Sample Category Title

The Euro probed again below 1.18 handle in early European trading, but limited downside keeps the so far within 1.1792/1.1837 session range. Outlook remains negative, but bears may show further hesitation at 1.18 zone as yesterday's weakness failed to close below 1.1800/1.1790 pivots (psychological / Fibo 76.4% of 1.1553/1.2555 upleg) and daily indicators are entering oversold territory. Negative outlook is supported by dollar's rally, driven by higher US yields and political uncertainty in Italy and would remain intact while the pair holds below Wednesday's high at 1.1853 (also Fibo 38.2% of 1.1996/1.1763 downleg). Break here would generate initial bullish signal which requires confirmation on break and close above falling 10SMA (1.1884). Otherwise, extended consolidation under 10SMA would precede fresh weakness and possible attack at key supports at 1.1709 (Fibo 38.2% of 1.0340/1.2555 ascend) and 1.1675 (top of thick weekly cloud). EU trade balance is the key event in European session while US jobless claims and Philly Fed Manufacturing Index and several speakers from Fed are the highlights of the US session.

Res: 1.1837, 1.1853, 1.1879, 1.1907
Sup: 1.1792, 1.1763, 1.1709, 1.1675

XAUUSD (1292.05): Gold prices have turned flat in the near term following the strong declines previously. With prices trading near the 1292 - 1300 region we expect to see a near term consolidation. The daily price action has resulted in a doji candlestick pattern being formed near the current lows. There is a possibility for gold prices to briefly retrace the losses. However, any gains are likely to be limited to the 1311 - 1307 level of resistance in the near term. A break down from the current lows at 1292 could signal a move toward the 1250 region of support.

GBPUSD (1.3558): The GBPUSD was seen attempting to recover from the previous declines below 1.3530 level. Although price action is seen retesting this level we expect to see further consolidation taking place near. The sideways price action has formed a short term range of 1.3610 - 1.3453 level. A breakout from this range will suggest the near term direction in prices. The bias is to the upside for a retest of 1.3900 level in the near term. To the downside, with prices briefly falling below the 1.3500 level, the support level in this region is likely to hold

EURUSD (1.1826): The EURUSD continued to extend the declines with price action falling to fresh lows of 1.1763 on the day. With the resistance level at 1.1960 - 1.1920 holding, we expect to see prices touching down to 1.1730 level of support in the near term. Alternately, the currency pair could maintain the sideways range within the said levels. There is also a potential falling wedge pattern that could be forming near the current levels however, we expect to see another short term local high being formed near the price level of 1.1920. The bias shifts only on a strong close above the resistance level.

The U.S. dollar continued to remain strong across its peers on Wednesday. Economic data showed that the consumer prices in the Eurozone came out as expected. Headline inflation was seen rising 1.2% while core inflation rate was registered at 0.7%, marking a slower increase in core CPI. German inflation was flat during the month.

Data from the U.S. showed that building permits increased 1.35 million matching the median estimates while data for March was revised slightly higher to 1.38 million. Housing starts were however a tad weaker, rising 1.29 million which was below estimates of 1.32 million. The U.S. industrial production report showed an increase of 0.7% beating estimates of a 0.6% increase.

Looking ahead, the economic calendar for the day is relatively quiet. Earlier in the Asian session, Australia released its unemployment figures. The Australian unemployment rate was seen rising to 5.6% against estimates of an unchanged print at 5.5%. However, the economy was seen adding a healthy 22k jobs during the month which was above estimates.

In the European trading session, the economic data is relatively quiet. The U.S. trading session will see the release of the Philly Fed Manufacturing index and the weekly unemployment claims data. Later in the evening, the BoE chief economist, Andy Haldane is expected to speak.

Here are the latest developments in global markets:

FOREX: The US dollar index is lower on Thursday, albeit by less than 0.1%, still hovering near the five-month highs reached earlier in the week. The US currency barely rose yesterday even though the yields on longer-term US Treasuries continued to climb, reaching fresh multi-year highs. Elsewhere, sterling jumped today after a media report on Brexit suggested the UK is willing to make concessions to avoid a hard border in Ireland.

STOCKS: Wall Street closed higher yesterday, even despite a continued climb in US Treasury yields, a factor that has been limiting advances in stocks recently. The Nasdaq Composite climbed 0.63%, while the S&P 500 and the Dow Jones rose by 0.41% and 0.25% respectively. The gains come ahead of a meeting today between China’s Vice Premier Liu He and key US officials including Treasury Secretary Mnuchin in Washington. The topic will be trade issues, and any relevant comments could well impact US equities today. Futures tracking the Dow, S&P, and Nasdaq 100 are all flashing red, pointing to a lower open. In Asia, Japan’s Nikkei 225 and the Topix rose by 0.53% and 0.45% correspondingly, though in Hong Kong the Hang Seng fell by 0.44%, even though tech giant Tencent (+5.2%) reported strong earnings. In Europe, futures tracking the major indices were all close to neutral levels, with the exception being Italy’s FTSE MIB, which is expected to open much higher.

COMMODITIES: Oil prices were higher on Thursday, extending gains from yesterday. WTI and Brent crude are up by 0.3% and 0.2% respectively, both hovering near multi-year highs. The trigger for the latest leg higher was a surprisingly large drawdown in the weekly EIA crude inventory data released yesterday. More broadly, recent media reports suggest that Saudi Arabia believes the spike in prices is driven by speculation and that this is not ground for producers to boost output, playing down expectations the Kingdom may raise its production to offset any shortage left by Iran. In precious metals, gold is lower today but by less than 0.1%, currently trading near the $1,289/ounce mark.

