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Daily Pivots: (S1) 0.7522; (P) 0.7592; (R1) 0.7647; More...

AUD/USD retreated after hitting 0.7660 and intraday bias is turned neutral first. Some consolidation could be seen but outlook will stay bullish as long a s0.7455 support holds. As noted before, whole corrective decline from 0.8006 should have completed at 0.6966 already. Break of 0.7660 will resume the rise from 0.6966 to retest 0.8006 high.

In the bigger picture, correction from 0.8006 could have completed at 0.6966, after drawing support from 0.6991. That is, up trend from 0.5506 (2020 low) might be ready to resume. Firm break of 0.8006 will target 61.8% projection of 0.5506 to 0.8006 from 0.6966 at 0.8511 next. This will remain the favored case as long as 0.7164 support holds.

Daily Pivots: (S1) 1.2427; (P) 1.2462; (R1) 1.2522; More...

USD/CAD dipped to 1.2401 but quickly recovered. Intraday bias remains neutral first. Further decline is expected with 1.2591 resistance intact. As noted before, corrective pattern from 1.2005 could have completed already. Break of 1.2401 will target 1.2286 support and then 1.2005 low. On the upside, nevertheless, break of 1.2591 resistance will turn bias back to the upside for 1.2899 resistance instead.

In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend from 1.4667 and that carries larger bearish implications too.

Daily Pivots: (S1) 1.0874; (P) 1.0932 (R1) 1.0963; More...

EUR/USD's break of 1.0943 support suggests that corrective rebound from 1.0805 has completed at 1.1184 already. Intraday bias is back on the downside for 1.0805 low. Firm break there will resume larger down trend from 1.2248. Next target is 61.8% projection of 1.1494 to 1.0805 from 1.1184 at 1.0758, and then 100% projection at 1.0495. On the upside, above 1.0987 minor resistance will mix up the outlook and turn intraday bias neutral again.

In the bigger picture, the decline from 1.2348 (2021 high) is expected to continue as long as 1.1494 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 1.1494 will maintain medium term neutral outlook, and extending term range trading first.

Daily Pivots: (S1) 1.3037; (P) 1.3102; (R1) 1.3137; More...

GBP/USD is staying in range of 1.2999/3297 and intraday bias remains neutral first. Further decline is mildly in favor with 1.3297 resistance intact. On the downside, firm break of 1.2999 will resume larger down trend from 1.4248. However, firm break of 1.3297 will turn bias back to the upside for stronger rebound.

In the bigger picture, current development suggests that the up trend from 1.1409 (2020 low) has completed at 1.4248. 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 1.3748 resistance is needed to indicate medium term bottoming, or outlook will stay bearish.

Daily Pivots: (S1) 0.9256; (P) 0.9277; (R1) 0.9316; More....

Intraday bias in USD/CHF remains neutral for the moment. With 0.9380 resistance intact, further decline cannot be ruled out. On the downside, below 0.9193 will resume the decline from 0.9459 to 0.9149 support. Firm break there will turn near term outlook bearish for 0.9090 support and below. On the upside, above 0.9380 resistance will revive near term bullishness, and flip bias back to the upside for 0.9459 resistance instead.

In the bigger picture, medium term outlook will be neutral at best as long as 0.9471 resistance holds. Larger down trend could still extend through 0.8756 (2021 low). However, firm break of 0.9471 will argue that whole down trend form 1.0342 (2016 high), has completed with waves down to 0.8756. A medium term up trend should be set up to target 1.0237/0342 resistance zone.

Daily Pivots: (S1) 122.38; (P) 122.66; (R1) 123.06; More...

USD/JPY's rebound from 121.27 continues today but stays below 125.09 high. Intraday bias remains neutral first and more consolidation could still be seen. But outlook remains bullish with 121.17 support intact and further rise is expected. On the upside, break of 125.09 will target 125.85 long term resistance. Firm break pave the way to 130.04 long term projection level. However, break of 121.17 will turn bias back to the downside for deeper pull back.

