Sample Category Title

GBP/USD - 1.2925

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Sterling’s retreat after yesterday’s brief rise to 1.2950 has retained our view that further consolidation below this level would be seen and pullback to 1.2865-70 cannot be ruled out, however, break of indicated support at 1.2830 is needed to confirm top has been formed and suggest the rebound from 1.2769 has ended, bring further fall to 1.2800.

On the upside, expect recovery to be limited to said resistance at 1.2950 and bring another retreat later. Only break above there would extend the erratic rise from 1.2769 to 1.2970, however, as broad outlook remains consolidative, reckon upside would be limited to 1.3000 and indicated previous resistance at 1.3015 should remain intact. As near term outlook is still mixed, would be prudent to stand aside for now.

EUR/USD - 1.1227

Original strategy  :

Bought at 1.1205, stopped profit at 1.1235

Position : - Long at 1.1205

Target :  -

Stop : - 1.1235

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As the single currency has slipped after meeting resistance again just below last week’s high at 1.1285, suggesting further consolidation below this level would be seen, however, break of 1.1195-00 (50% Fibonacci retracement of 1.1109-1.1285) is needed to signal top has been formed at 1.1285, bring retracement of recent rise to indicated support at 1.1164 first.

On the upside, only break of said resistance at 1.1285 would revive bullishness and extend recent rise to previous chart resistance at 1.1300, break there would encourage for headway to 1.1340-45 but overbought condition should limit upside to chart point at 1.1366. As near term outlook is mixed, would be prudent to stand aside for now.

USD/JPY - 109.43

Original strategy  :

Sell at 109.90, Target: 108.90, Stop: 110.25

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 110.20, Target: 109.20, Stop: 110.55

Position :  -

Target :  -

Stop : -

As the greenback has fallen again after brief recovery, suggesting recent decline from 114.37 is still in progress and bearishness remains for further weakness to 109.00-05 (1.236 times projection of 111.71-110.31 measuring from 110.73), then towards 108.70-75 but near term oversold condition should limit downside to 108.45-50 (1.618 times projection), bring rebound later.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as previous support at 110.24 (now resistance) should limit upside and bring another decline. Above previous support at 110.31 would defer and suggest low is formed instead, bring a stronger rebound to 110.60 but break of resistance at 110.73 is needed to add credence to this view.

Daily Pivots: (S1) 108.91; (P) 109.71; (R1) 110.20; More...

Intraday bias in USD/JPY remains on the downside for retesting 108.12 low first. Also whole decline from 118.65 is seen as a correction and is still in progress. Break of 108.12 will target 61.8% retracement of 98.97 to 118.65 at 106.48. We'll look for bottoming signal around 106.48. On the upside, above 110.23 support turned resistance will turn bias neutral first. But near term outlook will remain bearish as long as 111.70 resistance holds.

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.

Daily Pivots: (S1) 0.9603; (P) 0.9628; (R1) 0.9643; More.....

Intraday bias in USD/CHF stays neutral first and some more consolidation would be seen. Another decline will be mildly in favor as long s 0.9807 resistance holds. But in case of deeper fall, 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.

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) 1.2868; (P) 1.2909; (R1) 1.2946; More...

Intraday bias in GBP/USD remains neutral for the moment. On the downside, below 1.2768 minor support will extend the fall from 1.3047 to 1.2614 resistance turned support. Decisive break there should confirm completion of the consolidation pattern from 1.1946 and resume the larger down trend through this low. On the upside, break of 1.3047 will extend the correction with another rise towards 1.3444 key resistance.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. The rejection from 55 week EMA is maintaining bearishness in the pair. Also, at this point, as long as 1.3444 resistance holds, fall from 1.7190 is still expected to continue. Break of above mentioned 1.2614 support will affirm this bearish case.

Daily Pivots: (S1) 1.1250; (P) 1.1267 (R1) 1.1294; More....

EUR/USD dips further today but it's staying well above 1.1109 support. Intraday bias remains neutral for the moment. With 1.1109 intact, further rally is in favor. Decisive break of 1.1298 will carry larger bullish implication and target 1.1615 resistance next. However, break of 1.1109 will indicate short term topping and rejection from 1.1298. In that case, intraday bias will be turned back to the downside for 1.0838 support first.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD staying far above 55 week EMA (now at 1.0888). Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

Euro dips broadly today as it's reported that ECB would downgrade inflation forecast in the staff economic projections to be published tomorrow. Bloomberg quoted unnamed source noting that ECB staff forecasts inflation to be at 1.5% in 2017, 2018 and 2019. That's quite notable downward revision from prior forecasts of 1.7%, 1.6% and 1.7% respectively. Weakness in energy price is seen as a major factor for the change. This will add to the case for policymakers to be have more patience regarding any stimulus exit. However, GDP forecast will be another thing that's closely watched for any upward revision. Based on March staff projections, Eurozone economy will grow 1.8% in 2017, 1.7% in 2018 and 1.6% in 2019.

Also, ECB is widely expected to keep key interest rate at 0% and deposit rate at -0.4% tomorrow. The asset purchase program will be left unchanged, at EUR 60b per month. ECB officials have generally expressed the view that it won't raise interest rate before ending the asset purchase in December. It's still generally expected that, due to receding political risks, the central bank will end the asset purchase after that, and there could be an announcement of some sort in September. The main focus tomorrow is indeed on whether ECB would close the door for further stimulus by changing the language.

