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Daily Pivots: (S1) 112.16; (P) 112.61; (R1) 112.90; More...

A temporary top is in place at 113.04 in USD/JPY and intraday bias is turned neutral first. Further rise is still expected as long as 110.86 support holds. We'd holding on to the view that corrective fall from 118.65 has completed with three waves down to 108.12 already. Break of 113.04 will target 115.49 resistance. Firm break there will resume larger rally from 98.97 to 125.85 high. However, break of 110.86 support will keep USD/JPY inside near term falling channel and will turn bias back to the downside for 108.12 and below to extend the decline from 118.65.

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.

Cable is consolidating under session high at 1.2941 after nearly fully reversing Wednesday's fall that extended to 1.2830 low on Thursday.

Dips failed to clearly break below daily Tenkan-sen support at 1.2870, which continues to underpin the action. Near-term focus turned again towards 1.2965 pivot (28 Apr high), firm break of which is needed for final push towards initial 1.3000 target and possible extension towards 1.3080 (weekly cloud base).

Extended consolidation could be expected while 1.2865 high stays intact, with downside to stay protected by daily 10SMA/Tenkan-sen (1.2888/70).

Conversely, fresh downside risk could be expected on loss of Thursday's low at 1.2830, which would expose next strong supports at 1.2770/55.

Res: 1.2945, 1.2963, 1.3000, 1.3080
Sup: 1.2900, 1.2888, 1.2870, 1.2830

The Euro has eventually emerged above 1.0850/1.0950 congestion, where the price was trapped for the past seven days and came ticks ahead of psychological 1.1000 barrier, following strong rally on Thursday, when the pair was up nearly 1%. The Euro became attractive for investors on hopes of the victory of centrist candidate Macron on the French election, as the dollar eased after being initially supported by somewhat hawkish Fed on Wednesday. The EURUSD pair is pressuring 1.1000 barrier, firm break of which would trigger fresh upside extension towards weekly cloud base at 1.1067 (the cloud is going to twist next week and is magnetic). Near-term focus turns towards US jobs data, due later today, which may boost the dollar temporarily on better than expected release. Dip-buying scenario remains favored for now, with former range top at 1.0950 offering solid support and near-term price action being underpinned by thick hourly cloud (spanned between 1.0900 and 1.0816) top of which should contain extended downticks.

Res: 1.0989, 1.1000, 1.1033, 1.1067
Sup: 1.0965, 1.0950, 1.0900, 1.0874

Daily Pivots: (S1) 1.2855; (P) 1.2893; (R1) 1.2958; More...

Intraday bias in GBP/USD remains neutral as it's still bounded in range below 1.2965 temporary top. Further rise remains in favor with 1.2755 support intact. 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 seen 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.

US oil remains under strong pressure on Friday and slid to fresh nearly six months low at $43.74 in Asia, extending Thursday's strong fall when oil price was down 4.4% for the day.

Growing concerns about global oversupply offset OPEC's attempts to support oil price on production cut which is likely to extend until the end of the year.

Oil price erased all gains made after OPEC's decision and broke below former base and strong support at $47.07. Thursday's sharp fall also took out next important supports at $46.44 (top of thick weekly cloud) and $45.32 (Fibo 61.8% of $39.20/$55.22 ascend), seeing scope for further weakness towards $42.19 (14 Nov trough), as sentiment remains firmly bearish and oil is on track for strong bearish weekly close.

Bounce from session low at $43.74 is so far seen as mild correction, however, strongly oversold daily studies suggest further corrective action.

Former base at $47.08, reinforced by daily Tenkan-sen in steep descend, is expected to ideally cap corrective rallies.

Res: 45.61, 47.07, 47.74, 48.08
Sup: 44.00, 43.74, 42.98, 42.19

EUR/USD

Current level - 10979

The reversal at 1.0870 signals a completion of the consolidation pattern below 1.0950 and the bias is positive, for a test of 1.1010 resistance. Initial intraday support lies at 1.0950 and crucial on the downside is 1.0870 low.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 112.21

The uptrend has been reversed at 113.04 and the bias is already negative, for a test of 111.90, en route to 110.80. Crucial intraday resistance lies at 112.65.

GBP/USD

Current level - 1.2919

Yesterday's reversal at 1.2830 led to a fast rise and the bias is positive, for a test of 1.2965 peak. Minor intraday support lies at 1.2900.

Today, the key event will be the US employment report for April. The forecast is for NFP to have risen by 185k, a strong number that is consistent with further tightening in the labor market. The unemployment rate is forecast to have ticked up, while average hourly earnings are expected to have accelerated slightly in monthly terms. Despite a potential uptick in the unemployment rate, this looks like another solid report overall, which could amplify speculation regarding a June rate hike by the Fed. The probability for such action currently stands at 78% according to the Fed funds futures. Strong jobs data could drive that number higher and thereby, support the dollar.

