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Daily Pivots: (S1) 1.5930; (P) 1.5975; (R1) 1.6039; More....

Intraday bias in EUR/AUD stays neutral first. As long as 1.5857 minor support holds, further rally is expected in the cross. On the upside, above 1.6084 minor resistance will turn bias to the upside for retesting 1.6189 first. Break will resume larger rally towards 1.6587 key resistance. However, break of 1.5857 will be an early sign of trend reversal and turn bias to the downside for 1.5621 support to confirm.

In the bigger picture,rise from 1.3624 is not completed yet. And it's still in progress for 1.6587 key resistance level. We'd be cautious on strong resistance from there to limit upside, on bearish divergence condition in daily MACD. But for now, break of 1.5621 support is needed to be the first sign of medium term reversal. Otherwise, outlook will stays bullish even in case of deep pull back.

Daily Pivots: (S1) 0.8694; (P) 0.8721; (R1) 0.8742; More...

Intraday bias in EUR/GBP is mildly on the downside as deeper fall could be seen to retest 0.8666. But after all, it's staying in range of 0.8666/8796. On the downside, decisive break of 0.8666/86 support zone will resume whole fall from 0.9305. In that case, EUR/GBP should target 0.8303 key support next. On the upside, above 0.8749 will reaffirm the strong support from 0.8686 and turn bias to the upside for 0.8796. Break there will target 61.8% retracement of 0.8967 to 0.8666 at 0.8852 and above.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of deeper fall. And in that case, EUR/GBP could have a retest on 0.8303. But 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) 1.1761; (P) 1.1783; (R1) 1.1797; More...

No change in EUR/CHF's outlook. The rebound from 1.1445 might still extend higher. But we'd remain cautious on strong resistance from 1.1832 to bring near term reversal. On the downside, below 1.1730 minor support will turn bias to the downside first. Further break of 1.1649 support will indicate completion of rebound form 1.1445. And the corrective pattern from 1.1832 would then have started the third leg to retest 1.1445. However, firm break of 1.1832 will confirm resumption of larger up trend.

In the bigger picture, a medium term top should be in place at 1.1832 on bearish divergence condition in daily MACD. But there is no indication of long term reversal yet. As long as 1.1198 resistance turned support holds, we'd still expect another rise through prior SNB imposed floor at 1.2000.

Rates: Consolidation ahead?
Risk sentiment improved overnight as US officials softened trade rhetoric again after last week's hawkish opening bets. More signs of North Korean willingness to de-nuclearize are supportive as well. We expect consolidation on core bonds markets this week given the relatively thin eco calendar. Tomorrow's speech by Xi Jinping is a wildcard.

Currencies: Soft US payrolls block tentative USD rebound
Of late, the dollar held a cautious positive momentum even as the trade dispute between the US and China persisted. However, a soft US payrolls report blocked any further USD gains. This week the focus turns to the US price data. However, sustained further USD gains probably remain difficult as long as uncertainty on trade is clouding the Fed rate hike outlook

The Sunrise Headlines

• US stock markets ended the week on a bad note, losing more than 2%, after Chinese officials contradicted US rhetoric that trade negotiations were ongoing. Risk sentiment improved this morning, with Asian indices gaining around 0.5%.
• After threatening to slap China with new tariffs, Trump administration officials softened the rhetoric, noting that the penalties aren't imminent and there is ample time to work out a deal and step back from a possible trade war. (WSJ)
• North Korea has said it is willing to discuss de-nuclearisation with the US, a Trump administration official said, increasing changes of an unprecedented summit between North Korean leader Kim Jung Un and the US president (FT).
• Fed Chair Powell said that the outlook for inflation and employment support further gradual interest-rate increases, while the lack of a spike in wage gains shows the labor market is “not excessively tight.” He added that it's too soon to know if the trade issue would take its toll on the US economy.
• Hungarian PM Orban scored a crushing election victory to clinch a fourth term in a boost to Europe's populist forces that are challenging the EU's multi-cultural, democratic values. He's on track to score another 2/3rd majority.
• China's foreign-currency holdings resumed gains last month as the government kept capital curbs in place and the yuan capped its best quarter in a decade. Reserves rose $8.34 bn to $3.143 tn in March from the previous month.
• Today's eco calendar only contains second tier eco data. ECB Constancio and Praet are scheduled to speak.

