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'The euro is a sell on rallies above 1.10 against the dollar as the ECB's senior leadership under Draghi and Praet remain cautious about the outlook for euro-zone inflation.' – Mansoor Mohiuddin, NatWest Markets (based on Bloomberg)

Pair's Outlook

On Tuesday morning the common European currency continued to depreciate against the US Dollar, as the currency exchange rate passed the support of the weekly S1, which is located at the 1.0916 level. From a technical perspective on the daily chart the currency exchange rate is likely to retreat down to the 1.0833 level, where the closest support cluster begins. However, on smaller timeframes the situation is different, as there are various short term support levels, which could slow down the fall of the Euro or even induce a rebound.

Traders' Sentiment

SWFX traders remain bearish, as 61% of open positions are short. Meanwhile, 54% of trader set up orders are to sell the Euro.

'GBP-USD has seen a significant short squeeze from the March lows near 1.21. We expect further marginal upside into the 8 June UK general election and raised our forecast to 1.30 for Q2-2017 (from 1.18 previously).' – Standard Chartered (based on FXStreet)

Pair's Outlook

On Monday, the GBP/USD currency pair behaved in accordance with expectations, having edged slightly lower, with the weekly PP limiting the intraday losses. Although the Cable should continue edging lower, the technical indicators suggest a positive outcome is possible, but with the 1.30 mark remaining unmatched. However, due to lack of potential market movers, the Sterling is also capable of trading relatively flat against the US Dollar today, with risks still skewed to the upside. Ultimately, the 1.3120 handle should be the overall ceiling and the 1.2750–the bottom, as these levels mark the borders of the broadening rising wedge pattern, where the Cable is currently traded in.

Traders' Sentiment

Traders retain a neutral outlook towards the Pound, with 51% of all open positions being short and the other 49% being long.

'Aside from employment, we've seen some negative surprises in recent U.S. data while the Fed marches ahead to a June rate hike. I think the gap between the two will eventually bring down the dollar.' – Bank of Tokyo-Mitsubishi UFJ (based on Business Recorder)

Pair's Outlook

Not only did the USD/JPY pair manage to recover from its intraday low yesterday, but even establish a new seven-week high of 113.30. The Greenback refuses to give up the bullish momentum, exploiting the recent recovery further, now aiming to reclaim the 114.00 major level. A successful attempt to reach this area is still likely to be short-lived, amid a tough resistance cluster located a few pips higher. Furthermore, assuming the given pair completely broke out from trading within the descending channel's borders, continued positive outcomes are nothing out of the ordinary, which could even lead to reaching a larger scale down-trend, currently located around 117.00.

Traders' Sentiment

Bears keep gaining numbers, as 63% of all open positions are now short. Meanwhile, the share of sell orders remains unchanged at 52%.

'Should volatility remain becalmed, gold may find itself on the losing end of a deeper correction to the downside.' – Jeffrey Halley, OANDA (based on Reuters)

Pair's Outlook

During the early hours of Tuesday's trading session the yellow metal's price remained above the 1,225 mark, as the bullion found support in the 100-day SMA. The simple moving average is located at the 1,225.59 level and provides significant support, as it has kept the metal's price from falling during this week. It is most likely that the commodity price will continue the decline, if the SMA is passed, as the lower Bollinger band has moved below the 100-day SMA. Due to that factor the next targeted support is the 38.20% Fibonacci retracement level, which is located at the 1,219.20 level.

Traders' Sentiment

SWFX sentiment is neutral, regarding the metal. However, 66% of SWFX trader set up orders are to buy the bullion.

'Although growth of output, new orders and employment all eased, this was mostly offset by more evidence of supply chain pressures as input delivery times lengthened to the greatest extent in six years .' - Trevor Balchin, IHS Markit

According to the Federal Statistics Office, German manufacturing orders rose more than analysts estimated. The number of seasonally-adjusted industrial orders in March surged 1.0%, while most of the experts anticipated only a 0.7% increase. Despite the growth was 2.5% lower than in the previous month, it still remained a signal that the leading European economy develops at a healthy pace. Sower growth came in mainly due to weaker domestic demand, which plunged 3.8%, as a result of stronger pressure on wage growth and selling prices. In terms of products, the weakest interest was shown in the intermediate goods, orders for which fell 3.7%. However, it was not enough to offset the surging exports, which increased 4.8%. Namely, bookings from the Euro zone countries soared 6.8%, following a sharp decrease of 8.1% in February. Such difference to a certain extent was influenced by uncertainty associated with anticipation of an official adoption of the Brexit bill and the French Presidential Election.

