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The 'mighty' dollar has taken it on the chin in the overnight session, weakening for a fifth consecutive day, allowing the EUR to soar to its highest point in six-months on a hearsay report that U.S President Donald Trump revealed classified information to a Russian diplomat last week.

The time and effort that it taking for his administration to put out fires has investors questioning the President's ability to deliver on his economic agenda.

Elsewhere, the surge in oil prices is boosting commodity currencies (CAD, MXN and NOK) even as concern grows over the strength of the global economy. Stocks are mixed.

In the U.S, today's industrial production print (08:30 am EST) will provide useful insight into how the factory sector is performing.

1. Global stocks mixed results

Stocks opened the week upbeat on higher commodity and oil prices, with the S&P touching a new all-time high, before closing lower.

However, investors are growing increasingly wary as valuations look stretched and with the latest rally taking place in thinner volumes and led by just a few sectors.

In Japan, the Nikkei share average edged up +0.25%, drawing support from a sagging yen (¥113.61), while the broader Topix rallied +0.3%, paring an earlier gain of +0.7%.

In Hong Kong, China shares retreated -0.3% after surging +1.6% yesterday amid optimism over Beijing's infrastructure spending program.

In China, the Shanghai Composite Index increased +0.7%, erasing an earlier loss, while the Shenzhen Composite surged +2.1%, the most in nine-months, while India's Sensex rallied +0.5% to a new record.

In Europe, indices are trading mixed. The DAX hit a record high before pulling back, supported by Telecoms, while healthcare and automakers decline. On the FTSE 100, air transport and commodity prices are providing the early support.

U.S equities are set to open in the red (-0.1%).

Indices: Stoxx50 -0.1% at 3268, FTSE +0.4% at 7486, DAX -0.1% at 12799, CAC-40 -0.4% at 5394, IBEX-35 +0.1% at 10972, FTSE MIB +0.1% at 21714, SMI -0.2% at 9094, S&P 500 Futures -0.1%.

2. Oil rises on expectations output cuts, gold shines

Oil prices have extended yesterday's gains this morning after top producers – the Saudi's, Russia and Kuwait – supported prolonging supply cuts until the end of March 2018 in a bid to drain a global glut.

Brent crude oil is up +30c at +$52.12 a barrel, while U.S light crude (WTI) is +25c higher at +$49.10 a barrel.

Note: Both benchmarks have rallied more than +$5 a barrel since hitting five-month lows last week.

Global inventories remain high, and the output from other producers, especially the U.S is rising, which is keeping prices below the psychological +$60 some OPEC members would like to see.

OPEC and non-OPEC countries meet to decide policy on May 25 in Vienna.

Data last Friday showed that U.S energy firms added oil rig's for a 17th consecutive week, extending a 12-month drilling recovery.

Note: Today, the IEA comes out with estimates of April OPEC production.

Gold prices (+0.4% at +$1,234.81 per ounce) are rallying for a fourth consecutive day as the dollar slides on signs of slower economic activity in the U.S which is denting dealers expectations of an aggressive string of interest rate hikes by Fed.

The Fed remains on track to hike rates next month; however, the odds have fallen to +70% from +83% on waning U.S inflation outlook.

3. Yields on the move, but beware

If and how the Trump administration delivers on its promise to boost the country's growth rate may influence the pace by which the Fed drains easy money from the financial system.

If growth advances due to productivity gains, policy makers could keep interest rates “lower for longer,” but, if growth rises because it boosts demand without 'higher employment or higher productivity,' U.S policy makers could feel pressure to raise interest rates to prevent stronger inflation.

Nevertheless, last Friday's disappointing U.S data (Retail Sales and CPI) has fixed income dealers trimming the odds for a Fed hike next month. Fed fund futures currently see a +70% chance of a hike, down from +83% pre data release.

The yield on 10-year Treasury notes have backed +1 bps to +2.34%, after dropping -6 bps Friday when the weaker-than-expected CPI report buoyed bond prices.

Elsewhere, yields on Aussie 10's lost -5 bps to +2.59%. Benchmark yields in France and Germany rose +1 bps.

4. 'Big' Dollar sees red

The mighty greenback is under pressure from a number of sources – geo-political, economic and rate differential odds.

Ahead of the U.S open, Europe's single unit hit a fresh seven-month high (€1.1050) on continued optimism following the election of new French President Macron.

Germany's Chancellor Merkel is open to changing the E.U's treaties to strengthen the region, voicing a desire to “develop and renew” their bilateral relationship. The EUR continues to face strong resistance around the €1.1060-70 area, however, through here the techies sees it open to €1.1125-50 area.

The pound was firmer, trading atop of £1.2932, as U.K inflation (see below) data topped estimates and remained above the BoE's target for the third straight month.