Currencies: Soft US Payrolls Block Tentative USD Rebound

Soft payrolls block tentative USD rebound

The US-China trade dispute and the payrolls were the main drivers for USD trading last Friday. US president Trump opened the door for a new batch of tariffs on Chinese imports. China indicated soon that it could take countermeasures. The trade headines were a slightly negative for the dollar, but the damage remained limted. US payrolls disappointed (except for wage growth) and were an additional USD negative. USD/JPY drifted back south to the 107 area. EUR/USD traded near 1.2230 before the payrolls, but closed the session at 1.2281. Fed's Powell supported the scenario of gradual further rate hikes in a speech, but had no big impact on USD trading.

The narrative on the trade war turned a bit softer during the weekend as president Trump suggested that a deal with China remains possible. Asian equities mostly show decent gains despite the sell-off in the US on Friday. The impact of the swings in equities on the dollar remains modest as was often the case of late. EUR/USD hovers in the 1.2275 area. USD/JPY tries to regain the 107 mark.

There are no data in the US today and only second tier data in Europe. ECB's Constancio and Praet speak. US CPI/price data will be closely monitored later this week. Headline inflation (Wednesday) is expected to rise 0.0% M/M and 2.4% Y/Y. (Gradually) rising US inflation could be a ST USD supportive in theory. However, the swings in the trade war debate will probably continue to dominate the headlines. USD investors/traders avoided clear directional position taking on the trade issue. This indecisive trading pattern might persist as long as there is no clear sign that the issue might be solved in a constructive way. Last week, EUR/USD drifted gradually lower in the 1.2476/1.2155 ST consolidation pattern. A sustained break of this range bottom will probably remain difficult as long as Fed rate hike expectations are clouded by global trade uncertainty.

Sterling ignored soft (weather related) PMI's last week. The risk-on/risk-off balance gave only limited directional guidance for sterling trading. Today, only the Halifax house prices are scheduled for release. A better equity sentiment might be marginally sterling supportive. However, we don't see a trigger currently for EUR/GBP to break the mid 0.86 support area in a sustainable way.

EUR/USD near bottom of MT sideways range. Poor payrolls prevent real downside test

Friday's steep declines in Wall Street driven by weak employment report and a war of words between U.S. & China seem to have been shrugged off in Asia trade. President Trump's tweets are becoming a little confusing to investors. After threatening to impose tariffs on additional $100 billion of Chinese exports, Trump tweeted that he will always be friends with President Xi and China will take down its barriers because it is the right thing to do. The trade drama will continue to create noise in the coming weeks, but it will be interesting to hear from the Chinese President at the Boao Forum on Tuesday, where he will likely show his country's readiness to retaliate, while indicating a willingness to negotiate.

Oil traders will continue eyeing situation in Syria, after the Pentagon denied conducting air strikes on an airport in Homs. The missile strikes came a couple of hours after Trump warned of "a big price to pay", in response to the attack on rebel-held Douma.

While trade tensions and geopolitical risks are likely to keep appetite for risk in check, investors will have new information to digest this week, particularly earnings from big banks and U.S. inflation data.

Inflation data & FOMC Minutes

U.S. Consumer Price Index is expected to increase by 0.1% YoY, to 2.3%. Meanwhile, the core reading is anticipated to hit back the Fed's target of 2%, after falling short for the past 11 months. The inflation reading along with the FOMC minutes release on Wednesday will probably lead to a repricing of interest rates expectations given any surprise. An upside surprise will likely push U.S. 10-year Treasury yields bonds towards 2.9%, having fallen 17 basis points from its February's peak of 2.96%.

It's the Earnings Season

As usual, the U.S. earnings season kicks off with big banks – JPMorgan, Citi Group, and Wells Fargo will report their Q1 results on Friday. According to FactSet, the estimated earnings growth for the S&P 500 in Q1 is 17.1%, marking the highest earnings growth since Q1 2011. More interestingly, 26 companies in the Tech sector issued positive Earning Per Share guidance, well above the 5-year average of 11. With the S&P 500 down 2.6% for the year, I think there will be many buying opportunities, especially if trade tensions abate. The forward 12-month P/E ratio at 16.5 looks much more reasonable compared to a year ago.

Daily Pivots: (S1) 1.2740; (P) 1.2767; (R1) 1.2806; More....

