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Daily Pivots: (S1) 1.2336; (P) 1.2354; (R1) 1.2373; More...

Intraday bias in GBP/USD stays neutral for consolidation above 1.2306 temporary low. Further decline is expected as long as 1.2468 resistance holds. Decline from 1.2678 is seen as correcting whole up trend from 1.0351. Break of 1.2306 will target 1.1801 cluster support (38.2% retracement of 1.0351 to 1.2678 at 1.1789). On the upside, above 1.2468 minor resistance will turn bias back to the upside for stronger rebound.

In the bigger picture, as long as 1.1801 support holds, rise from 1.0351 medium term bottom (2022 low) is expected to extend further. Sustained break of 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759 will add to the case of long term bullish trend reversal. However, firm break of 1.1801 will indicate rejection by 1.2759, and bring deeper decline, even as a correction.

Daily Pivots: (S1) 0.9028; (P) 0.9045; (R1) 0.9062; More...

Intraday bias in USD/CHF remains neutral for the moment. Further rally is in favor as long as 0.8939 support holds. On the upside, sustained trading above 55 D EMA (now at 0.9039) should confirm that current rally is at least correcting whole down trend from 1.0146. Further rise should then be seen to 38.2% retracement of 1.0146 to 0.8818 at 0.9325. On the downside, though, break of 0.8939 will bring retest of 0.8818 low instead.

In the bigger picture, fall from 1.1046 (2022 high) is seen as a leg in the long term range pattern from 1.0342 (2016 high). So, downside should be contained by 0.8756 to bring reversal. Sustained break of 0.9058 support turned resistance will be the first sign of medium term bottoming. However, decisive break of 0.8756 will carry larger bearish implications.

Daily Pivots: (S1) 140.08; (P) 140.50; (R1) 140.88; More...

Intraday bias in USD/JPY is turned neutral for consolidation below 140.90 temporary top. But downside should be contained above 138.22 support to bring another rally. Break of 140.90 will resume larger rise from 127.20 to 142.48 fibonacci level. However, considering bearish divergence condition in 4 hour MACD, break of 138.22 will confirm short term topping, and turn bias back to the downside for 55 D EMA (now at 135.78).

In the bigger picture, rise from 127.20 is seen as the second leg of the corrective pattern from 151.93 high. Stronger rally would be seen to 61.8% retracement of 151.93 to 127.20 at 136.34. Sustained break there will pave the way back to retest 151.93. On the downside, however, break of 133.73 support will argue that the pattern could have started the third leg through 127.20 low.

Daily Pivots: (S1) 1.3573; (P) 1.3600; (R1) 1.3616; More....

Intraday bias in USD/CAD remains neutral for consolidation below 1.3653 temporary top. Overall, outlook is unchanged. Price actions from 1.3976 are seen as a triangle consolidation pattern. Above 1.3666 will target 1.3860 resistance first. Firm break of 1.3860 will argue that larger up trend is ready to resume through 1.3976 high.

In the bigger picture, rise from 1.2005 (2021 low) is expected to resume through 1.3976 after consolidation from there completes. On decisive break of 1.3976, next target will be 1.4667/89 long term resistance zone. This will remain the favored case as long as 38.2% retracement of 1.2005 to 1.3976 at 1.3233 holds.

Daily Pivots: (S1) 0.6521; (P) 0.6538; (R1) 0.6556; More...

Intraday bias in AUD/USD remains neutral first as consolidation from 0.6489 temporary low is extending. Upside of recovery should be limited by 0.6604 support turned resistance to bring another decline. Break of 0.6489 will resuming larger down trend, and target 61.8% projection of 0.7156 to 0.6563 from 0.6817 at 0.6451. Firm break there will target 100% projection at 0.6224.

In the bigger picture, rejection by 55 W EMA (now at 0.6822) keeps medium term outlook bearish. Current development suggests that down trend from 0.8006 (2021 high) is possibly still in progress. Retest of 0.6169 (2022 low) should be seen next. Firm break there will confirm down trend resumption. For now, this will remain the favored case as long as 0.6817 resistance holds.

