Sample Category Title

EURUSD can be trading at the end of a bigger bearish impulse labelled as wave 3, which means we may expect the price to slowly turn up for a temporary pullback. That said, we already see price picking up, ideally for the first wave of a correction, which may later look for resistance around the 1.1977 level.

EURUSD, 1h

GBPUSD can also be trading into a temporary pause within downtrend, which can see resistance and a turn lower at the 1.3628/1.3669 region.

GBPUSD, 1h

As seen in the D heat map, CAD is the strongest one today while JPY is the weakest one.

A look at the top mover chart also sees CADJPY as the biggest mover. It's natural to have a look at how CADJPY is performing.

In CADJPY action bias table, H action bias momentum is very apparent, not so in the 6H row.

But the 6H action bias chart clearly shows that CAD/JPY was in a consolidation pattern since hitting 85.75 back in April. And the strong H action bias momentum suggests that it's possibly completed at 83.88 earlier this week. A long trade in CADJPY should be in place for position trading.

And, recalling a short note here, CAD/JPY formed a bottom at 80.52 in March, after drawing support from 80.55 key support. Rise from 80.52 is seen as at the same degree as fall from 91.56 to 80.52. Pull back from 85.75 was contained above mentioned 83.52 support and thus maintained bullishness.

Hence, for a long trade, one could buy at a dip or break of 85.75 resistance. First target is 61.8% projection of 80.52 to 85.75 from 83.88 at 87.11. Second target is 100% projection at 89.11.

Daily Pivots: (S1) 1.1821; (P) 1.1879 (R1) 1.1922; More....

EUR/USD continues to lose downside momentum as seen in 4 hour MACD. But with 1.1938 minor resistance intact, intraday bias stays on the downside for deeper fall. Current decline would target 261.8% projection of 1.2475 to 1.2214 from 1.2413 at 1.1730. As it will then be close to 1.1708 medium term fibonacci level, some support could be seen around 1.1708/30 to bring rebound. Meanwhile, break of 1.1938 should confirm short term bottoming, on bullish convergence condition in 4 hour MACD. And stronger rebound would be seen first.

In the bigger picture, current decline and firm break of 1.2154 support confirms rejection by 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. A medium term top should be in place at 1.2555 and deeper decline would be seen back to 38.2% retracement of 1.0339 to 1.2555 at 1.1708 first. With current downside acceleration, there is prospect of hitting 61.8% retracement at 1.1186 before completing the decline. But still, we'll need to look at the structure before deciding if it's a corrective or impulsive move.

Daily Pivots: (S1) 1.3489; (P) 1.3541; (R1) 1.3598; More...

Intraday bias in GBP/USD remains neutral as consolidation from 1.3485 is still in progress. Stronger recovery could be seen to 4 hour MACD (now at 1.3655) and above. But upside is expected to be limited by 38.2% retracement of 1.4376 to 1.3485 at 1.3825 to bring fall resumption. Break of 1.3485 will resume the fall from 1.4376 to 1.3448 fibonacci level next.

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 1.4223). Deeper decline should be seen to 38.2% retracement of 1.1936 (2016 low) to 1.4376 at 1.3448 first. Break will target 61.8% retracement at 1.2874 and below. Outlook will stay bearish as long as 55 day EMA (now at 1.3925) holds, even in case of strong rebound.

Daily Pivots: (S1) 0.9997; (P) 1.0021; (R1) 1.0040; More...

No change in USD/CHF's outlook. It continues to lose upside momentum as seen in 4 hour MACD. But with 0.9982 minor support intact, further rally is still expected. Sustained trading above 1.0037 will pave the way to 1.0342 key resistance next. On the downside, though, below 0.9982 minor support will indicate short term topping, on bearish divergence condition in 4 hour MACD. And, in that case, deeper retreat could be seen, possibly to trend line support (now at 0.9735) before staging another rally.

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 0.9648 resistance turned support holds, even in case of pull back.

Daily Pivots: (S1) 108.85; (P) 109.10; (R1) 109.38; More...

