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For the 24 hours to 23:00 GMT, the EUR rose 0.44% against the USD and closed at 1.1240, after German Chancellor, Angela Merkel, blamed the European Central Bank's (ECB) ultra-low interest rates and its quantitative easing programme for weakness in the Euro. However, she admitted that Germany's trade exports have gained huge benefits from a weaker Euro.

In economic data, the Chicago Fed national activity index rose more than expected to 0.49 in April, hitting a three-year high level, suggesting an increase in production and hiring activity following a subdued first quarter. Investors had expected the index to rise to a level of 0.10 from 0.07 recorded in the previous month.

Meanwhile, the Federal Reserve Bank of Minneapolis President, Neel Kashkari, stated it is wrong to believe that the US Fed's monetary policy can solve all the economic problems.

Separately, Federal Reserve Board Governor, Lael Brainard, commented that it is still not clear whether the nation's economy is at full employment or there is still more slack left in the labour market.

In the Asian session, at GMT0300, the pair is trading at 1.1250, with the EUR trading 0.09% higher against the USD from yesterday's close.

The pair is expected to find support at 1.1185, and a fall through could take it to the next support level of 1.1121. The pair is expected to find its first resistance at 1.1289, and a rise through could take it to the next resistance level of 1.1329.

Going forward, the preliminary manufacturing and services PMI data across the Euro-zone, both for May, slated for today, will be closely watched by market participants. Additionally, data on Germany's GDP growth for the first quarter and the Ifo survey for May, will be on investors' radar. Moreover, the US Markit manufacturing and services PMI data for May, along with new home sales figures for April, scheduled later in the day, will also garner a lot of market attention.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.08% against the USD and closed at 1.3003.

Meanwhile, latest polls showed that the UK Prime Minister, Theresa May's lead over her opposition leaders had narrowed to nine points from around 20 points, ahead of the general elections due to take place on 8 June.

In the Asian session, at GMT0300, the pair is trading at 1.2987, with the GBP trading 0.12% lower against the USD from yesterday's close.

The pair is expected to find support at 1.2952, and a fall through could take it to the next support level of 1.2918. The pair is expected to find its first resistance at 1.3032, and a rise through could take it to the next resistance level of 1.3078.

Ahead in the day, investors will look forward to UK's public sector net borrowings data for April and Inflation report hearings for further direction.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.12% against the JPY and closed at 111.32.

Overnight data showed that Japanese manufacturing activity dipped to 52.0 in May from 52.7 reported in the prior month, thereby expanding at the slowest pace in six months as export orders slowed.

In the Asian session, at GMT0300, the pair is trading at 111.17, with the USD trading 0.13% lower against the JPY from yesterday's close.

The pair is expected to find support at 111.11, and a fall through could take it to the next support level of 110.9. The pair is expected to find its first resistance at 111.55, and a rise through could take it to the next resistance level of 111.78.

Looking ahead, investors will concentrate on a speech by the Bank of Japan's (BoJ) Governor, Haruhiko Kuroda, scheduled at night, to get his views on economy.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0% against the CHF and closed at 0.9739.

On macro front, Switzerland's total sight deposits rose to a level of CHF575.5 billion in the week ended 19 May, from a level of CHF575.0 billion in the previous week.

In the Asian session, at GMT0300, the pair is trading at 0.9725, with the USD trading 0.14% lower from yesterday's close.

The pair is expected to find support at 0.9728, and a fall through could take it to the next support level of 0.9716. The pair is expected to find its first resistance at 0.9758, and a rise through could take it to the next resistance level of 0.9776.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.06% against the CAD and closed at 1.3519.

In the Asian session, at GMT0300, the pair is trading at 1.3485, with the USD trading 0.25% lower from yesterday’s close.

The pair is expected to find support at 1.3505, and a fall through could take it to the next support level of 1.349. The pair is expected to find its first resistance at 1.3534, and a rise through could take it to the next resistance level of 1.3548.