Major movers: Pound bounces on Brexit news; euro under pressure; dollar stalls

The British pound rebounded overnight, gaining 0.4% versus the dollar, following a media report suggesting the UK government has agreed on a fallback position as a last-ditch effort to avoid a “hard” Irish border. The UK is prepared to remain in the EU customs union beyond 2021 to ensure frictionless trade on the Irish border. This has been one of the main issues that have been hindering progress in the Brexit negotiations and hence, signals that the worse case scenario of a hard border may be avoided likely reignited speculation the talks may finally move forward.

With little in the way of UK data releases until next week, pound crosses may continue to be driven by updates on the Brexit front. Any fresh signs that the UK administration is willing to make some concessions for the talks to progress may provide some much-needed support to the pound, which is still licking its wounds following the BoE’s cautious stance last week.

In euro land, the common currency remained under selling pressure yesterday amid reports that an incoming anti-establishment coalition government in Italy would seek to write-off as much as €250 billion of Italian debt. This sent shivers through the Italian debt market, triggering a flight out of Italian bonds and pressuring the euro. That said, these reports were subsequently denied by one of the two political parties, helping the euro to recover some of its losses.

Over in the US, the dollar index stalled yesterday, ending the day only marginally higher even though the yields on 10-year US Treasuries continued to climb, reaching a fresh seven-year high of 3.12% today. The continued advance in US bond yields has been one of the major factors supporting the greenback lately.

In Canada, the loonie surged following some comments from the nation’s Finance Minister Bill Morneau. He stoked expectations that a severely-delayed oil pipeline may be completed sooner rather than later, making it easier to export Canadian oil.

Day ahead: Light calendar day with US jobless claims due; updates on Brexit, Italian political situation eyed

Thursday’s calendar doesn’t feature much in terms of releases to get traders excited. In the absence of important data, the attention is expected to fall on developments revolving around Brexit and Italian politics.

At 1230 GMT, weekly jobless claims data will be made public out of the US, while the Philly Fed Business index pertaining to the month of May will also be hitting the markets at the same time.

A report by the Telegraph saying that Britain will tell Brussels it is prepared to stay in the EU’s customs union beyond 2021 boosted sterling. In this respect, a meeting between UK PM Theresa May and European Council President Donald Tusk taking place today will be of interest.

The euro is coming under pressure on the back of Italian political uncertainty and the implications an anti-establishment government by the 5-Star Movement and (Northern) League parties will have for the euro area. The story will be closely watched as it is expected to be the major driver in euro pairs, at least in the short term.

Retail giant Walmart will be releasing its quarterly results before today’s opening bell on Wall Street. The direction in Treasury yields will also be eyed as it has implications for equity markets; higher yields render bonds relatively more attractive compared to stocks.

Outgoing ECB Vice President Vitor Constancio will be delivering the opening address at the third annual ECB macroprudential policy and research conference at 1200 GMT – Cleveland Fed President Loretta Mester will be speaking on monetary policy at the same venue. Regional Fed Presidents Neel Kashkari and Robert Kaplan will also be making appearances at 1445 GMT and 1730 GMT respectively; neither holds voting rights within the FOMC in 2018.

Another meeting that could generate attention on Thursday is the one between US President Donald Trump and NATO Secretary General Jens Stoltenberg, while one should also keep in mind that US-China trade talks and deliberations for a North Korea-US summit remain on the background.

Technical Analysis: USDJPY touches 4-month high, short-term bullish

USDJPY has advanced considerably after touching an 18-month low of 104.62 in late March. Earlier on Thursday, it reached a four-month high of 110.56. The rising RSI is serving as a testament to the bullish short-term momentum that is in place. Notice though as well that the indicator is close to the 70 overbought level.

Should the US-Japanese yield differential continue to climb in the US’ favor, then the pair is likely to add to gains. The upper Bollinger band at 110.65 may be offering immediate resistance, with the 111 round figure being eyed next in case of stronger gains.

On the downside and in case of falling US Treasury yields, USDJPY may ease a bit. Support to declines may come around the 110 handle, and further below from the middle Bollinger line – a 20-day moving average line – at 109.38.

Although today’s US releases are not typically major market movers, the pair may still some positioning upon the release of the numbers.

EUR/CHF is slightly decreasing after bouncing off from 1.1772 low. The pair is trading above 1.18 and heading along 1.1810. Hourly support and resistance are given at 1.1715 (07/01/2018 low) and 1.2006 (20/04/2018 high). The shortterm technical structure suggests short-term downward moves.

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).

Daily Pivots: (S1) 0.8729; (P) 0.8756; (R1) 0.8781; More...

Despite dipping through 0.8727 support, EUR/GBP was supported by near term channel and recovered. Intraday bias is turned neutral first. Near term outlook also remains rather mixed. 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.

EUR/GBP bearish pattern continues after reaching 0.8837 (10/05/2018 high), heading along the 0.8713 range. EUR/GBP bearish pattern started in March is strengthening. 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 downward 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.

AUD/USD bounce continues, trading above 0.75 and heading along the 0.7550 range. Hourly support and resistance remain at 0.7412 (09/05/2018 low) and 0.7813 (19/04/2018 high). The technical structure suggests further shortterm 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.