Having said that though, in order for us to become as confident as the market that such action will indeed take place in June, we would first like to see clear signs that GDP growth and core inflationary pressures are regaining speed. Besides the data, comments by FOMC members will be critical to monitor too, as they usually provide a good indication of whether an action is imminent. In that respect, we will hear from both Chair Yellen and Vice Chair Fischer today.

USD/CAD traded higher yesterday and during the Asian morning today, it managed to overcome the resistance (now turned into support) barrier of 1.3760 (S1). The price structure on the 4-hour chart suggests a short-term uptrend and therefore, we would expect the rate to continue trading higher and perhaps target the 1.3850 (R1) hurdle. Despite expectations of a decent Canadian jobs report (see below), we believe that strong US employment data today could overshadow their Canadian counterparts and may prove the catalyst for the aforementioned rally. As for the bigger picture, on the 27th of April USD/CAD escaped from the sideways range it had been trading since early September, between the 1.3000 and 1.3600 key territories. This turns the medium-term outlook positive as well and increases the likelihood for the pair to continue trading north in the foreseeable future.

Second round of French elections in focus

On Sunday, French citizens will head to the polls once again, for the second and final round of their Presidential election. The two candidates are Emmanuel Macron and Marine Le Pen. Given the massive market reaction after the 1st round, when both the euro and European stock indices surged, we think that much of the “Frexit” risk has been already priced out of European assets. This is evident by the narrowing spread between the yields of French and German 10-year bonds.

As such, we think that the risks surrounding the euro's reaction from the second round may be asymmetrical, and tilted to the downside. A win by Macron is already expected and thus, any further upside in EUR in this case may be relatively modest. On the other hand, a potential Le Pen victory would come as a major surprise for markets, and is likely to lead to significant downside in EUR.

EUR/JPY continued trading north yesterday, but the advance was stopped at 123.70 (R1) and then the rate slid somewhat. The short-term outlook of the pair is to the upside, but we see signs for a setback today due to profit taking ahead of Sunday's election. We expect the rate to test 123.00 (S1) soon, where a clear dip could aim for the next support of 122.60 (S2). Now, in the aftermath of the election, a Macron victory could cause the pair to open with a positive gap above 123.70 (R1) and perhaps test the next resistance level at 124.10 (R2). On the other hand, if Le Pen wins, the pair may collapse back below the prior downside resistance line taken from the peak of the 15th of December. Sellers may take the opportunity to drive the battle towards the 120.50 territory, marked by the low of the 28th April.

As for the rest of today's highlights:

During the European day, the economic calendar is very light. The only indicator that could attract some market attention is Sweden's industrial production for March.

Besides the US jobs report, we get employment data for April from Canada as well. The forecast is for the unemployment rate to have held steady and for the net change in employment to have remained in positive territory. Even though this would be another piece of encouraging data, we doubt that it will have much effect on the BoC's dovish stance. The Bank made it clear at its latest meeting that it will remain dovish until the uncertainties surrounding trade clear up. Therefore, even though CAD could gain somewhat on solid jobs data, any such reaction may remain short-lived.

Besides Fed Chair Janet Yellen and Vice Chair Stanley Fischer, we have one more speaker on the agenda: San Francisco Fed President John Williams.

USD/CAD

Support: 1.3760 (S1), 1.3700 (S2), 1.3650 (S3)

Resistance: 1.3850 (R1), 1.3910 (R2), 1.4000 (R3)

EUR/JPY

Support: 123.00 (S1), 122.60 (S2), 122.00 (S3)

Resistance: 123.70 (R1), 124.10 (R2), 124.65 (R3)

Daily Pivots: (S1) 1.0909; (P) 1.0948 (R1) 1.1022; More....

EUR/USD's rise resumed by taking out 1.0949 and reaches as high as 1.0989 so far. Intraday bias is back on the upside for 100% projection of 1.0339 to 1.0828 from 1.0569 at 1.1058. At this point, rise from 1.0339 is still seen as a corrective move. Hence we'd expect strong resistance from 1.1058 projection to limit upside and bring near term reversal. On the downside, break of 1.0874 support will turn bias back 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.

