Societé Generale - "Following a small correction in late April, the dollar is rallying with a vengeance. A pause may be due, but recent moves confirm the shape of things to come: dollar gains will be far bigger in H2, as the Fed exit debate heats up. The worst performers in May are mostly G10 currencies, both high beta and low beta.

The AUD sell-off looks overdone. For now the AUD/USD looks like a falling knife; we start with a more cautious long in AUD/NZD. The peripheral debt rally-a…

Currently we are at 1.2910 reacting to the Announcements.  We are looking for a small retracement to the 0.500 Fibo @ 1.2936 and then on to the 1.2800 number.  The retracement could end up a pullback to the S4 @ 1.3011 so keep that in mind. The current average daily trading range (ATR) is 105 pips.…

Westpac - "USD strength has been a key theme of late. The bulk of its gains however have been posted against a motley bunch of currencies. In the last month USD strength has been concentrated primarily against the likes of AUD, SEK, NZD and CHF. Over the last week JPY, NZD, AUD and CHF have ceded the most ground to the USD. EUR on the other hand, while lower over both the last week and month against the USD, has weathered the USD’s rally comparatively well.

(...) Our longer term…

German, French and Italian Prelim GDP numbers were worse than expected, 0.1%, 0.2% and -0.5%. That’s very bad data which is also evident on the charts as EURUSD is testing 1.2900 level. This level is now key for further declines today, possibly to 1.2800 after also worse than expected EU Flash GDP numbers; -0.2% vs. 0.1%

Technically speaking, we can see EURUSD trading below 1.2936 which means that latest correction is done around 1.303. Now the only question is if we will get sharp…

Recommendations : SHORT positions below 1.2956 with 1.2890 & 1.2850 as next targets.

Alternative scenario : The upside breakout of 1.2956 will call for a rebound to 1.3010/50.

Description : The pair maintained a bearish momentum yesterday,stability below 1.2956 levels will keep the pair under pressure with risk towards 1.2890/1.2850 levels, on the upside , an hourly close above 1.2956 will delay the bearish scenario and…

TD Securities - "We have upgraded our outlook for the USD across a broad front. We are adjusting our views to reflect some market developments that have occurred a little more rapidly than we had expected (such as the push up in USD/JPY). But we are also recognising the emergence of some trends that we feel support our long-held view that the USD’s secular bear trend is very mature and is poised to show signs of a further recovery.

(...) We have upgraded out USD/JPY forecast to reflect…

Societé Generale - "The FX markets are now under the influence of a trilogy of themes: the American economic revival, diverging monetary policy expectations and the (unfinished) euro area (EA) crisis.

Those themes all point in the same direction: a stronger dollar. Dollar strength is now far less dependent on risk conditions; the US economic outperformance and the fears of a not-too-distant Fed exit imply that the dollar is no longer a funding currency of choice in the carry trade. The…

Westpac - "AUD/USD: Broad USD strength has been punishing AUD more than most, just as the opposite usually holds true. Stronger local data calls into question when the RBA will cut again, helping limit AUD/USD downside. But the cleanout could easily extend to 0.9850/70 near term before bouncing back above 1.00 on stretched short positioning.

NZD/USD: A possible peak in NZ economic momentum and record spec long NZD positions in the futures market dovetail with the stronger USD move to…

UBS - "USDJPY BULLISH The pair extended its strength and is approaching first resistance at 103.07, a break above which would open the important 105.50. Support is at 100.54 ahead of 98.58.

GBPUSD BULLISH The latest setback does not change the broader bullish picture. Support is at 1.5310 ahead of 1.5219. Resistance is at 1.5458 ahead of 1.5606.

EURUSD NEUTRAL Friday's sell-off stalled exactly at the strong support at 1.2936. A closing break below would be a bearish development,…

Recommendations: SHORT positions below 1.3194 with 1.2870 & 1.2780 as next targets.

Alternative scenario:The upside breakout of 1.3194 will call for a rebound to 1.3280/315.

