Sample Category Title

Daily Pivots: (S1) 1.2598; (P) 1.2775; (R1) 1.2915; More...

With 1.2802 minor resistance, intraday bias in GBP/USD remains on the downside. We're favoring the case that consolidation pattern from 1.1946 has completed at 1.3047 already. Break of 1.2614 resistance turned support would confirm our bearish view and target a test on 1.1946 low next. On the upside, above 1.2802 will bring turn bias neutral and bring recovery. But outlook will remain bearish as long as 1.2977 resistance holds.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. Price actions from 1.1946 medium term low are seen as a consolidation pattern, which could have completed after hitting 55 week EMA. Break of 1.1946 low will target 61.8% projection of 1.5016 to 1.1946 from 1.3047 at 1.1150 next. In case the consolidation from 1.1946 extends, outlook will stay remain bearish as long as 1.3444 resistance holds.

Daily Pivots: (S1) 0.9654; (P) 0.9690; (R1) 0.9729; More.....

Intraday bias in USD/CHF remains neutral as the correction from 0.9613 is still in progress. With 0.9807 resistance holds, near term outlook remains bearish. Break of 0.9613 will extend the whole fall from 1.0342 to 0.9548 support and below. We'd start to look for bottoming signal again as it approaches 0.9443 key support level. However, considering bullish convergence condition in 4 hour MACD, break of 0.9807 will indicate near term reversal and turn outlook bullish for 1.0099 resistance next.

In the bigger picture, USD/CHF is still bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level. However, sustained break of 0.9443 will carry larger bearish implication and target 0.9 handle.

Daily Pivots: (S1) 109.74; (P) 110.28; (R1) 110.85; More...

USD/JPY weakens today but stays above 109.11 temporary low. Intraday bias remains neutral for the moment. As long as 111.70 resistance holds, near term outlook remains mildly bearish and deeper fall is expected. Below 109.11 will target 108.12 low first. Break will extend the whole corrective fall from 118.65 to 61.8% retracement of 98.97 to 118.65 at 106.48. We will look for bottoming sign there. Meanwhile, break of 110.70 will suggest near term reversal and turn bias back to the upside for 114.36 resistance instead.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

USD/CHF - 0.9675

Original strategy :

Sold at 0.9720, Target: 0.9620, Stop: 0.9720

Position : - Short at 0.9720

Target :  - 0.9620

Stop : - 0.9720

New strategy  :

Hold short entered at 0.9720, Target: 0.9620, Stop: 0.9720

Position : - Short at 0.9720

Target :  - 0.9620

Stop : - 0.9720

Although dollar staged a strong rebound from last week’s low of 0.9613 to 0.9728 (last week’s high), the subsequent retreat has retained our bearishness and consolidation with mild downside bias remains for weakness to 0.9657 support, however, break of 0.9640 is needed to signal the rebound from 0.9613 has ended, bring retest of this level first. A break below this level would extend recent decline to 0.9600-05 (50% projection of 1.0100-0.9692 measuring from 0.9808) later.

In view of this, we are holding on to our short position entered at 0.9720. Above said resistance at 0.9728 would abort and signal a temporary low has been formed at 0.9613 last week instead, bring a stronger rebound to 0.9761 resistance but price should falter below resistance at 0.9808.

The DAX index has lost ground in the Monday session, dropping 0.91 percent. The index is currently at 12,700.50 points. On the release front, there are no German or Eurozone events. On Tuesday, Germany and the Eurozone will release ZEW Economic Sentiment reports, and Germany will also publish WPI.

The German stock markets are down on Monday, following sharp losses on the Nasdaq, which dropped 1.8% on the Friday session. Major technology stocks such as Facebook, and Google were all down by more than 3 percent, and Apple led the downturn with losses of close to 4 percent. German financial stocks were lower on Monday – Deutsche Bank is down 1.23%, while Commerzbank has dropped to 1.03 percent.

In contrast to the election shocker in the UK, there was little suspense in the first round of French parliamentary elections, as President Emmanuel Macron led with 28% of the vote. Voters will determine the makeup of the 577 seats in the National Assembly, with Macron expected to win a huge majority in the second round. Macron is expected to put forward legislation to revamp labor laws, which will not sit well with the powerful labor unions. Any changes to France's generous employment benefits is bound it be contentious, but a strong majority in parliament will make it easier for Macron to push through reforms.

