• AUD/USD up 0.15% in Asia, takes miss in April retail sales in stride

• Australia April retail sales rise 0.1% after falling 0.4% in March

• A 0.2% rise was expected; data points to consumers remaining cautious

• High borrowing costs and rising rents dent spending capacity of consumers

• Unlikely to influence RBA rate expectations a great deal; AU CPI Wed key

• A higher 0.6550-0.6750 range forms as Fed, RBA reiterate status quo on rates

• Support 0.6625-30, 0.6600-05, resistance 0.6665-70, 0.6695-00

• Asia range 0.6654-0.66655

• For more click on FXBUZ

• Flat early after closing up 0.25% - resilient with the USD off 0.15%

• PM Sunak proposes tax cuts for pensioners in new election pledge

• In chasing older voters the Conservative Party may alienate the young

• No tier one UK data or scheduled BoE events - risk appetite and the USD lead

• Charts; daily momentum studies rise - 5, 10 & 21-day moving averages climb

• 21-day Bollinger bands move higher - a strong positive trending setup

• Sustained 1.2766 0.786% Mar/Apr fall break targets the 1.2893 March high

• Close below the 1.2717 10-day moving average would flag caution to longs

For more click on FXBUZ

• Steady after closing up 0.1% with the U.S. dollar off 0.15%

• ECB to cut in June - will be data-driven on rate cuts - German CPI Wednesday

• Bund yields fell, 10yr -4bp to 2.546% on the outlook and soft German data

• Charts - net positive momentum studies, as 21-day Bollinger bands rise

• Neutral 5, 10, and 21-day moving averages - consolidates, little bias

• A close below the 1.0801 21-day moving average would be a bearish signal

• 1.0801 21-DMA and last week's 1.0884 top are initial support/resistance

• 1.0860 693 mln and 1.0870/75 1.051 BLN are the close strikes for May 28th

  For more click on FXBUZ

• AUD/USD bid in Asia after grinding higher in holiday-thinned markets Monday

• Opens 0.4% higher after trading in a 0.6622-0.6659 range; London, NYK closed

• A higher 0.6550-0.6750 range forms as Fed, RBA reiterate status quo on rates

• AU April retail sales Tue, will be watched for signs of consumer spending

• Bounce-back expected after Mar sales unexpectedly fell; 0.2% rise forecast

• AU, EZ, US, Tokyo inflation data due this week, key for rate expectations

• Support 0.6620-25,, 0.6600-05, resistance 0.6675-80, 0.6695-00

• For more click on FXBUZ

• USD/JPY pinned to 157.00 by massive FX option strike expiry hedging Friday

• There's another $1.5-billion 157.00 expiring at 10-am New York Monday

• USD/JPY trades 156.67-157.01 range (EBS) amid UK/U.S. thinned trade

• Thursday's 156.53-157.19 range is initial support/resistance

• 157.19 is post intervention recovery high and buyers will be wary of more

• Setbacks to remain limited amid resilient U.S. economy, slow U.S. rate cuts

For more click on FXBUZ

• Our EUR/GBP long remains in play but upside progress is proving elusive

• The pair struck a two-session high Friday but gains were eroded

• A daily inverted hammer candle formed which is a concern

• Falling monthly RSI and May's inverted candle also concern us

• Thursday bullish harami struggling to gain confirmation

• We have a tight stop is in place and the target is at 0.8580

  For more click on FXBUZ

• A tight but bullish range holding in early Monday trade

• Thin conditions are not being exploited despite UK-U.S. holidays

• Last week's 1.2761 high the initial hurdle: 1.2803 Mar. 21 high behind

• More UK Conservative lawmakers resign than before the 1997 election defeat

• Whatever the election result the Conservatives will have a new team

• Sterling is showing surprising resilience in the face of political news

• Global inflation and central bank policy the other main GBP drivers

• Friday sees U.S. personal consumption expenditures: Fed's preferred measure

• A steady month-on-month return expected

  For more click on FXBUZ

• AUD/USD trades a tight 0.6622-42 range amid UK/US holiday thinned market

• Support at rising 21 dma 0.6614, Fri's 0.6592 low, 100/200-dma 0.6561/32

• Series of daily highs add resistance before 16 May cycle high 0.6714

• Higher for longer Aus int rate underpins, robust US econ/less Fed easing cap

• Heavy FX option implied volatility signals low real volatility expectations

For more click on FXBUZ

• Bullish Frid session into an engulfing line

• No preceding bear trend to reverse but candle pattern still warns of gains

• Our 1.2720 long play never got going and risk is against us

• Daily momentum and RSI readings are rising

• A falling daily cloud and long upper candle shadows are fighting our corner

• Initial resistance at 1.2761, recent daily high

  For more click on FXBUZ

• EUR/USD clings near middle of a 1.08-1.09 range for the past 2-weeks

• Huge option strike expiry hedging helps to contain - more this week

• Tight UK/US holiday range 1.0846-59 Mon, recent daily highs are resistance

• 16 May daily high 1.0895 caps, offers touted around 1.0900

• 100-dma 1.0813 supports, rising 21-dma 1.0795 underpins

