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The euro has posted small gains in the Tuesday session, after starting the week with losses. Currently, EUR/USD is trading at 1.1140. On the release front, German Import Prices declined 0.1%, short of the forecast of +0.2%. Later in the day, Germany releases Preliminary CPI, which is expected to decline 0.1%. In the US, today's highlight is CB Consumer Confidence, which is expected to remain steady at 120.1 points. On Tuesday, Germany releases Retail Sales and the Eurozone publishes CPI Flash Estimate. The US will release Pending Home Sales.

The markets were all ears on Monday as ECB President Mario Draghi testified before the EU parliamentary committee for economic affairs. Draghi acknowledged that the euro-area economy was improving, but said that inflation and wage growth remained weak, requiring the ECB to continue its asset-purchase program. The scheme is due to wind up in December, and stronger data had raised speculation that the central bank might revisit its monetary stance and perhaps taper the program at the June policy meeting. Draghi's message remains one of caution, and appears to be putting the markets on notice that any moves in June will likely be of a minor nature.

There were plenty of questions marks about the eurozone economy at the start of 2017. Britain's vote to leave the European Union stunned and stung Europe, with EU members wondering who would pull out of the club next. The jitters increased as Donald Trump was sworn in as US president, who ran on a protectionist campaign of “America first”. Just four months later, the picture is much brighter for the euro-area. Donald Trump has managed to tussle with German Chancellor Angela Merkel and Brexit remains a serious challenge for the EU, but the political and economic landscape has shifted for the better. Fears of a populist wave across the continent have receded, as nationalist, anti-EU parties failed to win elections in the Netherlands and France. On the economic front, indicators continue to point upwards, as unemployment has dropped and growth is higher. The EU Spring Forecast has forecast Eurozone GDP to rise 1.7% in 2017 and 1.8% in 2018, with growth in the EU expected at 1.9% for both years. Investors have shown their approval by snapping up the euro, which has jumped 6.5% since the start of the year.

The US economy slowed down considerably in the first quarter of 2107, and there are no indications as of yet that we'll see a rebound in the second quarter. Will this lead to the Fed rethinking a June rate hike? The markets don't appear concerned, as the odds of a 0.25% rate hike have increased to 84%. At the same time, the likelihood of a rate hike in the second half of 2017 are low. The odds for a September rate are just 26%, with the markets unclear on whether the Fed will make further moves this year if inflation remains below the Fed target. Political concerns are a serious worry, as the Trump administration is embroiled in scandals, with several congressional investigations probing into Trump's alleged connections with Russian politicians. A weakened White House raises doubts if Trump will be able to keep his election promises to lower taxes and cut government spending.

Spot Gold price eased on Tuesday from fresh four week high at $1270 and returned into thick daily cloud, hitting session low at $1261. Bullish technicals are reinforced by positive sentiment on renewed safe-haven demand that supports the yellow metal's price. In addition, repeated close above $1264 Fibo 61.8% pivot was bullish signal for extension towards next target at $1276. Current pullback could be seen as corrective action which should be ideally contained by rising 10SMA/Tenkan-sen at $1258. However, extended pullback cannot be ruled out as slow stochastic is back into overbought territory and formed bearish divergence that may signal further easing. Top of thick 4-hr cloud at $1255 and last Friday's low at $1253 are next good supports which should keep downticks limited to avert risk of retesting key near-term support at $1245 (daily cloud base).

Res: 1267, 1270, 1276, 1280
Sup: 1261, 1258, 1255, 1253

The common European currency took a hit during the Asian morning Tuesday. Even though there was no clear catalyst behind this move, market chatter attributes it primarily to a media report released overnight suggesting that Greece may opt out of its next bailout payment, if it is unable to strike a debt relief deal with its creditors. We have to note though, that only one German newspaper reported this story. As such, unless we see more related reports, we doubt that market focus will remain on this issue for very long.

Instead, we think that today, investors will likely shift their attention to Germany's CPI data for May (see below), amid heightened speculation the ECB is set to appear slightly more optimistic soon. In this respect, Draghi's remarks yesterday did not reveal much. He mostly stuck to his script, reiterating that even though the bloc's economy is improving, underlying inflationary pressures remain subdued and thus, substantial monetary stimulus is still necessary.