In the bigger picture, up trend from 98.97 (2016 low) in in progress for retesting 125.85 (2015 high). Sustained break there will confirm long term up trend resumption. Next target will be 61.8% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 130.04. This will now remain the favored case as long as 116.34 resistance turned support holds.

Dollar trades broadly higher overnight together with treasury yields on hawkish comments from Fed officials. The green back remains firm in Asian session today. Though, Aussie remains the strongest one for the week so far, followed by Kiwi. Euro is the worst performing one, followed by Yen and then Swiss Franc.

Technically, EUR/USD's break of 1.0943 support argues that rebound from 1.0805 has completed at 1.1184 as a correction. Larger down trend from 1.2348 might be resuming through 1.0805. At the same time, attention will be on both USD/JPY and EUR/GBP. Break of 125.09 in USD/JPY will affirm the underlying strength in Dollar, as well as benchmark yield too. On the other hand, break of 0.8924 in EUR/GBP will solidify Euro's weakness, and bring retest of 0.8201 low. But of course, both could happen at the same time.

In Asia, at the time of writing, Nikkei is down -1.63%. Hong Kong HSI is down -1.52%. China Shanghai SSE is down -0.29%. Singapore Strait Times is down -0.49%. Japan 10-year JGB yield is up 0.0217 at 0.233. Overnight, DOW dropped -0.80%. S&P 500 dropped -1.26%. NASDAQ dropped 2.26%. 10-year yield rose 0.144 to 0.2556.

US 10-yr yield breaks 2.5 again as up trend resumes

US 10-year yield resumed recent up trend after hawkish comments from Fed officials, and closed up 0.144 at 2.556. It should be emphasized again that TNX is now facing multi-decade channel resistance, at around 2.6. Rejection by this channel resistance, followed by break of 2.311 support will bring deeper correction, before making the next move.

However, sustained break of the channel resistance will mark the the change of a very long term trend. Further break of 100% projection of 0.398 to 1.765 from 1.343 at 2.710 could trigger rather fierce upside acceleration through 3.248 structural resistance (2018 high).

Brainard: Fed to continue tightening methodically through series of hikes and balance sheet reduction

Fed Governor Lael Brainard said in a speech that FOMC will "continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting."

"Given that the recovery has been considerably stronger and faster than in the previous cycle, I expect the balance sheet to shrink considerably more rapidly than in the previous recovery, with significantly larger caps and a much shorter period to phase in the maximum caps compared with 2017–19," she added.

"I expect the combined effect of rate increases and balance sheet reduction to bring the stance of policy to a more neutral position later this year, with the full extent of additional tightening over time dependent on how the outlook for inflation and employment evolves," she said.

Fed George: We might have to go above neutral to bring inflation down

Kansas City Fed President Esther George told Bloomberg that "50 basis points is going to be an option that we will have to consider, along with other things" at the May FOMC meeting.

"We have to be very deliberate and intentional as we remove this accommodation. I am very focused on thinking about how the balance sheet moves in conjunction with policy-rate increases," she added.

"I think if you just look at where we are today, you might say we will have to go above neutral to bring inflation down," George said. "But there is a long time between now and the end of the year to see how the economy unfolds."

ECB Lane: Inflation may peak by mid then than decline in H2

ECB Chief Economist Philip Lane said in an interview with Antenna TV, there are three concerns about the Russian invasion of Ukraine, from view point of the economy, including energy, trade and uncertainty. "The war is a major negative economic issue, but the reopening of the economy gives some momentum. So this year, for example, we should expect the tourist season to be better than last year," he said.

Lane expected that inflation might peak by "mid-year" but that depends on the war. "Most likely, with the nature of the energy shock, prices will either level off at these high prices or will start to decline", he added. "But the momentum of inflation will slow down, so we do think that in the second half to the year, as you say, the inflation rate will come down."

