London Forex Report: USD Completes Hatrick Of Weekly Gains

London Forex Report: USD Completes Hatrick Of Weekly Gains

London Forex Report: G7 meeting over the weekend yielded little progress as its member countries failed to arrive at a consensus/ coordinated approach in dealing with the current economic challenges.  Data bag remained mixed across the globe. While existing home sales rose more than expected by 1.7% MoM in April, gains were nevertheless smaller compared to March’s 5.7% MoM increase. The back-to-back increase seen in the housing data could again shore expectations on the Fed to resume its normalization path as policy makers meet in June. USD continued its advance, the USD Index extended its gains for the fourth straight day albeit at a narrower pace of 0.05% to 95.33. Expectations for a June Fed rate hike continues to keep the USD supported.

FX Majors: EUR ECB current account surplus widened € 8.1 billion to € 27.3 billion in March due to higher trade surplus. Exports receipts rose 1.6% MoM while imports fell 2.8% MoM, widening the trade gap. GBP dropped 0.7% to 1.4500 against the US dollar last Friday. The pair was hurt a little by dovish comments from a Bank of England policymaker, who said that the BOE needed to provide more stimulus if growth failed to recover as forecast after the referendum. JPY Japan’s department sales shrank 3.8% YoY to 453.6 billion yen in April, extending the 2.9% YoY decline in March. Sluggish household spending coupled with major slowdown in other aspects of the economy may prompt BOJ to expand its already massive stimulus. On a separate report, Japan posted a trade surplus of 823.5 trillion yen. Japan’s exports fell 10.1%, for a 7th consecutive month in April as the yen strengthened whilst import fell by 23.3%.

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

Technical: Prior support at 1.1280 now becomes resistance while this area contains upside reactions, expect a test of 1.12 as interim support as bears now target symmetry support at 1.1065, only over 1.1450 eases immediate downside bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Friday’s close at 1.45 leaves a window of opportunity for the pair to recover and push higher to test symmetry resistance at 1.4730 as the next upside objective, only a more convincing close below 1.45 eases upside pressure
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Retest of offers at 110.60/90 see sellers emerge a failure at 109.50 opens a move to retest bids back towards 107.50, a close over 111.90 eases immediate bearish bias
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Bears now target weekly symmetry objective at 120.60. Intraday resistance at 124.20 only a close above 126.80 eases immediate downside pressure.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

Commodities FX: GOLD fell lower Friday despite mixed USD as traders recalibrated their expectations for a potentially earlier Fed rate hike. The gold price closed lower by US$1.90 to US$1252.90 on Friday (20 May). Oil prices eased lower on Friday (20 May) but still recorded the second consecutive weekly gain as traders continued to focus on supply disruptions from Canadian wildfires to disruptions in Nigeria and Libya. Meanwhile, oil-field services firm Baker Hughes reported that there was no change in the US rig count at 310 from the previous week. The US Nymex WTI futures eased by US$0.41 to US$47.75 AUD Considering the risks on the Australian housing market and Chinese economic growth, markets continued to see downside risks for the Aussie. CAD fell to a six-week low against the USD last Friday due to disappointing retail sales data and falling oil prices, while expectations grew that the US central bank would raise interest rates in June or July. Canadian retail sales dropped 1% in March, exceeding markets’ forecasts for a decrease of 0.6%, while core inflation rose to 2.2%. traders believe that the mixed data would keep the Bank of Canada on hold this week.

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

Technical: .7240/60 support erased now becomes intraday resistance as bears target .7050 as the next downside objective. Only a close over .7400 eases immediate downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: While 1.2960 supports bulls target 1.3140 and 1.32 as the next upside extension targets. Only a close below 1.2760 eases immediate bullish pressure
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1288 is now resistance. The anticipated second leg of corrective price action is underway to test of the pivotal 1240. Price is currently sitting on trend line support at 1250.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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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