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Daily Pivots: (S1) 1.0837; (P) 1.0849; (R1) 1.0871; More...

Break of 1.0869 temporary top suggests resumption of recent rebound from 1.0629. Intraday bias is back on the upside for 1.0897 resistance first. t. Decisive break there should confirm our bullish view of reversal and will target 1.0999 resistance next. On the downside, break of 1.0798 support will is needed to indicate short term topping. Otherwise, outlook will remain cautiously bullish in cas of retreat.

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 1.0652 support holds.

EURUSD

The EURUSD was indecisive yesterday. There are no changes in my technical outlook. The bias remains neutral in nearest term. Price has been moving inside a 100 pip range of 1.0950 – 1.0850 since last week. We need a clear break from that range area to see clearer direction. A clear break and daily close above 1.0950 would continue the recent bullish bias testing 1.1000 – 1.1050 area. On the downside, a clear break and daily close back below 1.0850 would expose the pre-gap level at 1.0730. There is no high impact fundamental release today so it is likely that price will remain inside the range area. Overall I remain neutral.

GBPUSD

The GBPUSD was corrected lower yesterday bottomed at 1.2882. The bias is neutral in nearest term but as long as stay above 1.2780/50 I still prefer a bullish scenario at this phase with nearest target seen around 1.3050 area. Immediate support is seen around 1.2860. A clear break below that area could trigger further bearish pressure testing 1.2800 but only a clear break below 1.2780/50 would interrupt the double bottom bullish scenario

USDJPY

The USDJPY continued its bullish momentum yesterday topped at 111.92 and hit 111.97 earlier today in Asian session. The bias remains bullish in nearest term testing 112.20 area. Immediate support is seen around 111.45. A clear break below that area could lead price to neutral zone in nearest term testing 110.85 but overall price is still in a bullish phase and any downside pullback should be seen as a good opportunity to buy. On the upside, a clear break and daily close above 112.20 would expose 112.85 – 113.50 region.

USDCHF

The USDCHF had a moderate bullish momentum yesterday. The bias remains neutral in nearest term but overall I still prefer a bearish scenario at this phase with key resistance seen around 1.0020 and the trend line resistance as you can see on my H4 chart below targeting 0.9880 and 0.9813. Overall I remain neutral.

After returning from a long weekend, equity investors seem undecided on whether to be bullish or bearish. Stocks across Asian markets were mixed on Tuesday despite the CBOE Volatility Index hitting its lowest levels in a decade.However,the low volatility was reflected in currency markets with the Euro, Pound, and the Yen stuck in tight trading against the U.S. dollar.

The Reserve Bank of Australia kept interest rates steady at 1.5% as widely anticipated, but the positive tone on the labor market outlook pushed the Aussie 0.2% higher against the dollar. Australia'scentral bank now expects unemployment to decline gradually over time, and inflation to increase as the economy continues to strengthen. The biggest concern going forward is likely to remain the overheated housing market despite price growth slowing slightly in April. For traders who like high yielding currencies, it will be critical to monitor the differentials in government bond yields. Spreads between U.S. and Australian 10-year bond yields are currently below 30 basis points, and without sufficient premium, it will be hard for AUDUSD to resume its rally. It will require somewhere around 50-60 basis points premium for AUDUSD to break above 2017 highs.

The Fed is next as it kicks off its two-day monetary policy meeting today with an announcement due on Wednesday. While no one expects any changes to policy, the 500-word statement will probably provide some direction to the US Dollar. Economic data releasedhas not been encouraging lately. Friday's GDP didn't reflect the upbeat PMI reports with the economy growing 0.7% in the first three months of 2017. Consumers pulled back on spending, and U.S. employers added far fewer jobs than expected in March.

Will the Fed acknowledge a slowdown in growth and thus send rate hike expectations lower for 2017? Or are these factors only a temporary drag affected by the Easter bank holiday weekend and a delay in tax refunds, which is likely to be reversed in Q2? The Fed's statement should be answering these questions, and based on that, traders will act.

In Europe, investors will take cues from the final PMI numbers from Spain, Italy, France and Germany.

Sunrise Market Commentary

• Rates: Investors sidelined ahead of key events?
  Today's eco calendar contains the final EMU manufacturing PMI and EMU unemployment rate. We don't expect them to influence trading ahead of Apple earnings (tonight), the FOMC meeting (Wednesday), payrolls (Friday) and a possible new vote on an health-care bill (end of the week) in US Congress. We have a neutral view for core bonds today.
• Currencies: Both EUR/USD and USD/JPY hold near recent correction top
  Yesterday, trading developed in thin market conditions. The dollar didn't react to a disappointing US manufacturing ISM. Today's calendar contains few clues for USD trading. The dollar probably needs support from better eco data and a confirmation from the Fed's rate hike intentions to start a sustained, broad-based rebound

