Sample Category Title

EURUSD

The EURUSD gaps higher earlier today after Macron and Le Pen made it to the second round of French election, opened at 1.0903 but unable to stay consistently above 1.0873 – 1.0900 key resistance and traded lower around 1.0840 at the time I wrote this comment. From technical perspective as you can see on my daily chart below, if price close back below 1.0873 today, we may see another bearish pullback retesting the trend line support and 1.0650/00 region this week. I am not bullish yet on this pair, but a clear break and daily close above 1.0900 would expose 1.1000 – 1.1050 region. Overall I remain neutral.

GBPUSD

The GBPUSD had a bullish momentum last week topped at 1.2903 but closed a little bit lower at 1.2806. The bias is neutral in nearest term but as long stay above 1.2750 the double bottom bullish scenario should remain valid with nearest target seen at 1.3000 – 1.3050. On the downside, a clear break and daily close back below 1.2750 would interrupt the bullish scenario testing 1.2650 region.

USDJPY

The USDJPY gaps higher earlier today opened at 110.46 but traded lower around 110.00 at the time I wrote this comment after French election result. As you can see on my H1 chart below, price respecting the trend line resistance which keeps the major bearish trend remains valid. Immediate support is seen around 109.40. A clear break and daily close back below that area would expose 108.70 region. On the upside, a clear break and daily close above the trend line resistance and 110.50 could trigger further bullish pressure testing 111.00 area or higher.

USDCHF

The USDCHF gaps lower earlier today after French election, opened at 0.9904 but traded a little bit higher around 0.9940 at the time I wrote this comment. The bias is neutral in nearest term but as long as stay below 1.0020 price is still in a bearish phase testing 0.9880 and 0.9813 area. Immediate resistance is seen around 0.9965. A clear break above that area could trigger further bullish pressure testing 1.0020 which is a good place to sell with a tight stop loss. Overall I remain neutral.

USD/CHF - 0.9935

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9955

Kijun-Sen level                    : 0.9947

Ichimoku cloud top                 : 0.9973

Ichimoku cloud bottom              : 0.9968

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

The greenback met renewed selling interest at 1.0000 on Friday and dropped again to as low as 0.9893 earlier today, having said that, the subsequent rebound from there suggests consolidation above this level would be seen and another bounce to 0.9980-85 cannot be ruled out, however, reckon 1.0000 (said resistance and 50% Fibonacci retracement of 1.0108-0.9893) would limit upside and bring another decline later. Below said support at 0.9893 would extend the fall from 1.0108 top to 0.9865-70 (2 times extension of 1.0108-1.0008 measuring from 1.0067) but support at 0.9831 would hold, bring rebound later.

In view of this, would be prudent to stand aside in the meantime. Above previous support at 1.0008 would suggest low is formed instead, bring rebound to 1.0025-30 (61.8% Fibonacci retracement of 1.0108-0.9893) but price should falter below resistance at 1.0067.

The first-round voting of the French presidential election was revealed on Sunday night April 23. The two top candidates: independent centrist Macron and the far-right wing Le Pen, won 23.7% and 21.7% of votes respectively. Fillion and the far-left wing Jean-Luc Mélenchon got around 19% of votes. The result was in line with expectations, black swans didn't appear.

The terror attack that occurred on April 20 in Paris was likely to give Le Pen one last push just a few days ahead of the election. However, the votes Le Pen got were even lower than the recent polls of 23%, indicating the probability of her presidency is lower than expectations.

As Macron got the first place in the first-round of voting, surpassing Le Pen with 2% of votes, market concerns over the EU's collapse after Le Pen's presidency has been eased to an extent.

The consensus was that Macron and the Le Pen would likely get into the second round with Macron likely winning the final vote. The outcome is in line with the first half of the consensus. Markets are now focused on the second-round of voting with the first-round outcome lifting market confidence and expectations on Macron's victory in the second-round on May 7.

The voting ratio was around 80%, higher than the forecast of 70%, indicating French civilians' high concerns on the futures of France and the EU.

The outcome of the first-round voting pushed the EUR up and weighed on safe havens after the release of the outcome. EUR/USD soared more than 180 points, hitting the highest level of 1.0918 since November 11, 2016. Spot gold plunged from 1284.17 to a 2-week low of 1265.38. EUR/JPY hit a 1-month high of 120.72. USD/JPY hit a 2-week high of 110.53.

