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Daily Pivots: (S1) 0.8341; (P) 0.8371; (R1) 0.8419; More...

EUR/GBP's rise from 0.8201 resumed by breaking through 0.8456 and intraday bias is back on the upside. Sustained break of 0.8476 resistance will indicate medium term bottom at 0.8201. Near term outlook will be turn bullish for 0.8697 fibonacci level next. . On the downside, below 0.8398 minor support will turn intraday bias neutral again first.

In the bigger picture, the down trend from 0.9499 is expected to continue as long as 0.8476 resistance holds. Sustained trading below 0.8276 support will argue that the whole up trend from 0.6935 (2015 low) has reversed. Deeper fall should be seen to 61.8% retracement of 0.6935 to 0.9499 at 0.7917 next. However, firm break of 0.8476 will indicate medium term bottoming at least, on bullish convergence condition in daily and weekly MACD. Stronger rally would be seen back to 38.2% retracement of 0.9499 to 0.8201 at 0.8697.

Daily Pivots: (S1) 1.4567; (P) 1.4632; (R1) 1.4729; More...

EUR/AUD's break of 1.4804 minor resistance argues that fall from 1.5327 is completed at 1.4533 already. Intraday bias is back on the upside for 1.5327 resistance. For now, such rise is seen as the third leg of the corrective pattern from 1.4561. As long as 1.5327 resistance holds, larger down trend is still expected to continue through 1.4533 at a later stage.

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.

Gold dives sharply on some progress in the negotiation between Russia and Ukraine. It's report that Ukrainian negotiators proposed a status under which it would not join alliances or host bases of foreign troops. Russia also promised to drastically scale down its military operations around Kyiv and the northern Ukrainian city of Chernihiv.

Gold's break of 1894.77 support indicate resumption of the fall from 2070.06. Deeper decline should be seen to 61.8% projection of 2070.06 to 1894.77 from 1966.00 at 1857.67, and then 100% projection of 1790.71. Also, such fall is seen as the third leg of the correction pattern from 2074.84, and could head to 1682.60 support before completion.

WTI crude oil's break of 109.03 support earlier this week argues that rebound from 93.98 has completed at 118.57 already. Fall from there is seen as the third leg of the corrective pattern from 131.82. Deeper decline would be seen back to 93.98, and possibly below. But still, firm break of 85.92 resistance turned support is needed to indicate trend reversal. Otherwise, medium term outlook is just neutral for range trading.

ECB Governing Council member Robert Holzmann said, "an increase to the deposit rate to zero by the end of the year would be important for monetary policy because it increases optionality."

"If, towards the end of the year, we were to find that inflation will remain higher for longer, we would have to tighten monetary policy more and raise interest rates more significantly," he added.

ECB Chief Economic Philip Lane said in an interview, "right now, clearly inflation is a huge issue across Europe, absolutely." But he added, "this essentially is an imported inflation shock, it's a supply shock... we would still maintain ... most of this inflation will fade away".

"We do think that inflation will decline later this year and will be a lot lower next year and the year after compared to this year," he added.

"There are mixed signals coming through... some indices are showing upside concern for energy prices and other indices are showing downside concern for activity levels through the sentiment channel."

"In March we had an inflation outlook which was getting close to 2 per cent. If that outlook is maintained, we will be looking to end net purchases in the third quarter. If it weakens, or if financing conditions deteriorate, that would be inconsistent with delivering that action. Then we would have to think again," Lane added.

Full interview here.

Stock markets across Europe are rallying on Tuesday, buoyed by positive noises coming from Turkey where Ukraine and Russia may be nearing a ceasefire agreement.

While there are reportedly still plenty of gaps in the demands of the two teams, there appear to have been compromises found on some big issues including Ukraine's previous ambitions of NATO membership. The next couple of days could be crucial but the signs are promising which we're seeing reflected in the markets today.

There has been no shortage of optimism in the markets since the talks began, which has looked premature at times but may now be paying off. Europe is up around 2% and US futures are making small gains also, a reflection of how much more exposed the bloc is to the invasion and the knock-on effects of a prolonged war.

