London Forex Report: FOMC Minutes Offer Little Support For USD

London Forex Report: FOMC Minutes Offer Little Support For USD

London Forex Report: Minutes of the latest FOMC meeting indicates that Fed officials will consider hiking rates as soon as June. It will “soon be appropriate” to hike rates, the minutes said as “most participants judged that if economic information came in about in line with their expectations it would soon be appropriate for the committee to take another step in removing some policy accommodation”. Prices of Fed Fund Futures showed that investors see an 80% chance of a June rate hike.

USD On the data front, existing home sales slumped 2.30% to annualize pace of 5.57 million from March to April after a revised 4.20% increase in the previous month. Decline was largely due to inventory shortages which kept property prices elevated, making it harder for first time owners to purchase a home. On a second report, MBA weekly mortgage application rose 4.40% after falling 4.10% the previous week.

EUR ECB President Mario Draghi maintained his preference to end QE before increasing interest rates, reinforcing our view that ECB will continue to stay pat this year. President Draghi also voiced concern over still soft underlying inflationary pressure despite improving growth outlook in the region.

GBP recovers following the terrorist attack in Manchester. Reports indicate that British troops are being deployed on the streets to bolster security, suggesting that concern about the risk of further incidents is high

JPY limited response to Moody’s credit rating downgrade of China. Overnight comments from BoJ Gov. Kuroda had no discernible impact on JPY, note the absence of domestic releases ahead of Friday’s CPI data for April.

EURUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Neutral

Technical: 1-3 Day View – As 1.1160 supports bulls target interim equidistant swing objective of 1.1291 en-route to a test of broader symmetry swing objective at 114.30. Only below 1.10 concerns near term bullish bias.

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A weekly close over 1.14 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives
Retail Sentiment: Bearish
Trading Take-away: Long

GBPUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – Psychological 1.30 magnet achieved as 1.2880 supports interim symmetry swing objectives at 1.3060 & 1.3118 are targeted next, only below 1.2750 concerns near term bullish bias.

1-3 Week View – The weekly closing breach of 1.2880 opens 1.30 as the next upside objective ahead of the broader symmetry swing objective sited at 1.3238.
Retail Sentiment: Bearish
Trading Take-away: Long

USDJPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – 115 becomes the next upside objective only back below 110.20 would concern the near term bullish bias, near term 112.30 is the next upside hurdle.

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Neutral
Trading Take-away: Neutral

EURJPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Neutral

Technical: 1-3 Day View – Close over 124.40 opens 129.44, near term support is sited at 122.50, near term upside objective of 126.84 equidistant swing objective, only below 121.30 concerns near term bullish bias.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, resetting focus on pivotal 124.40 a weekly breach of this level opens 129.44 as the broader upside objective
Retail Sentiment: Bearish
Trading Take-away: Long

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