New York Forex Report: EUR Testing 1.1050 Offers

New York Forex Report: EUR Testing 1.1050 Offers

New York Forex Report: The USD is trading broadly lower, with the EUR gaining notably, as the FX market reacts to reports that President Trump may have disclosed classified information to Russian diplomats during a meeting at the White House last week. The news heaps additional pressure on the US administration that has struggled to get ahead of an adverse news cycle in recent weeks and clearly represents another potential delay or impediment to the Trump team’s pursuit of its pro-growth/business agenda. The USD has lost ground against most of its G10 peers so far on the day, with the exception of the CAD, AUD and NZD which are all posting marginal losses, even as commodity prices hold up

USD US empire manufacturing index, a gauge of factories expansion in the New York district, unexpectedly dropped to -1.0 in May (April: 5.2). The index registered its first contraction since October 2016 amid a sharp pullback in new orders. US NAHB housing market index for May showed continued improvement as the index climbed higher to 70 (from 68 in April versus forecast of an unchanged 68).

EUR The newly inaugurated French President Emmanuel Macron on Monday named Edouard Philippe, the centre right mayor of the port city of Le Havre, as France’s new prime minister. After the PM announcement, Macron and German Chancellor Angela Merkel vowed to give a new impetus to Europe, even if it requires treaty change. Eurozone 2017 Q1 GDP data kicks off the week today and is expected to continue to show 1.7% growth YoY and 0.5% compared to 2016 Q4. Eurozone data has generally trended higher recently, suggesting more of the same this week, so there is a bias in the market expecting higher not lower results.

GBP Retails Sales releases on May 18 will probably be the most significant release for May as it captures the UK economy’s current standpoint. Consumer spending has slowed in the first quarter as the weak pound has pushed up the imports price leading shoppers to limit the size of their baskets. This slowdown is a major concern as if it continues it will depress economic growth significantly given that it accounts for the largest proportion of GDP. Slower growth will lessen even further the likelihood of the Bank of England (BOE) bringing forward the time when they will raise interest rates.

JPY Japan’s producer’s prices surged 2.10% YoY in April followed a 1.40% YoY rise in March, marking the quickest rise in factory price growth since November 2014. A second report showed that machine tool orders increased a solid 34.70% YoY in April (March: +22.80% YoY). Domestic orders rose 29.50% while foreign orders increased 38.00% last month amid brighter global economic outlook.

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

Technical: 1-3 Day View – 1.10 upside attempt has failed the first test as profit taking emerges but holds 1.0830 interim support. A close over 1.1030 opens symmetry swing objective at 1.14. Potential double top pattern could develop today.

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. Over 1.14 sets upside focus on 1.1876
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Psychological 1.30 magnet remains the upside objective for now with weekly symmetry swing objective at 1.3060 , 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 symmetry swing objective sited at 1.3238
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – As 112.20 supports 115 becomes the next upside objective 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: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Close over 124.40 opens 129.44, near term support is sited at 123.30, 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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