GBP/USD struggles to hold recent recovery amid Brexit pessimism

  • With likely same Brexit proposal, the UK PM May might not be able to avoid another humiliating defeat in the British parliament voting.
  • However, Irish support might help Mrs. May to gain a hold at home.

Growing probabilities of PM May’s another failure to let her Brexit proposal through the parliament weigh on the recent GBP/USD pullback as it trades near 1.2730 while heading into the London open on Monday. Traders may now concentrate on political development surrounding the UK PM Theresa May’s Brexit proposal as it will soon be up for voting in the British parliament.

The pair initially rose after the BBC reported that the UK PM Theresa May is likely to ask Tory colleagues to sign off some concessions relating to Brexit in order to lure members of the UK parliament (MPs) vote for her Brexit proposal.

There was a bit of a relief for PM May as well when Ireland’s deputy prime minister, Simon Coveney, said that Ireland won’t renegotiate Brexit agreement if Theresa May is replaced as UK prime minister.

PM May will try reaching out many headline UK lawmakers before her Brexit proposal readies for the vote in the parliament for the week starting from June 03. In doing so, Mrs. May could persuade politicians towards any concessions that can be availed to have the Brexit vote successful.

With the little or no major data/events on the economic calendar, except the Federal Reserve Chairman Jerome Powell’s speech at the Financial Markets Conference, in Florida, investors may keep following political headlines to determine near-term market moves.

Technical Analysis

Unless clearing 1.2770 on a daily closing basis, chances of the quote’s decline to 1.2700 can’t be denied. However, oversold condition of 14-day relative strength index (RSI) might question sellers around then, failure to do so can recall January 15 low near 1.2670 and the 1.2600 back on the chart.

If at all prices manage to surpass February low near 1.2770, 1.2800 and April low near 1.2865/70 could please buyers during further upside.

EUR/USD: Focus this week is on Eurozone PMIs

  • The pair may drop to 1.10 if the Eurozone PMIs, due later this week, actuate growth concerns. 
  • German finance ministry expects manufacturing to remain subdued. 
  • On Sunday, ECB’s Knot voiced concerns over weak inflation.

EUR/USD hit a 2.5-week low of 1.1153 in Asia and could drop to the psychological level of 1.10 in the near-term if the Eurozone preliminary PMIs, due this Thursday, miss expectations, accentuating growth concerns.

The news hit the wires last week that the US President Trump is considering delaying the decision on auto imports tariffs by six months.

The EUR, however, failed to pick up a bid and registered losses on each of the previous five trading days. The inability to cheer the tariffs news indicates the concerns about the future economic activity are extremely elevated, as stated by BK Asset Management’s Kathy Lien.

As for today, the shared currency will likely remain on the defensive, as the German finance ministry’s monthly report released over the weekend said the external risks for the economy remain high and so the manufacturing outlook is likely to remain subdued.

Further, European Central Bank (ECB) policymaker Klass Knot one Sunday said that inflation is not at the level the central bank wants it to be and the only thing the bank can do is to keep the pressure up, to make sure the economy performs at high levels of capacity.

The EUR/USD pair, however, may pick up a bid in the North American session if Fed’s Powell, scheduled to speak at 23:00 GMT, sounds dovish, leading to broad-based USD weakness.

Pivot points

    1. R31.1209
    2. R21.1197
    3. R11.1178
  1. PP1.1166
    1. S11.1147
    2. S21.1135
    3. S31.1116

USD/INR technical analysis: INR to cheer exit polls projecting comfortable BJP victory

  • Indian Rupee to gain ground on exit polls showing comfortable win for the ruling party. 
  • Rupee may remain better bid ahead of election results due this Thursday. 

With exit polls of the 2019 Loksabha elections projecting a comfortable win for Bhartiya Janata Party (BJP)-led National Democratic Alliance (NDA), the Indian rupee is seen catching a bid at 9 a.m. local time, leading to a sharp drop in the USD/INR pair.

The Indian rupee may continue to gain altitude in the run up to election results due this Thursday.

The currency pair, however, will likely reverse losses on the last trading day of the week if results reveal a far weaker showing than expected for BJP or a hung parliament.

Technically speaking, the falling wedge breakout confirmed last week is set trap the USD bulls on wrong side of the market. The pair closed last week at 70.348.

