Daily Pivots: (S1) 111.74; (P) 112.02; (R1) 112.27; More....

USD/JPY rises further to as high as 112.47 so far today and intraday bias remains on the upside. As noted before, corrective fall from 118.65 should have completed with three waves down to 108.12 already. Break of 115.49 will resume larger rally from 98.97 to 125.85 high. On the downside, break of 110.86 will bring lengthier consolidation before staging another rise.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Meanwhile, break of 115.49 resistance will extend the rise from 98.97 to retest 125.85. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Daily Pivots: (S1) 1.2888; (P) 1.2913; (R1) 1.2963; More...

GBP/USD continues to engage in consolidative trading below 1.2965 temporary top. Intraday bias remains neutral at this point. With 1.2755 support intact, further rise is expected. Break of 1.2965 will target 161.8% projection of 1.2108 to 1.2614 from 1.2365 at 1.3184. At this point, price actions from 1.1946 are still interpreted as a correction pattern. Therefore, we'd expect strong resistance below 1.3444 to bring larger down trend resumption. On the downside, break of 1.2755 minor support will turn bias to the downside. Further break of 1.2614 resistance turned support will now indicate near term reversal.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

GBP/USD - 1.2912

Original strategy :

Buy at 1.2790, Target: 1.2910, Stop: 1.2755

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2790, Target: 1.2910, Stop: 1.2755

Position : -

Target :  -

Stop : -

Although cable rebounded to 1.2948, the subsequent retreat after faltering below resistance at 1.2965 has retained our view that further consolidation below this level would be seen and another corrective fall to 1.2864 support is likely, below there would bring retracement of recent rise to 1.2840-45, then towards support at 1.2805 but reckon downside would be limited to 1.2790-95 (38.2% Fibonacci retracement of 1.2515-1.2965) and bring another rise later. Above 1.2948 would bring retest of 1.2965, break there would confirm upmove has resumed for headway towards 1.2990-00 (1.236 times projection of 1.2109-1.2616 measuring from 1.2365 and psychological resistance). 

In view of this, would not chase this rise here and would be prudent to buy cable on further subsequent pullback as downside should be limited to 1.2790-95. A drop below previous support at 1.2757 would abort and signal top is formed instead, bring correction to 1.2740 (50% Fibonacci retracement of 1.2515-1.2965) first. 

Daily Pivots: (S1) 0.9897; (P) 0.9930; (R1) 0.9948; More.....

Intraday bias in USD/CHF remains neutral for the moment. As 0.9999 resistance stays intact, deeper decline is still mildly in favor. Below 0.9893 will target 0.9812 and below to extend the correction from 1.0342. But break of 0.9812 should be brief and we will look for bottoming signal below there. On the upside, above 0.9999 minor resistance argues that fall from 1.0107 is finished, with bullish convergence condition in 4 hour MACD. In that case, intraday bias will be flipped back to the upside for 1.0107 resistance first.

In the bigger picture, we're still maintaining that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. However, the corrective nature of the fall from 1.0342 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.

EUR/USD - 1.0910

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the single currency rebounded after holding above support at 1.0883, break o indicated resistance at 1.0951 (last week’s high) is needed to signal recent upmove from 1.0340 low has resumed for headway to 1.0975-80 and possibly towards 1.1000 which is likely to hold on first testing due to loss of momentum.

In view of this, would not chase this rise here, below 1.0883-88 support would prolong consolidation below said resistance at 1.0951, bring correction towards support at 1.0851 but price should stay above 1.0821 support, bring another rise later. As near term outlook is still mixed, would be prudent to stand aside in the meantime.

USD/JPY - 112.33

Original strategy  :

Buy at 111.55, Target: 112.55, Stop: 111.20

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 111.55, Target: 112.55, Stop: 111.20

Position :  -

Target :  -

Stop : -

As the greenback has continued trading with a firm undertone after recent rally above previous resistance at 111.74, adding credence to our view that recent upmove is still in progress and bullishness remains for further subsequent gain to 112.50-60 but near term overbought condition should limit upside to 112.80 and price should falter below 113.00-10, risk from there has increased for a retreat to take place later.

In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as 111.50-55 should limit downside. Below indicated support at 111.21 would abort and suggest a temporary top is formed instead, bring correction towards 110.87 support.

