Volatility Expected In Stacked Calendar Week

GBPUSD – technical overview

A recovery rally to fresh 2015 highs at 1.5815 has stalled out, with the market considering the possibility of bearish trend resumption. The recent daily close back below 1.5445 strengthens the outlook and suggests a medium-term lower top is in place at 1.5815 ahead of the next major downside extension towards 1.5000. Next key support comes in at 1.5089. In the interim, rallies should be well called ahead of 1.5650.

• R2 1.5437 – 27May high – Strong
• R1 1.5385 – 28May high – Medium
• S1 1.5236 – 29May low  – Strong
• S2 1.5200 – Figure  – Medium

GBPUSD – fundamental overview

Dealers continue to talk of decent offers in this pair into rallies. Last week, a softer UK GDP print and renewed concerns over UK membership in the EU, seemed to be primary drivers of Sterling weakness, while an ongoing expectation for a sooner Fed rate hike also contributed. Lots to take in on the economic calendar this week, starting with today’s UK manufacturing PMIs, US core PCE, personal spending and ISM manufacturing.

USDJPY – technical overview

The market has finally broken out of a multi-month range, with the price surging through key resistance at 122.00, to open the door for the next major upside extension towards the 125.00-130.00 area further up. The broader trend remains highly constructive and any setbacks should now be very well supported on dips. At this point, only a close below 118.23 would delay.

• R2 125.00 – Psychological – Medium
• R1 124.45 – 28May/2015 high – Strong
• S1 123.49 – 28May low – Medium
• S2 122.77 – 27May low – Strong

USDJPY – fundamental overview

There has been a steady pickup in Yen short bets over the past several days, and larger players continue to play into the weak Yen. HFTs have also been notable USDJPY buyers, though there have been reports of some profit taking from these accounts into Monday. Overall, the outlook continues to favour additional US Dollar upside on the pronounced monetary policy divergence theme with many talking about a push towards 130.00 in the weeks ahead. Looking ahead, US core PCE, personal spending and ISM manufacturing stand out in Monday trade.

EURCHF – technical overview

The market has finally leveled out after a multi-day drop out from the February high at 1.0815. From here, there is risk for recovery back towards 1.0815 in the days ahead, with any setbacks expected to be very well supported above 1.0300 on a daily close basis. Look for a push back above 1.0525 to confirm and accelerate gains. Ultimately, only below 1.0235 negates.

• R2 1.0525 – 30Apr high – Strong
• R1 1.0385 – 25May high – Strong
• S1 1.0280 – 29May low– Medium
• S2 1.0235 – 20Apr low – Strong

EURCHF – fundamental overview

This market has come under some pressure in recent trade on the back of Euro outflows as market participants fear the worst in Greece. Still, an ongoing SNB commitment to act to curb excessive overvaluation in the Franc, as highlighted by SNB Jordan over the weekend, should continue to support dips. Dealers cite solid demand, with no meaningful stops until below 1.0200.

AUDUSD – technical overview

Overall, the broader downtrend remains intact after the market stalled out ahead of 0.8200 several days back. Look for a lower top to now be in place at 0.8163, in favour of the next major downside extension back towards and eventually below the current multi-year base from early April at 0.7533. Intraday rallies should be well capped ahead of 0.8000, while ultimately, only a break back above 0.8163 will delay the bearish structure.

• R2 0.7839 – 25May high – Strong
• R1 0.7768 – 27May high – Medium
• S1 0.7617 – 28May low – Medium
• S2 0.7533 – 2Apr/2015 low – Strong

AUDUSD – fundamental overview

While the RBA may not cut rates tomorrow, there is every reason to expect the central bank will leave the door open for additional policy accommodation as the Australian economy continues to face headwinds. Last Thursday’s much weaker Aussie Q1 CAPEX showing was followed up on Friday with disappointing new home sales and private sector credit data and today with softer building approvals. Meanwhile, the official China services PMI put in its slowest expansion in 17 months. AUDUSD is now closing in on a retest of the 2015 and multi-month low against the US Dollar, though some light profit taking has initially supported the pair ahead of the 2015 low. All eyes now on the RBA, though Monday US data in the form of US core PCE, personal spending and ISM manufacturing, should not be overlooked.

USDCAD – technical overview

The market looks like it may finally have based out at 1.1920, putting in a meaningful medium-term higher low, ahead of the next major upside extension and bullish trend resumption towards the 2015 high at 1.2835. The recent daily close back above previous support at 1.2350 strengthens the outlook, with any setbacks now expected to be well supported above 1.2000.