Trading has remained muted as major markets recuperate from a lengthy weekend. Investors are not reacting dramatically to the agreement regarding US debt ceiling. Instead, they are casting a cautious eye towards Congress, awaiting indications of how the deal will be received. Compounding the apprehension, a slew of significant economic data is slated for release in the latter half of this week. Reports such as Eurozone CPI flash and US non-farm payrolls are bound to generate increasing market volatility as the week progresses.

In the midst of these developments, the currency markets are seeing Yen emerge as one of the stronger performers this week, alongside the Swiss Franc. However, it's important to note that Yen's strength seems to be a result of digesting the deep losses incurred earlier in the month. This suggests a resumption of the sell-off could occur at any time, contingent on the broader trends in equity and bond markets.

Meanwhile, commodity currencies are bearing the brunt of the downturn, led by Australian Dollar, which is succumbing to the weight of faltering Chinese equities. Dollar and Euro are straddling a middle ground, showing a mixed performance.

Technically, AUD/CAD is now extending recent down trend from 0.9545, with break of last week's low. Near term outlook will stay bearish as long as 0.8941 support turned resistance holds. Next target is 61.8% projection of 0.9545 to 0.8941 from 0.9104 at 0.8731. A simultaneous focus is when AUD/USD would break through 0.6489 temporary low to resume the corresponding down trend from 0.7156 too.

In Asia, at the time of writing, Nikkei is up 0.42%. Hong Kong HSI is down -0.75%. China Shanghai SSE is down -0.92%. Singapore Strait Times is up 0.04%. Japan 10-year JGB yield is down -0.001 at 0.435.

ECB De Cos: Closer to end of tightening, prolonged restrictive rates necessary

ECB Governing Council member, Pablo Hernandez de Cos, expressed his thoughts on the direction of ECB's monetary policy during a speech yesterday.

In his remarks, de Cos stated, "We think that we still have some way to go in tightening monetary policy, although we also think that we are closer to the end." This suggests a continued commitment to ECB's policy of monetary tightening, albeit with the recognition that this phase might be nearing its completion.

Furthermore, de Cos underscored the necessity of maintaining restrictive interest rates over a substantial duration. The intention behind this strategy, he explained, is to ensure ECB's objectives are achieved in a consistent manner over time.

BoJ Ueda: Will patiently continue monetary easing

In today's parliamentary address, BoJ Kazuo Ueda laid out the central bank's approach to an evolving inflation scenario in Japan. Governor Ueda announced, "We expect inflation to quite clearly slow below 2%" as we move further into the current fiscal year.

Despite this imminent deceleration, BoJ is forecasting a subsequent rebound, albeit with a degree of caution. Ueda added, "Inflation is likely to rebound thereafter ... though there is high uncertainty" about the future direction of inflation rates.

In response to these trends, BoJ plans to remain patient and maintain its current approach to monetary policy. Ueda affirmed the central bank's commitment to its strategy, stating, "(We) will patiently continue monetary easing as there's still distance to achievement of sustainable and stable 2% price hikes together with continued rises in wages."

US NFP and ISM; Eurozone CPI and ECB accounts

As speculation intensifies around the possibility of a Fed rate hike in June, all eyes will be on the forthcoming non-farm payroll data. The report could be a significant determining factor for both traders and Fed officials, as it provides insight into the state of the labor market and potential need for further monetary tightening. Aspects such as headline job growth, unemployment rate, and wage growth will be scrutinized closely. Moreover, the ISM Manufacturing Index, which showcases the ongoing challenges in the sector, is also anticipated with interest.

Turning to the Eurozone, two key events are expected to make headlines - CPI flash estimate and ECB meeting accounts. ECB has been explicit about its intention to continue tightening its monetary policy, with the apex expected to be reached by the summer. However, uncertainty prevails over the specific month and rate of this peak, largely depending on the pace at which core inflation decelerates.

Elsewhere, much attention will also be on Australia CPI and China PMIs.