Intraday bias in USD/JPY remains neutral as it's staying in range below 110.02. Consolidation from 110.02 could extend with another fall. But in that case, we'd expect strong support from 38.2% retracement of 104.62 to 110.02 at 107.95 to contain downside and bring rebound. Meanwhile, on the upside, break of 110.02 will resume the rise from 104.62 to 61.8% retracement of 114.73 to 104.62 at 110.86 next.

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 as 55 day EMA (now at 107.95) holds. Decisive break of 114.73 resistance will confirm our view and target 118.65 and above. However, sustained break of 55 day EMA will dampen this bullish view and turn focus back to 104.62 low instead.

The Canadian dollar has posted losses in the Wednesday session, erasing the gains seen on Tuesday. In the North American session, USD/CAD is trading at 1.2880, down 0.54% on the day. On the release front, Canadian Building Permits jumped 3.1%, crushing the estimate of 2.0%. In the US, PPI dropped to 0.1%, shy of the estimate of 0.2%. Core PPI edged lower to 0.2%, matching the forecast. On Thursday, the US will publish consumer inflation reports.

The NAFTA negotiations continue this week, as senior officials from Canada, the US and Mexico are meeting in Washington to try and hammer out a new trilateral trade agreement. However, progress has been slower than hoped for, and a major stumbling block remains a US demand to raise the North American content of automobiles in order to avoid tariffs. Mexico is suspicious that the US is pushing a deal that will bring manufacturing jobs from Mexico back to the US. There are serious time constraints on reaching an agreement. Mexico is holding a general election in early July, and US President Trump wants to wrap up a deal before mid-term elections in November.

US President Trump dropped a bombshell on Tuesday, in announcing that the US would withdraw from the Iran nuclear deal. However, the currency markets are not showing much movement in response to the speech. The Canadian dollar has posted gains on Wednesday, as demand for safe-haven assets remained muted. In his televised remarks, Trump blasted the agreement and said that the US would reimpose stiff sanctions on Iran. However, Britain, France and Germany have said they plan to remain in the deal, and will be holding a high-level meeting with Iranian leaders on how the agreement can be salvaged. With the US acknowledging that the White House does not have a ‘Plan B’, it’s unclear what happens next. Meanwhile, tensions between Israel and Iran are at a fever pitch, and any confrontation between the two could shake up the markets.

The Federal Reserve’s newest regional Fed president, Thomas Barkin, delivered a major speech on Monday, and his tone was decidedly upbeat. Barkin said that the economy is “remarkably strong: above-trend growth, low unemployment, inflation at target”. Barkin added that although the labor market is strong, it is not causing pressure on wages, but low unemployment should lead to an increase in inflationary pressures. As for upcoming rate increases, Barkin was careful to remain mum on how many rate hikes he expects this year. The Fed raised rates in March by a quarter-point and continues to forecast two additional increases this year. However, some policymakers are calling for three more hikes, given the strong health of the US economy.

Daily Pivots: (S1) 1.2847; (P) 1.2872; (R1) 1.2907; More....

USD/CAD's sharp decline suggests temporary topping at 1.2996. Intraday bias is turned neutral for consolidation. For now, further rise is expected as long as 1.2802 minor support holds. Above 1.2996 will target 1.3124 resistance next. Decisive break there will extend larger rebound to 100% projection of 1.2246 to 1.3124 from 1.2526 at 1.3404. However, break of 1.2802 will at least delay the bullish case, and turn bias back to the downside for 55 day EMA (now at 1.2779) and below.

In the bigger picture, current development suggests 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.

Yen remains the weakest one in early US session while strength in oil price is giving Canadian Dollar a strong boost. Dollar, on the other hand, reversed earlier gains and trades broadly lower, except versus Yen. Bullish momentum of the greenback seems to be exhausted ahead of heavy weight Thursday, with BoE rate decision and US CPI featured. In other markets, European indices are mixed, with DAX flat, CAC down -0.1% at the time of writing. FTSE is up 0.47%. US futures point to higher open though, as DOW could have another take on 55 day EMA at 24442.

Released from the US, PPI closed more than expected to 2.6% yoy in April, below consensus of 2.8% yoy. Core CPI slowed to 2.3% yoy, below expectation of 2.4% yoy. Canada building permits rose 3.1% mom in March, above expectation of 2.0% mom. Released earlier today, Japan leading indicator dropped to 105 in March, labor cash earnings rose 2.1% yoy. UK BRC retail sales monitor dropped -4.2% yoy in April.

