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The euro struggles as the eurozone’s growth prospect dampens. The pair remains under pressure after it broke below a short-lived congestion area around 1.0770.

A bearish breakout below March 2020’s lows near 1.0650 (a major demand zone) could send the single currency to 1.0580. In the meantime, the RSI’s double-dip in the oversold territory may trigger a buy-the-dips behavior.

1.0750 is a fresh resistance and its breach could alleviate the selling pressure. The bulls must clear 1.0840 before they could regain control.

Market movers today

The data calendar is dominated by tier-2 releases today. In the US we get data on the trade balance and pending home sales.

France and Germany release consumer confidence this morning. Both indices dropped sharply last month and we have seen similar indices in European countries plummet further in recent weeks.

In Sweden we get PPI inflation, trade balance and unemployment.

Focus will also be on Russian gas deliveries after Russia yesterday said it would halt flows to Poland

The 60 second overview

Russian energy supplies: Both Poland and Bulgaria face a cut-off from Russian energy supplies today as they have reached the Russian deadline for shifting into RUB-based payments for Russian energy. The EU has refused Russian payment demands, yet in recent weeks there has been optimism as to the potential for an EU-Russia compromise. A cut-off of Russian energy to two EU member states marks a significant escalation in the ongoing energy crisis. It further highlights the vulnerability of other EU-members like Germany as they risk similar cut-offs soon. Also the Russian decision to stop energy supplies make a European energy embargo a less potent negotiation tool and threat.

European gas prices: On the back of the escalating outlook for less - and potentially no - Russian gas supplies to the EU, European gas prices have spiked higher although yesterday's afternoon surge of 20% was later cut in half. Brent crude oil prices moved above USD 105/bbl. Next to COVID-19, higher energy prices act as another negative supply shock to the global economy and significantly pressure not least the European economic recovery. European assets have visibly suffered from the negative terms of trade shock in recent months and the single currency has hit new lows.

Central banks: The combination of higher energy prices and a weaker growth outlook put central banks in a tough spot. Yet with inflation spiking above most inflation targets and inflation expectations moving to decade highs in many countries most central banks have clearly indicated forthcoming tightening of monetary policy. Overnight Australian inflation surprised to the topside adding pressure on the Reserve Bank of Australia to hike policy rates for the first time this cycle at the next policy meeting on Tuesday. While markets have reduced expectations for Fed policy rate hikes in recent sessions amid the sell-off in risky assets, rates pricing still embed more than 230bp worth of additional tightening by the end of this year.

Equities: Global equities down 2% yesterday and down 5% in the last 5 trading days. Drops (again) yesterday driven by the cyclical growth stocks while Min Vol and value showing massive outperformance. Tech and consumer discretionary the two biggest loser and earnings reports yesterday did not make things better. Tech normally one of the sectors with the highest surprise factor but so far after 30% reported it's ranked as the third lowest. Yesterday in US, Dow -2.4%, S&P 500 -2.8%, Nasdaq -3.9%(down 20 YTD) and Russell 2000 -3.3%.

Markets in Asia this morning looking somewhat better with Chinese stocks slightly higher while most other markets lower. European futures slightly lower while US once slightly higher.

FX: JPY rebounded further and USD continued to climb higher yesterday. DXY has moved close to 2016 and 2020 peaks now. In the other end of the scale Scandies and GBP lost out. EUR/USD slid towards 1.06 level. The rise in USD/CNH came to a halt yesterday with the pair lingering close to 6.60 level.

Credit: Yesterday the credit markets started the day on a positive footing amid an overweight in better than expected Q1 earnings results. During the day, though, focus on geopolitics, higher rates and Chinese uncertainty crept back into the front of investors' minds. Subsequently iTraxx main ended the day some 3.3bp wider and Xover 11.4bp wider. These indices ended the day in 87.6bp and 410.0bp respectively.

Daily Pivots: (S1) 158.77; (P) 161.19; (R1) 162.41; More...

GBP/JPY's fall from 168.40 is still in progress and could extend to 61.8% retracement of 150.95 to 168.40 at 157.61. Strong support is expected there to contain downside to bring rebound. On the upside, break of 163.57 minor resistance will turn bias back to the upside for retesting 168.40 high. However, firm break of 157.61 will bring deeper fall to 150.96 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.

Daily Pivots: (S1) 134.63; (P) 136.08; (R1) 136.82; More....