• R2 1.2538 – 28May high – Strong
• R1 1.2492 – 27May high – Medium
• S1 1.2395 – 27May low – Medium
• S2 1.2305 – 26May low – Strong

USDCAD – fundamental overview

Despite some mild broad based profit taking on USD longs, this pair continues to trade with a bid tone and remains well supported on dips. Friday’s contrasting economic data has contributed to the price action, after US GDP was not as bad as forecast, while Canada GDP came in much softer. Still, the Canadian Dollar has found some comfort in OIL’s ability to hold onto its impressive recovery gains. Later today we get Canada manufacturing PMIs along with US core PCE, personal spending and ISM manufacturing.

NZDUSD – technical overview

Last Thursday’s break to fresh 2015 and multi-month lows confirms a medium-term lower top at 0.7744 and opens the door for the next major downside extension towards a measured move objective in the 0.6500 area. At this point, look for any intraday rallies to be well capped ahead of 0.7400.

• R2 0.7271 – 28May high– Medium
• R1 0.7195 – 29May high– Strong
• S1 0.7078 – 1Jun/2015 low – Strong
• S2 0.7050 – Mid-Figure – Medium

NZDUSD – fundamental overview

Last week’s softer New Zealand building permits and business confidence haven’t done anything to help the beleaguered Kiwi, which has broken to fresh yearly and multi-month lows against the US Dollar. Also last week, we saw another Fonterra reduction in milk prices, which already gave bears another good excuse to knock the commodity currency lower. There has been a dramatic shift in RBNZ expectations these past few months and with the market now pricing in the possibility for a rate cut on June 10, deeper setbacks are projected. Throw in the diverging Fed policy outlook and slowing China and any rallies in NZDUSD should be very well capped. Looking ahead, US core PCE, personal spending and ISM manufacturing stand out in Monday trade.

US SPX 500 – technical overview

The latest break to fresh record highs has stalled out, with the lack of bullish momentum suggesting the market could be exhausted at current levels and poised for a significant corrective decline. The recent close below 2116 strengthens the outlook and could open the door for deeper setbacks towards critical support at 2040 over the coming sessions. Ultimately, only back above 2137 negates.

• R2 2150.00 – Psychological – Medium
• R1 2137.00 – 19May/Record – Strong
• S1 2099.00 – 26May low – Medium
• S2 2062.00 – 7May low – Strong

US SPX 500 – fundamental overview

The equity market has failed to establish any meaningful bullish momentum after breaking to fresh record highs in the previous week and could be at risk for stalling out yet again. A wave of solid US economic data, along with a number of hawkish comments from various Fed officials are all supportive of a rate liftoff sooner than later, and this reality is making it less attractive to be long equities at lofty levels. The economic calendar is stacked this week, but the direction in this market will most probably hinge on Friday’s all important monthly employment report.

GOLD (SPOT) – technical overview

The market has been very well supported on dips since recovering from the 2014 base. The price action suggests the market could now be poised for additional upside in the sessions ahead, in an attempt to carve out a more meaningful longer-term base. Look for a break back above recent highs at 1232 to strengthen this outlook. Ultimately, only a daily close below 1170 will negate.

• R2 1246.00 – 10Feb high – Medium
• R1 1232.00 – 18May high – Strong
• S1 1170.00 – 1May low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

Despite recent setbacks, the GOLD market continues to show signs of demand on dips. Many investors already feel that with currencies across the board looking less attractive in a low yield environment, and with global equities looking vulnerable at record highs, there is no better place for capital allocation than GOLD. Dealers cite plenty of interest ahead of $1170 with buy-stops reported above $1235.

Feature – technical overview

USDSGD has turned back up, following an intense round of declines off multi-year highs from March. The recent break back above a double bottom neckline at 1.3400 now opens the door for additional upside in the sessions ahead towards a measured move objective in the 1.3650 area. At this point, it looks like the market has carved out a medium-term higher low at 1.3190, eventually en route towards a retest of the 1.3937 March peak.

• R2 1.3650 – Measured Move – Strong
• R1 1.3540 – 27May high – Medium
• S1 1.3403 – 26May low – Medium
• S2 1.3358 – 25May low – Strong

Feature – fundamental overview

Not a lot of liquidity in the Singapore Dollar early Monday, with the Singapore market closed for Vesak Day. Still, broader flows are now firmly supportive of the US Dollar, with Fed policy expectations angling for a sooner than later rate liftoff. Also seen supporting the US Dollar is talk of Asian central bank intervention to weaken local currencies in light of declining exports.