London Forex Report: FOMC, NFP’s & French Elections Ahead

London Forex Report: FOMC, NFP’s & French Elections Ahead

London Forex Report: USD traded in relatively narrow ranges overnight as the holiday-thinned volumes kept overall activity light. The quiet start to the week however comes ahead of a very busy calendar that could significantly impact trade in global financial markets. Ahead of this weekend French elctions and Fridays NFP release traders will be watching the Fed meeting this week, the FOMC are widely expected to keep U.S. lending rates unchanged. However, the bank’s policy statement will be closely watched for clues on the outlook for a rate hike in June and the chances for further monetary policy tightening in September and perhaps, December.

EUR firmed against the USD in narrow ranges overnight after U.S. personal spending and income data undershot expectations. Market focus turns to France’s runoff election on May 7th, which is expected to see the centrist, market friendly Emmanuel Macron easily defeat the his far-right rival, Marine Le Pen. Barring a major shocker in the mid-week presidential debate, the expected Macron victory is not likely to cause any major waves in global markets. The single currency remains well supported by an improving data backdrop, which includes last Friday’s rise in CPI back near the ECB’s 2.0% target that fanned speculation that the ECB could sound a slightly less dovish tone at June’s Governing Council meeting.

GBP The May Day holiday in the U.K. likely kept volumes low and likely kept the pound’s reaction to the weekend EU summit muted. The meeting of the EU’s remaining 27 members in Brussels over the weekend provided a dose of reality to markets that have become somewhat sanguine to the risks associate with the Brexit. EU nations, in a rare show of unity, quickly approved an eight page, toughly worded outline for negotiations. EU officials warned Britons to have “no illusions” that negotiations would be quick or easy and emphasized little chances for talks to begin on the EU-U.K. trade relationship until a list of EU demands are met.

JPY In comments on Monday, US Treasury Secretary Mnuchin stated that the lack of detail in President Trump’s tax plan was due to the fact that the Administration is working with Congress to come up with a joint plan. There were also comments that the Administration was not going to put infrastructure spending and tax reform together in one bill. Anticipation surrounding the Tax bill is keeping JPY under pressure as risk sentiment remains buoyed.

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

Technical: 1-3 Day View – As 1.0850 supports expect a grind higher to test 1.0982 as the next upside objective. Only below 1.0820 concerns near term bullish bias.

1-3 Week View – While 1.10 contains corrective attempts higher focus remains on a retest of 1.03 ahead of 1.0118 extension objective form 2015/17 consolidation. Only over 1.14 sets upside focus on 1.1876
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 – As 1.2770/50 supports bulls will focus on a test of psychological 1.30 magnet , only below 1.2560 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 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): Bearish

Technical: 1-3 Day View – As 1.1080 supports potential to retest 113 descending trend line resistance pivot, only back below 110 would concern the near term bullish bias

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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Near term support sited at 120.35 as price prepares to test pivotal trend line resistance at 122.35 a close over this level opens 124.40.

1-3 Week View – The weekly close below symmetry swing support sited at 117.69 sets a bearish tone with 113.70 the medium term downside objective , a weekly close above 118.50 would arrest the immediate downside risk, resetting focus on pivotal 124.40.
Retail Sentiment: Bearish
Trading Take-away: Long

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