London Forex Report: USD Bid Better Data, Hawks Circling

London Forex Report: USD Bid Better Data, Hawks Circling

London Forex Report: USD bid overnight with positive US data and hawkish Fed comments. US housing starts and industrial production staged a turnaround in April while the biggest increase in CPI in over three years in April (+0.4% MoM and +1.1% YoY) bolstered the case for the Fed to continue hiking later this year. Coincidently, Fed President Lockhart and William said a June rate hike remains on the table and that the Fed could raise rates two or three times this year, more than the Fed own projection and certainly above market’s. USD traded mixed and advanced by a small margin during yesterday’s trade. The USD Index fell after the release of rebounding housing and CPI data but later pared some losses amid hawkish Fed comments.

FX Majors: EUR dropped back below 1.13 overnight after Lockhart and Williams said the central bank may raise rates two or three times this year. The Eurozone trade surplus improved to EUR 22.3 billion, but still fell short of expectations GBP disinflation prevails in the UK, increasing concerns of broad based weakness in price pressure. CPI moderated to 0.3% YoY last month after increasing 0.5% YoY in March. Retail prices grew a slower 1.3% YoY in April (March: +1.6% YoY) while producers prices remained in the red (- 0.7% YoY vs March: -0.9% YoY). JPY The Japanese economy staged a surprised 1.70% annualized QoQ expansion in Q1 due to the increase in private consumption and government spending, avoiding a technical recession, probably sparing BOJ from any immediate stimulus measures.

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

Technical: Prior support at 1.1350 now becomes resistance while this area contains upside reactions, expect a test of 1.1240 as interim support as bears now target symmetry support at 1.1065, only over 1.1450 eases immediate downside bias.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Bids ahead of 1.4316 primary symmetry support, the short squeeze fell short of resistance at 1.4530, only over 1.4550 eases immediate bearish bias. While 1.4530 contains upside 1.4370 is next downside objective below 1.43 opens 1.4260 symmetry support.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 108.20 supports intraday expect a retest of offers at prior highs en route to symmetry swing resistance at 109.80 where trend selling should re-emerge, over 111 eases immediate bearish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Bears now target weekly symmetry objective at 120.60. Intraday resistance at 124.65 only a close above 126.80 eases immediate downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD rose 0.38% to $1,278.95 an ounce, benefiting from safe haven buying due to falling equities despite a relatively firm dollar. OIL touched seven-month highs of $48.42 a barrel before closing at $48.31, up 59 cents, or 1.2%, best close since October. AUD rallied almost 1% on Tuesday after minutes of Reserve Bank of Australia policy meeting encouraged markets to cool down the expectations of a cut in interest rates. The RBA’s minutes revealed that RBA’s members discussed leaving interest rates unchanged earlier this month, but cut the rate was made as it would help drive up the inflation. CAD weakened yesterday against USD due to the strong US CPI data which had the biggest increment in three years. Apart from the strong US CPI data, the US April Housing Starts data was robust at 6.6%, beating the market expectations 3.3%.

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

Technical: .7240 level survives on a closing basis AUD and the anticipated window to correct the recent pull back to test symmetry resistance sited at .7580 is in play. Intraday resistance is sited at .7400
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: 1.30 upside objective achieved expected a correction to retest 1.2740/60 is underway, this level should now act as support for further upside corrective action.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Gold has tested and held the 1260 symmetry swing level, 1283 is now resistance for a further leg of corrective price action to set up a test of the pivotal 1240. A close over 1285 suggests early upside reversal targeting a retest of 1303 next
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Oil as 46.70 supports 50.00 becomes the material upside objective, with a symmetry swing target sited at 50.51 ahead of the larger AB=CD swing objective at 51.09, only a close below 43.00 threatens bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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