He also emphasized, "unlike the 1970s, these are a few months of high inflation rates. It is not a decade of high inflation rates, and we do think the inflation will fall later this year. So please remember: this inflation is coming from outside, it is not coming from the European economy. This is why we do think it has this special characteristic."

China PMI composite dropped to 43.9, downward pressure aggravated by several factors

China Caixin PMI Services dropped sharply from 50.2 to 42.0 in March, much worse than expectation of 49.9. That's also the worst reading since February 2020. PMI Composite dropped from 50.1 to 43.9, also the worst since February 2020.

Wang Zhe, Senior Economist at Caixin Insight Group said: "At present, China is facing the most severe wave of outbreaks since the beginning of 2020. Uncertainty also increased abroad. The outcome of the war between Russia and Ukraine is uncertain, and the commodity market has convulsed. Several factors have aggravated the downward pressure on China's economy and underscore the risk of stagflation."

Looking ahead

Germany factory orders, Eurozone PPI and UK PMI construction will be released in European session. Later in the day, Canada will release Ivey PMI. US will publish FOMC minutes.

USD/JPY Daily Outlook

Daily Pivots: (S1) 122.38; (P) 122.66; (R1) 123.06; More...

USD/JPY's rebound from 121.27 continues today but stays below 125.09 high. Intraday bias remains neutral first and more consolidation could still be seen. But outlook remains bullish with 121.17 support intact and further rise is expected. On the upside, break of 125.09 will target 125.85 long term resistance. Firm break pave the way to 130.04 long term projection level. However, break of 121.17 will turn bias back to the downside for deeper pull back.

In the bigger picture, up trend from 98.97 (2016 low) in in progress for retesting 125.85 (2015 high). Sustained break there will confirm long term up trend resumption. Next target will be 61.8% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 130.04. This will now remain the favored case as long as 116.34 resistance turned support holds.

Economic Indicators Update

US 10-year yield resumed recent up trend after hawkish comments from Fed officials, and closed up 0.144 at 2.556. It should be emphasized again that TNX is now facing multi-decade channel resistance, at around 2.6. Rejection by this channel resistance, followed by break of 2.311 support will bring deeper correction, before making the next move.

However, sustained break of the channel resistance will mark the the change of a very long term trend. Further break of 100% projection of 0.398 to 1.765 from 1.343 at 2.710 could trigger rather fierce upside acceleration through 3.248 structural resistance (2018 high).

China Caixin PMI Services dropped sharply from 50.2 to 42.0 in March, much worse than expectation of 49.9. That's also the worst reading since February 2020. PMI Composite dropped from 50.1 to 43.9, also the worst since February 2020.

Wang Zhe, Senior Economist at Caixin Insight Group said: "At present, China is facing the most severe wave of outbreaks since the beginning of 2020. Uncertainty also increased abroad. The outcome of the war between Russia and Ukraine is uncertain, and the commodity market has convulsed. Several factors have aggravated the downward pressure on China's economy and underscore the risk of stagflation."

Full release here.

ECB Chief Economist Philip Lane said in an interview with Antenna TV, there are three concerns about the Russian invasion of Ukraine, from view point of the economy, including energy, trade and uncertainty. "The war is a major negative economic issue, but the reopening of the economy gives some momentum. So this year, for example, we should expect the tourist season to be better than last year," he said.

Lane expected that inflation might peak by "mid-year" but that depends on the war. "Most likely, with the nature of the energy shock, prices will either level off at these high prices or will start to decline", he added. "But the momentum of inflation will slow down, so we do think that in the second half to the year, as you say, the inflation rate will come down."

He also emphasized, "unlike the 1970s, these are a few months of high inflation rates. It is not a decade of high inflation rates, and we do think the inflation will fall later this year. So please remember: this inflation is coming from outside, it is not coming from the European economy. This is why we do think it has this special characteristic."

Full interview here.