Sample Category Title

EUR/JPY Selling pressures.

EUR/JPY is trading lower. Hourly support is given at 122.56 (18/05/2017 low). Hourly resistance can be found at 125.82 (16/05/2017 high). Major support is given at 114.90 (18/04/2017low). The road seems wide-open for further downsides.

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Strong demand.

EUR/GBP's momentum is positive. The technical structure has turned positive since the pair has broken resistance at 0.8530 (25/04/2017 low). Strong support can be found at 0.8304 (05/12/2017 low). Expected to see further continued increase towards resistance at 0.8787 (13/03/2017 high).

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

EUR/CHF Pausing around 1.0900.

EUR/CHF is trading mixed. We believe that the medium-term pattern suggests us to see continued bearish pressures towards key support that can be found at 1.0623 (24/06/2016 low).

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

USD/CHF Weak buying pressures.

USD/CHF is bouncing slightly higher after the pair monitored support given at 0.9692 (22/05/2017 low). Strong resistance is given at 1.0107 (10/04/2017 high). Expected to show renewed weakness towards hourly support at 0.9692.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/CAD Wide-open for another leg lower.

USD/CAD is trading lower below 1.3500. The pair is still lying in a downtrend channel. Hourly support can be found at 1.3424 (28/05/2017 low) then 1.3388 (25/01/2017 high). Expected to show continued bearish pressures within downtrend channel.

In the longer term, there is now a death cross with the 50 dma crossing below the 200 dma indicating further downside pressures. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low).

AUD/USD Bearish pressures.

AUD/USD is pushing lower. Hourly support is given at 0.7329 (09/05/2017 low). As long as prices remain below resistance at 0.7608 (17/04/2017 high), there are strong downside risks. Expected to move back below 0.7400.

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

The major story around the financial markets today is the British Pound being pressured against its counterparts as investors price in upcoming election risks into the currency.

The GBPUSD has slipped to a weekly low below 1.28 so far during trading, and traders will be keeping a close eye on whether the pair can conclude trading below 1.2755. This could encourage further selling pressure to where the Pound was valued when Theresa May unexpectedly called a snap election at around 1.25. These losses being seen in the Pound can be strictly linked to the financial markets becoming anxious with a major election taking place just over one week away, and investors stacking their cards heavily in favour of Theresa May winning a one-horse race. Recent indications have suggested that the election is going to be a closer call than what was previously thought, and traders are now starting to shuffle their cards towards other potential outcomes.

All in all, the slide in the Pound provides another example of the markets underpricing risks heading into a major election. I personally don't think that the markets are prepared for a close election as it is, let alone other possibilities such as the potential for a hung parliament.

EUR/USD Sideways price action.

EUR/USD is consolidating lower below strong resistance at 1.1300 (09/11/2017 high). Hourly support given at 1.1162 (22/05/2017 low) has been broken. Stronger support lies at 1.0842 11/05/2017 low) and key support is given at 1.0494 (22/02/2017 low). Expected to show renewed bullish pressures.

In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD Weakening towards support at 1.2757.

GBP/USD is pushing lower. Hourly resistance lies at 1.3048 (18/05/2017 high). Hourly support given at 1.2831 (04/05/2017 low) has been broken. The pair is heading towards stronger support at 1.2757 (21/04/2017 low). A break of this last support would indicate further weakness. Expected to show renewed bullish pressures.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Weakening.

USD/JPY has exited the symmetrical triangle and keeps pushing lower. Hourly support is given at 110.24 (18/05/2017 low). Stronger support is located at 108.13 (17/04/2017 low). Other key supports lie at a distant 106.04 (11/11/2016 low). The road is wide-open for further decline.

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

US inflation data failed to wake up dollar bulls

The latest batch of data from the world’s largest economy failed to impress, suggesting that investors continue to discount President Trump’s reflation trade. The Fed’s favourite gauge of inflation, the core personal expenditure, slid to its lowest level since 2015 as it printed at 1.5% y/y in April, matching median forecast, but down from 1.6% in the previous month.