But, unable to find the momentum to tackle the psychological £1.30 handle, has since reversed to test back below the £1.29 level. Fixed income dealers are pricing in a BoE unlikely to raise interest rates in 2017 or 2018. With the Fed on track to hike rates next month and the worries of tough Brexit negotiations with the E.U, sterling bears have their sights on a sub £1.28 in the short-term.

5. U.K Inflation, Euro GDP and trade data

In the U.K, April data this morning indicates that consumer prices rose at the fastest pace in over three-years (y/y +2.7% vs. March +2.3%).

This may suggest that the U.K is facing a living-standards squeeze as the country heads into a general election (June 8) and begins its exit from the EU.

Compared with March, prices rose +0.5%, slightly above market expectations.

In the eurozone, exporters enjoyed a record March, with sales of goods to buyers outside the currency area at an 18-year high. Despite imports also up on the year, the trade surplus widened to €30.9B.

Other data also showed that preliminary Eurozone GDP rose by +0.5% q/q, and +1.7% y/y for Q1.

Sterling tumbled lower on Tuesday following reports of UK consumer prices jumping to 2.7% in April, the highest level since September 2013. It is becoming quite clear that the Brexit-fuelled currency weakness has elevated inflation to uneasy levels with consumers likely to feel the pinch if wage growth fails to keep up. Despite the rising prices, expectations of an interest rate increase in the short term remain subdued with uncertainty over Brexit and BoE doves playing a key part. The Bank of England may receive further headaches in the future with the combination of rising inflation and slowing economic growth weighing heavily on sentiment.

Sterling/Dollar is under pressure on the daily charts as bulls are struggling to keep above 1.2900. An intraday breakdown below 1.2850 should encourage a further depreciation lower towards 1.27750.

Dollar bulls missing in action

The Greenback entered the trading week under renewed selling pressure as the amalgamation of political tensions in the US and soft economic data impeded investor attraction towards the currency. Sentiment towards the Greenback took another hit on Monday after sellers exploited the surprisingly soft US manufacturing report to enforce further downside pressures. With the Dollar descending to its lowest level at 98.50 since Donald Trump’s presidential victory in November, the Trump rally could be on its last leg. While heightened expectations remain over the Federal Reserve raising US interest rates in June, the ongoing uncertainty revolving around Trump may ensure Dollar bulls remain missing in action. From a technical standpoint, the Greenback is bearish on the daily charts with weakness below 98.50 opening a path towards 98.00.

EURUSD breaks above 1.1000

A recent relief of political risk in Europe has rekindled appetite for the Euro with prices lurching to a fresh six-month high at 1.1040 as of writing. With Emmanuel Macron’s victory in the French Presidential election dealing a symbolic blow to populism and quelling fears of “Frexit”, investors have redirected their attention back towards the macro-economics in Europe. The overall data from Europe in recent months has displayed a touch of resilience and it will be interesting to see how the improving macro-fundamentals and Macron’s victory impact the ECB meeting in June. Euro bulls seem to be back in town with a vulnerable Dollar fuelling the upside rally.

From a technical standpoint, the breakout above 1.1000 has turned the EURUSD bullish on the daily charts. A daily close above 1.1000 should encourage a further appreciation towards 1.1120

Commodity spotlight – Gold

A vulnerable Dollar supported Gold on Tuesday with the metal finding comfort around $1235 as of writing. Although US interest rate hike expectations are likely to dictate where Gold trades to in the medium to longer term, uncertainty, and geological tensions should support the metal in the short term. Persistent Dollar weakness should encourage short term bulls to send prices above $1235. A breakout above $1235 may provide permission for buyers to send prices higher towards $1245.

GOLD Medium-term bullish.

Gold seems on its way back up. Hourly support is now located 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 Monitoring Fibonacci retracement at 16.92.

Silver is bouncing back. 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).

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 Strong upside pressures.

Crude oil continues to bounce on shortsqueeze move. Support is given at a distance 43.76 (05/05/2017 low). Demand is very strong and crude oil is set to be monitor again the $50 mark.

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).

The DAX index is showing limited movement in the Tuesday session. Currently, the DAX is trading at 12,794.00. On the economic front, Eurozone Flash GDP climbed 0.5%, matching the forecast. German ZEW Economic Sentiment disappointed, as the reading of 20.6 fell short of the forecast of 22.3 points, There was better news from Eurozone ZEW Economic Sentiment, which jumped to 35.1, easily beating the forecast of 29.1 points. On Wednesday, the eurozone releases Final CPI, which is expected to rise to 1.9%.

