Weekly Outlook - The Market Correction Continues

By @ibtimes on

Last week's currency trading review

The Dollar was well supported as the correction entered its second week. Stocks and Commodities all hit month lows and the brief rallies were sold into. CPI was at forecast 0.2%m/m in April, May Consumer Confidence increased to 72.4 as Oil fell. The end of Q2 in June is creating uncertainty in the currency markets and could lead to more USD strength as the US monetary policy normalizes. The Euro was under heavy selling pressure on the back of renewed focus towards Greece debt and the possibility of restructuring and bond holder haircuts. The EUR/USD was spooked lower and news over the weekend that the IMF chief had been arrested sent the major to fresh month lows near 1.4000. Q1 GDP impressed at 0.8% vs. 0.6% q/q. The EUR/USD is down -1.37% currently at 1.4117, after opening the week at 1.4311.

The Japanese Yen was strong against the crosses but range bound against the USD. The two safe haven currencies track the stock market for the majority of their direction and AUD/JPY and EUR/JPY were particularly weak. The USD/JPY is down +0.24 % currently at 80.78, after opening at 80.59. The GBP was sold against the greenback but made noticeable gains against the Euro and Aussie with the BOE inflation report supporting. The report firmed expectations that the central bank of England will raise rates later this year to fight inflation. The GBP/USD is down -1.03% currently at 1.6195 after opening at 1.6362. The AUD was hit from multiple directions in a large correction lower. April Unemployment shocked with -22k vs. 43.3k previously. This surprise added to the selling pressure from weak commodities and equity markets. The outlook for the AUD is very mixed after being the strongest currency in the market for the last 18 months. The AUD/USD is down -1.19% currently at 1.0570 after opening at 1.0696.

The Forex Trading Economic Data Ahead Preview

In the States; April Industrial Production forecast at 0.4% vs. 0.2% previously. On Wednesday, FOMC minutes released. On Thursday, Weekly Jobless Claims forecast at 429k vs. 434k previously.  We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; Tuesday we have May German ZEW Survey forecast at 88.0 vs. 87.1 previously. On Thursday, ECB President Trichet speaks. On Friday, German PPI forecast at 0.6% vs. 0.4% previously. In the UK, on Tuesday, April CPI forecast at 4.1% vs. 4.0% previously. On Wednesday, BOE Minutes. Also April Claimant Count change forecast at 1k vs. 0.7k previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; on Wednesday, Q1 GDP forecast at -0.5% Q/Q. On Thursday, Industrial Production previously at -12.9%. On Friday, BOJ Rate announcement forecast to remain at 0.1%. In Australia; On Tuesday, RBA minutes. On Wednesday, May Consumer Confidence previously at 105.3. On

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

1.4021

1.4062

1.4135

1.4442

1.4500

USD/JPY

78.83

80.00

80.95

81.69

82.28

GBP/USD

1.6091

1.6166

1.6185

1.6380

1.6517

AUD/USD

1.0443

1.0518

1.0550

1.0700

1.0953

XAU/USD

1462.00

1471

1491

1526

1551

OIL/USD

92.50

95.00

96.90

98.00

100.00

Euro - 1.4135

Initial support at 1.4062 (Apr 11 low) followed by 1.4021 (Mar 28 low). Initial resistance is now located at 1.4442 (May 9 high) followed by 1.4500 (Key level)

Yen - 80.95

Initial support is located at 80.00 (Psych suppport) followed by 78.83 (Mar 18 low). Initial resistance is now at 81.69 (May 2 low) followed by 82.28 (Apr 28 High).

Pound - 1.6185

Initial support at 1.6166 (Apr 18 low ) followed by 1.6091 (Apr 5 low). Initial resistance is now at 1.6380 (May 12 high) followed by 1.6517 (May 11 high).

Australian Dollar - 1.0550

Initial support at 1.0518 (38.2% retrace of 0.9706-1.1012) followed by the 1.0443 (Apr 19 low). Initial resistance is now at 1.0700 (big figure resistance) followed by 1.0953 (May 3 high).

Gold - 1491

Initial support at 1471 (May 6 low) followed by 1462 (May 5 low). Initial resistance is now at 1526 (May 11 high) followed by 1551 (May 3 high).

Oil - 96.90

Initial support at 95.00 (Intraday Support) followed by 92.50 (Intraday Support). Initial resistance is now at 98.00 (Intraday resistance) followed by 100.00 (Intraday Resistance).

Written by Anthony Darvall

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