GBP/USD - 1.2822

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2801

Kijun-Sen level                    : 1.2808

Ichimoku cloud top              : 1.2815

Ichimoku cloud bottom        : 1.2815

Original strategy :

Buy at 1.2710, Target: 1.2850, Stop: 1.2675

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2710, Target: 1.2850, Stop: 1.2675

Position : -

Target :  -

Stop : -

Although cable recovered initially to 1.2858, as price has retreated again again after faltering below resistance at 1.2859, suggesting further consolidation would be seen and another test of Friday’s low at 1.2757 cannot be ruled out, however, reckon downside should be limited to 1.2700-10 (50% Fibonacci retracement of 1.2515-1.2906) and bring another rally, break of 1.2759 would signal the pullback from 1.2906 has ended, bring retest of this level, break there would extend recent upmove to 1.2920-30 (2 times extension of 1.2365-1.2575 measuring from 1.2500), then 1.2950 but loss of near term upward momentum should prevent sharp move beyond 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 subsequent pullback as downside should be limited to 1.2710 (50% Fibonacci retracement of 1.2515-1.2906), bring another rise. Below 1.2700 would defer and signal top has been formed, risk correction to 1.2660-65 (61.8% Fibonacci retracement of 1.2515-1.2906) and price should stay well above 1.2608-16 (previous resistance now support).

European equity markets are poised to start the week on a positive note on Monday after the first round of the French elections suggested that the populist wave that engulfed the UK and US in 2016 has not quite breached the borders of the eurozone countries.

While it's clear that populism is growing in the region as it is elsewhere, the victory for Emmanuel Macron in the first round may well have crushed the chances of Marine Le Pen in two weeks' time. Even when the polls had Le Pen taking the first round, Macron was comfortably expected to win the head to head but with the centrist candidate having toppled her on Sunday, the leader of the National Front would appear to have a monumental job on her hands.

While the result on Sunday was largely in line with what the latest polls had been projecting, we did see a more cautious approach from investors heading into it having learned their lessons from last year. The relief rally in the euro overnight are a clear sign of this, with it having hit its late March highs above 1.09 against the dollar before paring gains.

Obviously there is still two weeks to go until the second round of voting and while Macron looks highly likely to succeed, the populist vote has surprised us in the past and may well again. It will be interesting to see whether the same complacency that left us surprised last June – when the UK voted to leave the EU – creeps back into the markets in the coming weeks or if the same caution that spurred the relief rally overnight lingers.

French President Marcon, in waiting

With this week and particularly today looking a little quiet on the economic calendar – barring the ECB meeting on Thursday and a couple of other releases – we're likely to see focus remain on the situation in France and Le Pen's efforts to prove the pollsters wrong. As was the case in the Netherlands, the first round of voting will be seen as a success for those seeking the status quo in the eurozone and with the AfD in Germany standing little chance in September, a similar result in two weeks may see the region survive the year unscathed. Assuming, of course, we don't see elections in Italy.

First round results of French presidential elections

The Euro surged to a fresh five-month peak at 1.0932 during early trading on Monday, after Centrist Emmanuel Macron moved one step closer to the French presidency when he won the first round of the elections. With this market-friendly outcome reducing the risk of a Trump-style shocker, investors have rediscovered their appetite for riskier assets. While the current risk-on rally may support the Euro in the short-term, gains could still be limited as anxiety mounts ahead of the second round of the elections on 7 May. Although speculation remains heightened over Macron claiming the title of the French president, I think that the lingering threat of a shock victory by Le Pen may limit gains on the Euro.

U.S. tax reforms

'Big TAX REFORM AND TAX REDUCTION will be announced next Wednesday.' This tweet came from Trump over the weekend. Markets have been waiting for these reforms for a long time now, and most of the gains in U.S. equities were built on these promises. The 100th day of Trump's presidency will be on Saturday, 29 April, and so far, he struggled to advance on most of his campaign promises. Will he finally deliver?

I think next week is going to be a crucial test for the new U.S. administration, especially now that markets have grown skeptical of its ability to deliver. U.S. stock indices closed slightly lower on Friday, in a sign that Trump comments are no longer effective. However, if the President’s proposed reforms were reasonable and can pass the Congress, there’s a high chance for equities rally to revive.

U.S. Growth

After a bunch of negative data from the U.S. economy, GDP is now expected to halve in Q1 relative to Q4 2016. Consumer spending is likely to be the primary driver of the slowdown given that retails sales fell for two consecutive months. Investors will then shift their focus on how the Federal Reserve will act on slowing growth. It seems now the probability of three rate hikes in 2017 is fading and based on that the USD might continue to feel the pressure.