Interestingly enough though, he repeated that at the June meeting, policymakers will have updated economic forecasts and will be able to make their judgement on the distribution of risks surrounding growth and inflation. In our view, this suggests a small change in language may indeed be on the cards soon. The ECB could signal that the risks surrounding the outlook for growth are no longer tilted to the downside, and instead echo the recent view of 'some members' in the April minutes that the risks are 'broadly balanced'.

Today's highlights:

During the European day, Germany's preliminary CPI figures for May will be in focus. The forecast is for the nation's inflation rate to have declined notably. We see the risks surrounding that forecast as skewed to the upside, perhaps for a smaller-than-anticipated decline, considering that the preliminary Markit composite PMI for the month showed that German businesses raised their prices at one of the steepest rates in six years. Should Germany's CPI rate surprise to the upside, it could raise some speculation for a positive surprise in the bloc's print that is due to be released the following day and thereby, bring EUR under renewed buying interest.

EUR/USD tumbled overnight, falling below the support (now turned into resistance barrier) of 1.1160 (R1). During the early European morning Tuesday, the price looks to be headed for a test near the support zone of 1.1100 (S1). We think that the pair could stay near that key level and wait for Germany's CPI. If indeed we see a positive surprise, the rate could rebound and test the 1.1160 (R1) barrier, where a clear break could set the stage for further upside recovery towards 1.1230 (R2). On the other hand, if the nation's CPI rate declines in line with the consensus, the latest pullback could continue. A decisive break below 1.1100 (S1) could initially aim for 1.1070 (S2).

From Sweden, we get GDP data for Q1. The forecast is for GDP growth to have slowed somewhat in quarterly terms, but to have accelerated in yearly terms. We also get retail sales for April from both Sweden and Norway.

From the US, we get personal income and spending data, all for April. The forecast is for both the income and the spending rates to have risen from the previous month. We also get the core PCE price index for April, though no forecast is available for the yearly figure. The monthly figure is anticipated to rise 0.1% mom, which would drag the yearly rate down to +1.4% yoy from +1.6% yoy. In case of strong personal income and spending data but a soft PCE print, we are likely to see a choppy reaction in USD. We think that in order for the currency to assume a clear direction afterwards, we would need to see a notable surprise in at least one of these figures.

USD/JPY traded lower yesterday, after it hit resistance near the 111.50 (R1) barrier. In case US data are strong today, the pair could recover some of its latest losses and rebound to test the 111.50 (R1) level again. On the other hand, overall disappointing data could generate some doubts as to whether a Fed June rate hike is indeed as likely as market pricing currently suggests (84%) and thereby lead to further downside in this pair. An initial break below 110.50 (S1) could see scope for declines towards the next support at 110.20 (S2).

We have three speakers on the agenda: ECB Executive Board members Ewald Nowotny and Erkki Likanen, as well as Fed Board Governor Lael Brainard. We think market focus may be primarily on Brainard, as she will be speaking about monetary policy, a topic she did not spend too much time on during her recent appearances. Considering that she will be speaking after the core PCE print is out, her view on inflation may be of particular interest to investors ahead of the June policy meeting.

EUR/USD

Support: 1.1100 (S1), 1.1070 (S2), 1.1020 (S3)

Resistance: 1.1160 (R1), 1.1230 (R2), 1.1270 (R3)

USD/JPY

Support: 110.50 (S1), 110.20 (S2), 109.70 (S3)

Resistance: 111.50 (R1), 112.10 (R2), 113.10 (R3)

GOLD Riding uptrend channel.

Gold is pushing higher within uptrend channel. Hourly support is located at 1246 (18/05/2017 low). Stronger support is given at 1195 (10/03/2017 low). Expected to show further upside pressures.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

SILVER Breaking 50% Fibonacci retracement.

Silver increases. Strong support is given at 15.63 (20/12/2017 low). Closest support is given at 16.20 (04/05/2017 low). Key resistance is given at a distance at 19.00 (09/11/2017 high). Expected to push towards 61.8% Fibonacci retracement around 17.75.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

CRUDE OIL Stalling below $50.

Crude oil has collapsed after the bounce following the short-squeeze move towards $52. Support is given at a distance 43.76 (05/05/2017 low). The technical structure suggests further strengthening.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 24.82 (13/11/2002) while resistance can now be found at 55.24 (03/01/2017 high).

EUR/JPY Selling pressures.

EUR/JPY is trading lower. Hourly support is given at 122.56 (18/05/2017 low). 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 Bearish consolidation.