With no major economic data in Canada today, investors will now await the Bank of Canada’s (BoC) interest rate decision, due tomorrow, to get further insights.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

Daily Pivots: (S1) 1.1178; (P) 1.1220 (R1) 1.1280; More....

With 1.1161 minor support intact, intraday bias in EUR/USD remains on the upside for further rally. We stay cautious on strong resistance from 1.1245/98 (138.2% projection of 1.0339 to 1.0828 from 1.0569 at 1.1245) resistance zone to limit upside and bring reversal. However, decisive break of 1.1298 will carry larger bullish implication and target 1.1615 resistance next. On the downside, below 1.1161 minor support will turn bias neutral first.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD now far above 55 week EMA. 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.

Daily Pivots: (S1) 0.9694; (P) 0.9730; (R1) 0.9768; More.....

With 0.9765 minor resistance intact, intraday bias in USD/CHF stays on the downside. Current fall from 1.0342 should target 100% projection of 1.0342 to 0.9860 from 1.0099 at 0.9617. We'll start to look for bottoming signal again below there. On the upside, above 0.9765 minor resistance will turn intraday bias neutral again and bring consolidations first, before staging another fall.

In the bigger picture, USD/CHF is 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.

Daily Pivots: (S1) 1.2961; (P) 1.3002; (R1) 1.3039; More...

GBP/USD's consolidative pattern from 1.3047 is still extending and intraday bias remains neutral. As long as 1.2844 minor support holds, further rise remains mildly in favor. Nonetheless, as we are still viewing price actions from 1.1946 as a corrective move, we'd expect upside to be limited below 1.3444 resistance to bring near term reversal. On the downside, break of 1.2844 will indicate short term topping and turn bias back to the downside for 1.2614 resistance turned support first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There are signs of reversal, like breaking of 55 week EMA, weekly MACD turned positive, and monthly MACD crossed above signal line. But still, break of 1.3444 resistance is need to confirm medium term bottoming. Otherwise, outlook will remains bearish for extend the down trend through 1.1946 low.

Daily Pivots: (S1) 110.94; (P) 111.27; (R1) 111.62; More...

The consolidation from 110.23 is still in progress and intraday bias stays neutral in USD/JPY first. Overall, the development suggests that whole corrective decline from 118.65 is going to extend lower. Below 110.23 turn bias back to the downside and send USD/JPY through 108.12 low. In that case, we'll look for bottoming signal again at 61.8% retracement of 98.97 to 118.65 at 106.48.

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.

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

As anticipated, the single currency continued to extend higher during the course of Monday’s segment. Germany's Chancellor Angela Merkel argued that the "too weak" EUR was to blame for the contracting trade surplus in Germany, increasing the demand. The move has, as you can see, brought the H4 candles up to within striking distance of H4 resistance at 1.1279, followed closely by the 1.13 handle. Also of interest here is the fact that this H4 resistance denotes the underside of a weekly resistance area at 1.1278, and in addition to this, we also see a daily trendline resistance etched from the low 1.0711 intersecting nicely with the 1.13 region.

Our suggestions: Given the confluence surrounding the 1.13 neighborhood, our team has expressed interest in shorting the unit here. In the event that a reasonably sized H4 bearish candle forms around 1.13/1.1279 today, preferably a full-bodied candle, we would have little hesitation in selling here. Ideally, stops would be positioned above the candle’s wick and the initial take-profit target is to be set at the nearest H4 demand formed on approach.

Data points to consider: German IFO business climate survey at 9am, Eurozone manufacturing reports between 8-9am. Several FOMC members set to take the stage at different times today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.13/1.1279 ([waiting for a reasonably sized H4 bear candle, preferably a full-bodied candle, to form before pulling the trigger is advised] stop loss: ideally beyond the candle’s wick).

