Last week's currency trading review

The Dollar weakness last week was accelerated by the FED chief Bernanke who spoke at the press conference after the FOMC meeting. In the first Q&A session ever post a FOMC session we saw Bernanke temper expectations that the US would change monetary policy soon with low rates expected for an 'extended period' and the FED very concerned with the weak employment situation. The Euro led the market higher in a sharp move heading towards 1.5000, the next major resistance. April CPI was strong at 2.8% y/y and could cause the ECB to raise rates again if it does not slow down in coming months. The EUR/USD is up +1.65% currently at 1.4802, after opening the week at 1.4558.

The Japanese Yen the dollar weakness led to default strength for the Yen against the major but the market was still selling the safe haven against most crosses with AUD/JPY and EUR/JPY tracking the stock markets higher. The BOJ held at 0.1% but is downgrading the economic forecast post earthquake and could lead to further stimulus packages.  The USD/JPY is down -0.86 % currently at 81.14, after opening at 81.84. The GBP ground higher after some strong GDP at 0.5% vs. -0.5% previously Q/Q allowed some positivity. The GBP/USD still underperformed though and EUR/GBP took advantage to hit month highs above 0.8900. The GBP/USD is up +1.20% currently at 1.6704 after opening at 1.6503. The AUD was the strongest currency in the market after CPI data showed inflation surged to 1.6% q/q vs. 0.4% previously q/q. The RBA, the central bank of Australia has a mandate to fight inflation and may raise rates soon if inflation remains stubbornly high. They have also noted in previous speech's that the high AUD helps to fight inflation through importing cheaper products. The AUD/USD is up +2.14% currently at 1.0966 after opening at 1.0731.

The Forex Trading Economic Data Ahead Preview

In the States; On Wednesday, April ADP Employment change forecast at 195k vs. 201k previously. On April, ISM services forecast at 57.5 vs. 57.3 previously. On Thursday, Weekly Jobless Claims forecast at 410k vs. 429k previously. Also, Bernanke Speaks. On Friday, April NonFarm Payrolls is forecast at 190k vs. 216k previously. The Unemployment rate is forecast unchanged at 8.8%. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; April PMI Composite forecast at 57.8. Also released, March EU Retail Sales forecast at 0.1% vs. -0.1%. ON Thursday, ECB Rate Announcement forecast unchanged at 1.25%. On Friday, March Industrial Production forecast at 0.5% vs. 1.6% previously. In the UK, On Wednesday, April PMI construction forecast at 55.4 vs. 56.4 previously. On Thursday, April PMI services forecast at 55.8 vs. 57.1 previously. Also, BOE rate announcement forecast at 0.5%. On Friday, BoE King Speaks. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; No data this week. In Australia; On Tuesday, RBA Rate decision forecast unchanged at 4.75%. On Thursday, March Retail Sales forecast at 0.5% m/m.

We will provide our previews and reviews of these data releases in the daily summary.



TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4633

1.4769

1.4790

1.4905

1.5000

USD/JPY

80.89

81.27

81.55

82.28

83.27

GBP/USD

1.6432

1.6500

1.6680

1.6747

1.6846

AUD/USD

1.0775

1.0852

1.0935

1.1000

1.1100

XAU/USD

1501.00

1524

1556

1569

1600

OIL/USD

110.00



112.00

112.30

114.00

115.00





Euro - 1.4790

Initial support at 1.4769 (April 28 Low) followed by 1.4633 (Apr 27 low). Initial resistance is now located at 1.4905 (Dec 7 2009 high) followed by 1.5000 (Big Figure Resistance)



Yen - 81.55

Initial support is located at 81.27 (Mar 27 low) followed by 80.89 (50% retrace of 76.25-85.53). Initial resistance is now at 82.28 (Apr 28 low) followed by 83.27 (Apr 18 High).

Pound - 1.6680

Initial support at 1.6500 (psychological support) followed by 1.6432 (Apr 26 low). Initial resistance is now at 1.6747 (Apr 28 high) followed by 1.6846 (Nov 18, 2009).



Australian Dollar - 1.0935

Initial support at 1.0852 (Apr 28 low) followed by the 1.0775 (Apr 27 low). Initial resistance is now at 1.1000 (big figure resistance) followed by 1.1100 (big figure resistance).

Gold - 1556

Initial support at 1524 (Apr 28 low) followed by 1501 (Apr 27 low). Initial resistance is now at 1569 (Apr 29 high) followed by 1600 (Big level resistance).



Oil - 112.30

Initial support at 112.00 (Intraday Support) followed by 110.00 (Intraday Support). Initial resistance is now at 114.00 (Intraday resistance) followed by 115.00 (Intraday Resistance).





Written by Anthony Darvall