• German IFO Monday, but main focus will be EZ HICP and U.S PCE Friday

• Option implied vol by l-term low - signals low FX realised volatility risk

For more click on FXBUZ

• Our long just in play as price lifts from the 100DMA, 1.0813 EBS pricing

• Daily-monthly RSIs are rising and the pair traded above the 10-DMA Friday

• A bull flag continuation pattern is in place on daily charts

• Completion of that pattern suggests the rally off April's low can resume

• The bull target remains 1.0960 with a stop at 1.0785

• Monday close above the weekly cloud top, 1.0892, would strengthen the rally

  For more click on FXBUZ

• +0.03% near the base of a tight 1.0859-1.0846 range with stocks up in Asia

• Expect a low-key session in Europe with London and New York on holiday

• German ifo business climate leads data - RTRS poll 90.4, expectations 90.9

• Charts - momentum studies flat-line, as 21-day Bollinger bands rise

• 5, 10, and 21-day moving averages conflict - consolidates, neutral setup

• A close below the 1.0794 21-day moving average would be a bearish signal

• 1.0794 21-DMA and last week's 1.0884 top are initial support/resistance

• There are no significant close strikes for May 27th

For more click on FXBUZ

• Flat after closing up 0.3% with the safe-haven U.S. dollar down 0.3%

• UK financial sector hoping for a period of stability after the election

• The political turbulence in recent years reduced investment in the sector

• UK and US holiday today, so a period of tight-range trading is likely

• Charts; daily momentum studies rise - 5, 10 & 21-day moving averages climb

• 21-day Bollinger bands rise - the daily charts show a positive setup

• 1.2766 0.786% Mar/Apr fall is pivotal - a break targets 1.2893 March high

• Close below the 1.2609 21-day moving average low would end the positive bias

For more click on FXBUZ

• Steady after closing up 0.3% with the U.S. dollar off 0.3%

• Should be quiet in Asia with London and New York on holiday today

• ECB board members Piero Cipollone and Fabio Panetta support a June 6th cut.

• Charts - neutral momentum studies, as 21-day Bollinger bands rise

• 5, 10, and 21-day moving averages conflict- uptrend stalled, neutral signals

• A close below the 1.0794 21-day moving average would be a bearish signal

• 1.0794 21-DMA and last week's 1.0884 top are initial support/resistance

• There are no significant close strikes for May 27th

  For more click on FXBUZ

• AUD/USD likely to remain bid on dips after bouncing ahead of 0.6580 support

• Closed 0.35% higher Friday after trading in a 0.6592-0.6636 range

• A higher 0.6550-0.6750 range forms as Fed, RBA reiterate status quo on rates

• Robust U.S. economy, fading Fed rate cut expectations will cap AUD rallies

• AUD downside limited as RBA rate cut expectations also pushed back

• RBA 25bps cut now not fully priced in till July 2025

• U.S. PCE price index, Australia CPI this week key for rate outlook

• Support 0.6600-05, 0.6580, resistance 0.6650, 0.6675-80; U.S. holiday Mon

• For more click on FXBUZ

• $JPY soft in NY aft trading -0.05% at 156.89; Friday range 157.15-156.90

• Pair remained tethered to recent highs just above 157 on US-JP rate diffs

• U.S. durables revisions, lower UMich inflation view stirs USD selling

• Liquidity light ahead of U.S., UK holidays; recent longs lightening slightly

• Suspected intervention lvl by 157.50 in focus, may temper further USD gains

• Japan CPI as forecast doesn't move BoJ hike expectations

• Res 157.19 May 23 high, 157.99 May 1 high, 158.35 upper 21-d Bolli

• Supt 156.90 Friday high, 156.53 May 23 high, 156.18 rising 10-DMA

• German CPI May 29 and U.S> core PCE Idx on May 31 next week's key data

For more click on FXBUZ

• NY opened near 1.0840 after 1.08058 traded overnight, rally extended in NY

• Softer US yields weighed on US$, helped tighten DE-US spreads US2DE2=RR

• Equity ESv1, gold XAU= gains added additional weight on the US$

• EUR/USD turned positive, rallied above the 10-DMA hit 1.0858 on EBS

• Pair's rally stalled near the top of the bull flag in place on daily charts

• Rising daily, monthly RSIs, move above 10-DMA are bullish technical signals

• EZ May HICP, US weekly claims & April PCE are key data risks next week

• For more click on FXBUZ

• NY opened near 0.6615 after an 8-session low of 0.6592 traded in Asia

• After an initial dip the overnight rally extended on risk-on markets

• Softer US yields US10YT=RR weighed on US$; stocks & gold rallied

• AUD/USD rallied above 0.6635, pair traded up +0.45% inNY's afternoon

• Daily RSI diverged, daily bull hammer formed; may worry AUD/USD shorts

• Australia April CPI, US weekly claims & April PCE are key risks next week

• For more click on FXBUZ

Synopsis:

ING assesses the current valuation of EUR/GBP, which has recently stabilized near the crucial 0.8500 level. Following disappointing UK retail sales data and soft PMI reports, the pound appears overvalued against the euro. ING forecasts a near-term rise in EUR/GBP, influenced by economic data and central bank policies.