GBP/USD

The GBP/USD, as expected, remains trading around the top edge of the ascending channel (low: 1.2804 high: 1.2965) despite closing above this structure on Friday. The large psychological level seen at 1.30, however, is proving to be a bit troublesome for the bears at the moment. With that being said though, a reasonable attempt to push lower from 1.30 was seen on Monday, forming a nice bearish rejection candle, but in this instance the bulls had other plans!

Ultimately, the desk believes that the odds of price breaking lower are high. This comes from seeing weekly price lurking within the walls of a supply base drawn from 1.3120-1.2957 and daily action continuing to trade around supply seen within the said weekly supply at 1.3058-1.2979.

Our suggestions: Similar to Monday’s report, 1.30 will be KEY in deciding direction. A rejection off this line will likely imply the bulls are going to attempt to break above the said higher-timeframe areas, and a violation of this number would likely lead to a move down to the H4 mid-level support at 1.2950, and possibly beyond. Personally, even with a solid rejection off 1.30 today, we would not be keen buyers in light of the bigger picture. Selling below 1.30 on the other hand could be a possibility if price were to retest the underside of this number and form a lower-timeframe sell signal (see the top of this report), targeting the H4 mid-level resistance at 1.2950 as an initial take-profit target.

Data points to consider: UK Inflation hearings at 10am. Several FOMC members set to take the stage at different times today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for H4 price to engulf 1.30 and then look to trade any retest seen thereafter ([waiting for a lower-timeframe sell signal to form following the retest is advised] stop loss: dependent on where one confirms this level).

AUD/USD

For those who read Monday’s report on the Aussie you may recall our desk highlighting the 0.7481/0.7470 neighborhood as a potential sell zone (green area). Our reasons for liking this area were due to the following:

Located within a weekly resistance area at 0.7524-0.7446.

Positioned within a daily resistance area (plotted within the said weekly zone) at 0.7449-0.7506.

May’s opening level at 0.7481 (denotes the top edge of the sell zone) was likely to produce a reaction.

And finally, the market’s overall trend is currently pointing south.

We also went on to say that traders should expect a fakeout through this zone. This is due to the H4 AB=CD approach taken from the low 0.7388 (see black arrows).

As you can see, this has played out as expected, and the bears have demonstrated some interest here following the fakeout. On the basis of our above notes, and the H4 selling wick formed on the fakeout, we are now short this market at 0.7475, with our stop tucked just above the wick at 0.7490. Ultimately, we’re looking for price to tap the H4 mid-level support at 0.7450 before taking partial profits and reducing risk.

Data points to consider: Several FOMC members set to take the stage at different times today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.7475 ([pending order] stop loss: 0.7490).

USD/CAD

In recent sessions, we saw the USD/CAD respond to the H4 demand base coming in at 1.3497-1.3521. However, as we anticipated, this area did not produce much to get excited about. The reason for this, in our opinion, is due to the far more appealing H4 buy (green) zone formed between 1.3434/1.3457. Comprised of a H4 Quasimodo support at 1.3457, a H4 61.8% Fib support at 1.3441 taken from the low 1.3223 (green line), a H4 mid-level support at 1.3450 which also happens to represent daily support and the 2017 yearly opening level seen on the weekly chart at 1.3434.

Our suggestions: Given the confluence surrounding 1.3434/1.3457, our team has placed a pending buy order around the top edge of this zone at 1.3458. Our stop has been conservatively set just beyond the 24th April low at 1.3410 around 1.3408. Ultimately, the first take-profit zone is going to be somewhere nearby the 1.35 neighborhood.

Data points to consider: Several FOMC members set to take the stage at different times today.

Levels to watch/live orders:

• Buys: 1.3458 ([pending order] stop loss: 1.3408).
• Sells: Flat (stop loss: N/A).

