure.

The GBP/USD went exactly as expected both on my LIVE trading webinars and FXstreet poll. It was a bit messy due to Megaphone pattern so we could have traded it both to the long and short side, but things have become more evident due to Head and Shoulders. 1.3425-35 and 1.345575 are POC zones, and we might expect rejections if the price retraces. A 1h or 4h close below 1.3400 could aim for 1.3353 and 1.3311 during the course of the week.

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Daily Camarilla Pivot (Daily Support)

D L4 – Daily H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

XAUUSD (1288.94): Gold prices were showing signs of consolidation which potentially suggests that a short-term bottom might have been formed. Price action is likely to retrace to the upside to test the resistance level at 1304 - 1301 level. Establishing resistance here could potentially signal a downside move in gold prices once again. However, if the previous low near 1286 is not breached, we expect to see gold prices maintaining a range within the current levels.