Intraday bias in USD/CAD remains neutral for consolidation above 1.2732 temporary low. Near term outlook stays bearish for deeper decline. A short term top is ate least formed at 1.3124 with head and shoulder top pattern (ls: 1.3000; h: 1.3124; rs: 1.2942). Below 1.2732 will target 61.8% retracement of 1.2246 to 1.3124 at 1.2581 next. However, break of 1.2942 will invalidate this bearish view and turn bias back to the upside for 1.3214 high.

In the bigger picture, current development turns favors to the case that rise from 1.2061 is a corrective three wave pattern. It could have completed at 1.3124 after hitting 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Focus is now back on 1.2061 and 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048.

Daily Pivots: (S1) 0.7652; (P) 0.7676; (R1) 0.7694; More...

AUD/USD is still bounded in consolidation above 0.7642 and intraday bias stays neutral. Another recovery cannot be ruled out. But outlook stays bearish with 0.7784 resistance holds. On the downside, break of 0.7642 will turn bias to the downside to extend recent fall from 0.8135 to retest 0.7500 key support level. On the upside, however, break of 0.7784 will suggest near term reversal and turn bias to the upside for 0.7915 resistance first.

In the bigger picture, medium term rebound from 0.6826 is seen as a corrective move. It might still extend higher but 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. On the downside, break of 0.7500 support will now be an important signal that such corrective rebound is completed. In that case, AUD/USD would be heading back to 0.6826 low in medium term.

Daily Pivots: (S1) 1.2232; (P) 1.2261 (R1) 1.2308; More....

Intraday bias in EUR/USD remains neutral for the moment. But as long as 1.2344 minor resistance holds, further decline is expected. Break of 1.2214 will target 1.2154 key support first. Firm break there should confirm rejection by 1.2516 key fibonacci resistance. In that case, whole decline from 1.2555 should target 38.2% retracement of 1.0339 to 1.2555 at 1.1708 next. However, break of 1.2344 will turn bias back to the upside for 1.2475 and above to extend recent range trading.

In the bigger picture, key fibonacci level at 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 remains intact despite attempts to break. Hence, rise from 1.0339 medium term bottom is still seen as a corrective move for the moment. Rejection from 1.2516 will maintain long term bearish outlook and keep the case for retesting 1.0039 alive. Firm break of 1.1553 support will add more medium term bearishness. However, sustained break of 1.2516 will carry larger bullish implication and target 61.8% retracement of 1.6039 to 1.0339 at 1.3862 in medium term.

Daily Pivots: (S1) 106.64; (P) 107.04; (R1) 107.32; More...

Intraday bias in USD/JPY remains neutral at this point. On the upside, above 107.48 will resume the rebound from 104.62. But reaction from 38.2% retracement of 114.73 to 104.62 at 108.48 is crucial to determine the outlook. Firm break of 108.48 will add some credence to the case of trend reversal. And USD/JPY should target 61.8% retracement at 110.86 next. Nonetheless, rejection from 108.48 (which is close to 108.12 key resistance too), will retain bearishness. Break of 105.65 support will indicate that the rebound is completed and turn bias back to the downside for 104.62 and below.

In the bigger picture, medium term down trend from 118.65 (2016 high) is still in progress and extending. Build up in downside momentum argues that it might be extending the whole corrective pattern from 125.85 (2015 high). 100% projection of 118.65 to 108.12 from 114.73 at 104.20 will be a key level to watch as firm break there could bring downside acceleration. And in that case, 98.97 key support level (2016 low) would at least be breached. This bearish case will now be favored as long as 108.12 support turned resistance holds.

Daily Pivots: (S1) 0.9563; (P) 0.9605; (R1) 0.9634; More...

Intraday bias in USD/CHF remains neutral first. On the downside, break of 0.9521 minor support will indicate rejection by 0.9626 key fibonacci resistance. Intraday bias would then be turned back to the downside for 0.9432 support first. Break there will also confirm completion of rebound from 0.9186 and turn outlook bearish. On the upside, sustained break of 0.9626 will be another evidence of larger reversal. In this case, further rise would be seen to next fibonacci level at 0.9900.

In the bigger picture, fall from 1.0342 is seen as a medium term down trend. Main focus is on 38.2% retracement of 1.0342 (2016 high) to 0.9186 (2018 low) at 0.9626. Sustained break there will add to the case of trend reversal and target 61.8% retracement at 0.9900 and above. However, rejection from 0.9626 will maintain medium term bearishness for another low below 0.9186.