We do not share the view of many market participants who argue that this weakness is transitory and that a rebound is looming. The relative encouraging developments in personal income and spending - both up 0.4% m/m in April - are not enough to switch to a more enthusiastic mood.

Again this softness in inflation does not jeopardise a June rate hike by the Federal Reserve. However, the central bank may have to reconsider the pace of tightening beyond the June meeting. The upcoming job report - that is due for release on Friday June 2nd - will be key in assessing the timing. Indeed, a solid print in wage growth could bolster expectations for further rate hike in 2017. Average hourly earnings are expected to have risen 2.6% y/y in May, up from 2.5% in April. We think that the market does not know which way to go.

On the one hand, the ECB’s dovishness took a lot of steam out of the EUR momentum, while on the other hand, the softness of US data puts into question a recovery in the USD. EUR/USD is currently trading at around 1.1175 with a downtrend bias.

New player in corporate activism?

As part of their standard monetary policy procedure the Swiss National Bank has amassed an equity portfolio valued well over chf 130 billion. According to some sources this makes the SNB the eighth largest public investors. Investing remains passive based on indices tracking. Investing is heavily skewed toward the US with 13F filed 31/03/2017 showing markets value of $80bn in 2534 securities.

SNB's Andrea Maechler has stated the SNB avoids banks to avoid conflict of interest. The SNB had begun to purchase stocks in 2005 after a change in Switzerland banking laws, which allow it to purchase assets outside of short term bonds. Maechler has stated that the bank has begun to vote by proxy in 2015. However, reviewing publicly-released speeches, there is scant guidance on voting procedures. While the SNB's holds are not concentrated, the natural size makes them a force. A fact not lost on activist investors.

Yesterday in an open letter a group of NGOs called on the SNB (or proxyholders) to use its voting rights at the Annual Meeting of Chevron to “mitigate climate change and respect for human and environmental rights.” It then goes on to list the four proposals which they requested the SNB to vote in favour on.

At this point we have not heard a response from the SNB on this request. Today is XOM annual meeting of shareholders were the SNB is holding 15.56 million shares. It is unclear how the SNB will vote on the nine shareholder proposals, election of directors, executive compensations, etc. In the past the Fed and ECB has steered clear of owning single shares for just this conflict of interest. It will be interesting to see how the SNB will handle this issue.

UK: Political uncertainties are growing

The pound is now suffering a one-month low against the greenback after the pair hit $1.30 for the first time in nine months. Traders and investors are monitoring the UK election as it looks like that the Conservatives lead is getting smaller. A few weeks ago, Theresa May's party advantage was above 20 points but recent polls show the lead is now around 5 points. Some other polls are even showing, for the first time, the possibility of a loss for Theresa May’s Conservatives. The outcome has started to be uncertain and markets are pricing it.

Indeed a failure for Theresa May to win the election with a large majority would trigger more concerns about the Brexit negotiations that are coming up mid-June as the UK may not have the upper hand in those future negotiations. A win by a large majority is favoured by GBP bulls as it would certainly reduce the risk of a bad deal for UK. The influence from minorities such as hard Brexiteers or hard Remainers would be largely lower. May wants a “soft” Brexit but this result is now largely being challenged.

US oil price remains in red on Wednesday and extend weakness towards $49.00 support (Tuesday's low / Fibo 61.8% of $48.16/$50.27 recovery rally), following repeated rejection at $ 50.00 resistance zone.

Tuesday's action was capped by daily Tenkan-sen at $50.00, after Monday's short-lived spike to $50.27.

Concerns about increasing production of US shale oil were boosted by rising output from Libya, which is expected to rise to 800,000 barrels per day and threatening to further undermine OPEC's attempts to support oil prices by extending output cut.

Near-term studies turned negative on recent pullback from recovery rejection at $50.27, as thick hourly cloud caps and continue to weigh on near-term action.

Daily studies are losing traction and see growing risk for retest of pivotal supports at $48.73 (20SMA), $48.16 (last Friday's low) and $47.86 (daily Kijun-sen) on sustained break below $49.00 handle.