'Housing demand appears to have been curbed in recent months due to the deterioration in housing affordability caused by a sustained period of rapid house price growth during 2014-16 .' — Martin Ellis, Halifax

A monthly report released by IHS Markit showed that change of house prices in the UK did not justify analysts' expectations. While majority of experts anticipated an increase of 0.1% in April, the revealed data showed the opposite result. Despite the minor fluctuations, UK house prices, in general, remained unchanged for the last three months. The reason behind price stagnation is partly based on the fact that the dynamics of home sales in March and April was very similar to January and February, and remained in line with the two-year average. In addition, experts referred to the deficit of supply in the market, as the number of houses available for purchase fell for the 13th consecutive month. In a more general context, a decrease in the pace of job creation as well as rising inflation also reduced consumers' ability to acquire new houses. On the other hand, analysts noted that confidence in the UK housing market is gradually improving, following a record fall after the Brexit referendum in June 2016. This fact in conjunction with very low mortgage interest rates should offset the abovementioned constraints and slightly raise housing prices.

USD/CHF - 1.0005

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9994

Kijun-Sen level                    : 0.9953

Ichimoku cloud top                 : 0.9908

Ichimoku cloud bottom              : 0.9890

Original strategy :

Buy at 0.9930, Target: 1.0030, Stop: 0.9895

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9955, Target: 1.0055, Stop: 0.9920

Position : -

Target :  -

Stop : -

As the greenback has rallied yesterday and broke above indicated resistance at 0.9966-69, adding credence to our view that low has been formed at 0.9859 and suggesting recent decline from 1.0108 top has ended, hence consolidation with upside bias remains for further gain to 1.0025-30, however, near term overbought condition should prevent sharp move beyond previous resistance at 1.0067 and price should falter below 1.0090, bring retreat later.

In view of this, we are looking to buy dollar on dips as the Kijun-Sen (now at 0.9953) should limit downside. Below 0.9925-30 would suggest top is possibly formed, bring test of previous resistance at 0.9903 but break there is needed to add credence to this view, brig further fall to 0.9880-85.

GBP/USD - 1.2941

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2946

Kijun-Sen level                    : 1.2959

Ichimoku cloud top              : 1.2961

Ichimoku cloud bottom        : 1.2911

Original strategy :

Buy at 1.2900, Target: 1.3000, Stop: 1.2865

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.2960, Target: 1.2860, Stop: 1.2995

Position : -

Target :  -

Stop : -

Although cable rose to as high as 1.2991 yesterday, the subsequent retreat suggests consolidation below this level would be seen and pullback to 1.2900-10 is likely, however, break there is needed to suggest top is possibly formed, bring further fall to 1.2875-80 but price should stay well above last week’s low at 1.2831, risk from there is seen for another rebound later.

In view of this, we are looking to turn short on recovery. Above said resistance at 1.2991 would extend recent upmove to 1.2999-00 (1.236 times projection of 1.2109-1.2616 measuring from 1.2365 and psychological resistance), then towards 1.3040-50 which is likely to hold from here due to near term overbought condition. 

EUR/USD - 1.0913

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.0918

Kijun-Sen level                  : 1.0944

Ichimoku cloud top             : 1.0986

Ichimoku cloud bottom      : 1.0950

Original strategy  :

Sell at 1.0980, Target: 1.0880, Stop: 1.1015

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0970, Target: 1.0870, Stop: 1.1005

Position : -

Target :  -

Stop : -

Euro’s selloff after yesterday’s initial brief rise to 1.1025 suggests top has been formed there and consolidation with mild downside bias is seen for further fall to 1.0875 support, however, break there is needed to add credence to this view, bring retracement of recent rise to 1.0851 support which is likely to hold from here due to near term overbought condition.

In view of this, we are looking to sell euro on recovery but at a lower level as 1.0970-80 should limit upside. Above resistance at 1.0997 would bring retest of said yesterday’s high at 1.1025, however, break there is needed to signal recent upmove from 1.0340 low has resumed for headway to 1.1050 but reckon upside would be limited to 1.1065-70 (61.8% projection of 1.0602-1.0951 measuring from 1.0851).

USD/JPY - 113.62

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 113.41

Kijun-Sen level                  : 113.04

Ichimoku cloud top             : 112.65

Ichimoku cloud bottom      : 112.57

New strategy  :

Buy at 113.10, Target: 114.10, Stop: 112.75

Position :  -

Target :  -

Stop : -

As dollar has rallied after breaking above previous resistance at 113.05 (now support), adding credence to our bullish view that recent upmove is still in progress and may extend further gain to 113.75-0 (76.4% retracement of 115.51-108.13) and later towards 114.00, however, reckon upside would be limited to 114.25-30 (100% projection of 110.87-113.05 measuring from 112.09) and 114.50-55 (100% projection of 108.13-111.78 measuring from 110.87) should hold.

In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as said previous resistance at 113.05 should limit downside, bring another rise. Below 112.80 would defer and suggest top is possibly formed, bring correction to 112.55-60 but support at 112.39 should contain weakness.