As expected, the ECB did not announce any changes to monetary policy at its June meeting. However, the ECB did tweak its language in the rate statement and in Mario Draghi's follow up comments. The ECB kept the benchmark rate pegged at 0.00% and maintained its asset-purchase plan (QE) of EUR 60 billion/month. The cautious ECB did, however, remove its guidance on rate cuts, as the ECB rate statement said that it expected interest rates to remain at "present levels" for an extended period of time. This was slightly more hawkish than the April statement, which said that policymakers expected rates to remain at present or lower levels" for an extended period. As well, Draghi characterized risks to the economy as "broadly balanced", compared to previous warnings that risks were "tilted to the downside. The subtle nuance in wording appears to be a nod to improving economic conditions in the euro-area, and could be a sign that the ECB may look to wind up its stimulus program before it terminates in December, if the economy continues to improve. The ECB has revised upwards its growth forecast for 2017 and 2018, although it has lowered its inflation forecast.

Daily Pivots: (S1) 139.21; (P) 140.86; (R1) 142.22; More....

GBP/JPY's fall continues today and reaches as low as 139.08 so far. Intraday bias stays on the downside for 135.58 support. As it's also close to 135.39 fibonacci level, we'd look for bottoming signal around there to bring rebound. However, break of 142.75 resistance is needed to indicate completion of fall from 148.09. Otherwise, near term outlook will say mildly bearish in case of recovery.

In the bigger picture, while the fall from 148.09 is deeper than expected, we're not bearish in the cross yet. Price action from 148.42 is possibly developing into a sideway pattern with fall from 148.09 as the third leg. Deeper decline could be seen but we're looking for strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside. Rise from 122.36 is still mildly in favor to resume at a later stage. However, sustained break of 135.58/39 will confirm reversal and target a retest on 122.36 low.

The Japan Yen surges broadly today on risk aversion as last week's selloff in NASDAQ is spreading over. At the time of writing, DAX is trading down -0.9% while CAC is down -1.0%. FTSE is down a mere -0.1% as helped by renewed selling in Sterling. While DOW opens nearly flat, NASDAQ is losing another -1% in early trading. Elsewhere, the Pound is under some pressure again as it breaches last week's low against Euro and Yen. Dollar is also trading softer as despite firm expectation of an FOMC rate hike later in the week.

In US, the political drama surround US President Donald Trump continued. Republicans called Trump to clear the air regarding any recordings on his conversations with former FBI Director James Comey. And they urged Trump to provide them to Congress if he does. Attorney General Jeff Sessions will testify before Senate on Tuesday regarding the firing of Comey. Meanwhile, it's reported that attorney generals of Maryland and Washington D.C. are filing a lawsuit today against Trump alleging that foreign payments to his businesses violate the Constitution.

Fed is widely expected to raise interest by another 25bps to 1.00-1.25%. Fed fund futures are pricing in 95.8% chance of that. The biggest question in traders mind is whether Fed is still ready to hike another time in September, to make a total of three hikes. There are doubts on whether the US economy could withstand that. And the new economic projections to be released with the rate announcement should shed some lights on policy makers' mind on it.

A softer Brexit is now possible but negotiation might be delayed

Credit rating agency Moody's said in a report that the inconclusive election in UK now increases the chance of a "softer" form of Brexit. That would likely include access to the EU single market Also, "while the economic impact of such an outcome would be significantly less severe than the 'hard' Brexit pursued so far, it is still far from clear whether these are indeed realistic scenarios." But it also pointed out that the elections result could now "complicate and probably delay Brexit negotiations". And it maintained there are still risks of a "sudden exit".

Talking about delaying Brexit negotiation, UK Brexit Minister David Davis said today that the formal negotiation with EU may not start as scheduled next week on June 19 as scheduled. Davis said that he's taking with EU on the details. But he pointed out it may not be next Monday "because we've also got the Queen's Speech that week and I will have to speak in that and so on".

Meanwhile, EU's chief negotiator Michel Barnier insisted on the approach that the divorce bill, citizens rights and border of Ireland should be settled first. Then, discussions on trade agreement could start. An unnamed EU official warned that if UK don't accept this "phased negotiations", it could take "a year" to draw up a new set of negotiating guidelines for Barnier.

Macron's LREM to get overwhelm majority in parliament

In France, President Emmanuel Macron's centrist party looks set to take an overwhelming majority in parliament after the first round of election yesterday. The new La Republique En Marche and its ally MoDem won 32.32% of votes in the first round, well ahead of rival Les Republicain's alliance at 21.56%. The far-right Front National got 13.2% while Socialist got 9.5%. Based on current estimations, the La Republique En March could get up to 430 seats in the 577 seat parliament after the final round on June 18. And if that happens, it would be a boost for Macron to implement his center right policies including loosing up labor laws and reforming the welfare system.

