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EURUSD

The EURUSD attempted to push lower last week slipped below 1.0850 key support but closed higher at 1.0931. The bias is bullish in nearest term testing 1.0950. A clear break above that area would expose 1.1020 region. Immediate support is seen around 1.0900. A clear break below that area could lead price to neutral zone in nearest term retesting 1.0850 key support which remains a good place to buy with a tight stop loss as a clear break and daily close below that area would expose the pre-gap level at 1.0730. Overall I remain neutral.

GBPUSD

The GBPUSD had a bearish momentum last week bottomed at 1.2844 after formed a triple top formation as you can see on my H1 chart below. The bias is bearish in nearest term testing 1.2830. A clear break and daily close below that area would expose 1.2780 which is a good place to buy with a tight stop loss. Overall I remain bullish. Immediate resistance is seen around 1.2910. A clear break above that area could lead price to neutral zone in nearest term retesting 1.2985 region.

USDJPY

The USDJPY attempted to push higher last week topped at 114.36 but closed lower at 113.34. The bias is neutral in nearest term probably with a little bearish bias testing 113.00 area which is a good place to buy with a tight stop loss targeting 115.00. Immediate resistance is seen around 113.50. A clear break above that area could trigger further bullish pressure testing 114.00/35 area. Overall I still prefer a bullish scenario but a clear break and daily close back below 113.00 would activate my wait and see mode as direction would become unclear.

USDCHF

The USDCHF had a bullish momentum last week slipped above the trend line resistance but closed back below the trend line resistance as you can see on my H4 chart below. The H4 EMA 200 (located around 0.9990) still provides a good support so far. The bias is neutral in nearest term. Immediate resistance is seen around 1.0050. A clear break above that area could trigger further bullish pressure testing 1.0085 or higher. On the downside, a clear break below 0.9990 would expose 0.9950/00 region. Overall I remain neutral.

EUR/USD – 1.0952

EUR/USD:   Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.

As the single currency retreated after meeting resistance at 1.1025 last week, suggesting consolidation below this level would be seen and pullback to 1.0820-25 cannot be ruled out, however, reckon downside would be limited to previous resistance at 1.0778 and bring another rise later, above said resistance at would extend the erratic rise from 1.0340 (tentatively wave v of larger defer wave 3) low to 1.1050 but reckon upside would be limited to 1.1125-30 (61.8% Fibonacci retracement of 1.1616-1.0340) and price should falter well below strong resistance at 1.1300, bring retreat later. 

Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.

On the downside, although initial pullback to 1.0820-25 cannot be ruled out, reckon previous resistance at 1.0778 (now support) would limit downside and bring another rise later. A daily close below previous resistance at 1.0778 would defer and risk weakness to 1.0735-40, break there would signal top is formed, bring test of support at 1.0678-82 first but downside should be limited to 1.0602 support and key level at 1.0570 should remain intact. 

Recommendation: Buy at 1.0780 for 1.0980 with stop below 1.0680. 

Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.

Cable regained traction and bounced on Monday after completing Morning Doji Star reversal pattern. Three day pullback that followed repeated rejection at psychological 1.3000 barrier, found footstep above pivotal support at 1.2830 (04 May low) and subsequent bullish acceleration sidelined growing downside risk seen on loss of 1.2830 trigger. Fresh rally that broke above pivotal barrier at 1.2914 (10SMA) brings daily MA's back to full bullish configuration and turns near-term focus towards 1.3000 barrier. Additional support was provided by bullish near-term studies, as Monday's rally surged through thick hourly cloud (spanned between 1.2888 and 1.2917) which now acts as initial support. However, larger picture shows the pair in extended directionless mode, entrenched within 1.2840 and 1.3000 range, with break of either range boundary required to generate fresh direction signal. The pair is eyeing release of a batch of UK data due in coming days for clearer signals. UK CPI data are due on Tuesday and inflation is expected to pick up in April, according to the forecast for annualized CPI at 2.6% compared to 2.3% in March. UK jobs data are due on Wednesday with unemployment expected to stay unchanged at 4.7% in April, but jobless claims are forecasted to fall significantly (5.0K in Apr vs 25.5K in Mar) and Average earnings seen increasing in March, according to the forecast at 2.4% vs 2.3% in Feb. Figures at or above forecasted level would provide fresh support to sterling for final push through 1.3000 pivot, while alternative scenario sees increased downside risk for deeper pullback on downbeat UK data.

Res: 1.2946; 1.2986; 1.3000; 1.3032
Sup: 1.2914; 1.2877; 1.2843; 1.2830

USD/JPY - 113.58

USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.

The greenback met resistance at 114.37 and has eased, suggesting consolidation below this level would be seen and pullback to 112.90-00 cannot be ruled out, however, reckon downside would be limited to support at 112.09 and bring another rise later, above said resistance at 114.37 would extend the rise from 108.13 low to 114.60-65 (61.8% Fibonacci retracement of 118.66-108.13). Having said that, a daily close above there is needed to retain bullishness and suggest the entire fall from 118.66 has ended at 108.13, then further gain to 115.00 and later test of key resistance at 115.51 which is likely to hold on first testing.

Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00.

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.

On the downside, whilst initial pullback to 113.00 cannot be ruled out, reckon downside would be limited to 112.09 support and bring another rise later. Below previous resistance at 111.78 would defer and signal top is formed, bring further fall to 111.00-05  but price should stay above previous resistance at 110.60 (now support) and bring another rise later. 

Recommendation: Buy at 112.10 for 114.10 with stop below 111.10.

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.