Daily Pivots: (S1) 1.0902; (P) 1.0917 (R1) 1.0946; More....

Intraday bias in EUR/USD stays neutral as the consolidation form 1.0949 temporary top continues. At this point, further rise is still expected as long as 1.0851 minor support holds. However, choppy rebound from 1.0339 is seen as a correction. Hence we'd look for topping again on next rise. Meanwhile, on the downside, break of 1.0777 will turn turn bias to the downside for 1.0851 support first.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. This would also be supported by sustained trading above 55 week EMA.

Dollar is steady against European majors as FOMC rate decision looms. Job data from US is basically in line with expectation and triggers little reactions. Instead, news regarding ultra-long bonds sends the Japanese Yen lower again. Released from US, ADP report showed 177k growth in private sector jobs in April, comparing to expectation of 178k. The US Treasury Department said today that it's conducting an "internal review" regarding ultra-long bonds. The department was meeting with "a broad variety of market participants" regarding the pros and cons of 50-year and 100-year securities. Earlier this week, Treasury Secretary Steven Mnuchin said that ultra-long bonds absolutely makes sense to the Treasury. 30 year yield jumped on Monday after Mnuchin's comments.

FOMC rate decision will be a major focus today and it's widely expected to keep monetary policies unchanged. At this point, the base case for Fed remains unchanged. That is, Fed will continue with it's plan of a total of three rate hikes this year. That would be followed by a "brief pause" as Fed starts shrinking its balance sheet later in the year. Markets are pricing in over 60% chance of a rate hike by Fed in June. It's generally believed Fed will look past the weaker than expected Q1 GDP data. There is no post meeting press conference scheduled.

Eurozone GDP grew 0.5% qoq, focus on French debate

Eurozone GDP grew 0.5% qoq in Q1, up from prior quarter's 0.4% and met expectation. However, PPI dropped -0.3% mom, rose 3.9% yoy in March, below expectation of 0.1% mom, 4.3% yoy. German unemployment dropped -15k in April, larger than expected drop of -10k. Unemployment rate was unchanged at 5.8%. The set of data does little to change ECB's monetary policy stance. The central bank should continue with it's asset purchase of EUR 60b a month till the end of the year. And it will keep interests rate unchanged before ending the purchases. Nonetheless, markets would be eager to hear if ECB policymakers would start reassessing the monetary policy stance in June meeting.

For now, focus will stay in French election. Pro-EU centrist Emmanuel Macron and EU-sceptic far right Marine Le Pen will have a head-to-head TV debate tonight. At this point, polls are still suggesting Macron as a clear winner out of the run-off of the French Presidential election this Sunday. With just four days to go, Macron is having a strong lead of 20 points over Le Pen. Macron said that he will use "hand-to-hand fighting to demonstrate that her ideas represent false solutions" in the debate. On the other hand, Le Pen said that "his program seems to be very vague, but in reality it is a simple continuation of (Socialist President) Francois Hollande's government."

EU and UK at odds over EUR 100b Brexit bill

Regarding Brexit, it's reported that EU has raised the up-front settlement bill to EUR 100 on request of France and Germany. EU's chief Brexit negotiator Michel Barrier said that "some have created the illusion that Brexit would have no material impact on our lives or that negotiations can be concluded quickly and painlessly." And, "this is not the case". Meanwhile he emphasized that "mutual commitments" must be honored and "the final settlement is all about settling the accounts".

On the other hand, UK's Brexit Secretary David Davis said that "this is a negotiation. They lay down what they want and we lay down what we want." And when asked when at figure of EUR 100b was acceptable, Davis said that "we will not be paying €100bn." He emphasized that "we will meet our international obligations, but there will be our international obligations including assets and liabilities and there will be the ones that are correct in law, not just the ones the Commission want."

Released from UK, construction PMI rose to 53.1 in April. BRC shop price index dropped -0.5% yoy in April.

Surge in NZD/USD was brief

New Zealand Dollar surged sharply against Australian Dollar today after solid employment data. NZD/USD also spiked higher to 0.6967 but quickly lost steam. New Zealand unemployment rate dropped to 4.9% in Q1, down from 5.2% and below expectation of 5.1%. Employment grew 1.2% qoq, up from prior quarter's 0.7% qoq and beat expectation of 0.8% qoq. However wage growth was muted as the ordinary time private sector labor cost index just rose 0.4% qoq, 1.5% yoy. That was at the lowest level since 2010. The lack of wage pressure should keep RBNZ on hold.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0902; (P) 1.0917 (R1) 1.0946; More....