The Sunrise Headlines

• US stock markets ended mixed with Nasdaq outperforming, as bipartisan agreement over a US budget deal balanced a weak US manufacturing ISM. Overnight, Asian bourses gain ground with China underperforming.
• China's factory sector lost momentum in April, with growth slowing to its weakest pace in seven months as domestic and export demand faltered and commodity prices fell. The Caixin manufacturing PMI fell from 51.2 to 50.3.
• Australia's central bank left its cash rate at 1.5%, a widely expected decision given policy makers have signalled a steady outlook for much of the year ahead. AUD/USD gains marginally ground, rising above 0.7550.
• Greece and its foreign creditors reached a deal early this morning on a package of bailout-mandated reforms, Greek FM Euclid Tsakalotos said, paving the way for the disbursement of further rescue funds and debt relief talks.
• Matteo Renzi recaptured the leadership of Italy's centre-left Democratic party. He won more than 70% of the ballots cast, allowing him to brush off concerns that the referendum loss had left him fundamentally discredited.
• The White House is pursuing a twisting path in Congress this week, yielding to Democratic demands on a major spending bill while aggressively pushing a partisan health-care measure, gambling on a big win on health but risking setbacks on both fronts.
• Today's eco calendar contains the April manufacturing PMI's in the UK and EMU (final). The EMU unemployment rate is also scheduled for release. ECB Nouy and Nowotny speak..

Currencies: Both EUR/USD And USD/JPY Hold Near Recent Correction Top

USD/JPY nears 112 barrier

Trading in EUR/USD and USD/JPY was confined to tight ranges yesterday as European markets were closed. In the US, both the spending and income data and the manufacturing ISM were soft. The latter printed at 54.2 from 57.2 and the details were also disappointing. The dollar lost temporary ground after the publication of the report, but the loss was easily reversed. A good performance of US equities (especially the Nasdaq) and a rise of LT US yields after comments from US Treasury secretary Mnuchin on the issuance of long-dated bonds, kept USD/JPY well supported. The pair closed the session at 111.84. EUR/USD finished the day little changed at 1.0899.

Overnight, most Asian markets partially join the tech-driven rally from the US yesterday evening. China underperforms. The Caixin Chinese manufacturing PMI unexpectedly declined to 50.3 from 51.2 in April. USD/JPY stabilizes in the high 111 area, near the recent correction top. EUR/USD still hovers in the low 1.09 area. The Reserve bank of Australia kept its policy rate as expected unchanged at 1.5%. The RBA keeps a balanced approach on the economy going forward. The Aussie dollar gained a few ticks after the RBA's policy statement, but the move is insignificant. AUD/USD trades currently just below 0.7550.

The eco calendar is only moderately interesting today with the final EMU manufacturing PMI's and the EMU March unemployment rate. In the US, only the monthly vehicle sales are on the agenda. The final EMU manufacturing PMI's are expected to confirm the strong reading from the preliminary release. The US vehicle sales mostly have only limited impact on global markets and on the dollar in particular. However, they might get some more attention as soft car sales weighed on consumer spending of late. Global markets might also be affected by the results of several US bellwethers (including Apple). In a daily perspective, we expect relatively cautious trading in the major dollar cross rates. USD/JPY of late had a constructive momentum. Good US earnings might keep the downside in this cross rate well protected. However, given recent US soft data, the dollar probably needs support from better US eco data and a clear sign from the Fed that it maintains its rate hike intentions for this year to gain sustained further ground. The signal won't come today. In this context, we also expected EUR/USD to hold near the recent recovery high. The PMI's might be marginally euro supportive

Last week, FX trading was driven by the global risk trade as (European) political event risk eased. This supported USD/JPY, but also EUR/USD and EUR/JPY. The market also pondered whether declining political risk could bring forward the ECB normalisation process. However this hope was moderated after the ECB press conference. From a technical point of view, the rebound of USD/JPY suggests a bottoming out process has started, but the pair needs to regain the 112.20 level (neckline ST double bottom) to improve the picture. EUR/USD extensively tested the topside of the MT range (1.0874/1.0906 area) late March. The pair returned to the range top after the French election and set minor new highs. We look out how this test turns out. If EUR/USD would regain the 1.10 barrier, next resistance comes in in the 1.1145/1.13 area (US pre/post-election swings). The jury is still out, but we are not convinced that the time is already ripe for a sustained break higher of EUR/USD.

EUR/USD: holding near the post-Macron-top, but no clear break yet

EUR/GBP

Sterling cedes slightly ground on harsh Brexit talk

Yesterday, sterling traded with a soft bias both against the dollar and the euro. Trading developed in thin market conditions as most European markets were closed. The decline of sterling was probably driven by harsh comments from EU leaders this weekend as they discussed the EU strategy for the upcoming Brexit talks. Especially negative/skeptical comments from EU's Juncker on a possible collapse of the negotiations dominated the headlines. Cable returned back south to the 1.29 area. EUR/GBP closed the session at 0.8458.

