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Daily Pivots: (S1) 1.3582; (P) 1.3652; (R1) 1.3702; More....

Intraday bias in USD/CAD remains cautiously on the downside for 1.3534 resistance turned support Break there should confirm completion of the rise from 1.2968 and target 1.3222 support next. On the upside, above 1.3721 will turn bias back to the upside and target 1.3793 and above. However, as noted before, choppy rise from 1.2460 is seen as a corrective move. In case of an extension, upside should be limited by 1.3838 fibonacci level to bring reversal.

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.

Daily Pivots: (S1) 1.4741; (P) 1.4775; (R1) 1.4836; More...

EUR/AUD rebounds strongly after drawing support from 5 hour 55 EMA. But as it's staying below 1.4909 temporary top, intraday bias remains neutral first. Overall outlook is unchanged as whole correction from 1.6587 has completed at 1.3624 already after defending 1.3671 key support level. Rise from 1.3624 is expected to continue. Hence, in case of another fall, downside should be contained by 1.4442/4649 support zone to bring rise resumption. Above 1.4909 will extend recent rally from 1.3624 to next medium term fibonacci level at 1.5455.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction should be completed 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.

Daily Pivots: (S1) 0.8473; (P) 0.8494; (R1) 0.8530; More...

EUR/GBP's break of 0.8529 resistance confirms resumption of rebound from 0.8312. Intraday bias is back on the upside. Current rise would now target 0.8786 resistance next. On the downside, below 0.8457 minor support will dampen the bullish case and turn focus back to 0.8383 support instead. Overall, price actions 0.9304 are viewed as a medium term corrective pattern that is extending. As EUR/GBP has just defended 0.8303 resistance. Break of 0.8786 could bring a retest on 0.9304 high.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. In case of deeper fall, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Rise from 0.6935 (2015 low) will resume at a later stage to 0.9799 (2008 high). However, sustained break of 0.8116 could bring deeper decline to next key support level at 0.7564 before the correction completes.

Daily Pivots: (S1) 1.0924; (P) 1.0938; (R1) 1.0951; More...

EUR/CHF is staying in consolidation below 1.0986 short term top and intraday bias remains neutral. More consolidative trading would be seen with risk of another dip. But downside should be contained by 1.0791/0872 support zone to bring rise resumption. Outlook is unchanged that corrective pattern from 1.1198 has completed already after defending 1.0653 fibonacci level. 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.

The Euro broke psychological 1.1000 barrier and extended above former high and strong upside rejection at 1.1020 on 08 May. The single currency extends strong bullish acceleration from 1.0838 correction low for the third straight day, driven by strong bullish sentiment and weaker US dollar. Today's fresh bullish extension also penetrated into weekly cloud which twisted last week, attracting for further upside. Firmly bullish daily studies are supportive for further upside and test of strong barriers ahead, provided by 20-d Bollinger band at 1.1056, weekly cloud top at 1.1067 and Fibo 76.4% of 1.1298/1.0338 downleg at 1.1071. Daily close above 1.1000 handle is seen as minimum requirement to keep firm bullish stance for further advance. The pair is awaiting releases of German ZEW economic sentiment which is expected to rise significantly, according to the forecast at 22.00 vs April's 19.5 release and EU Q1 GDP data. Eurozone Gross Domestic product is expected to stay unchanged in the first quarter (y/y forecast is at 1.7%, while q/q is expected to stay at 0.5%). Releases at/ above consensus would further support the Euro while disappointing numbers would drag the currency lower.

Res: 1.1034, 1.1056, 1.1071, 1.1100
Sup: 1.1000, 1.0970, 1.0950, 1.0930

Daily Pivots: (S1) 145.94; (P) 146.46; (R1) 147.25; More....

GBP/JPY is still bounded in consolidation below 148.09 short term top. Intraday bias remains neutral for the moment and deeper pull back cannot be ruled out. But in that case, we'd expect downside to be contained by 38.2% retracement of 135.58 to 148.09 at 143.31 and bring rise resumption. Break of 148.42 resistance will target 150.42 long term fibonacci level first. Break there will pave the way to 100% projection of 122.36 to 148.42 from 135.58 at 161.64.

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.

The minutes of the latest RBA policy meeting contained no surprises and more or less reflected the meeting statement. There was little in the minutes to suggest that there may be a change in policy anytime soon, which is consistent with our view that the RBA is likely to keep its powder dry in the foreseeable future. Given that we got no new information with regards to the Bank's forward guidance, the Australian dollar moved little at the release. Perhaps the most noteworthy point in the minutes was that officials remain worried about the labor and housing markets. Given the Bank's focus on the labor market, we think that the next major market mover for the Aussie is likely to be the employment report for April, due out during the Asian morning Thursday. Besides Australian data, we think that much of AUD's forthcoming direction is also likely to be decided by the path of iron ore prices, investors' risk sentiment, as well as incoming Chinese data, considering Australia's heavy trade exposure to the world's second largest economy.

AUD/USD traded lower yesterday ahead of the minutes, and moved little on their release. Given that the rate is still trading below the downtrend line taken from the peak of the 30th of March, we believe that the short-term trend remains negative. Nevertheless, we see the possibility for the pair to turn up again and continue correcting north. A break above 0.7450 (R2) could confirm the case and is possible to open the way for a test near the crossroad of the 0.7490 (R3) hurdle and the aforementioned downtrend line. The catalyst for more upside corrective extensions may be Thursday's employment data, where the net change in employment is expected to stay positive even following the previous month's remarkable surge.

