Weekly Technical Analysis: May 14-18, 2018
EUR/USD showed an upward reaction after mixed inflation figures out of the US last week. The consumer price index rose 0.2% in April, below the forecast of 0.3%. The CPI has risen 2.5% year-on-year basis, the highest rate in 14 months. Yet the yearly increase in the core rate was unchanged at 2.1%, a softer than expected reading that's likely to give comfort to a Federal Reserve on inflation watch.
Looking ahead, we will focus on US retail sales for April on Tuesday. The retail sales are expected to come out at 0.4%, lower than March number's 0.6%. However, Core Retail Sales excluding auto and gas are expected to rise to 0.5% m/m from 0.2% growth in the previous number. A lower than expected reading should be taken as negative for the greenback.
Additionally, among this week's US data; industrial production, building permits, housing starts, as well as the Philadelphia and New York manufacturing indices will be closely followed by investors.
In the Eurozone, the CPI inflation and GDP growth for first-quarter will be also published this week. The Eurozone Flash CPI inflation is expected to remain stable at 1.2%. The flash read of first-quarter GDP is expected to come out at 0.4% q-o-q growth as the same as previous number. This would lead to an annual realization of 2.5%. A better than expected realization may support EUR/USD.
The EUR/USD pair found buyers above the 1.1812 daily support level and then moved up. In order for the rise to continue, it needs to go beyond 1.1968 and sustain above that level. In this case, the next daily resistance level will be 1.2053. Otherwise, If the currency stays below 1.1968, we will see support levels again at 1.1884 and 1.1812.
- Support: 1.1884 – 1.1812 - 1.1768
- Resistance: 1.1968 – 1.2053 – 1.2109
GBP/USD: The BoE kept interest rate unchanged last Thursday. The Pound dropped as money markets price out a rate hike this year. The BoE Governor Carney noted the underlying growth remains resilient and sees a Q1 slowdown as temporary. Carney also said that the labor market is reassuringly strong. Regarding Brexit, Carney noted its drag on the economy is persistent rather than intensifying, while he believes the economic momentum is going to reassert.
In the upcoming week, the UK Unemployment Rate will be important for sterling. It is expected to stay to 4.2% as the same as the previous reading. A higher than expected reading should be taken as negative for the Sterling
The GBP/USD pair closed last week just above 1.3536 key support level. As long as the price stays above 1.3536, on a four hourly basis, we will follow 1.3652 as a daily resistance level. On the other hand, if the price drops below 1.3536, the next daily support level will be at 1.3447.
- Support: 1.3536 – 1.3447 – 1.3338
- Resistance: 1.3652 – 1.3745 – 1.3880
USD/JPY: Japan prelim. GDP for first quarter will be announced this week. It is expected to come out at an annualized rate of -0.2%, which would mark a sharp slowdown from growth of 1.6% in the fourth quarter. A lower than expected reading would be negative for the yen.
The USD/JPY found sellers from the 109.90 resistance level and then dropped below the daily level of 109.35. If the price stays below 109.35, on a daily basis, the downward movement may gain more momentum. At this point, we will face 108.78 and 107.65 as support levels. On the other hand, if the price moves above 109.35, we will see resistance level again at 109.90
- Support: 108.78 – 107.65 - 106.46
- Resistance: 109.35 - 109.90 – 110.86
The price of gold showed upward movement last week. If the yellow metal is able to stay above 1319 on a four hourly basis, the bullish action may continue and we will follow resistance levels at 1330. On the other hand, if the price falls below 1319, the next daily support level can be found at 1307
- Support: 1319 - 1307 – 1291
- Resistance: 1330 – 1352 - 1367