US Iran deal withdrawal has more implications on geopolitics than oil fundamentals

Donald Trump confirmed that the US would withdraw from the Iran nuclear deal, an agreement reached in 2015 between Iran, the P5+1 (5 UNSC permanent members including US, France, Russia, UK, China + Germany) and the European Union. New sanctions, both financial sanctions and bans of oil exports, would be re-instituted on Iran. Geopolitical uncertainty would likely cause great volatility in the oil market in the near term. In the longer-term, we believe the move has more implications on geopolitics than oil fundamentals, both would affect oil prices and the financial markets, though. More in Lasting Impacts of Trump's Unilateral Withdrawal from Iran Nuclear Deal.

French FM Le Drian: Trump's decision was "isolationist, protectionist and unilateral logic

French Foreign Minister Jean-Yves Le Drian criticized Trump's decision to withdraw from the Iran deal as "isolationist, protectionist and unilateral logic." And he added, "this is a break with international commitment and France deeply regrets this decision."

But Le Drian emphasized that the Iran nuclear deal "is not dead", and pledged to "bring businesses together in the coming days to try and preserve them as much as possible from the US measures." And, "we must talk about Iran's impressive ballistic missiles. Let's talk about this with Iran, let's put everything on the table but let's stay in the accord, the accord is a good thing for the stability in the region and for our security."

French President Emmanuel Macron would call Iranian President Hassan Rouhani  today. And representatives from France, the UK and Germany would meet with Iranian counterparts on Monday. Just after Trump's announcement, UK, France and Germany issued a joint statement urged US not to obstruct JCPoA Iran deal implementation.

Japan, South Korea and China agreed on security and economic cooperations

Japanese Prime Minister Shinzo Abe, South Korean President Moon Jae-in and Chinese Premier Li Keqiang met in Tokyo today for the first trilateral summit since 2015. The three leaders agreed to work together on denuclearization of North Korea. IN particular, Moon said that the actual steps to achieve it could be difficult. But the three countries will work together out the necessary steps needed. Li and Abe also oversaw the signing of a pact to set up a security hotline within 30 days.

Also, a Japanese official said that the leaders agreed to work on a free trade pact among the three countries. And, they will also work towards the proposed Regional Comprehensive Economic Partnership with Southeast Asian countries too.

RBNZ to keep OCR unchanged at 1.75%.

In the upcoming Asian session, RBNZ is widely expected to keep the official cash rate unchanged at 1.75%. Sluggish inflation is a key factor giving RBNZ room for not acting. CPI slowed deeply to 1.1% yoy in Q1, sitting near the lower end of the target band. RBNZ Governor Adrian Orr also said after the release that "very benign inflation going forward without doubt, as we've forecast."

Suggested readings on RBNZ

• RBNZ Meeting: New Governor, Same Old Neutral Message?
• Australia & New Zealand Weekly: RBA Firmly on Hold as Bank Funding Costs Rise (in the NZ section)

USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.2847; (P) 1.2872; (R1) 1.2907; More....

USD/CAD's sharp decline suggests temporary topping at 1.2996. Intraday bias is turned neutral for consolidation. For now, further rise is expected as long as 1.2802 minor support holds. Above 1.2996 will target 1.3124 resistance next. Decisive break there will extend larger rebound to 100% projection of 1.2246 to 1.3124 from 1.2526 at 1.3404. However, break of 1.2802 will at least delay the bullish case, and turn bias back to the downside for 55 day EMA (now at 1.2779) and below.

In the bigger picture, current development suggests 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.

Economic Indicators Update

Heading into US session, USD is broadly sold off and reversed all of today's against except versus JPY. There is no apparent trigger for the reversal. But it could because USD's rally has exhausted on overbought conditions. Also, traders could be lighting up positions ahead of tomorrow's CPI release.

Notable buying is seen in GBP, ahead of tomorrow's BoE rate decision. But CAD is the one the emerges as the strongest for today, with WTI crude oil back above 71 handle.