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Daily Pivots: (S1) 0.7440; (P) 0.7464; (R1) 0.7498; More...

AUD/USD's recovery from 0.7328 extends higher today. The break of near term falling channel is seen as the first sign of near term reversal. But it's staying below 0.7555 resistance so far and intraday bias remains neutral first. On the downside, below 0.7388 minor support will turn bias to the downside for 0.7328. Break there will extend the decline from 0.7748 to 0.7144/7158 support zone. However, firm break of 0.7555 will argue that fall from 0.7748 is completed and turn bias back to the upside.

In the bigger picture, we're still treating price actions from 0.6826 low as a corrective pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8115) and above.

Global Markets:

• Asian stock markets: Nikkei down 0.10 %, Shanghai Composite lost 0.15 %, Hang Seng rose 0.15 %, ASX 200 fell 0.05 %
• Commodities: Gold at $1262 (+0.05 %), Silver at $17.16 (-0.15 %), WTI Oil at $50.90 (-0.40 %), Brent Oil at $53.65 (-0.40 %)
• Rates: US 10-year yield at 2.24, UK 10-year yield at 1.08, German 10-year yield at 0.40

News & Data

• Australia ANZ Roy Morgan Consumer Confidence 15-May: 110.5 (prev 109.4)
• Japan Nikkei Manufacturing PMI May P: 52.0 (prev 52.7)
• PBoC Fixes USDCNY Reference Rate At 6.8661 (prev fix 6.8849 prev close 6.8892)
• Pound sags vs yen after Manchester blast, euro at six-month highs – RTRS

Markets Update:

The British Pound came under pressure following an explosion at a concert in Manchester (UK). 19 people have died, and over 50 were injured. The police are currently treating this as terrorist incident. GBP/USD fell from 1.30 to 1.2973.

Risk appetite decreased in the stock markets as well, with most Asian indices down on the day. Gold was in demand in Asia, but is still struggling with resistance ahead of $1265. Should it break above it, a rally towards $1290 seems likely.

The Euro remains strong. Comments from German Chancellor Merkel that the currency was too weak boosted it additionally. While the charts are suggesting overbought conditions, EUR/USD is not showing any signs of weakness yet. Resistance now lies at 1.13, while support is seen at 1.1220 and 1.1180.

The Australian and New Zealand Dollar are bid again as commodities are recovering. AUD/USD broke above 0.7470 resistance and NZD/USD rose above 0.70. The next key levels to watch are 0.7450 and 0.7040/50 respectively.

Upcoming Events:

• 07:00 BST – Swiss Trade Balance
• 07:00 BST – German GDP
• 08:00 BST – French Manufacturing PMI
• 08:00 BST – French Services PMI
• 08:30 BST – German Manufacturing PMI
• 08:30 BST – German Services PMI
• 09:00 BST – Euro Zone Manufacturing PMI
• 09:00 BST – Euro Zone Services PMI
• 09:00 BST – German IFO Business Expectations
• 09:00 BST – German IFO Current Assessment
• 09:00 BST – German IFO Business Climate
• 10:00 BST – UK Inflation Report Hearings
• 14:45 BTS – US Services PMI
• 14:45 BST – US Manufacturing PMI
• 15:00 BST – US New Home Sales
• 15:00 BST – US Richmond Manufacturing Index
• 20:15 BST – FOMC Member Kashkari speaks
• 22:00 BST – FOMC Member Harker speaks

Key Points:

• NZDUSD reaches key reversal point and declining trend line.
• 0.70 handle represents a critical inflexion point.
• Watch for a pullback towards the 69 cent handle in the coming days.

The Kiwi Dollar has faced some sharp swings over the past few weeks as the pair has reacted to a range of changing U.S. Dollar sentiment. Subsequently, the pair has largely rallied over the last trading session and finally reached the declining trend line. However, it remains to be seen if the pair can retain its current level and potentially rise above the key 70 cent handle.

In fact, taking stock of the 4-hour chart is particularly illuminating and actually demonstrates the strong rally that price action has undertaken over the past few days. However, the technical indicators are suggesting that momentum might actually be stalling for the bullish pair. In particular, the RSI Oscillator has now ticked into overbought territory which suggests that a pullback might be on the cards in the coming days.

