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·       Fundamental Forecast for EUR/USD: Neutral

- The Euro rallied to the top spot among the major currencies after rumors emerged that the ECB would use its June policy meeting to make a tweak to its QE program.

- At a minimum, it would seem that the ECB will pave the runway for an announcement about its QE program in July, that way it can make the change in September to ensure a smooth step down in the taper.

•   Investors will keenly watch this week's meeting of the Federal Reserve for signs of whether the world's most powerful central bank may target a fourth interest rate hike in 2018 as the US economy powers ahead.

The Fed meets this week where it is almost certain to raise interest rates for the second time this year, to 1.75 to 2 per cent. The central bank has raised the target range for its key federal funds rate seven times starting in December 2015, and its last set of projections issued in March showed the committee is evenly split on whether to deliver a total of three or four hikes in 2018.

•   The European Central Bank releases a policy decision, a day after the Federal Reserve’s expected vote for a rate increase. Last week, the ECB’s chief economist, Peter Praet, sent a signal that the bank could decide as soon as this week’s meeting to wind down its bond-buying program. Those asset purchases have been credited with supporting a robust recovery in the eurozone, although the economy has experienced a slowdown of late.

·       FRIDAY: The Bank of Japan releases a policy statement. Japanese prices rose more slowly in April, showing how the tight job market has yet to build momentum for the central bank to reach its 2% inflation target. Analysts said the BOJ was likely to stick to its current monetary-easing policies, including negative interest rates and large purchases of government bonds. The inflation numbers weren’t bad enough to prompt more easing, they said.

·       U.S. President Donald Trump said on Monday his historic summit with North Korean leader Kim Jong Un in Singapore could “work out very nicely” as officials from both countries met to narrow differences on how to end a nuclear stand-off on the Korean peninsula.

·       The White House has taken aggressive new steps in its effort to reduce a $337bn trade deficit with China, announcing that it will impose a 25% tariff on $50bn of Chinese goods containing “industrially significant technology”.

The full list of imports that will be subject to the 25% tariffs will be announced by 15 June, the White House said.

The announcement comes at a sensitive time in US-China relations, amid US talks with nuclear-armed North Korea as well as rising tensions in the South China Sea, where two US vessels recently sailed close to two disputed islands, prompting protest from Beijing.

·       A war of words has erupted between the US and its G7 allies, hours after the group had put on an apparent show of unity at the end of a tense summit.

US President Donald Trump has continued his personal attacks against Canadian Prime Minister Justin Trudeau, tweeting that he "acts hurt when called out".

·       Europe will implement counter-measures against U.S. tariffs on steel and aluminium just like Canada, German Chancellor Angela Merkel said on Sunday, voicing regret about President Donald Trump’s abrupt decision to withdraw support for a G7 communique.

·       Germany is ready to discuss global trade imbalance to diffuse a dispute with the United States, which has imposed high tariffs on steel and aluminium imports from the European Union, Economy Minister Peter Altmaier said on Monday.

·       Japan’s core machinery orders in April jumped the most since the start of 2016, reversing the prior month’s decline and raising some hopes for durable growth in capital expenditure seen as crucial for a recovery in the economy after a contraction in the first quarter.

Core orders, a highly volatile data series regarded as an indicator of capital expenditure in the coming six to nine months, rose 10.1 percent and handily beat a 2.8percent gain forecast in a Reuters poll of economists. They fell 3.9 percent in March.

·       Oil prices fell on Monday, pulled down by rising Russian production and U.S. drilling activity creeping to its highest in more than three years.

Brent crude futures LCOc1 were at $76.18 per barrel at 0639 GMT, down 28 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 18 cents, or 0.3 percent, at $65.56 a barrel.

Reference: Reuters, BBC