EURUSD, GBPUSD, USDJPY
Weekly Forex Analysis
(May 18 - May 22, 2020)
Hey! This is Philip with our new weekly outlook of the Forex market.
This is only a partial preview of the analysis. Go to the link below to read the Full Weekly Forex Analysis For FREE.
US Dollar Fundamental Outlook: Central Banks Have Made Fx A Boring Market
Overall, the dollar remains within its trading ranges as the markets are anticipating incoming economic data and possible further policy responses. In essence, for the time being, the Fed and other central banks killed Fx volatility, and now we have sideways price action across most major currency pairs.
Last week US economic reports showed that CPI inflation and consumer spending have plunged in April. But, significant declines were widely expected and already well priced into financial markets, given the circumstances, so the price reaction was muted.
In a speech last week, chairman Powell said the Fed is not thinning about negative rates in the US, which pushed the dollar higher. On Tuesday, he will testify before the senate on the coronavirus aid measures, so his speech will again be closely watched by traders.
The Fed will also release the minutes from the latest meeting on Wednesday. Thursday sees unemployment claims, Philly Fed manufacturing index, and Markit’s PMI manufacturing survey. The USD ranges should hold, though, as none of these events on the calendar is likely to be a game-changer for the dollar.
Japanese Yen Fundamental Outlook: Japan Officially Enters A Technical Recession
Earlier today, Japan reported GDP had contracted -0.9% in Q1 this year, which is slightly better than the -1.1% contraction economists predicted. However, the coronavirus induced contraction comes after a -1.8% contraction in Q4 2019. Thus, Japanese officials have every reason to keep stimulus measures at the maximum in these times.
In the meantime, the Yen is also confined to ranges for the past several weeks, against both of its two major counterparts, the dollar, and the euro. Investors remain upbeat on risky assets as they believe the stimulus programs will help to quickly get the economy on the right track. The Yen is trading on the weak side as a result, but that can quickly change if risk sentiment deteriorates, in which case, the safe-haven attributes of the Yen would
likely come to light.
USDJPY Technical Outlook:
USDJPY broke above 107.00 last week and held above that level into the close. The high was established after hitting the 55-day moving average at 107.76. Moving above this moving average would signal the next leg higher. For this week, it is standing near 107.50.
Furthermore, by moving above the last week’s high of 107.76, USDJPY would break the neckline of an inverted head and shoulders pattern (see 4h chart below). The target of this pattern would then be projected toward the 109.50 area.
Looking at the larger timeframes, nothing much has changed for USDJPY, and the price is likely to stay within the loosely defined 107.00 – 110.00 range.
If you have any questions or feedback, don't hesitate to reply to this email.
High Risk Warning: Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
|
|
|
|
