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USDJPY (111.11): The USDJPY currency pair was seen closing on a bearish note but price action managed to recover some of those losses late on Friday. Friday's price action closed with a doji. The occurrence of this pattern near the 111.18 - 110.85 level of resistance indicates that the strong rally in USDJPY could stall. This will need to be validated by a bearish close daily. In the near term, USDJPY is likely to retest the resistance level before it is likely to correct towards the 109.57 - 109.43 level of support that is pending a retest.

EURUSD (1.1754): The EURUSD currency pair failed to make any recovery last week with Friday's price action closing at fresh lows. The common currency continues to remain weak amid strong bullish momentum from the U.S. dollar. With the euro seen inching closer to the 1.1730 level of support, we expect to see price action eventually pushing lower to this level. With the resistance level coming in near 1.1846 - 1.1824, we expect that any rebounds in price action would be limited. There is also a strong possibility that price action could break past this resistance level given the bullish divergence seen on the 4-hour Stochastics.

The U.S. dollar continued to maintain gains on the day on Friday and marks a strong close to the week. The gains come amid higher bond yields and mounting expectations of a rate hike from the Fed in the coming months.

On the economic front, data on Friday saw the release of the German PPI. Producer prices rose 0.5% on the month beating estimates of a 0.3% increase and accelerated from the 0.1% increase in the month before.

Data from Canada stood out as the annual inflation rate rose to 2.3% on the month although inflation was seen rising at a slower pace. Still, the increase to 2.3% is seen to be higher than the BoC's 2% inflation target rate. Retail sales report also showed that core retail sales excluding autos fell 0.2% on the month but picked up 0.6% on the headline retail sales. Strong revisions to retail sales data for January and February saw the retail sales rising for three consecutive months.

Earlier, the quarterly retail sales report from New Zealand showed that retail sales rose 0.1% on the quarter. This was weaker than the forecasts of a 1.0% increase. Previous quarterly retail sales data was also revised down to show a 1.4% increase.

Looking ahead, the economic calendar for the day is relatively quiet. The ECB will be releasing its financial stability report followed by the FOMC's Bostic speaking later in the day. The lack of economic data on the day is likely to keep trading subdued and could see the markets digest the information from last Friday.

WTI oil moved higher on Monday and hit session high at $71.86, boosted by improved global sentiment after US and China put looming trade war on hold.

Oil price remains supported by geopolitical risk, as implementation of the US sanctions on Iran could cause shortage in global oil supply and also by fall in oil production in Venezuela, due to ongoing economic crisis.

Bullish techs continue to underpin oil price, as momentum continues to strengthen and rising 10SMA, which tracks the advance since early April, contained dips last week, keeping the downside protected.

Bulls eye fresh 3 ½ year high at $72.28 (posted on 17 May), break of which would expose Fibo projections at $72.48 & $72.85 (138.2% & 161.8% respectively), with stronger bullish acceleration expected to open $74.94 (Oct 2011 low) and $76.35 (Fibo 61.8% of 107.45/$26.04 fall) in extension.

Top of thick rising 4-hr cloud ($71.08) and ascending 10SMA ($71.13) mark solid supports which should ideally contain dips and keep bulls intact.

Res: 71.86, 72.28, 72.48, 72.85
Sup: 71.13, 70.65, 70.25, 70.00

The Aussie dollar moved higher in Asian trading on Monday, benefiting from US – China trade news, but was unable to clearly break above falling 20SMA (0.7520) so far.

Stronger action could be anticipated after trading in past two days ended in Dojis and signaled strong indecision, while falling 20SMA repeatedly capped.

Fresh bullish sentiment on trade data could drive the pair higher, however, close above 20SMA is needed to generate bullish signal and open way towards key near-term barrier at 0.7565 (double-top/Fibo 38.2% of 0.7812/0.7412 descend).

Rising bullish momentum on daily chart supports the notion, as converged 5/10SMA’s mark solid support at 0.7503 and hold today’s action. Only close below here would weaken near-term structure and risk further easing.

Res: 0.7520, 0.7547, 0.7565, 0.7592
Sup: 0.7503, 0.7488, 0.7447, 0.7433

Cable slid to new 2018 low on Monday, as fresh rally of the dollar (sparked by easing trade tensions between US and China and already boosted by higher US yields and expectations of more aggressive Fed) eventually pushed the pair below two-week congestion floor (1.3451).