Today, the UK manufacturing PMI is expected to decline slightly from 54.2 to 54.00. After some mixed data of late, the (FX) markets will look for clues to whether some further cooling in the UK economy might be at hand. We don't have strong arguments to take a different view from the consensus, but the market might become a bit more sensitive to negative surprises. We also look out whether Brexit might get some further attention as a driver for sterling trading. However, we doubt that it will become really important already before the UK elections. We start the week with a slight sterling negative bias.

Two weeks ago, EUR/GBP dropped below EUR/GBP 0.84 support, (temporary) improving the sterling picture. The pair came within reach of the key 0.8305 support (Dec low), but no real test occurred. After last week's rebound, the range bottom is better protected. Longer term, Brexit-complications remain potentially negative for sterling. On technical considerations we are inclined to reconsider a cautious EUR/GBP buy-on-dips approach.

EUR/GBP: downside better protected after last week's rebound

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Daily Pivots: (S1) 1.0880; (P) 1.0901 (R1) 1.0920; More....

Intraday bias in EUR/USD remains neutral as consolidation from 1.0949 continues. With 1.0777 minor support intact, further rise is still expected. But still, 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 1.0569 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.

Daily Pivots: (S1) 1.2863; (P) 1.2903; (R1) 1.2923; More...

GBP/USD is staying in consolidation below 1.2965 temporary top. Further rally is expected as long as 1.2755 minor support holds. 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.

Daily Pivots: (S1) 0.9939; (P) 0.9952; (R1) 0.9975; More.....

Intraday bias in USD/CHF remains neutral as it's bounded in tight range above 0.9893 temporary low. With 0.9999 minor resistance intact, deeper decline is 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.

Daily Pivots: (S1) 111.37; (P) 111.65; (R1) 112.09; More....

Intraday bias in USD/JPY is back on the upside as rise from 108.12 resumes. The current development indicates that corrective decline from 118.65 has completed with three waves down to 108.12. Further rally would be seen to 115.49 resistance first. Break will target 118.65 high. On the downside, break of 110.86 minor support will turn bias neutral and bring consolidations first.

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) 1.3648; (P) 1.3667; (R1) 1.3698; More....

USD/CAD lost some upside momentum as seen in 4 hour MACD. But with 1.3529 minor support intact, further rise is still expected. Current rally is part of the larger rise from 1.2460 and should target next medium term fibonacci level at 1.3838 ahead. Meanwhile, break of 1.3529 will indicate short term topping and bring lengthier consolidation.

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. The second leg from 1.2460 is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. However, break of 1.3222 support will argue that the third leg has already started and should at least bring a retest of 1.2460 low. Meanwhile, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

As widely anticipated, RBA left its cash rate, for an 8th meeting, at 1.5% in April. While headline CPI has more or less reached the central bank's target level, the core reading has remained subdued. Policymakers have decided to take more time to gauge the inflation outlook before action. Meanwhile, the unemployment rate has remained elevated while excess capacity in the job market has rendered wage growth weak.

The RBA reiterated its rhetoric on the housing market, suggesting conditions 'continue to vary considerably around the country'. Policymakers would be cautious over adopting another rate cut as previous reductions have caused a surge in housing produces and rebound in investment related credit growth. A rate hike is equally unlikely as Australian dollar has remained at historically high levels.

Housing markets: Continue to vary considerably around the country

On the housing market, policymakers reiterated that conditions 'continue to vary considerably around the country'. They acknowledged that 'prices have been rising briskly in some markets and declining in others. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years'. Additionally, rent increases are the slowest for two decades.

Growth in housing debt has outpaced the slow growth in household incomes. The recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness'. The latest data from CoreLogic showed that Sydney housing prices dropped in April, while growth in Melbourne prices decelerated. Yet, it would be premature to call that Australian property prices have peaked after just one month of moderation.

Headline inflation picked up

On other macroeconomic developments, policymakers acknowledged the pick-up in headline inflation rates, as a result of 'higher commodity prices'. Yet, core CPI remained low.

Growth outlook unchanged

The economic growth outlook has stayed unchanged with growth 'expected to increase gradually over the next couple of years to a little above +3%'. RBA suggested that the economy is 'continuing its transition following the end of the mining investment boom, with the drag from the decline in mining investment coming to an end and exports of resources picking up'.

Mixed picture in job market

Policymakers saw a mixed picture in the job market, noting that a modest increase in the unemployment rate has been accompanied with a little stronger growth in payrolls. Policymakers expected the unemployment rate to 'decline gradually over time' while wage growth would remain 'slow and this is likely to remain the case for a while yet'

Repeating what has been stated in recent months, RBA 'judged that holding the stance of monetary policy unchanged' would be 'consistent with sustainable growth in the economy and achieving the inflation target over time'. We retain the view that RBA would stay on hold for the remainder of the year.