Technically, EUR/USD is staying well above 1.1109 near term support and thus, outlook remains bullish. 1.1298 is a key structure resistance to watch and firm break there will carry larger bullish implications. Meanwhile, EUR/GBP is also staying comfortably above 0.8654 support for the moment and maintains near term bullish outlook.

Sterling mixed as election awaited

Sterling continues to trade mixed as markets await the highly uncertain election tomorrow. The latest Survation poll found that Prime Minister Theresa May's Conservatives at 41.5% and Labour at 40.4%, just 1.1% apart. According to YouGov's model, Conservatives could get just 304 seats in the Commons, down 26 from prior parliament. On the other hand, Labour could get 266 seats, up 37. That is, neither one will get the 323 seats required for absolute majority.

We'll try not to predict the outcome of the election, which now becomes too hard to predict. But we do have anticipation on market reactions depending on the outcome. It should be noted again that Sterling surged sharply when May announced the snap election. Conservatives had over 20 pts lead over Labour back then. And the Pound started to struggle when Labour gained momentum recently. We'd expect to see such pattern continue as the vote counts are being released.

Aussie surges on GDP growth

Australian dollar surges broadly today as GDP grew 0.3% qoq in Q1, meeting market expectations, even though it's sharply slower than prior quarter's 1.1% qoq. But after all, it's the 103rd successive quarter, or 26 years, without recession. And it's now a new world record of a country without a recession. Treasurer Scott Morrison said that "the results demonstrate the continued resilience of the Australian economy:" Some analysts noted that the slowdown in Q1 showed that the economy is "tired". But Morrison blamed the weather for the slowdown in Q1 and argued that improvements would be seen ahead. He noted that RBA Governor Philip Lowe reiterated yesterday that he expects the economy to grow above 3% in the next couple of years.

Elsewhere...

Canadian building permits dropped -0.2% mom in April. Swiss foreign currency reserves dropped slightly to CHF 694b in May. New Zealand manufacturing activity rose 2.8% in Q1. Australia GDP rose 0.3% qoq in Q1. Japan leading index dropped to 104.5 in April. German factory orders dropped -2.% mom in April.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1250; (P) 1.1267 (R1) 1.1294; More....

EUR/USD dips further today but it's staying well above 1.1109 support. Intraday bias remains neutral for the moment. With 1.1109 intact, further rally is in favor. Decisive break of 1.1298 will carry larger bullish implication and target 1.1615 resistance next. However, break of 1.1109 will indicate short term topping and rejection from 1.1298. In that case, intraday bias will be turned back to the downside for 1.0838 support first.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD staying far above 55 week EMA (now at 1.0888). Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

Economic Indicators Update

GBPUSD also suggests that there can be dollar strength coming as recovery from end of May looks to be slow and choppy; a clear overlapping move that suggests weaker pound, especially once 1.2860 level is broken.

GBPUSD, 1H

An air of caution lingered across the financial markets on Wednesday as investors rushed to the side lines ahead of a week filled with key political and macroeconomic events. Asian equity markets were mostly mixed this morning amid the subdued trading mood while European stocks opened cautiously higher. Wall Street closed in the red territory on Tuesday and may follow the same pattern this afternoon as anxious investors avoid riskier assets. With Risk-off potentially becoming the name of the game ahead of a trio of major risk events on Thursday, the flight to safety could support safe-haven assets such as Gold and the Japanese Yen.

Will the ECB surprise markets?

The current relief from political risk in Europe and encouraging macro-fundamentals for the European economy has made the Euro a champion amongst its pairs. Sentiment is turning increasingly bullish towards the currency and this can be reflected on the EURUSD which currently trades around a seven-month high at 1.1275 as of writing.

Much attention will be directed towards Thursday's ECB meeting which can be labelled as a major event risk for the Euro. Although it is widely expected that the central bank will leave monetary policy unchanged in June, investors will be paying very close attention to see if there are any hints of the ECB tapering in the future. With confidence steadily rising over the health of the European economy amid the improving fundamentals, it will be interesting to see if the ECB dishes out a hawkish surprise.

Sterling on standby ahead of UK General Election

The Sterling/Dollar was static on Wednesday as investors remained on the fence ahead of Thursday's General Election in the UK. With poll results varying from Labour making minimal gains to a potential "hung parliament" scenario, Thursday's election outcome is uncertain. I feel that this growing uncertainty ahead of the General Election should leave Sterling vulnerable to further losses. While a scenario where Theresa May secures victory in the UK General Election could support the Pound, the upside could still face some headwinds against ongoing Brexit uncertainty. From a technical standpoint, the GBPUSD is currently on standby with prices trading around 1.2900 as of writing. A hung parliament situation could expose Sterling to extreme downside risks with 1.2600 acting as the first checkpoint.

Dollar Index pressured below 97.00

The Greenback has lost some of its charisma this year with the outlook tilted to the downside as political uncertainty in Washington and soft US economic data weighs on the currency. With the Trump rally a theme of the past and expectations fading over US President Donald Trump moving forward with the proposed fiscal spending, Dollar bullish investors have lost the inspiration to support prices. Although the Federal Reserve is widely expected to raise US interest rates in June, the longer-term hiking path remains clouded amid the uncertainty and as such, has contributed to the Dollar's woes.

The main event risk for the Dollar this week will be the testimony of former FBI Director James Comey before the Senate Intelligence Committee on Thursday. If Comey shares any new information on whether President Trump wanted him to stop investigating his connections to Russia, the Greenback may be exposed to further losses.