Intraday bias in EUR/USD stays neutral as the consolidation form 1.0949 temporary top continues. At this point, further rise is still expected as long as 1.0851 minor support holds. However, choppy rebound from 1.0339 is seen as a correction. Hence we'd look for topping again on next rise. Meanwhile, on the downside, break of 1.0777 will turn turn bias to the downside for 1.0851 support first.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. This would also be supported by sustained trading above 55 week EMA.

Economic Indicators Update

GBP has been the strongest currency over past three weeks.

GBP/USD has seen a 4.6% rise since April 10, largely because of UK Prime Minister Theresa May's sudden announcement of a snap general election on April 18.

On the daily chart, the price is still holding above the downside 10-day SMA support.

Nevertheless, the bullish momentum has turned weaker over the past week as Cable nears the significant psychological resistance level at 1.3000; where there is heavy selling pressure.

UK construction PMI for April, released this morning was 53.1, which surpassed expectations of 52.0, and hitting the highest level this year.

GBP/USD didn't respond much to this improved figure mainly because of the reduced bullish momentum and lack of subsequent market drivers fundamentally.

The daily Stochastic Oscillator is around 70, suggesting a correction.

The resistance level is at 1.2950, followed by 1.2970 and 1.3000.

The support line is at 1.2900, followed by 1.2880 and 1.2860.

Keep an eye on the FOMC monetary policy statement to be released this evening at 19:00 BST, the UK Markit Services PMI (Apr) at 09:30 BST on Thursday, and the crucial US non-farm payroll (Apr) at 13:30 BST on Friday. The figures will likely cause volatility for GBP and GBP crosses.

It's been a quiet week for European stock markets, and the CAC is flat in Wednesday session. Currently, the index is trading at 5,290.35. On the release front, Eurozone Preliminary Flash GDP remained unchanged in the first quarter at 0.5%, matching the forecast. In the US, the Federal Reserve is expected to maintain interest rates at 0.75%. On Thursday, France and the Eurozone release Services PMIs, followed by Eurozone Retail Sales.

All eyes will be on the Federal Reserve, which releases its policy statement later on Wednesday. A rate hike is extremely unlikely, with the CME Group pricing in a hike at just 5%. This means that the markets will be focusing on the rate statement and the views of policymakers concerning economic conditions. The Fed has two key goals which have been achieved, namely full employment and an inflation rate of 2%. One area of concern is the balance sheet, which stands at $4.5 trillion. The minutes of the March meeting stated that policymakers want to start reducing this figure before the end of 2017, so the markets will be looking for another reference to the balance sheet in the rates statement or the minutes of the meeting. The markets are fairly confident that the Fed will press the rate trigger in June, as the odds for a hike have improved to 63%. If the rate statement is more hawkish than expected, we could see these odds increase.

The eurozone has been hampered by years of high unemployment, but the labor situation has improved considerably. The eurozone economy continues to expand, and more growth has meant more jobs and lower unemployment figures. Just a year ago, the eurozone unemployment rate was at 10.3%, but the rate has been steadily decreasing since then. The March release remained unchanged at 9.5%, within expectations. Germany has led the way for Europe, with improving employment data. US employment numbers will also be in the spotlight this week, with wage growth and the official nonfarm payrolls report being released on Friday. If these indicators are not close to the estimates, we're likely to see some movement from the CAC.

French voters will head back to the ballot box on Sunday, with Emmanuel Macron and Marine Le Pen vying for the next president of France. European stock markets have been very steady in the second round of the campaign, as opinion polls continue to show a comfortable majority for Macron:

The polling average line looks at the five most recent national polls and takes the median value, ie, the value between the two figures that are higher and two figures that are lower.

Source - BBC

French Election Timeline

May 3 - TV debate between the two remaining candidates

May 5 - [from midnight] Poll blackout

May 7 - Second round of French presidential elections. Last polls close at 19:00 BST / 14:00 EDT, with an exit poll result announced immediately.

May 11 - Official proclamation of the new President.

May 14 - [from midnight] End of Francois Hollande's mandate

June 11 - First round of legislative elections

June 18 - Second round of legislative elections.