Today's highlights:

During the European day, the main event will probably be the release of the UK CPI data for April. The forecast is for both the headline and the core rates to have risen notably, something supported by the nation's services PMI for the month, which indicated that service firms raised their prices charged at the fastest pace since 2008. Even though something like that could bring the pound under renewed buying interest, we stick to our guns that the Bank of England is likely to remain on hold in the foreseeable future should the data evolve more or less in line with its expectations. What's more, we think that sterling's forthcoming direction over the next weeks is likely to be decided primarily by news surrounding the upcoming General Election, rather than developments regarding monetary policy.

GBP/USD traded in a consolidative manner yesterday and during the early European morning Tuesday, it is trading near the 1.2900 (S1) barrier. Bearing in mind that the pair has been oscillating between the key support of 1.2850 (S2) and the psychological zone of 1.3000 (R2) since the 27th of April, we consider the short-term outlook to be neutral for now. Nevertheless, accelerating CPIs today could encourage the bulls to target the 1.2950 (R1) zone, where a decisive break may trigger extensions towards the round figure of 1.3000 (R2).

From Germany, we get the ZEW survey for May. The consensus is for both the expectations and the current conditions indices to have risen. This would probably be an encouraging development for ECB policymakers, as it could signify that the bloc's economic powerhouse continues to perform at a robust pace. We also get Eurozone's trade balance for March and the second estimate of Q1 GDP. From the US, we get building permits, housing starts, and industrial production, all for April.

We have only one speaker on the agenda: ECB Executive Board member Benoit Coeure.

AUD/USD

Support: 0.7400 (S1), 0.7375 (S2), 0.7330 (S3)

Resistance: 0.7430 (R1), 0.7450 (R2), 0.7490 (R3)

GBP/USD

Support: 1.2900 (S1), 1.2850 (S2), 1.2770 (S3)

Resistance: 1.2950 (R1), 1.3000 (R2), 1.3050 (R3)

GBP/USD – 1.2930

 
GBP/USD – Wave 4 is unfolding as an (A)-(B)-(C) and could have ended at 1.7192

 
Although the British pound eased after rising to 1.2991 earlier and minor consolidation below this level would be seen, reckon downside would be limited to 1.2830-35 and renewed buying interest should emerge above support at 1.2757, bring another rise later, above said resistance would confirm the erratic rise from 1.1986 low has resumed for retracement of medium term decline to psychological resistance at 1.3000, then 1.3050-55, however, loss of near term upward momentum should prevent sharp move beyond 1.3100 and price should falter below 1.3140-50 (38.2% Fibonacci retracement of 1.5018-1.1986), risk from there has increased for a retreat later. 

Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has possibly ended at 1.7192, below support at 1.4232 would add credence to this count, then further fall to 1.4000 level would follow but reckon downside would be limited to 1.3655 support and price should stay above previous support at 1.3500.

On the downside, whilst initial pullback to 1.2830-35 cannot be ruled out, reckon downside would be limited to 1.2757 support and previous resistance at 1.2706 would turn into support and contain downside, bring another rise later. Only below previous resistance at 1.2616 (tentatively wave i top) would abort and suggest top is possibly formed, risk weakness to 1.2550-60 but break of 1.2500 support is needed to provide confirmation.
 
Recommendation: Buy at 1.2760 for 1.3000 with stop below 1.2660.

 
Longer term - Cable's rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is seen as [A], the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree wave B with circle. The selloff from there is a 5-waver with wave (A) ended at 1.3500 (23 Jan 2009), wave (B) itself is labeled as A: 1.6733, triangle wave B: 1.4813 and wave C as well as top of wave (B) ended at 1.7192 (2014), hence the selloff from there is an impulsive wave (C) with wave I : 1.4566, wave II 1.5930, an extended wave III is unfolding and already exceeded our downside target at 1.3500 and 1.3000, hence weakness to 1.2500 and possibly 1.2000 cannot be ruled out, however, price should stay well above psychological level at 1.0000.

Cable regained strength and accelerated above 1.2900 handle in early European session on Tuesday, awaiting release of UK inflation data. Monday's pullback from upside rejection at 1.2938 was contained by rising 20SMA at 1.2879, keeping broader bullish bias intact. Daily bulls are back to full capacity on today's rally above 10SMA/daily Tenkan-sen (1.2915/08), signaling possible attack at psychological 1.3000 barrier for break above near-term 1.2830/1.2987 congestion. Annualized inflation for April is seen accelerating in April according to the forecast at 2.6%, compared to 2.3% in March, while monthly figure is expected to stay unchanged at 0.4%. Core CPI is also seen higher, as forecast for April lies at 2.2%, up from 1.8% in March. Release at forecasted levels or upside surprise would be supportive for sterling for probe above psychological 1.3000 and test of another strong barrier, base of thick weekly cloud, currently at 1.3032. On the other side, weaker than expected inflation numbers would put the pound under fresh pressure and risk break below pivotal support at 1.2830 (04 May low).

Res: 1.2946, 1.2986, 1.3000, 1.3032
Sup: 1.2915, 1.2889, 1.2877, 1.2843

Daily Pivots: (S1) 124.04; (P) 124.46; (R1) 125.30; More...

EUR/JPY's rally resumed by taking out 124.53 and reaches as high as 125.15 so far. Intraday bias is back on the upside. Current rise from 114.84 is part of the medium term rebound from 109.03 and should target 126.09 resistance first. Decisive break there will extend the rise to 100% projection of 109.03 to 124.08 from 114.84 at 129.89. On the downside, break of 123.30 support is needed to indicate short term topping. Otherwise, outlook will stay bullish in case of retreat.

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.