Here are some highlights for the week:

• Tuesday: New Zealand building permit; Australia building approvals; Japan unemployment rate; Swiss GDP, KOF; Eurozone M3 money supply; Canada current account; US house price index, consumer confidence.
• Wednesday: Japan industrial production, retail sales, consumer confidence, housing starts; New Zealand ANZ business confidence; Australia CPI. China PMIs; Germany import prices, unemployment, CPI flash; Swiss retail sales, Credit Suisse economic expectations; France GDP, consumer spending; Canada GDP; US Chicago PMI, Fed's Beige Book.
• Thursday: Japan capital spending, PMI manufacturing final; Australia private capital expenditure, retail sales; China Caixin PMI manufacturing; Germany retail sales; Swiss trade balance, PMI manufacturing; Eurozone PMI manufacturing final, CPI flash, unemployment rate, ECB accounts; UK PMI manufacturing final, M4 money supply, mortgage approvals; US ADP employment, jobless claims, ISM manufacturing.
• Friday: New Zealand terms of trade; Japan monetary base; US non-farm payrolls.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6521; (P) 0.6538; (R1) 0.6556; More...

Intraday bias in AUD/USD remains neutral first as consolidation from 0.6489 temporary low is extending. Upside of recovery should be limited by 0.6604 support turned resistance to bring another decline. Break of 0.6489 will resuming larger down trend, and target 61.8% projection of 0.7156 to 0.6563 from 0.6817 at 0.6451. Firm break there will target 100% projection at 0.6224.

In the bigger picture, rejection by 55 W EMA (now at 0.6822) keeps medium term outlook bearish. Current development suggests that down trend from 0.8006 (2021 high) is possibly still in progress. Retest of 0.6169 (2022 low) should be seen next. Firm break there will confirm down trend resumption. For now, this will remain the favored case as long as 0.6817 resistance holds.

Economic Indicators Update

In today's parliamentary address, BoJ Kazuo Ueda laid out the central bank's approach to an evolving inflation scenario in Japan. Governor Ueda announced, "We expect inflation to quite clearly slow below 2%" as we move further into the current fiscal year.

Despite this imminent deceleration, BoJ is forecasting a subsequent rebound, albeit with a degree of caution. Ueda added, "Inflation is likely to rebound thereafter ... though there is high uncertainty" about the future direction of inflation rates.

In response to these trends, BoJ plans to remain patient and maintain its current approach to monetary policy. Ueda affirmed the central bank's commitment to its strategy, stating, "(We) will patiently continue monetary easing as there's still distance to achievement of sustainable and stable 2% price hikes together with continued rises in wages."

ECB Governing Council member, Pablo Hernandez de Cos, expressed his thoughts on the direction of ECB's monetary policy during a speech yesterday.

In his remarks, de Cos stated, "We think that we still have some way to go in tightening monetary policy, although we also think that we are closer to the end." This suggests a continued commitment to ECB's policy of monetary tightening, albeit with the recognition that this phase might be nearing its completion.

Furthermore, de Cos underscored the necessity of maintaining restrictive interest rates over a substantial duration. The intention behind this strategy, he explained, is to ensure ECB's objectives are achieved in a consistent manner over time.

Key Highlights

• GBP/USD extended its decline below the 1.2440 support.
• A key bearish trend line is forming with resistance near 1.2380 on the 4-hour chart.
• EUR/USD remains at risk of more downsides toward 1.0650.
• Crude oil price is consolidating above the $70 support.

GBP/USD Technical Analysis

The British started a fresh decline from well above 1.2500 against the US Dollar. GBP/USD traded below the 1.2440 and 1.2400 support levels.

Looking at the 4-hour chart, the pair settled below the 1.2400 level, the 100 simple moving average (red, 4 hours), and the 200 simple moving average (green, 4 hours).

The bears even attempted a break below the 1.2300 level. A low is formed near 1.2309 and the pair is now consolidating losses. Immediate support is near the 1.2300 level. The next major support is near the 1.2280 level.

If there is a downside break below the 1.2280 support, the pair could decline toward the 1.2200 support level. The next major support sits near the 1.2150 level.

On the upside, the pair might face resistance near the 1.2380 level. There is also a key bearish trend line forming with resistance near 1.2380 on the same chart. The next major resistance is near 1.2400, above which the pair could rise toward the 1.2500 level.

Looking at crude oil price, there was a bearish reaction below the $73.85 support before the price started a consolidation phase.

Economic Releases

• US Housing Price Index for March 2023 (MoM) - Forecast +0.3%, versus +0.5% previous.
• Dallas Fed Manufacturing Business Index for May 2023 - Forecast -19.6, versus -23.4 previous.