EUR/JPY's pull back from 139.99 is still in progress and deeper fall could be seen to 38.2% retracement of 124.37 to 139.99 at 134.02. Downside should be contained there to bring rebound. On the upside, above 137.52 minor resistance will bring retest of 139.99 resistance first. However, firm break of 134.02 will bring deeper decline to 61.8% retracement at 130.33.

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) 0.8414; (P) 0.8439; (R1) 0.8484; More...

EUR/GBP's rise from 0.8248 resumes after brief retreat and intraday bias is back on the upside. Current rally should target 0.8511 resistance first. Further break of 0.8511 will reaffirm that 0.8201 is a medium term bottom, and target 0.8697 medium term fibonacci level next. On the downside, below 0.8391 minor support will mix up the outlook and turn bias neutral again.

In the bigger picture, a medium term bottom could be in place at 0.8201, on bullish convergence condition in daily and weekly MACD. Rise from there could either be a correction to the down trend from 0.9499 (2020 high), or a medium term up trend itself. In either case, further rise should be seen to 38.2% retracement of 0.9499 to 0.8201 at 0.8697. Sustained break there will target 61.8% retracement at 0.9003.

Daily Pivots: (S1) 1.4849; (P) 1.4897; (R1) 1.4981; More...

Intraday bias in EUR/AUD remains neutral for the moment. Another rise is still mildly in favor 1.4687 support intact. On the upside, break of 1.5053 will target 61.8% retracement of 1.6223 to 1.4318 at 1.5495. On the downside, below 1.4687 minor support will turn bias back to the downside for retesting 1.4318 instead.

In the bigger picture, fall from 1.9799 is seen as a long term impulsive move. Next target is 61.8% projection of 1.9799 to 1.5250 from 1.6434 at 1.3623, which is close to 1.3624 long term support (2017 low). Some support could be seen there to bring interim rebound. But overall, break of 1.5354 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of recovery.

Daily Pivots: (S1) 1.0204; (P) 1.0247; (R1) 1.0283; More....

Intraday bias in EUR/CHF is mildly on the downside for the moment. Corrective pattern from 1.0400 is extending with another falling leg. Deeper decline could be seen to 1.0086 support. On the upside, though, break of 1.0400 resistance will resume the rebound from 0.9970 to 1.0610 structural resistance instead.

In the bigger picture, long term down trend from 1.2004 (2018 high) is still in progress. Next target is 100% projection of 1.2004 to 1.0505 to 1.1149 at 0.9650. In any case, sustained break of 1.0505 support turned resistance (2020 low) is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish.

Germany Gfk consumer sentiment for May dropped significantly from -15.7 to -26.5, well below expectation of -15.7. That's the second month of decline, as well as a new historic low.

Looking at some details for April, economic expectations plunged from -8.9 to -16.4. Income expectations dropped from -22.1 to -31.3. Propensity to buy dropped from -2.1 to -10.6.

"The war in Ukraine and rates of high inflation have dealt a severe blow to consumer sentiment. This means that hopes of a recovery from the easing of pandemic-related restrictions have finally been dashed," explains Rolf Bürkl, GfK consumer expert.

Full release here.

Daily Pivots: (S1) 1.0602; (P) 1.0671 (R1) 1.0705; More...

EUR/USD's decline is still in progress and intraday bias stays on the downside for 100% projection of 1.1494 to 1.0805 from 1.1184 at 1.0495. Firm break there will pave the way to 161.8% projection at 1.0069. On the upside, above 1.0756 minor resistance will turn intraday bias neutral first. But outlook will stay bearish as long as 1.0935 resistance holds, in case of recovery.

In the bigger picture, the decline from 1.2348 (2021 high) is expected to continue as long as 1.1185 support turned resistance holds. Firm break of 1.0635 (2020 low) will raise the chance of long term down trend resumption and target a retest on 1.0339 (2017 low) next. Nevertheless, break of 1.1185 will maintain medium term neutral outlook, and extending term range trading first.

Daily Pivots: (S1) 1.2507; (P) 1.2639; (R1) 1.2708; More...

Intraday bias in GBP/USD remains on the downside as down trend continues. Next target is 161.8% projection of 1.3641 to 1.2999 from 1.3297 at 1.2258. On the upside, above 1.2771 minor resistance will turn intraday bias neutral and bring consolidation first, before staging another decline.

In the bigger picture, rise from 1.1409 (2020 low) has completed at 1.4248, ahead 1.4376 long term resistance (2018 high). Decline from 1.4248 could still be a corrective move, or it could be the start of a long term down trend. In either case, deeper decline would be seen back to 61.8% retracement of 2.1161 to 1.1409 at 1.2493. In any case, break of 1.3158 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.