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Daily Pivots: (S1) 215.16; (P) 215.54; (R1) 216.15; More...

Intraday bias in GBP/JPY stays neutral and more consolidations could be seen. Further rise is expected as long as 213.94 r support holds. On the upside, firm break of 216.04 will resume larger up trend to 61.8% projection of 199.04 to 214.98 from 209.58 at 219.43.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Firm break of 214.98 will target 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. This will remain the favored case as long as 55 W EMA (now at 205.25) holds, even in case of another deep pullback.

Daily Pivots: (S1) 186.33; (P) 186.70; (R1) 187.33; More...

No change in EUR/JPY's outlook as consolidation from 187.93 is extending. Intraday bias stays neutral. Strong support is expected from 38.2% retracement of 182.56 to 187.93 at 185.87 to bring rebound. On the upside, firm break of 187.93 will resume larger up trend. However, further break of 185.87 will bring deeper fall to 184.75 resistance turned support instead.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Next target is 78.6% projection of 124.37 (2022 low) to 175.41 (2025 high) from 154.77 at 194.88 next. For now, medium term outlook will stay bullish as long as 180.78 support holds, even in case of deeper pullback.

Daily Pivots: (S1) 0.8652; (P) 0.8667; (R1) 0.8679; More…

Range trading continues in EUR/GBP and intraday bias stays neutral. Further fall is expected with 0.8685 support turned resistance intact. On the downside, below 0.8652 will resume the fall from 0.8740 to retest 0.8610 support next. Nevertheless, firm break of 0.8685 will dampen the bearish view and turn bias back to the upside for 0.8740 again.

In the bigger picture, strong support was seen again from 38.2% retracement of 0.8821 to 0.8863 at 0.8618. Break of 0.8788 resistance will argue that larger rise from 0.8221 might be ready to resume through 0.8863 (2025 high). Nevertheless, sustained trading below 0.8618 should confirm bearish reversal, and bring deeper fall to 61.8% retracement at 0.8466 at least.

Daily Pivots: (S1) 1.6284; (P) 1.6314; (R1) 1.6340; More...

Despite loss of downside momentum as seen in 4H MACD, further fall is expected in EUR/AUD with 1.6418 resistance intact. Retest of 1.6126 low should be seen next. Firm break there will resume larger down trend from 1.8554. However, firm break of 1.6418 will indicate short term bottoming, and turn bias back to the upside for stronger rebound instead.

In the bigger picture, fall from 1.8554 (2025 high) is in progress and deeper decline should be seen to 61.8% retracement of 1.4281 to 1.8554 at 1.5913, which is slightly below 1.5963 structural support. Decisive break there will pave the way back to 1.4281 (2022 low). For now, risk will stay on the downside as long as 55 W EMA (now at 1.7129) holds, even in case of strong rebound.

Daily Pivots: (S1) 0.9211; (P) 0.9231; (R1) 0.9266; More....

While EUR/CHF's rebound was strong, it's still capped below 0.9264 resistance. Intraday bias remains neutral and more consolidations could be seen. But still, further rise is expected with 0.9155 support intact. On the upside, firm break of 0.9264 will resume the rise from 0.8979 to 0.9394 resistance next. However, break of 0.9155 will turn bias back to the downside for deeper pullback.

In the bigger picture, considering bullish convergence condition in W MACD, a medium term bottom should be in place at 0.8979. Sustained trading above 55 W EMA (now at 0.9277) will add more credence to this case. Further break of 0.9394 resistance will pave the way to 0.9660 resistance next. However rejection by the 55 W EMA will set up another fall through 0.8979 low at a later stage.

Markets

Core bond yields yesterday staged a further (forceful) bear steepening heading into the Fed, BoC, BoE and ECB policy meetings scheduled today and tomorrow. Markets are growing ever more convinced that a prolonged stalemate in the US-Iran conflict, including blockage of the Strait of Hormuz, will inevitably have lasting consequences for multiple supply chains. Most recent communication from the parties involved suggests that both of them consider themselves to be in a position not to be forced into concessions. In this respect, the WSJ reported that US President Trump told aides to prepare for an extended blockade of Hormuz. Brent oil ‘settles’ north of $110/b. The UAE announcing to leave the OPEC cartel didn’t help much. Turning to Europe, the ECB’s consumer expectations survey (March) showed citizens preparing/fearing a new, sharp and extended rise in global price levels. Inflation expectations for the next 12 months jumped from 2.5% to 4%. Three year ahead expectations also rose way more than expected to 3%. Combined with a strong stagflation message from last week’s PMI’s, this for sure won’t pass unnoticed at the ECB as it prepares the communication on its reaction function at tomorrow’s policy meeting. German yields added between 7.8 bps (2-y) and 1.2 bps (30-y). Consecutive steps in June (100%) and July (75%) are now seen as highly likely as is a third one by year-end. The ‘extreme’ positioning of end March/early April is again within reach. US pricing again was more modest with the 2-y adding 3.9 bps and the 30-y ceding 1.2 bps. The BoE is also under pressure to give a clear anti-inflationary commitment with the 10-y gilt yield surpassing 5%. The direct spill-over to other markets again was modest/orderly. Equities in the US lost up to 0.9% (Nasdaq). The Eurostoxx 50 ceded 0.41%.The dollar also profited only modestly from the oil ascent (DXY 98.64; EUR/USD 1.171). The yen underperformed as the BoJ failed to give a hard commitment on further policy normalization (USD/JPY 159.6).