German Chancellor Angel Merkel expressed her "heartfelt congratulations" to Macron on the "great success" of the party in its first ballot. She hailed that the result was a "strong vote for reforms" that could strengthen the German-French alliance. Both expressed common goal to develop a roadmap to strengthen EU and the Eurozone when they met in Berlin last month. And Macron is clear about his wish to push for reforms in EU, strengthening of Eurozone with a common budget and introduce new executive power in Eurozone with a Euro chamber and a Euro commissioner.

GBP/JPY Mid-Day Outlook

Daily Pivots: (S1) 139.21; (P) 140.86; (R1) 142.22; More....

GBP/JPY's fall continues today and reaches as low as 139.08 so far. Intraday bias stays on the downside for 135.58 support. As it's also close to 135.39 fibonacci level, we'd look for bottoming signal around there to bring rebound. However, break of 142.75 resistance is needed to indicate completion of fall from 148.09. Otherwise, near term outlook will say mildly bearish in case of recovery.

In the bigger picture, while the fall from 148.09 is deeper than expected, we're not bearish in the cross yet. Price action from 148.42 is possibly developing into a sideway pattern with fall from 148.09 as the third leg. Deeper decline could be seen but we're looking for strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside. Rise from 122.36 is still mildly in favor to resume at a later stage. However, sustained break of 135.58/39 will confirm reversal and target a retest on 122.36 low.

Economic Indicators Update

GBP/USD - 1.2673

Original strategy :

Sold at 1.2760, met target at 1.2660

Position : - Short at 1.2760

Target :  - 1.2660

Stop : -

New strategy  :

Look to sell again higher

Position : -

Target :  -

Stop : -

As the British pound has retreated after faltering below indicated resistance at 1.2780, adding credence to our bearish view that the rebound from 1.2635 has ended at 1.2780 (our short position entered at 1.2760 just met our downside target at 1.2660 with 100 points profit) and bearishness remains for retest of said support at 1.2635, however, break there is needed to confirm recent decline has resumed for weakness to 1.2616 (previous resistance turned support) and possibly towards 1.2575-80 but reckon downside would be limited to 1.2550.

As we have taken profit on our short position entered at 1.2760, would not chase this fall here and would be prudent to stand aside for now. Above 1.2710-15 would prolong consolidation and risk recovery to 1.2745-50 but said resistance at 1.2780 should limit upside and bring another decline. Above 1.2780 would defer and risk a stronger rebound to 1.2800-05 but break there is needed to signal a temporary low has been formed, bring further gain to 1.2830-35 but price should falter below 1.2870-75 and bring another decline later.

EUR/USD - 1.1216

Original strategy  :

Sold at 1.1230, Target: 1.1130, Stop: 1.1265

Position : - Short at 1.1230

Target :  - 1.1130

Stop : - 1.1265

New strategy  :

Hold short entered at 1.1230, Target: 1.1130, Stop: 1.1265

Position : - Short at 1.1230

Target :  - 1.1130

Stop : - 1.1265

Although the single currency rebounded after falling to 1.1166 on Friday and initial upside risk is seen for this rebound to extend gain to 1.1237 (previous resistance), however, reckon 1.1250 would hold, bring retreat later, below 1.1180 would bring retest of 1.1166 but break there is needed to extend the fall from 1.1285 top for retracement of early upmove to 1.1145-50 and then towards 1.1120 but support at 1.1109 should hold from here.

In view of this, we are holding on to our short position entered at 1.1230. Above 1.1265-70 would abort and bring retest of 1.1285, only break there would revive bullishness and confirm recent upmove has resumed and extend further gain to previous chart resistance at 1.1300, break there would encourage for headway to 1.1340-45 and later towards chart point at 1.1366.

USD/JPY - 110.00

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback jumped to as high as 110.81, lack of follow through buying on break of previous resistance at 110.73 and the subsequent retreat suggest consolidation below 110.81 would be seen and pullback to 109.75 cannot be ruled out, however, break of this support is needed to signal top is formed, bring further fall towards 109.38 but only break there would indicate the rebound from 109.11 has ended at 110.81, bring retest of this level later.

On the upside, above 110.50-60 would bring test of 110.81 but break there is needed to signal the erratic rise from 109.11 low is still in progress for further gain to 111.00 and possibly 111.20-30 but price should falter well below resistance at 111.71, bring retreat later. As near term outlook is mixed, would be prudent to stand aside in the meantime.