The DAX remains close to record highs, buoyed by a solid reading from growth data for the eurozone. Market predictions for Eurozone growth were on target, as Flash GDP came in at 0.6% in the first quarter of 2017. This figure was slightly higher than Preliminary GDP back in April, which showed a gain of 0.5%. The eurozone continues to show improved numbers in 2017, boosted in no small part by the German economy, which also expanded 0.6% in the first quarter. However, the well-respected ZEW Economic Sentiment surveys, which gauge optimism among investors and analysts, were a mixed bag for May. The German indicator improved to 20.6, short of expectations. What was more surprising was the unexpected jump from the Eurozone indicator, which improved to 35.1, its strongest level in almost two years. With the eurozone showing stronger growth, has inflation kept up? We’ll get an indication on Wednesday, with the release of Eurozone Final CPI, which is expected to rise to 1.9%. Stronger inflation levels will increase pressure on the ECB to consider tapering its ultra-loose monetary policy. Germany, for one, is finding that ultra-low interest rates is hampering growth, and wants Brussels to adopt a tighter monetary policy.

A rise in oil prices has boosted stock markets, and on Monday, brent crude climbed close to 2 percent. This surge boosted the DAX, which briefly touched a high of 12,833.00, a new record. The first quarter of 2017 has seen improved numbers in the euro area, largely due to strong numbers from Germany, the largest economy in the eurozone. Germany’s economy expanded 0.6% in the first quarter, compared to a 0.4% gain in Q4 of 2016. What was particularly encouraging was that the expansion was broadly based, with strong consumer and state spending, and an upsurge in the construction and manufacturing and export sectors.

Trumps Political Gaff Has EUR Soaring

President Trump and his aides continues to be preoccupied with damage control, as the White House and Congress remain focused on Comeygate, as the fallout from Trump’s dismissal of FBI director James Comey continues. There was more bad news for President Trump on Tuesday, with a report in the Washington Post that Trump had shared confidential intelligence reports with Russia’s foreign minister at a meeting last week. The White House has denied the report, but the timing is particularly bad for Trump, who is already under investigation for possible Russian involvement in the presidential campaign. The markets are concerned that Trump will be so busy trying to put out political firestorms, that his agenda of increased fiscal spending and tax reform will stall. These jitters could hurt investor confidence and send global stock markets lower.

EUR/JPY Sideways price action.

EUR/JPY's bullish run has broken resistance at 124.59 (07/05/2017 high), Hourly support is given at 122.93 (05/05/2017 low). Major support is given at 114.90 (18/04/2017low). Expected to see further renewed buying pressures towards 125.00.

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 Bullish breakout.

EUR/GBP is strengthening. The technical has turned positive since the pair has broken resistance at 0.8530 (25/04/2017 low). Support can be found at 0.8304 (05/12/2017 low).

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 Fading below 1.1000.

EUR/CHF is getting lower. Despite the sharp increase and the recent bullish breakout which is very likely psychological, we believe that the medium-term pattern suggests us to see at some point renewed 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 Strong weakness.

USD/CHF continues to push lower after monitoring of resistance given at 1.0107 high (10/04/2017 high). Support is located at 0.9856 (23/04/2017 low). Expected to continue going lower.

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 Weakening.

USD/CAD is declining declined after failing to reach 1.3800 before bouncing back. Hourly support can be found at 1.3411 (24/04/2017 high) then 1.3353 (20/01/2017 high). Expected to show bearish pressures as the pair remains broke support at 1.3530 (27/04/2017 low).

In the longer term, there is a golden cross with the 50 dma crossing the 200 dma indicating further upside 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 Pushing higher within symmetrical triangle.

AUD/USD has paused above key support at 0.7339 (intraday low). As long as prices remain below the resistance at 0.7608 (17/04/2017 high), the short-term technical structure is negative. Key resistance stands at 0.7681 (30/03/2017 high). Expected to show further weakness.

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

The EURUSD had a bullish momentum yesterday broke above 1.0950, topped at 1.0989. The bias remains bullish in nearest term testing 1.1020. A clear break and daily close above that area would expose 1.1120 region. Immediate support is seen around 1.0950. A clear break below that area could lead price to neutral zone in nearest term testing 1.0900 but key support remains at 1.0850. A clear break below 1.0850 could trigger further bearish pressure testing the pre-gap level at 1.0730 and the trend line support as you can see on my H4 chart below, which is a good place to buy. Overall I remain neutral.

GBPUSD

The GBPUSD was indecisive yesterday. The bias is neutral in nearest term. The triple top bearish scenario remains valid, but price is now moving inside a minor bullish channel as you can see on my H1 chart below after unable to break below 1.2830 support area. Immediate support is seen around 1.2885. A clear break below that area could trigger further bearish pressure testing 1.2830 but key support remains at 1.2780 which remains a good place to buy. Overall I remain bullish but need a clear break above 1.2985 to continue the bullish scenario.