EUR/USD - 1.0857

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.0849

Kijun-Sen level                  : 1.0809

Ichimoku cloud top             : 1.0739

Ichimoku cloud bottom      : 1.0733

Original strategy  :

Bought at 1.0690, met target at 1.0790

Position : - Long at 1.0690

Target :  - 1.0790

Stop : -

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

The single currency did find renewed buying interest at 1.0682 (we recommended to buy at 1.0690 and a long position was entered there) and the pair opened sharply higher today, indicated upside target at 1.0790 was met as price surged to as high as 1.0936 before retreating, suggesting consolidation below this level would be seen and pullback to the Kijun-Sen (now at 1.0809) cannot be ruled out, however, reckon previous resistance at 1.0778 would contain downside and bring another rise later. Above 1.0900-05 would bring retest of 1.0936 but break there is needed to extend recent rise to 1.0975-80 and possibly towards 1.1000.

As we have taken profit on our long position entered at 1.0690, would not chase this rise here and would be prudent to stand aside in the meantime. Below previous resistance at 1.0778 (now support) would defer and risk weakness to the Ichimoku cloud (now at 1.0733-39) but support at 1.0682 should remain intact, bring rebound later.

EUR/USD

The EURUSD ended Friday's trading above important 1.0700 support which was dented on spike to 1.0682, low of the day. The pair ranged between 1.0682 and 1.0736 on Friday, showing strong indecision ahead of the first round of French presidential election. The action remained capped by daily Kijun-sen line during past four days, with brief probe at 1.0776, being short-lived.

Setup of technical studies on daily chart was mixed on Friday, with the pair awaiting results of election for direction signal.

Scenarios see extension below the first pivot at 1.0677 (daily Tenkan-sen), through thin daily cloud at 1.0640 and possible extension to 1.0600 higher base in bearish scenario.

At the upside, break through Kijun-sen barrier at 1.0738 and weekly high at 1.0777 would accelerate above round-figure resistance at 1.0800, through 1.0838 (200SMA) and may spike towards 1.0906 (Mar 27peak).

Support: 1.0700, 1.0682, 1.0657, 1.0640
Resistance: 1.0738, 1.0777, 1.0800, 1.0826

USD/JPY

The EURUSD ended Friday's trading above important 1.0700 support which was dented on spike to 1.0682, low of the day. The pair ranged between 1.0682 and 1.0736 on Friday, showing strong indecision ahead of the first round of French presidential election. The action remained capped by daily Kijun-sen line during past four days, with brief probe at 1.0776, being short-lived.

Setup of technical studies on daily chart was mixed on Friday, with the pair awaiting results of election for direction signal.

Scenarios see extension below the first pivot at 1.0677 (daily Tenkan-sen), through thin daily cloud at 1.0640 and possible extension to 1.0600 higher base in bearish scenario.

At the upside, break through Kijun-sen barrier at 1.0738 and weekly high at 1.0777 would accelerate above round-figure resistance at 1.0800, through 1.0838 (200SMA) and may spike towards 1.0906 (Mar 27peak).

Support: 1.0700, 1.0682, 1.0657, 1.0640
Resistance: 1.0738, 1.0777, 1.0800, 1.0826

GBP/USD

GBPUSD ended trading on Friday in long-legged Doji, signalling strong indecision, as the pair is entrenched in narrowing consolidation in past three days under fresh multi-month high at 1.2905, posted earlier this week.

Initial support at 1.2770 (lows of last Wed/Thu) is still holding, despite Friday's short-lived spike to 1.2755, where extended dip was contained by Fibonacci 38.2% of 1.2514/1.2904 upleg support, keeping the downside attempts limited for now.

However, correction may extend below 1.2700/55 handles, as slow stochastic is generating bearish signal on daily chart on reversal from overbought territory, which may extend below 1.2700 handle and expose rising daily Tenkan-sen support at 1.2654. Otherwise, we may expect further consolidation, before broader bulls resume towards key barriers at 1.2905 and 1.3000.

Support: 1.2770, 1.2755, 1.2700, 1.2654
Resistance: 1.2834, 1.2859, 1.2905, 3000

AUDUSD

The AUDUSD's near-term action is on the firmer footing after two consecutive bullish days that managed to retrace over 38.2% of 0.7610/0.7492 downleg and close above important barrier at 0.7541 (daily Tenkan-sen line).

Immediate downside risk of returning to key supports at 0.7472 is sidelined for now, as fresh recovery extension above next pivots at 0.7550/65 (200SMA / Fibonacci 61.8% retracement) would generate fresh bullish signal for extended gains 0.7582 (Fibonacci 76.4%) , possibly to attack key near-term barrier at 0.7610 (daily Ichimoku cloud top, reinforced by Kijun-sen line).

Alternatively, return below former pivots at 0.7541/37 (Tenkan-sen / Fibonacci 38.2%) would soften near-term structure and signal that recovery may be running out of steam.