Bearish signal on break of 1.3451/42 pivots (range floor / Fibo 38.2% of 1.1930/1.4376 recovery rally) needs daily close below for confirmation and could result in extension towards 1.3205 (weekly cloud top).

Broken former range floor at 1.3451 now marks initial resistance, ahead of falling 10SMA at 1.3511.

Res: 1.3451, 1.3482, 1.3511, 1.3558
Sup: 1.3400, 1.3354, 1.3330, 1.3302

The Euro remains firmly in red on Monday and extends strong fall of last week (the second biggest one-week loss in 2018). News of US-China trade war being put on hold, boosted the dollar and increase pressure on the single currency. Fresh weakness approaches the first key support at 1.1709 (Fibo 38.2% of 1.0340/1.2555), break of which would be negative signal for larger bulls off 1.0340 (Jan 2017) which are in corrective phase from 1.2555 (2018 high). Bears could extend on violation of 1.1709 and challenge next strong support at 1.1675 (top of thick weekly Ichimoku cloud). Oversold daily RSI / slow stochastic and strengthening momentum suggest bears take a breather, but firmer signal being generated so far. Corrective upticks could be seen as positioning for further weakness, with falling 10SMA (1.1843) expected to cap and keep bears intact.

Res: 1.1775, 1.1800, 1.1834, 1.1858
Sup: 1.1720, 1.1709, 1.1675, 1.1662

China's Vice Premier Liu He was interviewed by the CGTN TV network after the trip to Washington.

He noted the trade talks were "constructive, positive and fruitful", and "very practical". There were "lots of concrete consensus" reached in terms of trade and structural issues.

The concrete issues include agricultural and energy exports to China. Liu added that "the Chinese market will become the largest world market. So to increase imports, re-balance the economy and expand domestic demand is our national policy." Also, Liu said "we expand our domestic market and increase imports because we want to serve the needs of our people, our economy, and our growth. Speeding reform and growth by means of opening up is a very important national strategy. It worked for China for the past 40 years, and we will continue down that path."

But he emphasized that "exporting to China or making China buy more, one must make the Chinese consumers happy".

Also, Liu noted that the strongest demand from both sides were to stop imposing more tariffs on each other's products. And he said "this time, both sides pledged to stop the trade war and develop good relations, be it in trade or in investment. I think this is a major demand from both countries."

Liu also pointed to resolutions of some of "our misunderstands from the past. He hailed that "these meetings will not just help bilateral economic and trade relations, but overall ties. It's good for people in both countries."

Daily Pivots: (S1) 148.86; (P) 149.45; (R1) 149.81; More...

Intraday bias in GBP/JPY stays neutral first. Corrective recovery from 147.04 could still extend higher. But upside should be limited below 150.60 support turned resistance to bring decline resumption. On the downside, break of 148.16 will turn bias to the downside for 147.04 and then 144.97. Decisive break of 144.97 will resume the fall from 156.59 and target 100% projection of 156.59 to 144.97 from 153.84 at 142.22 next.

In the bigger picture, for now, we're treating price actions from 156.59 as a corrective move. Therefore, while deeper fall is expected, strong support should be seen above 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) to contain downside and bring rebound. There is still prospect of extending the rise from 122.36. However, considering that GBP/JPY failed to sustain above 55 month EMA (now at 153.94), firm break of 139.29 will confirm trend reversal and turn outlook bearish.

Daily Pivots: (S1) 130.03; (P) 130.58; (R1) 130.92; More....

Intraday bias in EUR/JPY remains neutral as range trading continues above 129.22. With 131.36 resistance intact, further fall is expected in the cross. Below 129.22 will target 128.94 first. Break will resume whole fall from 137.49 and target 61.8% projection of 137.49 to 128.94 from 133.47 at 128.18, and possibly further to 126.61 medium term fibonacci level. Nonetheless, break of 131.36 will turn focus back to 133.47 resistance instead.

In the bigger picture, for now, price actions from 137.49 are viewed as a corrective pattern only. Hence, while deeper decline would be seen, strong support is expected at 38.2% retracement of 109.03 to 137.49 at 126.61 to contain downside and bring rebound. Up trend from 109.03 (2016 low) is expected to resume afterwards. Though, sustained break of 126.61 will be an important sign of trend reversal and will turn focus to 124.08 resistance turned support.