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Daily Pivots: (S1) 1.0280; (P) 1.0309; (R1) 1.0349; More....

Intraday bias in EUR/CHF stays neutral and further fall is expected with 1.0359 resistance intact. On the downside, below 1.0228 will reaffirm the case that corrective rebound from 0.9970 has completed at 1.0513. Deeper fall would be seen to 1.0086 support next. However, above 1.0359 will dampen this bearish view and bring stronger recovery back towards 1.0513 resistance.

In the bigger picture, as long as 1.0505 support turned resistance (2020 low) holds, long term down trend from 1.2004 (2018 high) is expected to continue. Next target is 100% projection of 1.2004 to 1.0505 to 1.1149 at 0.9650. However, firm break of 1.0505 will suggest medium term bottoming, and bring stronger rebound towards 1.1149 structural resistance.

Daily Pivots: (S1) 136.67; (P) 137.17; (R1) 138.07; More....

EUR/JPY's rebound form 132.63 extends higher and intraday bias is now on the upside. Correction from 139.99 should have completed with three waves down to 132.63 already. Break of 138.33 will bring retest of 139.99 high next. On the downside, below 134.97 support will turn bias back to the downside, to extend the corrective pattern from 139.99 with another falling leg.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Such rise is seen as the third leg of the pattern from 109.30 (2016 low). Next target will be 100% projection of 114.42 to 134.11 from 124.37 at 144.06. In any case, outlook will now remain bullish as long as 124.37 support holds, in case of deep pull back.

Daily Pivots: (S1) 160.71; (P) 161.12; (R1) 161.89; More...

Intraday bias in GBP/JPY remains neutral with focus on 161.83 resistance. Firm break there should confirm that correction from 168.40 has completed at 155.57 already. Intraday bias will be back on the downside for retesting 168.40 high next. nevertheless, on the downside, break of 155.57 will extend the correction towards 150.96 key structural support.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Sustained break of 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 will be a long term bullish signal, and could pave the way back to 195.86 high. This will now remain the favored case as long as 150.95 support holds, even in case of deep pull back. However, firm break of 150.95 will indicate rejection by 167.93, and bearish trend reversal.

Canadian Dollar is trading as the strongest one so far for the week. Rising oil price is giving extra support to the Loonie, on the back of improving overall risk sentiment. Aussie and Euro are firm behind too. Yen remains the worst performing one, followed by Swiss Franc and Dollar, while Sterling is mixed. US markets will be back from holiday and attention will be on whether last week's strong rebound in stocks could extend.

Technically, focuses will stay on the rallies in Yen pairs. CAD/JPY is now pressing 101.13 resistance while GBP/JPY is pressing 161.83. Break of these two levels will resume the rebound from 97.78 and 155.57 respectively. Such developments could trigger some upside acceleration to retest recent highs. That would also affirm that overall market sentiment continues to improve.

In Asia, at the time of writing, Nikkei is down -0.19%. Hong Kong HSI is up 0.43%. China Shanghai SSE is up 0.75%. Singapore Strait Times is up 0.41%. Japan 10-year JGB yield is up 0.0138 at 0.247.

Japan industrial production dropped -1.3% mom in Apr, expected to return to growth in May

Japan industrial production dropped -1.3% mom in April, much worse than expectation of -0.2% mom. It's also the first decline in three months. The seasonally adjusted production index for the manufacturing and mining sectors stood at 95.2 against 100 for the base year of 2015.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expected output to return to growth in May, gaining 4.8%, followed by a 8.9% rise in June.

Also from Japan, unemployment rate dropped from 2.6% to 2.5% in April, lowest in two years. Retail sales rose 2.9% yoy, above expectation of 2.6% yoy.

China PMI manufacturing rose to 49.6 in May, services rose to 47.8

The official China PMI manufacturing rose from 47.4 to 49.6 in May, matched expectations. PMI Services rose from 41.9 to 47.8, above expectation of 45.2. PMI Composite also rose from 42.7 to 48.4.