In addition, price action is facing some stiff resistance around the 70 cent handle, which has been a key reversal point in the past. The level has been seen as a psychological zone of resistance and the market will be watching the handle closely for any signs of a change in trend. In fact, given the historical validity of the declining trend line, any further gains will in all probability be limited.

Fundamentally, the Kiwi Dollar is also potentially over valued given that inflationary pressures and GDP gains are still within the recovery phase. Additionally, the only economic indicator largely supporting strong growth is the global dairy trade numbers, which have continued to improve over the past few months. Additionally, the U.S. economic data continues to point to tightening within the labour market which is likely to lead to monetary policy action from the Fed in the coming months. Subsequently, there are plenty of reasons to suggest that we might see additional moves to the short side in the coming weeks.

Ultimately, the most likely scenario for the pair in the coming session is an abject failure to breach the declining trend line and then a steady depreciation against the greenback. This is further supported by the various oscillators’ overbought status and the need for a period of moderation or a pullback to relieve the pressure. Subsequently, keep a close watch for a failure around the 70 cent handle and then a steady move lower back towards support around the 0.6900 mark.

Daily Pivots: (S1) 1.3477; (P) 1.3508; (R1) 1.3533; More....

Intraday bias in USD/CAD remains on the downside as fall from 1.3793 continues. Current decline should target 1.3222 support next. As noted before, corrective rally from 1.2460 could have finished ahead of 1.3838 fibonacci level. Break of 1.3222 will affirm this case and target 1.2968 key support level for confirmation. On the upside, break of 1.3668 minor resistance is needed to indicate completion of the fall from 1.3793. Otherwise, outlook will remain cautiously bearish in case of recovery.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and would end at around 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should indicate the start of the third leg while further break of 1.2968 should confirm. Nonetheless, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Key Points:

• Silver prices could be about to hit a near-term peak.
• Overarching technical bias remains rather bearish despite the recent rally.
• We could sink back below the 17.000 handle during the subsequent decline.

Silver prices have been recovering strongly over the past few sessions and have now reached the near-term peak that was forecasted for the metal a short while ago. However, given the fact that Trump is on the loose internationally and calls for his impeachment remain fresh, we may have to delve back into the technical forecast to ensure a revision of our expectations is not warranted just yet.

Firstly, it is relatively clear on the below chart that buying pressure is about to face some notable technical hurdles in the coming days, despite the apparent underlying shift in sentiment for silver. In particular, the presence of the 38.2% Fibonacci level and a historical zone of resistance around the 17.224 handle will be giving the bulls pause for thought which is in line with our earlier forecasts

However, something that wasn't clear last time was just where the 100 day EMA would be situated and what role it might play in capping upside potential. At the movement, we actually have a little more room to move before this average begins to seriously exert some selling pressure on the metal. As a result, we may see some more bullish momentum moving ahead that could mean gains extend up to around the 17.400 handle.

Nevertheless, despite the apparent need for an upward revision of our near-term high, we still expect to see the metal enter a bearish phase within a week or so. This is largely due to the overall configuration of the EMA's which remains highly bearish. However, the stochastics also shouldn't be ignored as they are deeply overbought as a result of the past few sessions of strong buying activity.

From a more fundamental perspective, Trump's international engagements and the fallout from the Russian investigation are generally expected to generate some negative market sentiment this week. This will almost certainly buoy silver prices which would be in line with the upwards revision of our near-term high but it might also work against the subsequently forecasted slide. As a result, keep half an eye on the news feed as Trump's antics may slow silver potential decline to a crawl.

Ultimately, whilst we might see a bit more buying coming down the line, we are still expecting to hit a near-term peak for silver prices in the coming week or so. Additionally, we expect to see the metal move into decline fairly shortly after – even with Trump posing a bit of threat to this forecast.

Daily Pivots: (S1) 144.17; (P) 144.62; (R1) 145.13; More....

