EUR/USD: dollar's gains moderated, but will likely extend
|EUR/USD Current Price: 1.1112
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The American dollar ended the week with a firm tone, up against most of its major rivals as speculation that the US FED can rise rates as soon as next June kept leading FX moves. The EUR/USD pair closed in the red for a fourth consecutive week, albeit movements were for the most shallow in these past few days, with high levels of uncertainty forcing investors to trade cautiously. On Friday, a slight improvement in US growth, as the Q1 GDP was revised from 0.5% to 0.8%, and comments from FED's Chair Yellen, who said that a rate hike is "probably" appropriate in the coming months, were behind the EUR/USD pair's decline down to 1.1110, the lowest since mid March.
The upcoming week will start in slow motion, with the US and the UK having bank holidays, pointing to another dull Monday. Nevertheless, the macroeconomic calendar will be quite busy all through the week, closing next Friday with the release of the US Nonfarm Payroll report.
From a technical point of view, the EUR/USD pair seems poised to extend its decline, as in the daily chart, the pair has been developing below its 100 DMA for most of the past week, extending its decline to fresh lows on Friday. In the same chart, the technical indicators head sharply lower within negative territory, pointing at least to a test of 1.1080, a major support, given that in there, the 200 DMA converges with a daily ascendant trend line coming from November 2015 low. Should the price break below it, the bearish momentum will likely accelerate, on stops being triggered. In the 4 hours chart, the price is now below a bearish 20 SMA, whilst the technical indicators have lost partially their bearish strength, but remain below their mid-lines, in line with the longer term outlook.
Support levels: 1.1080 1.1040 1.1000
Resistance levels: 1.1160 1.1200 1.1245
EUR/JPY Current price: 122.69
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The EUR/JPY pair edged modestly lower in the past week, but remained within May's limited range, as both currencies keep moving evenly against the greenback. On Friday, however, the pair extended its decline to 122.21, a fresh 2-week low, as the EUR came under selling pressure. The overall technical outlook is bearish for the pair, as in the daily chart, the price develops well below a bearish 100 SMA, whilst the technical indicators head slightly lower below their mid-lines, lacking enough momentum to confirm a breakout lower at this point. In the 4 hours chart, the technical outlook is neutral-to-bearish as the 100 and 200 SMAs are horizontal in the 123.20/123.50 region, whilst the technical indicators head nowhere around their mid-lines. May's low stands at 121.47, and is the level to break to see the pair gaining some directional strength, pointing then to a decline down to 120.00.
Support levels: 122.20 121.80 121.45
Resistance levels: 123.10 123.50 124.00
GBP/USD Current price: 1.4610
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The British Pound was buoyed during the first half of the previous week, underpinned by Brexit fears easing further, amid opinion polls indicating the "remain" vote remains ahead. The GBP/USD pair surged up to 1.4739, the highest since May 3rd before retreating to the current 1.4600 region, down on broad dollar's demand and a downward review of Q1 GDP. The UK’s GDP during the first quarter of 2016 was revised lower to 2.0% y/y from 2.1% in the preliminary estimate, below market's expectations of a 2.1% reading. The quarterly reading, however, remained unchanged at 0.4%, showing growth remained tepid in the kingdom. Now trading around the 1.4600 figure, the daily chart shows that the price holds well above a horizontal 20 SMA, while the technical indicators retreat from near overbought levels, but remain within positive territory, suggesting the pair can continue grinding lower, particularly on an extension below 1.4600. The 4 hours chart presents a strong downward potential, as the price broke below its 20 SMA that lost its bullish slope and now caps the upside around 1.4650/60, while the Momentum indicator heads sharply lower below its 100 level and the RSI indicator consolidates around 46.
Support levels: 1.4600 1.4570 1.4525
Resistance levels: 1.4655 1.4690 1.4730
USD/JPY Current price: 110.41
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The USD/JPY pair closed the week at the upper end of its latest range, fueled by poor inflation figures released in Japan late last week, showing CPI for April contracted for a second straight month. The reading fueled speculation of some BOJ intervention, either by monetary stimulus or a delay in the sales tax hike announced late last year. The pair rallied late Friday on the back of dollar's strength, as Yellen's comments were supportive of a soon-to-came rate hike in the US. Nevertheless, the pair remains below the critical 110.60 region, a major static resistance level, and with a slightly positive tone in the daily chart, given that, despite the technical indicators have bounced from their mid-lines and maintain strong bullish slopes, the pair is also below a bearish 100 DMA, around 111.40. Shorter term, the 4 hours chart presents a neutral stance, as the pair has been trading in a well-limited range for almost two weeks. Anyway, the technical indicators are flat within positive territory, whilst the price is above the 100 and 200 SMAs in this last time frame, suggesting the pair may finally break higher this week, particularly if the US economy shows further signs of improvement.
Support levels: 110.15 109.80 109.50
Resistance levels: 110.60 111.00 111.45
AUD/USD Current price: 0.7216
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The AUD/USD pair closed lower for a fifth consecutive week, although losses moderated this past week, as the market seems to have fully priced in Central Banks' imbalances. After the RBA cut rates by surprise, on an unexpected fall in inflation during the first quarter of the year, speculative interest rushed to price in at least two additional rate cuts in Australia during the upcoming months, whilst the US is expected to provide two rate hikes before the year is over. The pair, however, maintains a strong bearish tone, and seems likely it will extend its decline down to the 0.7000 figure and even lower, where RBA's Governor Stevens will be more comfortable with the exchange rate. Daily basis, the 20 SMA heads sharply lower around 0.7280, while the Momentum indicator turned south below its 100 level and the RSI indicator consolidates near oversold territory, all in line with further declines. In the shorter term, the 4 hours chart presents a neutral-to-bearish stance, with the price below a horizontal 20 SMA, and the technical indicators heading nowhere right below their mid-lines. The pair set a weekly low at 0.7144, and a break below it should see the decline extending quickly towards the 0.7100 figure, en route to the mentioned 0.7000 figure.
Support levels: 0.7145 0.7100 0.7065
Resistance levels: 0.7215 0.7250 0.7290
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