Sanctions have sought to wreak havoc on the Russian economy while shielding oil and gas, which Europe is heavily reliant on, but as the war has intensified, talk of weaponising this mutually dependent relationship has increased. This is still being rejected by those most exposed in Europe but the longer the war rages, the more likely it is that their position will change.

Russian demands to pay for gas in roubles may effectively take both sides down the same path though. The G7 has fiercely rejected Kremlin demands for unfriendly nations to settle in roubles and believe the contracts are in their favour. It's not clear how the Kremlin plans to enforce such a demand but if neither side blinks, it could have massive consequences for all concerned.

BoJ continues to push back against YCC challenges

There remains a massive focus on rising yields and the impact on the US yield curve in particular. Flashing recession signals are the last thing we need right now but some are sounding the alarm as parts of the curve invert. The Fed, as ever, doesn't appear particularly concerned but further inversions may change that at which point a more cautious approach may be considered.

One consequence of global yields (and inflation) rising as aggressively as they have is being seen in Japan, where BoJ's yield curve control policy is being tested. The central bank is buying unlimited bonds at 0.25% in an attempt to protect the cap but with limited success so far.

The yen has come under heavy pressure again as a result of the BoJ purchases, prompting speculation that currency interventions may be warranted due to the risks of rapid depreciation. Or, of course, a tweak to the YCC policy allowing more flexibility as the market pushes back against the current limits. The yen is paring losses today.

Oil higher as political OPEC+ prepares to continue gradual output increases

Oil prices are a little higher today, slightly paring heavy losses on Monday sustained on the back of intensifying lockdowns in China. The country remains committed to its zero-Covid policy which will ultimately weigh on crude demand in the near term. No doubt it comes at a good time given current supply/demand dynamics but we're only talking short-term relief.

Longer-term pressures remain and OPEC+ looks unlikely to do anything to alleviate those this week. The group has repeatedly stated its desire to remain apolitical and base its decisions purely on achieving a balanced market. Given how unbalanced the market is and the fact that at the center of the alliance is the country to blame for the most recent surge in oil prices, it's hard to view a decision to not increase output targets as anything but political.

Gold eases further as risk appetite improves

Gold prices are easing again as risk appetite improves on reported progress in talks between Ukraine and Russia. The yellow metal was in strong demand as Russian troops crossed the border and hope of a ceasefire is seeing that unwind. There will remain a certain amount of support for gold still given the inflationary, geopolitical, and risk environment but we could see it ease a little further in the near term. The next key level for gold will be $1,900 where it saw strong support earlier this month.

Bitcoin pares gains after smashing resistance

Bitcoin is paring gains today after breaking free at the start of the week. It finally broke through $45,500 resistance and it just took off from there, peaking just above $48,000. The outlook is suddenly looking far more promising after a long period of consolidation, with the next tests coming at around $50,000 and $52,000.

Daily Pivots: (S1) 122.26; (P) 123.68; (R1) 125.33; More...

Intraday bias in USD/JPY remains neutral for consolidation below 125.09 temporary top. But downside should be contained by 121.17 minor support to bring another rally. On the upside, above 125.09 will target 161.8% projection of 109.11 to 116.34 from 114.40 at 126.09, which is close to 125.85 long term resistance. However, break of 121.17 will indicate short term topping, and bring 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.

Daily Pivots: (S1) 0.9304; (P) 0.9343; (R1) 0.9385; More....

Intraday bias in USD/CHF remains neutral for the moment. On the upside, break of 0.9374 minor resistance will suggest that the pull back from 0.9459 has completed. Support from 55 day EMA will also retain near term bullishness. Intraday bias will be back on the upside for 0.9459 first. Break will resume the rise from 0.8756 to 61.8% projection of 0.8756 to 0.9471 from 0.9090 at 0.9532. However, sustained break of 55 day EMA (now at 0.9261) will target 0.9149 support.

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) 1.3045; (P) 1.3117; (R1) 1.3168; More...

Intraday bias in GBP/USD is turned neutral with current recovery. Overall outlook stays bearish as long as 1.3297 resistance holds. Break of 1.2999 low will resume larger down trend from 1.4248. However, firm break of 1.3297 will bring strong rebound through 55 day EMA (now at 1.3325) and above.

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.