Support: 0.7541, 0.7520, 0.7490, 0.7472
Resistance: 0.7551, 0.7550, 0.7576, 0.7596

GBPCAD

The GBPCAD cross generated strong bullish signal last week's strong rally and weekly close, as the pair hit fresh multi-month high at 1.7340 and stayed just below it after Friday's brief easing.

Strong bullish sentiment for British pound is reinforced by firmly bullish technical studies, which are so far ignoring strongly overbought conditions. However, stronger correction could be anticipated in the near-term, after strong bearish signal will be generated on reversal of daily RSI and slow stochastic from deep overbought territory.

Levels to watch at the downside lay at 1.7145 (Fibonacci 23.6% of 1.6515/1.7340 rally), 1.7078 (broken weekly Ichimoku cloud base) and 1.7024 (Fibonacci 38.2%) which should ideally contain dips.

At the upside, barriers lay at 1.7436 (50% retracement of 1.9127/1.5745 descend) and 1.7524 (Sep 15 high).

Support: 1.7185, 1.7145, 1.7100, 1.7024
Resistance: 1.7300, 1.7340, 1.7436, 1.7524

GOLD

Spot Gold maintained strong bullish sentiment despite weekly close red on Friday (the first bearish weekly close after five straight bullish weeks), as last week's rally cracked important barrier at $1292 (weekly Ichimoku cloud top) on extension to fresh multi-month high at $1295.

Corrective easing was contained at $1275 (Fibonacci 38.2% of $1243/$1295 upleg), keeping intact another downside pivot at $1271 (daily Tenkan-sen line). While these supports hold, near-term focus is expected to remain shifted higher, as bullish technical studies favour final push towards psychological barrier at $1300 and extension above on sustained break.

Support: 1278, 1274, 1271, 1265
Resistance: 1288, 1292, 1295, 1300

WTI CRUDE OIL

WTI oil closed strongly in red and below psychological $50.00 support on Friday and generated another bearish signal. In addition, strong bearish weekly close after three straight bullish weeks, weighs on near-term action. Bearish sentiment is growing on fears of failure of extending OPEC output cut and increased production of US shale oil that offset bullish impact on oil prices on recent geopolitical tensions.

Daily technical indicators turned south and reinforce bearish pressure, as broken and widening broken daily Ichimoku cloud continues to pressure the price. If the price sustains break below $50.00 trigger, it may extend towards $48.41 (55 SMA), possibly to fully retrace $47.07/$53.74 upleg of further weakness.

To neutralize immediate downside threats, bounce and close above daily cloud top ($51.03) is seen as minimum requirement).

Support: 49.20, 48.64, 48.64, 48.00
Resistance: 50.00, 50.40, 50.74, 51.03

DJIA

Dow Jones closed in red on Friday, failing to capitalize on Thursday's strong recovery that was capped by 20 SMA at 20558, with 20/55SMA's bear-cross that was formed at this zone, further weighs on the market.

Mixed setup of daily MA's shows not clear direction, however, indicators are holding in the negative territory.

On the other side, near-term technical studies remain bullishly aligned, but the action remains limited by thick 4-hr Ichimoku cloud.

Stronger bullish signals could be expected on lift above 20600 (4-hr cloud top) and 20669 (daily Kijun-sen) that will expose key barrier at 20736 (daily cloud top).

Conversely, return below daily cloud base (20385) will be seen as bearish signal, with extension below 20310 (Apr 19 low) to signal continuation of larger pullback from 21160 (Mar1 all-time high).

Support: 20442, 20385, 20310, 20266
Resistance: 20553, 20600, 20669, 20736

FTSE100

FTSE index ticked higher on Thu/Fri, in extended consolidation above fresh multi-month low at 7032, posted on last e after pound surged on early election news. The price is holding in firm bearish mode and sees limited upside action for now, as strong negative sentiment is maintaining pressure. Strongly oversold studies on daily chart, so far did not produce firmer bullish signals for extended correction, however, such scenario cannot be ruled out.

Break above initial triggers at 7092/7129 (Fibonacci 23.6% and 38.2% retracement of strong 7285/7032 fall last week), would be seen as stronger bullish signals.

Otherwise, the price may spend more time in extended consolidation, before bears resume.

Break below 7032 low would open psychological 7000 support and 6969 (Fibonacci 61.8% of 6675/7444 rally) in extension).

Support: 7032, 7024, 7000, 6969
Resistance: 7077, 7092, 7129, 7149

DAX

DAX made the second consecutive bullish daily close on Friday and sidelined immediate downside risk, seen on last week's probe below psychological 12000 support. Recovery is facing strong barriers at 1219/12144 (daily Tenkan-sen / Kijun-sen lines) that formed bearish cross and could limit recovery attempts.