Despite the turbulent global context, the Fed is widely expected to stick to a (modestly hawkish) hold today. Labour market and other US activity data over the previous six weeks were strong enough for the Fed to reconfirm that they can hold the policy rate at a tentatively restrictive level for some time to come. The main focus at the press conference probably will go to whether Powell will stay in the FOMC after his term as Fed chair ends mid-May. In Europe, the focus will stay on the next batch of (April) national inflation data (Spain, Germany, Belgium) as the impact of the conflict in the Middle East is filtering through to end prices. Even if this pass-through to official CPI data might be a bit different/delayed across individual countries, the trend probably won’t provide much comfort for ECB policymakers. We assume little market correction on the recent rebound in (European) yields as long as the stalemate in the Middle East persists and oil holds near current (or higher) levels. For (US) equities, Q1 earnings from bellwethers (Alphabet, Microsoft, Meta Platforms and Amazon) should ‘justify’ the recent tech rally.

News & Views

Australian CPI in Q1 accelerated to a consensus-matching 1.4% Q/Q and 4.1% Y/Y well above the RBA 2-3% target band. Core measures came in close to expectations, varying between 3.3% and 3.5%. The monthly March print showed a material quickening to 1.1% m/m (flat in Febr) reflecting the initial energy impact of the Iran war. The quarterly print, however, was only slightly higher than the RBA’s February projection, prior to the Middle East conflict. While much of the impact is probably yet to come, markets were bracing for a bigger inflationary shock already. It’s causing a bull steepening move in the Australian swap yield curve with changes amounting to up to -11 bps at the front end. The market implied probability for a third consecutive rate hike in May fell from around 80% to less than 70%. AUD/USD is trading around 0.716 compared to the multiyear highs of 0.72 in the days before.

Hungary’s incoming prime minister Magyar and the European Commission are negotiating to salvage some €10bn in pandemic funding that would otherwise be lost beyond an August deadline. The money is part of a total of more than €20bn in frozen resources over rule of law concerns during the Orban administration. Hungary would need to implement a slew of anti-corruption measures and judicial independence in order to regain access. That can happen fairly quickly because of Tisza’s supermajority. But for the €10bn in focus, the country also needs to present shovel-ready projects in a rewritten Recovery and Resilience Plan to claim the money. The remaining three months to do so is very tight. Some of the options being discussed include bringing forward projects currently allocated to other European programs with more distant expiry dates, Bloomberg reported citing an official, or use some of the available funds to increase the capital of its state investment bank, similar to what for example Spain has done. Those steps would salvage the funding while letting it be spent over a longer period of time.

Daily Pivots: (S1) 1.1684; (P) 1.1706; (R1) 1.1735; More….

Intraday bias in EUR/USD remains neutral for the moment. Further rally is expected with 1.1662 support intact. On the upside, sustained trading above 61.8% retracement of 1.2081 to 1.1408 at 1.1824 will pave the way to retest 1.2081 high. However, firm break of 1.1662 support will indicate the the rebound from 1.1408 has completed, and bring deeper decline back towards this low instead.

In the bigger picture, the strong support from 38.2% retracement of 1.0176 to 1.2081 at 1.1353 suggests that the pullback from 1.2081 is more likely a corrective move. Strong support was also found in 55 W EMA (now at 1.1530). Focus is back on 1.2 key cluster resistance level. Decisive break there will carry long term bullish implications. Nevertheless, break of 1.1408 support will revive the case of medium term bearish trend reversal.

Daily Pivots: (S1) 159.12; (P) 159.45; (R1) 159.95; More...

Intraday bias in USD/JPY remains neutral as consolidation continues below 160.45. Further rise is expected with 157.49 cluster support (38.2% retracement of 152.25 to 160.45 at 157.31) intact. On the upside break of 160.45 will target a retest on 161.94 high. However, firm break of 157.31/49 will bring deeper fall back to 61.8% retracement at 155.38 next.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 153.81) holds. Firm break of 161.94 will pave the way to 61.8% projection of 102.58 to 161.94 from 139.87 at 176.75.

Daily Pivots: (S1) 1.3472; (P) 1.3509; (R1) 1.3556; More...

Range trading continues in GBP/USD and intraday bias stays neutral. Further rise is still in favor with 1.3446 support intact. On the upside, firm break of 61.8% retracement of 1.3867 to 1.3158 at 1.3596 will pave the way to retest 1.3867 high. However, break of 1.3446 will turn bias back to the downside for deeper pullback.

In the bigger picture, current development suggests that price actions from 1.3867 are merely a corrective pattern within the broader up trend from 1.0351 (2022 low). With 1.3008 support intact, medium term bullishness is maintained and break of 1.3867 is back in favor for a later stage, towards 1.4248 key resistance (2021 high).

Daily Pivots: (S1) 0.7853; (P) 0.7883; (R1) 0.7923; More….

Intraday bias in USD/CHF stays neutral for the moment. On the downside, below 0.7830 will turn bias to the downside for 0.7774 support. Sustained break of 61.8% retracement of 0.7603 to 0.8041 at 0.7770 will pave the way to retest 0.7603 low. However, decisive break of 0.7933 will argue that fall from 0.8041 has completed as a corrective move. Further rise should then be seen through 0.8041 to resume the whole rebound from 0.7603.

In the bigger picture, rebound from 0.7603 medium term bottom is seen as correcting the fall from 0.9200 only. Rejection by 55 W EMA (now at 0.8053) will affirm this bearish case, and setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage. Though, sustained break of 55 W EMA will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high).