Broken 200SMA now offers strong resistance at $49.66, followed by daily Tenkan-sen at $50.00 and Monday's high at $50.27.

Res: 49.66, 50.00, 50.27, 50.55
Sup: 49.00, 48.73, 48.44, 48.16

'After the two disappointing quarters in 2016 we expect to see a pickup in early 2017. But I don't think that growth this year will be much more than last year's 1.3 percent, which is still below potential.' - Alexander Koch, Raiffeisen Schweiz

The Swiss Economic Institute reported on Tuesday that its KOF Economic Barometer dropped unexpectedly in May. A composite indicator that provides a reading on the GDP growth direction for the Swiss economy came in at 101.6 in the reported month, down from April's upwardly revised 106.3 points. Meanwhile, market analysts anticipated a slight decrease to 106.2 in May. Nevertheless, the Barometer remained well above its long-term average, suggesting that the economy held the ace for further growth. The manufacturing sector contributed the most to the following decrease, with the paper, metal and electronic industries posting the largest losses. The weak sentiment in the sector was shown in lower volumes of new orders and competitiveness. However, the indicators for inventories pointed to a positive trend. Apart from the manufacturing sector, negative contributions were also made by the financial industry, exports, domestic consumption and the construction sector. Despite the disappointing release, the Swiss Frank managed to refrain from it.

'Consumers were somewhat less upbeat than in April, but overall remain optimistic that the economy will continue expanding into the summer months.' - Lynn Franco, Conference Board

The mood of American shoppers deteriorated for the second consecutive month in May. The Conference Board reported on Tuesday that its Consumer Confidence Index dropped to 117.9 points in the reported month, falling behind expectations for 120.1 points. Apart from that , April's reading was revised down to 119.4 from initially reported 120.3 points. The share of consumers saying business conditions were 'good' fell to 29.4% from 30.8% in April, whereas the share of those saying business conditions were 'bad' remained unchanged at 13.7% in May. The share of shoppers expecting business conditions to improve over the next six months fell to 21.3% from 25.1% in April, whereas the share of those expecting more jobs to be created over the same period of time declined to 18.6% in May from 21.9% in the preceding month. Meanwhile, 29.9% of the respondents stated that there were plentiful jobs, compared to 30.3% in April. Earlier in the day, the Commerce Department reported that consumer spending climbed 0.4% last month, the largest gain since December. Overall, US consumers maintained the positive outlook for the economy.

'ECB may upgrade its economic assessment when it meets June 8.' – Alexandria Arnold and Dennis Pettit, Bloomberg

Pair's Outlook

After a large increase in the volatility of the EUR/USD currency pair during the second half of Tuesday's trading session the currency exchange rate remained below the 1.12 mark on Wednesday morning. If no fundamental events and information will inflow into the markets during Wednesday's trading the currency exchange rate is most likely going to decline. In such case it faces two lone support levels, which might hinder the fall. First of all it is the weekly S1 at the 1.1141 level, and, secondly, it is the weekly S2 at the 1.1097 level, which is supported by the close by 20-day SMA at 1.1077 mark.

Traders' Sentiment

SWFX traders remain bearish, as 58% of open positions are short. Meanwhile, trader set up pending commands are neutral.

'The narrowing in the polls has clearly dented sterling's performance and continues to weigh on the currency, and is probably likely to do so in the near term.' – Barclays (based on Business Recorder)

Pair's Outlook

The Cable managed to recover from its intraday low yesterday, but failed to breach the immediate resistance, which resulted in trade remaining relatively flat. The pair is likely to keep consolidating today as well, but with risks still skewed to the downside and the 1.28 major level being the main threshold. A decline towards this handle would not mean a complete breach from the broadening rising wedge pattern, as a potential recovery could still take place by the end of the week. Meanwhile, technical indicators retain mixed signals, unable to confirm the possibility of the bearish momentum prevailing today.

Traders' Sentiment

Both traders' sentiment and the portion of purchase orders remain unchanged since Tuesday, taking up 52% and 51% of the market, respectively.