Weekly chart

Trend: Bearish

Pivot points

    1. R371.0738
    2. R270.8119
    3. R170.58
  1. PP70.3181
    1. S170.0861
    2. S269.8242
    3. S369.5923

EUR/JPY weaker, tumbles to session lows near 122.40

The selling pressure around EUR drags the cross lower.
The mood around JPY remains bid and adds to the downside.
EMU final April CPI matched preliminary figures. Core CPI ticked higher.
The bid tone around the Japanese safe haven in combination with the pessimism surrounding the single currency is driving EUR/JPY to fresh lows in the 122.40 region.

EUR/JPY looks to trade, risk-trends

The weakness around the cross has been picking up pace as of late against the backdrop of rising fears over the US-China trade dispute plus renewed political effervescence in Italy.

In fact, trade concerns remain steady – to say the least – despite the lack of fresh headlines from the still ongoing negotiations, while recent comments from Lega Nord’s leader M.Salvini have reignited the struggle between Rome and Brussels with fiscal spending and EU rules in the centre of the debate.

In today’s docket, final April inflation figures in Euroland gauged by the CPI matched the preliminary readings, although Core prices ticked higher to 1.3% YoY (from 1.2%).

EUR/JPY relevant levels

At the moment the cross is retreating 0.25% at 122.41 and a breach of 122.08 (low May 15) would aim for 120.54 (monthly low Jan.17 2017) and then 118.82 (2019 low Jan.3 ‘flash crash’). On the other hand, initial resistance aligns at 123.04 (10-day SMA) followed by 123.61 (high May 10) and finally 124.06 (21-day SMA).

GBP/JPY slips below 140.00 handle, lowest since mid-Jan.

• Brexit-related chaos continues to dent sentiment surrounding the British Pound.
• Cautions mood underpins JPY’s safe-haven status and adds to the bearish pressure.

The GBP/JPY cross tumbled to four-month lows during the early European session on Friday, with bears now eyeing a sustained weakness below the key 140.00 psychological mark.

The cross extended its recent bearish trajectory and has now retreated over 650-pips from monthly tops set on May 3 amid persistent selling pressure surrounding the British Pound. The already weaker sentiment deteriorated further after Labour party source said that there is no point doing a deal with a government which is about to collapse.

Meanwhile, the latest comments by the UK opposition leader Corbyn, saying that the Labour will continue to oppose the UK PM Theresa May’s Brexit deal. In his letter to the May, Corbyn confirms Brexit talks have collapsed, which fueled concerns about a no-deal Brexit and continued taking its toll on the British Pound.

It is worth reporting that after failing to get parliament’s approval three times, the government has pledged to bring back the Brexit deal before the parliament for yet another vote in early June.

Adding to this, the prevailing cautions mood, as depicted by a weaker trading sentiment around European equity markets, underpinned the Japanese Yen’s relative safe-haven status and further collaborated to the pair’s heavily offered tone/the ongoing slide to the lowest level since mid-January.

WTI regains $ 63 amid supply risks, eyes on US rigs data, OPEC + meeting

  • Oil supported by supply threats on Middle-East woes, US sanctions on Iran.
  • Focus on US rigs count data, risk sentiment and OPEC + meet for the next direction.

WTI (futures on Comex) stretches its bullish momentum into a fourth day today, now flirting with two-week tops of 63.48, as the sentiment remains underpinned by mounting supply disruption threats fuelled by rising tensions in the Middle East this week.

Moreover, the US sanctions on Iran continue to curb the Iranian crude exports, adding to the tighter global supplies as well as to the upside in the black gold. Furthermore, the ongoing OPEC supply cuts also raise the risks of a supply deficit in the coming months, rendering oil positive.

The concerns over supply disruption continue to overshadow the recent surge in the US crude stockpiles and the US-China trade escalation induced risk-aversion.

Later today, all eyes will remain on the US rigs count data for fresh hints on the US supply-side scenario. The focus also remains on the OPEC + meeting scheduled over this meeting in Jeddah for the next direction in oil prices.

The OPEC + meeting is called on to assess member states’ commitment to the OPEC oil output cut deal and may make a recommendation on whether to extend or adjust the pact.

EUR/USD down it goes, testing 2-week lows near 1.1160

  • The pair’s downside picks up pace, approaches 1.1160.
  • EMU final April CPI rose 1.7% on a yearly basis.
  • Focus remains on trade, Italian politics.

The selling pressure has now gathered steam around the shared currency and dragged EUR/USD to fresh 2-week lows in the boundaries of 1.1160.

