Sample Category Title

Daily Pivots: (S1) 164.20; (P) 164.51; (R1) 165.08; More...

Intraday bias in EUR/JPY stays neutral for the moment. On the upside, firm break of 165.33 will resume larger up trend towards 169.96 key resistance next. However, decisive break of 162.26 support will argue that it's at least correcting the rise from 153.15, and target 38.2% retracement of 153.15 to 165.33 at 160.67.

In the bigger picture, current rally is part of the up trend from 114.42 (2020 low), which is still in progress. Next target is 169.96 (2008 high). Break of 160.20 support is needed to be the first sign of medium term topping. Otherwise, outlook will stay bullish in case of retreat.

Daily Pivots: (S1) 0.8536; (P) 0.8554; (R1) 0.8587; More...

EUR/GBP dipped to 0.8519 but quickly recovered. Intraday bias remains neutral first. On the downside, firm break of 0.8529 support will argue that the corrective recovery from 0.8497 has completed at 0.8601. Intraday bias will be back on the downside for retesting 0.8497 low next. On the upside, break of 0.8601 will resume the rebound instead.

In the bigger picture, there is no clear sign that down trend from 0.9267 has completed, despite loss of downside momentum as seen in D MACD. As long as 0.8601 resistance holds, the down trend will remain in favor to resume through 0.8491 low at la later stage.

Daily Pivots: (S1) 1.6548; (P) 1.6574; (R1) 1.6612; More...

Intraday bias in EUR/AUD is turned neutral with current retreat and some consolidations would be seen. Further rally is mildly in favor. Above 1.6616 will resume the rebound form 1.6368 to 1.6677 resistance next. Break there will confirm that correction from 1.6742 has completed, and bring further rally through this high. However, sustained break of 55 4H EMA (now at 1.6500) will bring turn bias back to the downside for 1.6368 support instead.

In the bigger picture, fall from 1.7062 medium term top is seen as a correction to the up trend from 1.4281 (2022 low). The correction is probably still in progress with fall from 1.6742 as the third leg. Strong support is expected around 1.5846 and 38.2% retracement of 1.4281 to 1.7062 at 1.6000 to bring rebound.

Daily Pivots: (S1) 0.9692; (P) 0.9706; (R1) 0.9736; More...

Intraday bias in EUR/CHF is turned neutral first with current recovery. While correction from 0.9847 could extend lower, downside should be contained by 38.2% retracement of 0.9252 to 0.9847 at 0.9620 to bring rebound. On the upside, above 0.9745 minor resistance will turn bias back to the upside for retesting 0.9847.

In the bigger picture, a medium term bottom should be in place at 0.9252 already, on bullish convergence condition in W MACD. Rise from there now target 38.2% retracement of 1.2004 (2018 high) to 0.9252 (2023 low) at 1.0303, even as a correction to the down trend from 1.2004. This will remain the favored case as long as 55 D EMA (now at 0.9639) holds.

Markets

In a session deprived of key data, yields and the USD yesterday faced a correction on recent rise. Markets concluded that, without new data evidence on strong US demand or sticky inflation, enough Fed rate cut delay is discounted. A decline in oil prices (high US stockpiles) also supported core bonds. US yields dropped between 5.5 bps (2-y) and 8.6 bps (5-y). The Fed Beige Book preparing the May Fed meeting reported slight or modest growth in most districts. Also job growth was labeled very slow to modest. Price increases were seen at a similar pace compared to March. Contacts still saw some upside risks to the near term inflation development. Bunds underperformed Treasuries. The 2-y yield rose slightly (+0.8 bp) while the 30y yield shed 2.8 bps. Several ECB members including Centeno, Cipollone, Lagarde and Holzmann commented on monetary policy. From Holzmann, we retain he admits that the inflation situation in Europe is different from the US. At the same time he suggested that ECB moving ahead of the Fed makes rate cuts less effective. Lagarde also stressed the different nature of EMU inflation compared to the US. She also indicated that the ECB will monitor the impact of FX on inflation. The correction in US yields annex decline in oil prices, wasn’t enough to propel equities (Nasdaq 1.15%). US and EMU indices are captured in a sell-on-upticks correction. The dollar also returned part of recent gains. EUR/USD jumped from the 1.061 area to close at 1.0673. UK inflation data (easing slightly less than expected) only had a temporary impact on UK markets. Later, BoE governor Bailey also assessed that the nature of inflation in Europe (and the UK) is different from demand driving inflation in the US. He expects headline inflation to return to 2.0% soon even as core/service inflation stays elevated. A different nature in inflation at some point might allow the BoE start cutting rates before the Fed. Sterling reversed a small gain post the CPI data. EUR/GBP closed at 0.857 (from 0.8645).

Asian markets this morning are trading in positive territory. Amongst other, regional markets apparently draw some comforted from a joint statement of the finance ministers of the US, Japan and Korea sharing concerns on the recent depreciation of the won and the yen. Even so, the direct advantage for the yen remains limited (USD/JPY 154.2). Later today, the eco calendar contains US jobless claims, the Philly Fed business outlook and existing home sales. Plenty of Fed and ECB policy makers are again scheduled to speak. Without high profile news, yesterday correction on bond markets and in the dollar might have some further to go.