"This showed manufacturing production and demand have recovered to varying degrees, but the recovery momentum needs to be strengthened," said Zhao Qinghe, senior statistician at the NBS.

WTI oil to clear 120 as EU bans 2/3 of Russia import immediately

WTI crude oil is extending recent rally and it's now eyeing 120 handle. EU leaders finally agreed yesterday to embargo on seaborne oil imports from Russia, which covers more than two-thirds of the imports. Another one-third is delivered via the Druzhba pipeline. Also, the embargo would be raised to 90% once Poland and Germany, which are connected to the pipeline, stop buying by the end of the year. The remaining 10% temporarily exempt including imports to Hungary along with Slovakia and Czech.

"This immediately covers more than 2/3 of oil imports from Russia, cutting a huge source of financing for its war machine. Maximum pressure on Russia to end the war," European Council President Charles Michel said in a tweet.

WTI crude oil's break of the near term channel resistance suggests upside acceleration. 118.57 near term resistance is also taken out. As long as 114.27 support holds, further rally would be seen, back towards 131.82 high.

Nevertheless, current rally from 93.47 is tentatively seen as the second leg of the medium term corrective pattern from 131.82. Hence, a firm break of 131.82 is not expected for now while sideway trading could extend for some more time.

Bitcoin heading to 55 D EMA as near term rebound resumes

On the back of improving market sentiment, Bitcoin rises through 31407 resistance to resume the rebound from 25083. Further rally is now expected to 55 day EMA (now at 34297). Sustained break there will further affirm the case that whole decline from 68986 has completed with three waves down to 25083.

It's still a bit too early to confirm a bullish trend reversal for the moment. But even as a corrective rebound, firm break of 44 day EMA should pave the way to 38.2% retracement of 68986 to 25083 at 41853 at least. For now, this will remain the favored case as long as 27993 support holds.

Looking ahead

Swiss trade balance, retail sales and GDP will be released in European session. France GDP and consumer spending, Germany employment, UK M4 and money supply will also be featured. But main focus will likely be on Eurozone CPI flash. Later in the day, Canada will release GDP. US will release house price index, Chicago PMI, and consumer confidence.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 160.71; (P) 161.12; (R1) 161.89; More...

Intraday bias in GBP/JPY remains neutral with focus on 161.83 resistance. Firm break there should confirm that correction from 168.40 has completed at 155.57 already. Intraday bias will be back on the downside for retesting 168.40 high next. nevertheless, on the downside, break of 155.57 will extend the correction towards 150.96 key structural support.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Sustained break of 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 will be a long term bullish signal, and could pave the way back to 195.86 high. This will now remain the favored case as long as 150.95 support holds, even in case of deep pull back. However, firm break of 150.95 will indicate rejection by 167.93, and bearish trend reversal.

Economic Indicators Update

On the back of improving market sentiment, Bitcoin rises through 31407 resistance to resume the rebound from 25083. Further rally is now expected to 55 day EMA (now at 34297). Sustained break there will further affirm the case that whole decline from 68986 has completed with three waves down to 25083.

It's still a bit too early to confirm a bullish trend reversal for the moment. But even as a corrective rebound, firm break of 44 day EMA should pave the way to 38.2% retracement of 68986 to 25083 at 41853 at least. For now, this will remain the favored case as long as 27993 support holds.

WTI crude oil is extending recent rally and it's now eyeing 120 handle. EU leaders finally agreed yesterday to embargo on seaborne oil imports from Russia, which covers more than two-thirds of the imports. Another one-third is delivered via the Druzhba pipeline. Also, the embargo would be raised to 90% once Poland and Germany, which are connected to the pipeline, stop buying by the end of the year. The remaining 10% temporarily exempt including imports to Hungary along with Slovakia and Czech.

"This immediately covers more than 2/3 of oil imports from Russia, cutting a huge source of financing for its war machine. Maximum pressure on Russia to end the war," European Council President Charles Michel said in a tweet.

WTI crude oil's break of the near term channel resistance suggests upside acceleration. 118.57 near term resistance is also taken out. As long as 114.27 support holds, further rally would be seen, back towards 131.82 high.