EUR/USD vulnerable on trade, Italy

The upside momentum around the greenback stays unabated at the end of the week, lifting the US Dollar Index (DXY) to fresh tops near 98.00 the figure and spot to new multi-day lows.

In the meantime, trade tensions between US and China remains the key driver for the broad risk appetite trends after China announced there is no plans for resuming talks in the near future, particularly after the US blacklisted Chinese telecom giant Huawei.

Additionally, political effervescence in Italy has brought in extra concerns to European policymakers ahead of next week’s EU parliamentary elections and prospects of a bigger presence of populism in the Parliament.

What to look for around EUR

Recent data releases in Euroland and Germany have poured cold water over the idea that some healing process could be under way in the region, re-shifting the focus to the ongoing slowdown and its likely duration and extension. In the meantime, the current ‘neutral/dovish’ stance from the ECBis expected to persist for the reminder of the year and probable H1 2020. The broad-based risk-appetite trends and USD-dynamics are posed to rule the sentiment surrounding the European currency for the time being, all in combination with the onoging US-China trade dispute and potential US tariffs on EU products. On the political front, Italy has re-emerged as a source of uncertainty and volatility, while investors’ focus has now shifted to the EU parliamentary elections next week.

EUR/USD levels to watch

At the moment, the pair is losing 0.04% at 1.1169 and faces the next support at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 2017). On the other hand, a break above 1.1246 (55-day SMA) would target 1.1264 (high May 1) en route to 1.1308 (100-day SMA).

EUR/JPY: Mildly bid in Asia after back-to-back doji candles

Back-to-back doji candles on EUR/JPY’s daily chart show seller exhaustion.
A big move on the higher side, however, may remain elusive, courtesy of trade tensions.
EUR/JPY is attempting gains this Friday morning in Asia amid signs of seller exhaustion on technical charts.

The currency pair is currently trading at 122.86, representing 0.10% gains on the day, having hit a high of 122.97 earlier today.

The minor gains come after back-to-back doji candles created in the previous two trading days. A doji is widely considered a sign of indecision in the marketplace.

In EUR/JPY’s case, however, that candle represents seller exhaustion. After all, it has appeared after a sell-off from 126.68 to 122.00.

The pair, however, may have a tough time capitalizing on bearish exhaustion if trade tensions keep risk assets under pressure. As of writing, the futures on the S&P 500 are lacking a clear direction. The index gained 25 points or 0.89% on Thursday.

The bid tone around the EUR may strengthen in Europe if Eurozone’s final consumer price inflation for April prints above the preliminary estimate of 0.7% month-on-month growth.

AUD/JPY remains quiet near 19-week low due to lack of fresh catalysts

Absence of fresh directives offers rest to the bears.
Overall sentiment remains in favor of sellers due to risk-off moves.
Even after declining to the lowest since early-January, AUD/JPY refrained from extending its downside further as it traders near 75.70 on initial Friday.

The broad Australian Dollar (AUD) weakness on the back of RBA’s rate cut expectations could be considered as an important reason for the quote’s latest decline.

Additionally, the market’s risk on sentiment due to the US-China trade tension and political disturbance between the US and Iran also played its role to please sellers.

However, the downside was capped as the Wall Street remained positive after upbeat data from the US and some positive earnings report.

Global barometer of risk, 10-year treasury yield from the US, recovered nearly 2 basis points (bps) to 2.4% by the Thursday-end whereas losing nearly one bps to 2.39% during the press time.

Considering the lack of fresh catalysts, be it on the economic calendar or at the political front, prices might witness a short covering move unless additional data/news favor further risk aversion.

Technical Analysis

Not only recent low near 75.40 but January 04 bottom at 75.20 and 75.00 round-figure could also challenge sellers targeting 74.50 comprising July 2016 low.

On the contrary, 76.00 and a month-long trend-line at 76.50 seem adjacent upside stops, a break of which could please buyers with 77.00 and 77.45/50 resistance-area comprising multiple lows marked during January and March.

AUD/USD technical analysis: Lowest levels since flash crash with upside reversion target at 0.6915 swing low

  •  AUD/USD is now oversold on a short term and daily basis.
  • AUD/USD likely needs correction before sinking lower towards the said target down in the 0.6850’s.
  • 0.6855 is the 78.6% Fibo target. 
  • A correction to the upside opens 0.6915 as the last bullish stick’s lows on the 4HR outlook, a swing low following the decline from 0.6950.

Daily chart and oversold stochastics with 78.6% Fibo target: