Big picture themes in focus on light calendar day

GBPUSD – technical overview

The market has rebounded sharply, after collapsing to a +30 year low below 1.1500. This supports the longer-term constructive outlook, with a major bottom sought out ahead of the start to a big run to the topside back through 1.3000. Look for the major pair to hold up well into setbacks, and ultimately above 1.2000 on a monthly close basis for confirmation.

• R2 1.2648 – 8 May high – Strong
• R1 1.2526– 2 June high – Medium
• S1 1.2290 – 29 May low – Medium
• S2 1.2161 – 22 May low – Strong

GBPUSD – fundamental overview

There hasn't been much to update as far as UK related activity goes. We have seen the Pound better bid on the more encouraging outlook for EU-UK trade negotiations. But overall, most of the demand has come from broad based US Dollar selling as risk appetite continues to look healthy in global markets. UK PM Johnson is said to be planning a 'major speech on UK economic revival' this month. Looking ahead, we get UK mortgage approvals and consumer credit. There is no first tier data on the US docket.

USDJPY – technical overview

We're seeing a pickup in volatility in the major pair, with the market swinging wildly through the upper and lower bound of a massive triangle. Still, there is no clear direction in sight, with rallies well capped above 110.00 and dips well supported below 104.00.

• R2 109.38 – 6 April high – Strong
• R1 108.09 – 19 May high – Medium
• S1 106.74 – 13 May low – Medium
• S2 105.99 – 6 May low  – Strong

USDJPY – fundamental overview

At the moment, the Yen has been confined to tight trade, as we see offsetting flow from risk on and broad based US Dollar selling. There hasn't been much reaction to all of the tension on the global trade front, and tension around China relations with Hong Kong. There has been some positive sentiment around more reopenings with Tokyo and Osaka working back to normal. Looking ahead, the calendar is exceptionally thin, with no first tier data scheduled.

EURCHF – technical overview

The market remains very well capped into offers and the medium-term picture continues to favour the downside. A break back above 1.08000 would be required to take the immediate pressure off the downside.

• R2 1.0800 – Previous support – Strong
• R1 1.0726 – 29 May high – Medium
• S1 1.0576 – 25 May low – Medium
• S2 1.0504 – 18 May/2020 low – Strong

EURCHF – fundamental overview

The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook, and from a US administration that has put Switzerland on its currency manipulator watchlist. Any signs of risk liquidation in 2020, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.

AUDUSD – technical overview

Technical studies have turned up in recent weeks, after the market traded down to its lowest levels since 2003 earlier this year. There is evidence of a longer-term bottom, though the market will need to break back above the December 2019 high at 0.7032 to take the immediate pressure off the downside.

• R2 0.6900 – Figure – Medium
• R1 0.6814 – 2 June high – Strong
• S1 0.6610 – 29 May low – Medium
• S2 0.6506 – 22 May low – Strong

AUDUSD – fundamental overview

The RBA went ahead and left rates on hold, while offering a more balanced outlook. While the central bank continued to highlight the high level of uncertainty in the world of coronavirus, it also said things were looking better than what it was expecting. Overall, Aussie has been well in demand, extending its recovery on the back of risk on flow and broad based US Dollar outflows. We've also seen some Monday demand from the better than expected Aussie manufacturing PMI reads. Looking ahead, the calendar is exceptionally thin, with no first tier data scheduled.

USDCAD – technical overview

Has been in the process of correcting since topping out earlier this year above 1.4600. At this stage, with the correction well extended, the market is likely to find solid support in the 1.3500 area, ahead of a resumption of gains. Ultimately, only a weekly close below 1.3500 would suggest otherwise.

• R2 1.3900 – Figure – Medium
• R1 1.3833 – 29 May high – Strong
• S1 1.3545 – 2 June low – Medium
• S2 1.3500 – Psychological – Strong

USDCAD – fundamental overview

The Canadian Dollar has been better bid with the Loonie getting a big boost from the ongoing recovery in both global equities and OIL. Monday's manufacturing PMI data out of Canada was also a beat, which has generated additional demand for the Loonie. Looking ahead, the calendar is exceptionally thin, with no first tier data scheduled.

NZDUSD – technical overview

There's a case to be made for a meaningful bottom, with the market looking quite extended after dipping below major psychological support at 0.5500. As such, look for setbacks to continue to be well supported in the weeks ahead, in anticipation of additional upside. Only a weekly close below 0.5500 would give reason for rethink.

• R2 0.6400 – Figure – Medium
• R1 0.6307 –  2 June high – Medium
• S1 0.6149 – 27 May low – Medium
• S2 0.6081 – 22 May low – Strong

NZDUSD – fundamental overview

Overall, Kiwi has been better bid on account of the broad based risk on flow. We have however seen Kiwi lagging against its commodity currency peers, seemingly on the back of this latest discouraging trade data print out of New Zealand. Looking ahead, the calendar is exceptionally thin, with no first tier data scheduled.

US SPX 500 – technical overview

Setbacks have been intense as the market puts in a longer-term top. The market has collapsed through the 2018 low, with the next major support coming in at the 2016 low around 1800. Extended readings have led to an overdue corrective bounce, but rallies should now be well capped ahead of 3200.

• R2 3138 –  3 March high – Strong
• R1 3070 – 28 May high – Medium
• S1 2970 – 27 May low – Medium
• S2 909 – 22 May low – Strong

US SPX 500 – fundamental overview

Although we've seen attempts at recovery in response to unlimited QE from the Fed and massive US stimulus, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for additional runs to the topside, on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, tension on the global trade front, geopolitical risk, and ongoing worry associated with recovery post coronavirus, should weigh more heavily on investor sentiment in 2020.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, and suggests the market is in the early stages of a bullish move towards and through the record high (just ahead of 2000), following a multi-month consolidation. The next major level of resistance comes in around 1800 (measured move extension target, 2012 high), while in the interim, look for any setbacks to be well supported above 1500.

• R2 1796 – 2012 high – Strong
• R1 1765 – 18 May/2020 high – Medium
• S1 1641– 8 April low – Medium
• S2 1568 – 1 April low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, political uncertainty, coronavirus fallout, systemic risk and trade war threats. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

BTCUSD – technical overview

Setbacks should be very well supported ahead of the 2018 low, with a higher low sought out in favour of a bullish continuation back above the 2019 high and towards the record high from late 2017 further up. Ultimately, only a weekly close below 5,000 would compromise the constructive outlook. Back above 10,500 further encourages the bullish prospect. Shorter studies are however stretched and warn of a pullback ahead.

• R2 10,477– 9 February/2020 high – Strong
• R1 10,360 – 2 June high – Medium
• S1 8,000 – Psychological – Medium
• S2 7,704 – 29 April low – Strong

BTCUSD – fundamental overview

Bitcoin has enjoyed a nice recovery since bottoming in March, with the runup in stocks and hype around the halving event contributing to a lot of the momentum. Interest from well known traditional market participants is helping to generate plenty of buzz as well. At the same time, given the extended nature of technical readings into important resistance, we see this as timing well for a sell the fact with the halving event now officially behind us and global equities once again looking vulnerable.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market is in the process of attempting to establish a meaningful base after stalling out in the latter half of 2019. Look for setbacks to be well supported above the 2018 low, in favour of another big bounce, eventually back towards and through the 2019 high up at 363.

• R2 289 – 15 February/2020 high – Strong
• R1 250 – Psychological – Medium
• S1 176 – 11 May low – Medium
• S2 148 – 16 April low  – Strong

ETHUSD – fundamental overview

While there is plenty of Ether demand built up, with so much optimism around prospects for the blockchain, given all of the development going on in the decentralised finance space, macroeconomics will likely play a negative role in 2020, with Ether expected to underperform in a mostly risk off backdrop, in light of Ethereum's higher sensitivity and correlation with risk themes.