News & Views

ECB executive board member Schnabel said the central bank should consider rethinking the way it forecasts growth and inflation with the ultimate goal of improving communication and to be able to respond to shocks rapidly. Relying on the current policy of publishing baseline projections only is risky, Schnabel said, warning they convey a false sense of precision. She advocates the regular and consistent use of alternative scenario’s to the baseline to highlight the inherent forecast uncertainty. And while the ECB already produces those, they are overlooked by investors. Her comments come after former Fed chair Bernanke advised the Bank of England on how to improve its projections, including publishing an outlook for rates with scenario’s showing the best path for reaching the 2% inflation target. Schnabel also saw benefits in using a Fed-like dot plot. It “can help convey uncertainty about the future path of the economy while providing greater clarity about where policymakers see rates moving in the future. At the same time, they may overly condition market pricing, thereby reducing its informational content.”

The IMF in its fiscal monitor warned the US’ massive deficits have stoked inflation and pose significant risks for the global economy. It expects a fiscal shortage of 7.1% next year. It has also concerns about China with a projected 7.6% in 2025 adding to already quickly piling up debt. The US and China, along with the UK and Italy are the four countries labeled as “critically need to take policy action to address fundamental imbalances between spending and revenues”. The fiscal position of the US raises short-term risks to the disinflation process, as well as longer-term fiscal and financial stability risks for the global economy, the IMF chief economist said. Rising US borrowing costs as a result typically have spillover effects across the world and create FX turbulence, the IMF noted. And while Chinese debt tends to be domestically held, its dynamics could still affect Chinese trading partners.

Daily Pivots: (S1) 1.0626; (P) 1.0653; (R1) 1.0700; More...

Intraday bias in EUR/USD stays neutral at this point as consolidation from 1.0601 is extending. While stronger recovery cannot be ruled out, upside should be limited by 1.0723 support turned resistance. On the downside, break of 1.0601 will resume the decline from 1.1138 to 100% projection of 1.1138 to 1.0694 from 1.0980 at 1.0536 next.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern to rise from 0.9534 (2022 low). Current fall from 1.1138 is seen as the third leg. While deeper decline is would be seen to 1.0447 and possibly below. Strong support should emerge from 61.8% retracement of 0.9534 to 1.1274 at 1.0199 to complete the correction.

Daily Pivots: (S1) 154.11; (P) 154.43; (R1) 154.71; More...

Intraday bias in USD/JPY is turned neutral with current retreat. Considering bearish divergence condition in 4H MACD, in case of another rise, upside should be limited by 155.20 fibonacci projection level. On the downside, break of 153.89 minor support will turn bias back to the downside for 55 4H EMA (now at 153.33) and possibly below.

In the bigger picture, current rise from 140.25 is seen as the third leg of the up trend from 127.20 (2023 low). Next target is 61.8% projection of 127.20 to 151.89 from 140.25 at 155.20. Outlook will now remain bullish as long as 146.47 support holds, even in case of deep pullback.

Daily Pivots: (S1) 1.2421; (P) 1.2451; (R1) 1.2486; More...

GBP/USD is staying in consolidation from 1.2404 and intraday bias remains neutral. Upside but upside of recovery should be limited by 1.2538 support turned resistance to bring another fall. On the downside, firm break of 1.2404 will resume the decline from 1.2892 to 100% projection of 1.2892 to 1.2538 from 1.2708 at 1.2354. Firm break there will target 161.8% projection at 1.2207 next.

In the bigger picture, price actions from 1.3141 medium term top are seen as a corrective pattern to up trend from 1.0351 (2022 low). Fall from 1.2892 is seen as the third leg. Deeper decline would be seen to 1.2036 support and possibly below. But strong support should emerge from 61.8% retracement of 1.0351 to 1.2452 at 1.1417 to complete the correction.

Daily Pivots: (S1) 0.9088; (P) 0.9115; (R1) 0.9135; More....

USD/CHF is extending the consolidation pattern from 0.9151 and intraday bias remains neutral. Deeper pull back cannot be ruled out. But further rally is expected as long as 0.8996 support holds. Firm break of 0.9151 will target 0.9243 key resistance next.

In the bigger picture, price actions from 0.8332 medium term bottom as tentatively seen as developing into a corrective pattern to the down trend from 1.0146 (2022 high). Further rise would be seen as long as 0.8728 support holds. But upside should be limited by 0.9243 resistance, at least on first attempt. However, decisive break of 0.9243 will argue that the trend has already reversed and turn medium term outlook bullish.

Daily Pivots: (S1) 1.3743; (P) 1.3790; (R1) 1.3821; More...

A temporary top was formed at 1.3845 in USD/CAD after hitting 100% projection of 1.3176 to 1.3540 from 1.3477 at 1.3841. Intraday bias is mildly on the downside for pull back to 55 4H EMA (now at 1.3711). But downside should be contained by 1.3660 support to bring another rally. Break of 1.3845 will resume the whole rally from 1.3716 to 1.3976 key resistance.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern only. In case of another fall, strong support should emerge above 1.2947 resistance turned support to bring rebound. Firm break of 1.3976 will confirm up resumption of whole up trend from 1.2005 (2021 low). Next target is 61.8% projection of 1.2401 to 1.3976 from 1.3176 at 1.4149.