EUR/GBP's momentum is still positive despite ongoing bearish consolidation. 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 Declining.

EUR/CHF is trading lower. 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 Consolidating higher.

USD/CHF is bouncing 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 Ready to bounce lower.

USD/CAD is back below 1.3500. The pair is still lying in a downtrend channel. Hourly support can be found at 1.3411 (24/04/2017 high) then 1.3353 (20/01/2017 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 Renewed bearish pressures.

AUDUSD is pushing lower. Hourly support is given at 0.7329 (09/05/2017 low). As long as prices remain below the 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.

EURUSD Profit taking.

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 Monitoring support at 1.2757.

GBPUSD is trading 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). An unlikely 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 oil price fell on Tuesday recovery rally last week's low at $48.16 failed to clearly break above psychological $50.00 barrier. Oil hit fresh recovery high at $50.27 on Monday, but failed to close above $50.00 pivot, also daily Tenkan-sen which caps upside attempts for the third straight day.

Close in red today would generate reversal signal, as price action ended in Doji on Monday, signaling strong indecision at $50.00 barrier.

Near-term studies are neutral/bearish while dailies show mixed setup.

Stronger direction signals could be expected on sustained break above $50.00 which would open way for upside extension towards 100SMA pivot at $50.95 of close below 200/55 SMA's at $49.66/$49.51 respectively, for fresh bearish extension towards next strong support at $48.66, provided by rising 20SMA.

Concerns about global oversupply continue to weigh on oil price, threatening to offset efforts from OPEC to support the price by extending output cut for additional nine months.

Res: 50.00, 50.27, 50.55, 50.95
Sup: 49.66, 49.51, 48.83, 48.66

The Aussie dollar bounced from fresh over one week low at 0.7415 on Tuesday, pulled by fresh losses on EURAUD cross, sidelining immediate downside risk seen on break below 0.7400 pivot.

The downside remains protected by 20SMA (0.7423) for now, despite several attempts below the support.

Technical studies are overall negative and see risk of fresh downside after correction, however, stronger recovery above 0.7470 (4-hr cloud top) would generate initial signal of basing and open way for further retracement of 0.7516/0.7416 downleg.

Otherwise, early recovery rejection would keep bears in play for renewed attack at 0.7400 trigger, loss of which would confirm reversal from 0.7516 peaks.

Res: 0.7470, 0.7500, 0.7516, 0.7545
Sup: 0.7435, 0.7415, 0.7400, 0.7388

The UK general election will be held on June 8th –less than 10 days away.

Currently the breakdown of the 650 seats in the House of Commons are as follows: The Conservative Party has 330 seats, the Labour Party has 229 seats, the SNP has 54 seats, the Liberal Democrats has 9 seats and “other” parties have 28 seats. With a narrow majority, the Conservative Party will likely encounter hurdles from other parties during the Brexit negotiation process.

GBP/USD has rallied around 3.5% since Theresa May announced a snap general election, until giving up some of these gains on May 22nd, as markets have largely priced in the expectations on a landslide Conservative victory. GBP/USD hit a high of 1.3047 on May 18, last seen on September 29th.

However, the bullish momentum has waned since May 22, as the difference of approval rating between the Conservative and the Labour narrowed to 9% after Theresa May proposed the cancellation of free school lunches and reduction of free healthcare services for wealthy Senior Citizens.

The terror attack in Manchester on May 22, and the downward revised UK Q1 GDP released on May 25th, has further weighed on Cable.

Notably, per the latest polls conducted by YouGov after the Manchester terror attack, the Conservatives’ lead is now down to just 5%; 43% vs. 38%. A landslide victory for the Tory now appears to be uncertain. The increased uncertainty over the general election outcome has been weighing on GBP’s prospects.

GBP/USD fell by 1.2% last Friday, hitting a 1-month low of 1.2774, marking the largest intra-day fall since February. The downtrend was held above the significant support line at 1.2800 afterwards, where there is stronger support. However, if the support line is broken, we will likely see an extended downtrend.

Be aware that GBP crosses are likely to be volatile before and after the general election.

Tuesday May 30, during early European session, the dollar index hit the highest level of 97.68, last seen on May 19. Spot gold bulls have failed to break the resistance level at 1270 since Friday.

The US PCE and core PCE inflation figures for April, will be released this afternoon at 13:30 BST. Be aware that it will likely affect USD and USD crosses.