USDJPY

The USDJPY regained its bullish momentum yesterday topped at 113.85. The bias is bullish in nearest term testing 114.35. A clear break and daily close above that area would expose 115.00 region. Immediate support is seen around 113.40. A clear break below that area could lead price to neutral zone in nearest term testing 113.00 region which remains a good place to buy with a tight stop loss.

USDCHF

The USDCHF had a bearish momentum yesterday bottomed at 0.9957 and hit 0.9952 earlier today in Asian session. The bias is bearish in nearest term as a part of the false breakout bearish scenario as you can see on my H4 chart below, targeting 0.9813 region. Immediate resistance is seen around 0.9985. A clear break above that area could lead price to neutral zone in nearest term testing 1.0020 region. Overall I remain neutral.

The euro continues to gain ground in the Tuesday session, and EUR/USD is currently trading at 1.1040. On the release front, Eurozone Flash GDP climbed 0.5%, matching the forecast. German ZEW Economic Sentiment disappointed, as the reading of 20.6 fell short of the forecast of 22.3 points, There was better news from Eurozone ZEW Economic Sentiment, which jumped to 35.1, easily beating the forecast of 29.1 points. In the US, today's key events are Building Permits and Housing Starts. On Wednesday, the eurozone releases Final CPI, which is expected to rise to 1.9%.

Market forecasts for Eurozone growth were on the money, as Flash GDP came in at 0.6% in the first quarter of 2017. This figure was slightly higher than Preliminary GDP back in April, which showed a gain of 0.5%. The eurozone continues to show improved numbers in 2017, boosted in no small part by the German economy, which also expanded 0.6% in the first quarter. The well-respected ZEW Economic Sentiment surveys, which gauge optimism among investors and analysts, were a mixed bag for May. The German indicator improved to 20.6, short of expectations. What was more surprising was the unexpected jump from the Eurozone indicator, which improved to 35.1, its strongest level in almost two years. With the eurozone showing stronger growth, has inflation kept up? We'll get an indication on Wednesday, with the release of Eurozone Final CPI, which is expected to rise to 1.9%. Stronger inflation levels will increase pressure on the ECB to consider tapering its ultra-loose monetary policy. Germany, for one, is finding that ultra-low interest rates is hampering growth, and wants Brussels to adopt a tighter monetary policy.

Washington remains abuzz over Comeygate, which has put the Trump administration on the defensive. There was more bad news for President Trump on Tuesday, with a report in the Washington Post that Trump had shared confidential intelligence reports with Russia's foreign minister at a meeting last week. The White House has denied the report, but clearly damage control remains a top priority for Trump, and the euro has taken advantage, pushing past 1.10, as EUR/USD is trading at 6-month highs. The markets are concerned that Trump will be so busy trying to put out political firestorms, that his agenda of increased fiscal spending and tax reform will stall. This could send the dollar to lower levels as investors look for alternatives to investing in dollar assets

EUR/USD Bullish breakout.

EUR/USD is trading higher. Resistance at 1.1023 (07/05/2017 high) has been broken. Hourly support has been given at 1.0842 (11/05/2017 low). Strong support is now given at 1.0682 (21/04/2017 base) and key support can be found at 1.0494 (22/02/2017 low). Expected to continue growing higher.

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 Bullish pressures.

GBP/USD is trading mixed. Hourly resistance is given at 1.2989 (07/05/2017 high). Hourly support can be found at 1.2757 (21/04/2017 low). An unlikely break of this support would indicate further weakness. Expected to push higher.

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 Consolidation phase.

USD/JPY is pushing higher since the pair broke resistance given at 112.20 (31/03/2017 high). Hourly support can be found at 113.86 (11/05/2017 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). Expected to show continued bullish pressures after this consolidation phase.

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 is consolidating under Monday's fresh recovery high at $49.64 but holds strong bullish sentiment which was boosted by agreement for extended output cut. Tuesday's price action is holding above broken Kijun-sen line at $48.74 (also 50% of $53.74/$43.74 descend) above which the price managed to close on Monday after rally lost traction and stalled at $49.64, failing to sustain break above 200SMA at $49.34. Kijun-sen line offers strong support and immediate focus will remain shifted higher while the price is holding above it. However, today's price action is ranging between daily Kijun-sen and 200SMA ($48.74/$49.38) and extended consolidation could be expected while these boundaries hold. Also, slow stochastic is strongly overbought on daily chart and is turning lower that may generate negative signal for fresh easing. Break below $48.74 pivot would expose support at $48.25 (Fibo 23.6% of $43.74/$49.64) and $47.73 (Monday's low) and would delay final push through $50.00 target.

Res: 49.38, 49.64, 50.00, 50.39
Sup: 48.74, 48.36, 48.25, 47.73