USD/CHF

As can be seen from the H4 chart this morning, the 0.97 handle elbowed its way into the spotlight during yesterday’s segment and has held beautifully as a support. For all you faithful followers out there, you may recall us mentioning that between the 0.97 number and the daily Quasimodo support at 0.9678, this could be an ideal area to enter long from. However, we also emphasized the importance of waiting for an additional confirming H4 bullish rotation candle to form. This was simply to avoid being faked on a push down to the weekly Quasimodo support at 0.9639.

H4 bulls, as you can see, printed a healthy bullish candle off the 0.97 level yesterday. As much as we were tempted to buy the market following this, the candle was just too big for our liking. The stop loss, if one were to trade conservatively, would have been required to be set below the said daily Quasimodo! This severely impacts risk/reward as the take-profit target is the 0.98 barrier.

Our suggestions: Personally, we’re going to wait and see if H4 price can retest 0.9678/0.97 today. Only this time, we’d like to see it fake yesterday’s low and then print a H4 bullish candle, preferably a full-bodied candle. This would be an ideal signal to enter long from.

Data points to consider: Several FOMC members set to take the stage at different times today.

Levels to watch/live orders:

• Buys: 0.9678/0.97 region ([waiting for a reasonably sized H4 bull candle, preferably a full-bodied candle, to form before pulling the trigger is advised] stop loss: ideally beyond the candle’s tail).
• Sells: Flat (stop loss: N/A).

DOW 30

US equities continued to climb higher on Monday and resulted in price driving through a H4 supply zone coming in at 20882-20849, which, right now, is being retested as a support area. Should this zone hold firm, the next upside target from here is May’s opening base line at 20929.

Over on the weekly chart, the only salient point we can glean from this timeframe is the index appears to be chiseling out a consolidation around record highs of 21170 between 20425/21000. Moving down to the daily timeframe, however, we can see that the unit is trading within shouting distance of a resistance area pegged at 21022-20933.

Our suggestions: Buying this index from the current H4 support area is possible if you’re happy with taking full profits at May’s opening level. This is because this line is situated a few points beneath the underside of the daily resistance area mentioned above! For an entry to be permitted, we would advise waiting for a lower-timeframe confirming signal to form (see the top of this report) before making a play.

Data points to consider: Several FOMC members set to take the stage at different times today.

Levels to watch/live orders:

• Buys: 20882-20849 ([waiting for a lower-timeframe buy signal to form before pulling the trigger is advised] stop loss: dependent on where one confirms the area).
• Sells: Flat (stop loss: N/A).

GOLD

In recent trading, the price of gold advanced and is now seen teasing the underside of a H4 supply zone drawn from 1268.3-1262.7. Also noteworthy is our long position taken on Thursday from 1249.2 is very close to reaching its second and final take-profit target: the H4 61.8% Fib resistance at 1264.5 (green line) extended from the high 1295.4 seen planted within the said H4 supply.

As for potential setups going forward, we’re at somewhat of a technical crossroads at the moment. On the weekly chart, the yellow metal aggressively recovered from demand at 1194.8-1229.1 during last week’s segment. The move broke a four-week bearish phase, and could potentially drag this market back up to the two weekly Fibonacci extensions 161.8/127.2% at 1313.7/1285.2 taken from the low 1188.1 (green zone) sometime this week.

Before the bulls can form an extension, nevertheless, offers placed around the daily resistance area drawn from 1265.2-1252.1 will need to be consumed. A decisive (daily) close beyond this zone would likely confirm further buying up to not only the 1313.7/1285.2 area seen on the weekly chart, but also quite possibly the daily Quasimodo resistance level seen at 1307.8.

Our suggestions: Yes, shorts could be a possibility from within the current H4 supply, but we’re really not happy with this given the position of price on the weekly chart right now. So, with that in mind, we’re going to continue running with our current position until the take profit is achieved, and then assess structure going into tomorrow’s open.

Levels to watch/live orders:

• Buys: 1249.2 ([live] stop loss: breakeven).
• Sells: Flat (stop loss: N/A).