Weekly Technical Analysis For May 21st to 25th, 2018
EUR/USD: US dollar continued to extend gains against the all major currencies. The EUR/USD pair found sellers from the 1.1968 resistance level at the beginning of this week and then dropped below the major level of 1.1812. US industrial production, Building Permits, NY Empire State and Philadelphia Fed Manufacturing Index; All of them came out better than expected last week. while retail sales increased at a slower rate than forecast. The greenback rose to a five-month high level. Strong upbeat data support that the Federal Reserve will increase interest rates.
Looking ahead, the FOMC meeting notes will be a significant release of next week. The FOMC meeting Minutes may give a more detailed about Fed Outlook for 2018. The Fed keeps interest rate unchanged in a range between 1.5%-1.75% in their last meeting. The Fed projected for two more rate hikes for 2018 and they said the inflation to move up in coming months, stabilize around their target of 2%. The Fed is scheduled to hold its next policy meeting on June 12-13. Investors highly expect a chance of a rate hike at that meeting.
Moreover, we will focus on Manufacturing and Service PMI, Core Durable Goods Orders as well as Existing Home Sales from the US in the upcoming week.
Also, watch out for the ECB meeting minutes. The ECB kept interest rates unchanged at 0% in their last meeting. The euro was under pressure by a dovish tone from the European Central Bank.
As long as the price stays below 1.1812, on a daily basis, the bearish action is most likely dominate and we will see 1.1720 and 1.1660 as support levels. On the other hand, if the price rise above 1.1812, the next resistance level will be at 1.1884.
Support: 1.1720 – 1.1660 - 1.1607
Resistance: 1.1812 - 1.1884 – 1.1968
GBP/USD: The unemployment rate remained unchanged at a 42-year low of 4.2%, in line with forecasts. Average earnings, excluding bonuses, rose by an annual 2.9% in the three months to March, from 2.8% previously
In the upcoming week, UK CPI Inflation and GDP for the first quarter will be published. The CPI is expected to stay at 2.5% in April in year-on-year basis. On the other hand, Core inflation is expected to ease to 2.2% from 2.3%
Additionally, The UK GDP is expected to come out at 1.2%, as the same as initial estimate. A higher than expected reading should be taken as positive for Sterling.
The GBP/USD pair has been falling for five weeks and it dropped to the 1.3447 daily support level. If the pair is able to break down below 1.3447 and stays below that level on a daily basis, the downward movement may continue and we will face 1.3338 as a support level. Otherwise, we will follow resistance levels at 1.3536 and 1.3652.
Support: 1.3447 – 1.3338 – 1.3241
Resistance: 1.3536 – 1.3652 – 1.3745
USD/JPY: Japan GDP growth for the first quarter fell 0.6% compared to the same period last year, marking the end of economic growth for nine quarters.
Keep your eye on Japan Tokyo CPI inflation on Friday. The consensus estimate for core inflation in May is 0.6%, as the same as the previous number.
The USD/JPY pair has been rising for eight consecutive weeks session and then hit the 110.86 key resistance level. In order for the upward movement to continue, it needs to rise and stay above 110.86, on a four hourly basis. In this case, the next daily resistance level can be found at 111.66. Otherwise, we will watch support levels again at 110.61 and 110.15
Support: 110.61 - 110.15 - 109.90
Resistance: 110.86 – 111.66 – 112.46
Gold: The GOLD price fell to its lowest level since December 2017 last week, as the US dollar surged. In order for the gold bearish action to continue, it needs to break down and stays below 1291, on a four hourly basis. At this point, we will see 1283 and 1276 as support levels. Otherwise, If the price sustains above 1291, we will watch the daily resistance level of 1307.
Support: 1291 – 1283 – 1276
Resistance: 1307 – 1319 - 1352