Intraday bias in GBP/JPY remains neutral for the moment. The corrective pattern from 148.09 short term top could extend. On the upside, above 145.78 will turn bias back to the upside for retesting 148.09 first. Meanwhile, break of 143.34 will extend the pull back from 148.09 to 61.8% retracement at 140.35. Overall, we'd still expect the rise from 122.36 to resume after pull back from 148.09 completes. Break of 148.09 will target 150.42 long term fibonacci level first.

In the bigger picture, based on current momentum, rise from 122.36 bottom should be developing into a medium term move. Break of 38.2% retracement of 195.86 to 122.36 at 150.42 should pave the way to 61.8% retracement at 167.78. This will now be the favored case as long as 135.58 support holds.

Daily Pivots: (S1) 124.35; (P) 124.82; (R1) 125.53; More...

EUR/JPY's consolidation from 125.80 is still in progress and intraday bias remains neutral. Another fall could be seen but downside should be contained by 38.2% retracement of 114.84 to 125.80 at 121.61 to bring rise resumption. We're staying mildly bullish in the cross. And, break of 126.09 key resistance will extend the whole rebound from 109.03 to 100% projection of 109.03 to 124.08 from 114.84 at 129.89.

In the bigger picture, focus is back on 126.09 support turned resistance. Decisive break there will confirm completion of the down trend from 149.76. And in such case, rise from 109.20 is at the same degree and should target 141.04 resistance and above. Meanwhile, rejection from 126.09 and break of 114.84 will extend the fall from 149.76 through 109.20 low.

Daily Pivots: (S1) 1.0897; (P) 1.0922; (R1) 1.0964; More...

EUR/CHF is staying in the consolidation pattern from 1.0986 and intraday bias remains neutral for the moment. In case of another fall, downside is expected to be contained by 1.0791/0872 support zone to bring rise resumption. As noted before, the consolidative pattern from 1.1198 should be completed. Firm break of 1.0999 resistance will pave the way for a retest on 1.1198 high.

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Current strong rebound is raising the chance that it's completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.0999 resistance will target a test on 1.1198 high. For now, this will be the preferred case as long as 1.0791 support holds.

Daily Pivots: (S1) 1.4974; (P) 1.5023; (R1) 1.5080; More...

Consolidation from 1.5074 is still in progress and intraday bias remains neutral first. In case of another fall, downside of retreat should be contained above 1.4669 support and bring rise resumption. We're holding on to the bullish view that the medium term trend has reversed. Break of 1.5094 resistance will extend the rally from 1.3624 to next medium term fibonacci level at 1.5455. However, considering bearish divergence condition in 4 hour MACD, break of 1.4669 will confirm short term topping and bring deeper pull back, possibly to 55 day EMA (now at 1.4469).

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction should be completed at 1.3624 after defending 1.3671 key support. Rise from 1.3642 is now expected to target 61.8% retracement of 1.6587 to 1.3624 at 1.5455 and above. In any case, outlook will now stay cautiously bullish as long as 1.4309 resistance turned support holds.

Currency pair EUR/USD

The EUR/USD is showing a bullish continuation within wave 5 (purple), which could complete a wave C (blue). The angle of the support (green) and resistance (red) trend lines are showing a rising wedge reversal chart pattern. However, considering the bullish price action the EUR/USD could test 1.13 first and break either way: above resistance or below support. A break above 1.13 invalidates the wave 2 (green) correction.

The EUR/USD bounced at the 38.2% Fibonacci level of wave 4 (pink) and then broke above the resistance trend line (dotted red). A new 5 wave (pink) formation is most likely occurring within wave 5 (purple).

Currency pair USD/JPY

The USD/JPY bearish break below the support trend line (dotted green) could indicate a bearish continuation towards the next Fibonacci level which is the 78.6% at 109.50. However, a break below the support line connecting the candle bottoms might be needed before price can move down significantly.

The USD/JPY is building a potential wave 4 (orange) correction and a wave 5 (orange) continuation before completing wave C (brown).

Currency pair GBP/USD

The GBP/USD could be building a wave 1-2 (grey) but this depends on whether price is able to break below the channel support (green/blue). A break above the orange trend line indicates the invalidation of wave 2 and the potential for an uptrend continuation.

The GBP/USD break above the resistance (orange) invalidates wave 2 (grey) whereas a break below the support (blue) could indicate a bearish breakout.