Nevertheless, current rally from 93.47 is tentatively seen as the second leg of the medium term corrective pattern from 131.82. Hence, a firm break of 131.82 is not expected for now while sideway trading could extend for some more time.

The official China PMI manufacturing rose from 47.4 to 49.6 in May, matched expectations. PMI Services rose from 41.9 to 47.8, above expectation of 45.2. PMI Composite also rose from 42.7 to 48.4.

"This showed manufacturing production and demand have recovered to varying degrees, but the recovery momentum needs to be strengthened," said Zhao Qinghe, senior statistician at the NBS.

Japan industrial production dropped -1.3% mom in April, much worse than expectation of -0.2% mom. It's also the first decline in three months. The seasonally adjusted production index for the manufacturing and mining sectors stood at 95.2 against 100 for the base year of 2015.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expected output to return to growth in May, gaining 4.8%, followed by a 8.9% rise in June.

Also from Japan, unemployment rate dropped from 2.6% to 2.5% in April, lowest in two years. Retail sales rose 2.9% yoy, above expectation of 2.6% yoy.

Bitcoin has kicked-off the week on the front foot, dragging most major altcoins higher and catching up with the stock markets’ latest rally, despite the recent decoupling between digital assets and the major US indices. Nevertheless, the king of cryptocurrencies had an extended record-breaking losing streak, recording nine consecutive weekly losses, while it is currently trading more than 50% beneath its all-time high. Therefore, even if some positive signs have emerged after the bulls managed to recapture the $30,000 psychological level, the road back to complete recovery appears to be long and bumpy.

Inflation remains the name of the game

Last Friday, the April US PCE inflation reading hit the markets, with the annual figure falling from 6.6% to 6.3% in line with analysts’ projections. This development reinforced the view that inflationary pressures have likely peaked in the US, which in turn boosted investors' bets that the Fed might eventually slow down its monetary tightening, paving the way for the recent relief rally in stock markets. Nonetheless, Bitcoin and the broader crypto space continued to head down, exhibiting signs that their strong positive correlation with equity markets has broken up.

Unexpectedly, at the beginning of this week, most major crypto assets have been edging higher, mirroring the stocks’ recent rebound and indicating that their positive relation has partially returned.

Barrage of positive developments

The recent relief rally in equity markets has entrained cryptocurrencies higher, but it is not the sole factor. Firstly, China’s easing of Covid-19-related curbs has eased investors’ fears over a potential recession, increasing their appetite for risky assets. Moreover, the broader crypto space is getting a boost from the recent weakness observed in the US dollar, which is heading towards its first monthly loss in five months as markets project a shallower monetary path for the Fed.

Can the price break above its sideways pattern?

Bitcoin price has been trading within a tight range during the past two weeks, with investors scrutinizing the current complex market conditions, and appearing to be on hold for fresh catalysts that could provide strong directional impetus.

In the positive scenario, bullish actions could send the price to test the recent peak of $31,570 before the attention shifts to the $34,450 barrier.

On the flipside, should selling interest intensify, Bitcoin’s price may descend towards $28,000, which is the lower boundary of its recent rangebound pattern. A violation of the latter could set the stage for the 2022 low of $25,390.

Overall, even though a raft of tailwinds has emerged for cryptocurrencies, their future is closely tied to the pace and magnitude of central banks’ monetary tightening. Therefore, in the upcoming week, the Eurozone CPI print may be a substantial driver for investors’ risk tolerance as it could provide insights into how hard the ECB will slam the brakes on the Eurozone economy.

• GBPCAD reversed from resistance level 1.6175
• Likely to fall to support level 1.5950

GBPCAD recently reversed down from the key resistance level 1.6175 (top of the earlier minor correction from the start of May).

The resistance area near the resistance level 1.6175 was further strengthened by the upper daily Bollinger Band and by the 61.8% Fibonacci correction of the downward impulse from April.

Given the strong downtrend, GBPCAD can be expected to fall further toward the next support level 1.5950 (low of the earlier minor correction wave (b)).