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iFOREX Daily Analysis : May 22,2017

Published 05/22/2017, 07:52 AM
Updated 09/16/2019, 09:25 AM

The U.S. dollar continued its drop on Friday, posting its largest weekly loss in nearly a year as political turbulence around the Trump administration continued to dominate market sentiment.

The U.S. dollar index ended the week down 2.12% after getting hit by fears that instability in the U.S. political system could prevent the government from pushing through tax or spending reforms.

In the Eurozone, recent economic data has indicated that the economic recovery is deepening, fuelling speculation over how soon the European Central Bank could scale back its stimulus program.

Both the yen and the sterling gained ground in the past days, ending last week with a gain of 1.82% and 1.16% respectively against the dollar.

In the week ahead, investors will be looking at Wednesday’s Federal Reserve meeting minutes for fresh indications on the possible timing of the next U.S. rate hike.

Revised data on U.S. first quarter growth and private sector survey data out of the euro zone will also be in focus.

Today, financial markets in Canada are to remain closed for a holiday.

EUR/USD

The euro gained against the dollar on Friday, advancing 0.95% and reaching fresh six month highs at 1.1207. The dollar ended the week 2.5% lower against the single currency.

Recent economic data in the euro zone has indicated that the economic recovery is improving, something that could bring the ECB to cut down on its stimulus program.

Today, eurogroup finance ministers are to hold regularly scheduled talks in Brussels while In the week ahead, investors will be looking at Wednesday’s Federal Reserve meeting minutes for fresh indications on the possible timing of the next U.S. rate hike.

EUR/USD Chart Pivot: 1.1165 Support: 1.1165 1.114 1.112 Resistance: 1.121 1.1245 1.1285 Scenario 1: long positions above 1.1165 with targets at 1.1210 & 1.1245 in extension. Scenario 2: below 1.1165 look for further downside with 1.1140 & 1.1120 as targets. Comment: the RSI lacks downward momentum.

Gold

Gold prices were higher on Friday posting the largest weekly gain since mid-April as political uncertainty surrounding the Trump administration pressured the dollar lower, boosting demand for the precious metal.

The dollar came under renewed selling pressure on Friday following reports that a senior White House adviser is a person of interest in the investigation into alleged Russian interference in November’s presidential election.

Gold traders are now shifting their attention towards Wednesday’s FOMC minutes, for any clues on the future monetary policy steps of the Fed.

Gold Chart Pivot: 1251 Support: 1251 1245.5 1241 Resistance: 1257.8 1262 1265 Scenario 1: long positions above 1251.00 with targets at 1257.80 & 1262.00 in extension. Scenario 2: below 1251.00 look for further downside with 1245.50 & 1241.00 as targets. Comment: a support base at 1251.00 has formed and has allowed for a temporary stabilisation.

WTI Oil

Crude oil prices settled at a four-week high on Friday, with prices hitting a weekly gain of more than 5% amid optimism that key producers will extend output cuts beyond an agreed-on June deadline when they meet later this month.

Most market analysts expect the oil cartel to extend output cuts for a further nine months until March 2018, instead of six months as previously expected.

Data from energy services company Baker Hughes showed on Friday that U.S. drillers last week added rigs for the 18th week in a row.

Oil ministers from the Organization of Petroleum Exporting Countries and other major producing countries will meet in Vienna on May 25 to decide whether to extend their current production agreement beyond a June 30-deadline.

WTI Oil Chart Pivot: 50.15 Support: 50.15 49.85 49.5 Resistance: 51.3 51.7 52.15 Scenario 1: long positions above 50.15 with targets at 51.30 & 51.70 in extension. Scenario 2: below 50.15 look for further downside with 49.85 & 49.50 as targets. Comment: the RSI is mixed to bullish.

US 500

The main U.S. stock indices were higher after the close on Friday, as gains in the Oil & Gas, Industrials and Basic Materials sectors led shares higher.

At the close in NYSE, the Dow Jones Industrial Average added 0.69%, while the S&P 500 index added 0.68%, and the NASDAQ Composite index climbed 0.47%.

The rise on U.S. equities was limited as worries remain on whether Trump would be able to follow through on his promises for tax cuts, deregulation and fiscal stimulus.

In the week ahead, investors will be looking at Wednesday’s Federal Reserve meeting minutes for fresh indications on the possible timing of the next U.S. rate hike.

US 500 Chart Pivot: 2377 Support: 2377 2367 2359 Resistance: 2389 2394 2400.5 Scenario 1: long positions above 2377.00 with targets at 2389.00 & 2394.00 in extension. Scenario 2: below 2377.00 look for further downside with 2367.00 & 2359.00 as targets. Comment: the RSI is mixed to bullish.

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