Strong weekly bearish close (the third in a row), continues to weigh) but on the other side, rising daily Ichimoku cloud continues to underpin the action.

Firm break above Tenkan-sen / Kijun-sen pivots would be seen as bullish signal, with extension above 12200 zone needed to confirm reversal.

Conversely, fresh attempts below 12000 handle will be seen as negative signal.

Resistance: 12114, 12129, 12144, 12220
Support: 12030, 12000, 11962, 11878

USD/JPY - 110.09

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 110.08

Kijun-Sen level                  : 109.74

Ichimoku cloud top             : 109.20

Ichimoku cloud bottom      : 108.98

New strategy  :

Buy at 109.50, Target: 110.50, Stop: 109.15

Position :  -

Target :  -

Stop : -

The greenback opened higher today and rallied to as high as 110.60, adding credence to our view that a temporary low has been formed at 108.13 last week and bullishness remains for this move to extend further gain, above said resistance at 110.60 would bring test of 111.00, however, near term overbought condition should limit upside and price should falter well below resistance at 111.58, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy dollar again on dips as previous resistance at 109.50 should turn into support and limit dollar’s downside, bring another rise later. Below the upper Kumo (now at 109.20) would abort and suggest an intra-day top is formed, bring weakness to the lower Kumo (now at 108.98) first.

• Macron and Le Pen win first round French elections
• Market horror scenario of Le Pen- Mélenchon run-off avoided
• Macron still likely to win (easily?) the presidency in second round on May 8
• What will parliamentary elections bring? Which government will be formed?
• Outcome positive for risk sentiment, but lingering (modest) tail risk to stay
• Negative Bund, positive OAT's and peripherals; positive euro and Euro equities.

The first round of the French presidential elections caused a lot of suspense in recent weeks as four candidates were, according to the polls, in a neck-to-neck race. Their poll differences were smaller than the error margins. Finally, like the polls suggested, Centrist Macron and Right- wing Le Pen qualified for the second round to be held in a fortnight, with likely the pro-European Union centrist Emmanuel Macron becoming president.

For markets, the following issues are important

First, the horror scenario in which right-wing Le-Pen and Left-wing Jean-Luc Mélenchon would go to the second round is avoided. Both threatened to leave the euro of/and EU and both had a radical anti-market programme.

Second, the result suggests, like the polls, that Macro will win the second round and become president. He beat her, as polls had predicted by about 24% to 21.4% (official, though not yet complete vote tally). A snap poll released after the vote suggest Macron will defeat her by a 20%- point margin in the runoff. An anti Le Pen front is already established with the socialist Hamon, former PM Valls, current PM Cazeneuve, Republican candidate Fillon and many other personalities, lining up behind Macron for the second voting round. However, a small residual risk of a Le Pen election win might still be visible in the markets.

Third, even in case of the likely Macron win in the second round , he is an independent without an established party. This means he will have to find partners to establish a government after the June parliamentary elections. This might cause still problems and eventually make him, in an unlikely worst case scenario, a kind of lame duck. The country may de facto be reigned by other parties. Given the election outcome of today, we suspect that ultimately the next government coalition will be centre-right oriented, as the socialists lost heavily. Please note that these elections also occur in two rounds, which favours the Republicans, the biggest party (Fillon).

Market reactions

The result is positive for the risk sentiment and the initial reaction cross markets was strong, but moves have moderated and partially reversed.

In the bond market, it means there is less need for safe havens. So, it is bearish for German (and other core) bonds, while the spreads of French OATs and peripheral bonds will narrow. The Bund is still closed but the T-Note future fell slight less than 1 point on the outcome, but has recouped 8/32 from the lows. The 10-yr OAT-Bund spread already narrowed on Friday, as some positions were squared, to about 68 bps. However, when European bond markets open, more spread narrowing is likely, maybe to about 50 bps in the next days. Only after the parliamentary elections, it will be clear whether France will get a reform and pro- European Union oriented government. That may fade the tail risk completely.

In the FX markets, the event is euro positive and yen negative. EUR/USD jumped immediately to above 1.09 from about 1.0720 in thin far east trading, but has now reverted to 1.0845. The safe haven yen lost ground versus the dollar (and euro of course) up from about 1.09 to a high of 110.65, but also here some retracement to about 110. More detail about the outlook in our Sunrise report.

Asian equities trade mixed with Japan profiting from the weaker yen, but no euphoria in other markets. Initial gains have been largely lost. European equities should do well.