Description: The EURUSD maintained a bearish momentum last week after losing the key support  1.3109, with the key resistance 1.3194 intact, the risk for more losses is likely towards 1.2860 where a…

Currently we are at 1.2995.  IF we can break this support, we are looking for a continuation to the support @ 1.2892 and then the S5  support  @ 1.2868. The current average daily trading range (ATR) is 110 pips.…

Bank of Tokyo-Mitsubishi - "The euro continues to remain relatively stable in the near-term with EUR/USD lacking direction. We do not expect that dynamic to change in the week ahead with no clear fresh catalyst on the horizon. The euro appears well supported against the US dollar above the 1.30-level where its 200-day moving average is located. Even ECB President Draghi’s signal that the ECB is open to lowering its deposit rate into negative territory has had only a limited negative impact…

UBS - "The overnight break above the psychological 100 level is likely to pave the way for further upside too. The break was accompanied by broad-based dollar strength which chimes with our more general stronger dollar view for 2013.

With events unfolding in favour of further yen weakness, we take this opportunity to raise our 1m and 3m USDJPY forecasts to 102 and 105 respectively (previously both stood at 95.00). Our end-2013 forecast remains at 110.

(...) The dollar has chalked up…

Bank of Tokyo-Mitsubishi - "Given the ECB rate cut, speculation on negative rates, and the strong US employment report, the stability of EUR/USD is impressive. It does suggest that factors like reserve re-cycling may well be playing some role in supporting the euro. But the stability of the periphery debt markets in conjunction with record current account surpluses also mean reduced euro sales in the market. It’s not necessarily due to increased foreign investor demand for periphery debt –…

Societé Generale - "Markets are risk friendly. Benoit Anne sent out his latest EM investor survey results and they are, basically, happier than a month ago. It seems that the palliative effects of global easy money are washing away EM-specific concerns about that downgraded EM growth expectations and softer commodity prices. And so, USD/MXN attacks 12, USD/CAD tests parity, AUD refuses to break through 1.0150, XO spreads test 2011 lows, etc etc. There isn't enough news to drive these trends…

As shown on the 4 hour chart posted below, the EURUSD has formed a breakout pattern, support at 1.3033, resistance at 1.3159,a four hour close above 1.3159 will advance the pair further higher towards 1.3285 and 1.3410 levels, while a four hour close below 1.3033 will open the way to 1.2910 and 1.2785 levels.

Recommendation 1 # : Buying the pair with a 4 hour closing above 1.3159 targeting 1.3285 and 1.3410 levels, stop loss below 1.3033 levels.

Recommendation 2 #…

UBS - "USDJPY BULLISH With the broader bull trend in place, any downside will be limited. Support is at 97.90 ahead of 97.01. Important resistance is at 99.95 ahead of 101.45.

GBPUSD BULLISH Critical resistance at 1.5606, a closing break above this would be positive opening the way to 1.5689 and 1.5789. Support is at 1.5481 ahead of 1.5402.

EURUSD NEUTRAL Initial support is at 1.3033, a break below this would expose 1.2995 and then 1.2936. Resistance is at 1.3159 ahead of…

Bank of Tokyo-Mitsubishi - "we believe that the euro will continue to remain relatively stable in the coming months as upside pressures from the narrowing euro-zone sovereign credit risk premium are offset by loosening ECB monetary policy conditions. However with the positive impact from the narrowing euro-zone sovereign credit risk premium already appearing to be diminishing, we expect that downward pressure upon the euro will begin to weigh more heavily heading into the second half of the…

UBS - " Foreign exchange markets have started May still largely rangebound. But the two major central bank meetings so far this month have begun to shift the balance of risks.

First, the European Central Bank's willingness to consider cutting interest rates below zero is set to act as a cap on the euro. Shorting the single currency has been difficult this year. But upside risks are likely to be limited now by ECB officials discussing negative interest rates whenever the euro rises. In…