'The euro is expected to find further offers around 1.1000 and likely near the Monday high at 1.1023.' – Alexandria Arnold and Dennis Pettit, Bloomberg

Pair's Outlook

During the early hours of Monday's trading session the common European currency scored new heights against the US Dollar, as the currency exchange rate had touched the 1.0950 mark. The currency pair is being supported by the newly calculated weekly PP, which is located at the 1.0932 level. It is most likely that the currency rate will reach for the resistance at 1.0977 by the end of the day. At that level the 50.00% Fibonacci retracement level is located at. However, in the case of a change of the direction the pair might retreat to the 20-day SMA at 1.0873.

Traders' Sentiment

SWFX traders remain bearish, as 61% of open positions are short, and 60% of trader set up orders are to sell the Euro.

'Altogether we remain constructive on GBP and remain long via a basket of USD, EUR and AUD. We remove EUR/GBP upside from our 2017 forecasts and expect GBP/USD to test 1.37 by year-end.' – Nomura (based on FXStreet)

Pair's Outlook

Even though the US inflation data disappointed on Friday, the Cable was still unable to close in the green zone, but did manage to negate all intraday losses. Trade remained relatively unchanged, with the consolidation trend also intact, thus, a positive development today is expected. The 1.30 mark is the trend's upper border, which is unlikely to be reached today, as no strong market movers are expected to emerge today. However, the nearest resistance, namely the weekly PP, is not much of an obstacle; therefore, more attention should be paid to the second supply area, formed by the weekly R1 and the upper Bollinger band circa 1.2985.

Traders' Sentiment

Market sentiment remains bullish, but now with bulls slightly outnumbering the bears, as 51% of all open positions are long.

'And unfortunately for yen bulls, the weaker yen hasn't led to a pickup in Japanese exports. Until this happens, the yen will likely continue to weaken.' – Marc Chandler, BBH (based on Market Watch)

Pair's Outlook

The USD/JPY currency pair appears to have topped out last week, with the 114.40 mark being the reversal point. Poor US fundamentals contributed to the U-turn, causing the Greenback to weaken further against the Yen. However, due to the pair opening with a bearish gap today, the Buck managed to regain some of its bullish momentum, paving its way towards erasing Friday's losses. Technical indicators support this possibility, but the 114.00 major level is still expected to be out of reach. Overall, this recovery is likely to be a minor setback in the US Dollar's bearish trend, as demand, represented by the 200-hour SMA, which caused the reversal, should not succeed again this week.

Traders' Sentiment

Today 63% of traders are bears (previously 65%), while all pending orders are equally divided between the buy and the sell ones.

'U.S. data on Friday showed a smaller-than-expected 0.4 percent increase in April retail sales from the previous month, while a disappointing report on consumer prices raised concerns about the retail sector and the broader economy.' – Vijaykumar Vedala, Reuters

Pair's Outlook

On Monday morning the yellow metal continued to score gains against the US Dollar, as the bullion passed a significant resistance level. The commodity price surged to trade above the 100-day SMA, which is located at the 1,229.29 mark. Due to that fact the bullion has a large free range for a surge. The closest resistance level was the weekly R1, which is located at the 1,239.37 level. It is highly possible that the resistance will be reached during this week. However, smaller timeframe resistance levels might hold back the metal.

Traders' Sentiment

SWFX market sentiment remains almost neutral, as 52% of open positions are long. However, 64% of trader set up orders are to buy the metal.

'To some extent, this new weakness in price inflation is due to competitive pressures rather than weak demand, so the Fed can afford to discount it.' - Paul Ashworth, Capital Economics

Consumer prices in the United States advanced last month but less than analysts expected. The Labour Department reported on Friday that its CPI rose 0.2% in April, following the preceding month's drop of 0.3% but missing expectations for a 0.3% gain. Furthermore, the so-called core inflation rate climbed 0.1% last month, compared to the previous month's fall of 0.1%, whereas analysts anticipated an increase of 0.2%. However, both figures pointed to a tightening labour market and solid inflation growth, suggesting that the Federal Reserve will likely raise interest rates at its June meeting. April's inflation rebound was mainly attributable to the oil price rebound. Other data released by the Commerce Department showed retail sales rose 0.4% in April, following the prior month's upwardly revised gain of 0.1% and falling behind forecasts for a 0.6% increase. Meanwhile, core retail sales, which exclude volatile items, climbed 0.3%, unchanged from the preceding month's upwardly revised reading, while analysts anticipated a 0.5% climb. According to the Atlanta Fed, the economy is set to expand 3.6% in the Q2 of 2017.

'The economy is looking quite normal verging on strong and in that sense it's at odds with a cash rate which is really well below any levels of normality.' - Craig Ebert, BNZ

Retail sales in New Zealand rebounded sharply in the first quarter, beating analysts' expectations, amid higher car sales, official figures showed on Monday. Statistics New Zealand reported that retail sales volumes climbed 1.5% on a seasonally adjusted basis in the three-month period to March, up from a 0.6% gain in the preceding period, whereas analysts anticipated a slighter increase of 1.1%. The figures are set to please the Reserve Bank of New Zealand, which surprised markets at its last policy meeting, expressing concerns over the economy that performed stronger than expected over the past couple of months. However, analysts said that strong retail sales would not be enough to change the RBNZ's policy stance. The March quarter's sharp rebound was mainly driven by higher demand for cars. Back in the Q1 of 2017, sales of automobiles surged 5.9%, pointing to growing population and low car prices. On an annual basis, sales were up 4.6%, surpassing expectations for a 4.4% gain. After the release, the New Zealand rose from 0.6853 to 0.6870 against its US counterpart.