Weekly Technical Analysis For June 18th to 22nd, 2018
EUR/USD: Euro tumbled last week after ECB signals end of QE. The ECB keeps interest rates unchanged at 0%, as expected. Net asset purchases will be reduced to €15 billion from Oct until the end of December 2018 and that net purchases will then end. However, rates will be unchanged till Summer 2019. The EUR/USD dropped sharply on dovish ECB.
The other significant event of last week was the FOMC Monetary Policy Meeting. The Federal Reserve raised interest rates by 25 basis points last Wednesday. Its second rate hike this year, and signaled two more hikes in 2018. Also, Fed sees slightly higher 2018 GDP growth, lower unemployment in 2018-2020, higher inflation in 2018-19 versus the previous forecast.
Additionally, US announced tariffs on $50 billion worth of Chinese goods, spurring a promise of immediate and equivalent retaliation from Beijing.
Looking ahead, among this week's US data; Building Permits, Housing Starts, Manufacturing, and Services PMI, as well as Philadelphia Fed Manufacturing Index, will be closely followed by investor this week
There is also an annual European Central Bank (ECB) panel "Forum on Central Banking" in Portugal from Monday to Wednesday. We will watch the world biggest central banks governors this week.
The EUR/USD pair found sellers from the daily resistance of 1.1812 and closed last week just above 1.1607. Watch out for the 1.1607 major support this week. As long as the price stays above that level, on a daily basis, we might see an upward reaction. In this case, we will face 1.1720 and 1.1812 as resistance levels. On the other hand, if the price drops below 1.1607, the next support level is holding at 1.1531.
Support: 1.1607 - 1.1531 - 1.1446Resistance: 1.1720 – 1.1812 – 1.1884
GBP/USD: The GBP/USD pair dropped to the 1.3241 daily support level last week. The UK annual rate of inflation rose by 2.4% in May, unchanged from the previous month, which was a one year low and in line with expectations. In the upcoming week, the BoE Interest Rate Decision will be the most important event. The market expects the BoE keeps unchanged their benchmark interest rates at 0.5%. Also, note though that no change is expected in either the bank’s £435 billion government bond-buying or its £10 billion corporate bond purchases.
As long as the price stays above 1.3241, on a daily basis, the downward movement may be limited and we will face 1.3338 and 1.3447 as resistance levels. On the other hand, if the price breaks down 1.3241, the next support level can be found at 1.3152
Support: 1.3241 – 1.3152- 1.3050
Resistance: 1.3338 – 1.3447 – 1.3536
USD/JPY: The BoJ kept monetary policy unchanged on last Friday and they signaled that inflation will be in no rush to dial back its massive stimulus program.
The USD/JPY upward movement was limited at 110.86 last week. As long as the price trades below 110.86, on a four hourly basis, the rise may be limited and we will face again 109.90 and 109.35 as support levels. On the other hand, if the price rises above 110.86, the next resistance level is given at 111.86
Support: 109.90 - 109.35 – 108.78
Resistance: 110.86 - 111.66 - 112.46
GOLD: The GOLD price found sellers from 1307 and then hit the 1276 support level which is the lowest level so far this year despite news that the US was pushing forward with tariffs on an additional $50 billion in Chinese goods.
As long as long as the price stays above 1276 on a daily basis, the fall may be limited and we will see 1283 and 1291 as resistance levels. On the other hand, If the yellow metal breaks down 1276, the next support level will be at 1272.
Support: 1276 - 1272 - 1265
Resistance: 1283 - 1291 - 1307