Dollar is trading mixed as markets are turning their focus to employment data from US today. Non-farm payroll is expected to show 180k growth in April. Unemployment rate is expected to climb back to 4.6%. Average hourly earnings are expected to rise 0.3% mom. Looking at other employment related data, ADP private payroll growth slowed to 177k in April, down from 255k. Employment component of ISM manufacturing dropped sharply from 58.9 to 52.0, hitting the lowest level this year. Employment component of ISM services was nearly unchanged but stayed low at 51.4. Conference Board consumer confidence dropped to 120.3, down from 124.9, but was solid. Overall, other employment data argue that we won't have much chance of an upside surprise in today's NFP. Nonetheless, some attention would be on revision to March's poor number of 98k. Also, expectations is high on the 0.3% wage growth which leaves room for disappointment.

Six Fed officials to speak

There is no change in the expectation of Fed's rate path after this week's FOMC meeting. Markets are expecting another two hikes this year before Fed having a brief pause to start shrinking its balance sheet. Fed fund futures are pricing in more than 70% chance of a hike in June. Markets will also listen to speeches of six Fed officials today. The list include Fed Chair Janet Yellen, Boston Fed President Eric Rosengren, Fed Vice Chairman Stanley Fischer, San Francisco Fed President John Williams, Chicago Fed President Charles Evans, and St. Louis Fed President James Bullard.

ECB Praet: A little upside risk for Q2

ECB chief economist Peter Praet sounded upbeat in a conference yesterday. He said that "there may be a little upside risk for Q2" and the "balance of risks has improved". There are speculations that ECB may tweak the statement towards the hawkish side again in June. And the central bank could also revise up economic projections then. But Praet emphasized that the "fundamental features of our forward guidance have a clear logic". And, "all other features of our forward guidance are of a parametric nature and can be recalibrated depending on incoming data." That is taken as the emphasize that the order of steps that ECB would take will remain unchanged. And that is, ECB will still end the asset purchase program before considering to raise interest rates.

Macron extends lead over Le Pen

Euro is trading as the strongest major currency together with Swiss Franc and markets look forward to French presidential election this Sunday. Pro-EU centrist Emmanuel Macron extended his lead over EU-sceptic far right Marine Le Pen. According to and Elabe poll for BFM TV and L'Express, Macron is set to get 62% of votes in the run-off. And Le Pen will only get 38%. That's a 24 pts lead, up 3 pts from the last Elabe poll. Macron was also voted as the most convincing one in the last pre-election debate earlier this week.

Oil selloff accelerates

WTI crude oil's selloff accelerated after taking out 47.01 key support level yesterday. WTI reaches as low as 43.76 in Asian session before recovering mildly. OPEC hinted that it is likely for the output cut deal to be extended with the same terms, i.e. reducing production by 1.8M bpd, for 6 months. According to an official who preferred to stay anonymous, "the willingness to extend the current understanding is strong among OPEC and non-OPEC participants". However, it is unlikely that "more cuts will be discussed as the current agreement is yielding a positive outcome". Meanwhile, Russian Energy Minister Alexander Novak indicated that the country was inclined to join the extension.

The market was disappointed as they had hoped for bigger reduction in the "new" deal. The goal of the output cut deal, announced late last year and effective in January 2017, is to rescue the massive selloff of oil prices. However, price performance signal that the cartel has probably lost control. The market is more concerned over the persistent increase in US oil production with the number of US oil rigs hitting a 2-year high last week.

Elsewhere...

Swiss foreign currency reserves rose to CHF 696b in April. Eurozone retail PMI will be featured in European session. Canada will also release employment data and Ivey PMI today.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.0909; (P) 1.0948 (R1) 1.1022; More....

EUR/USD's rise resumed by taking out 1.0949 and reaches as high as 1.0989 so far. Intraday bias is back on the upside for 100% projection of 1.0339 to 1.0828 from 1.0569 at 1.1058. At this point, rise from 1.0339 is still seen as a corrective move. Hence we'd expect strong resistance from 1.1058 projection to limit upside and bring near term reversal. On the downside, break of 1.0874 support will turn bias back 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.

Economic Indicators Update

USD/CHF - 0.9874

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9872

Kijun-Sen level                    : 0.9908

Ichimoku cloud top                 : 0.9932

Ichimoku cloud bottom              : 0.9927

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Yesterday’s selloff after meeting renewed selling interest at 0.9957 together with the breach of support at 0.9891-93 confirm recent decline from 1.0108 top has resumed and bearishness remains for further weakness to support at 0.9831 and possibly towards 0.9800, however, near term oversold condition should prevent sharp fall below 0.9770, risk from there is seen for a rebound later.

In view of this, would not chase this fall here and would be prudent to stand aside in the meantime. Above the Kijun-Sen (now at 0.9908) would bring recovery to 0.9925-30 but price should falter well below said resistance at 0.9957, bring another decline later. Only break of 0.9966-69 resistance would signal low is formed instead, bring subsequent bounce to 1.0000-08 later.