Key Points:

• UK Economic Data: Recent figures for UK retail sales and PMIs suggest a weakening economic backdrop, which has negatively impacted GBP.
• Central Bank Expectations: The Bank of England’s (BoE) potential dovish shift contrasts with a hawkish cut expectation from the ECB, potentially favoring EUR strength against GBP.
• Political Risk Premium: The upcoming UK general election in July might introduce a risk premium on sterling, further supporting EUR/GBP.
• Market Pricing: The current market pricing of BoE rate cuts seems overly cautious, with ING still anticipating an initial cut in August despite political events.

Conclusion:

Considering the softer UK economic indicators and the shifting monetary policy landscape, ING maintains a bullish stance on EUR/GBP, expecting the pair to move higher in the short to medium term. This outlook is bolstered by potential political uncertainties in the UK and diverging rate expectations between the ECB and BoE.

• GBP$ drifts higher into NY afternoon, +0.34% at 1.2742; NY range 1.2751-10

• US durables revision lwr, falling UMich 1/5-yr inflation view sinks USD

• Sterling bulls keep focus on 2024 high nL1N3HR19W

• Pair eyes Wed high 1.2761 as BoE rate cut expectations slip; see LSEG's IRPR

• Hot UK CPI pushes cut view from Aug to Sept/Nov boosts GBP/USD

• GBP$ res 1.2761 May 22 high, 1.2764 upper 21-d Bolli, 1.2803 Mar 21 High

• Supt 1.2712 Friday NorAm low, 1.2680 Friday low, 1.2634 100-DMA

Synopsis:

Danske Bank anticipates a political maneuver from the ECB with a 25bp rate cut on June 6, characterized as a reversal of last year’s precautionary increase. Further adjustments in monetary policy are projected to follow a cautious and data-driven approach.

Key Points:

• June Rate Cut: The ECB is anticipated to adjust rates downward by 25 basis points in June, viewed largely as a political move to reverse the previous year’s ‘insurance hike’.
• ECB's Forward Guidance: Post-June, the ECB is likely to maintain its meeting-by-meeting, data-dependent stance, indicating a careful approach to future rate decisions.
• Revised Rate Path: Danske has updated its ECB rate forecast for the first time in over a year, predicting two rate cuts in 2023 (June and December) and three additional cuts in 2024, targeting a deposit rate of 2.75% by the end of 2025.
• Market Repricing: Financial markets have adjusted their expectations, now anticipating a 61 basis point reduction in ECB rates for the current year.

Conclusion:

Danske’s outlook suggests a strategic calibration of the ECB’s policy rate, starting with a June rate cut framed as a correction of a previous increase. This move is seen as part of a broader, cautious strategy to navigate economic indicators and gradually reduce rates over the coming years, aligning closely with evolving economic data.

• $CAD slid in early NY trading -0.25% at 1.3697; Friday range 1.3739-1.3692

• U.S. durables revised lower hit USD, tempered reaction to soft CA ret sales

• Recent USD longs paring ahead of long U.S. holiday weekend

• US-CA rate diff continue to favor USD longs; USD bulls may test recent highs

• LSEG's IRPR pricing 1st BoC cut in July; Fed 60% odds for Sept, 80% for Nov

• Res 1.3740 by Thurs/Fri highs, upper 21d Bolli 1.3764, 1.3785 Apr 30 high

• Supt 1.3692 Friday low, 1.3677 21-DMA, 1.3630 daily cloud base

Bank of America Global Research flags a tactical sell signal for GBP/USD into month-end. 

"A tactical sell signal near trend line resistance at 1.28.15-1.2800 suggest GBP/USD dips into month end.

Six of the last seven signals shown below alined with trend changes which means if a turn down ends May, it could persist into mid-June. Note the last high was in March at 1.2894," BofA notes.

Synopsis:

ANZ suggests caution towards the recent rally in GBP/USD, citing over-extension amid a potentially more dovish Bank of England (BoE).

Key Points:

• Consumer Price Support: The GBP has seen some uplift on the G10 crosses from firmer CPI prints in March and April, which temporarily buoyed its value.
• BoE's Dovish Shift: Indications from recent BoE MPC meetings hint at an evolving dovish tilt, which could become more apparent at the upcoming June meeting.
• Potential Vulnerability: Despite the recent strength, the GBP may be over-extended, especially considering the dovish leanings of the MPC and the potential onset of more aggressive easing cycles starting in June.

Conclusion:

While recent inflation data have provided temporary support for the GBP, ANZ views the currency's rally as potentially overdone. The expected dovish shift by the BoE could undermine the GBP's recent gains, making it vulnerable, especially against other currencies, as global easing cycles begin to intensify.