EUR/USD Current price: 1.0799

• Market players await the release of the US Consumer Price Index on Wednesday.
• Federal Reserve speakers stand out in the American session.
• EUR/USD is poised to extend its advance in the near term, although volatility is limited.

The EUR/USD pair holds on to familiar levels, trading in a tight range just below the 1.0800 mark. Major currency pairs still struggle for direction amid the absence of fresh clues. Central banks have held their monetary policies on hold for longer than anticipated, as inflation refuses to come down to match policymakers’ goals, while the different employment sectors remain relatively tight.

 Investors will try to get answers from upcoming United States (US) data, as the country will release the April Consumer Price Index (CPI) on Wednesday. The Federal Reserve (Fed) prefers to base its decision on another inflation measure,  the Personal Consumption Expenditures (PCE) Price Index, but the CPI usually triggers interesting market reactions. In the meantime, the US Dollar trades with a soft tone against most major rivals, but price action seems contained.

Data-wise, Germany published a minor figure, the March Current Account, which posted a non-seasonally adjusted surplus of €27.6 billion, slightly below the February reading. The US session will bring multiple Fed officials’ speakers, who have lately had no relevant effect on the USD price.

EUR/USD short-term technical outlook

From a technical point of view, the risk skews to the upside, although additional gains are still unclear. The daily chart for the EUR/USD pair shows it is battling to overcome a mildly bearish 200 Simple Moving Average (SMA), while the 100 SMA provides resistance around 1.0840. The 20 SMA, in the meantime, aims north below the current level, reflecting increased buying interest. Finally, technical indicators hold within positive territory, although lacking clear directional strength.

According to the 4-hour chart, another leg north seems likely in the near term, particularly if EUR/USD breaks through 1.0810, the immediate resistance level. The pair is developing above all its moving averages, with the 20 SMA gaining bullish traction above the longer ones. Furthermore, technical indicators picked up momentum within positive levels, in line with an upward continuation.

Support levels: 1.0750 1.0695 1.0660  

Resistance levels: 1.0810 1.0840 1.0885  

EUR/USD Current price: 1.0799

• Market players await the release of the US Consumer Price Index on Wednesday.
• Federal Reserve speakers stand out in the American session.
• EUR/USD is poised to extend its advance in the near term, although volatility is limited.

The EUR/USD pair holds on to familiar levels, trading in a tight range just below the 1.0800 mark. Major currency pairs still struggle for direction amid the absence of fresh clues. Central banks have held their monetary policies on hold for longer than anticipated, as inflation refuses to come down to match policymakers’ goals, while the different employment sectors remain relatively tight.

 Investors will try to get answers from upcoming United States (US) data, as the country will release the April Consumer Price Index (CPI) on Wednesday. The Federal Reserve (Fed) prefers to base its decision on another inflation measure,  the Personal Consumption Expenditures (PCE) Price Index, but the CPI usually triggers interesting market reactions. In the meantime, the US Dollar trades with a soft tone against most major rivals, but price action seems contained.

Data-wise, Germany published a minor figure, the March Current Account, which posted a non-seasonally adjusted surplus of €27.6 billion, slightly below the February reading. The US session will bring multiple Fed officials’ speakers, who have lately had no relevant effect on the USD price.

EUR/USD short-term technical outlook

From a technical point of view, the risk skews to the upside, although additional gains are still unclear. The daily chart for the EUR/USD pair shows it is battling to overcome a mildly bearish 200 Simple Moving Average (SMA), while the 100 SMA provides resistance around 1.0840. The 20 SMA, in the meantime, aims north below the current level, reflecting increased buying interest. Finally, technical indicators hold within positive territory, although lacking clear directional strength.

According to the 4-hour chart, another leg north seems likely in the near term, particularly if EUR/USD breaks through 1.0810, the immediate resistance level. The pair is developing above all its moving averages, with the 20 SMA gaining bullish traction above the longer ones. Furthermore, technical indicators picked up momentum within positive levels, in line with an upward continuation.

Support levels: 1.0750 1.0695 1.0660  

Resistance levels: 1.0810 1.0840 1.0885  

• Last Friday concluded a busy week for UK markets with the release of Gross Domestic Product (GDP) data.
• This showed convincingly that Britain has turned away from the weakness seen at the end of last year to growth.
• The preliminary reading for the first quarter at 0.6% is impressive considering the technical recession that preceded it.
• The printing for the fourth quarter was concerning at -0.3%. As a result, the British pound against the US dollar (GBP/USD) remained stable at the psychological support level of 1.2500.

ING Bank had indicated that “higher real wages, the easing of the recent mortgage crisis and higher rates of economic migration have helped return the UK economy to growth.” The figure was 0.6%, better than the expected 0.4%, and puts Britain on a strong footing for 2024 when interest rate cuts are almost certain in light of the Bank of England’s speech on Thursday. At the same time, the FTSE index once again recorded all-time highs while the price of the British pound remained stable despite the possibility of cuts. The euro against the pound remains at 0.86.

Overall, Britain’s impressive GDP figure supports leading indicators such as purchasing managers’ indexes that have already indicated that Britain will return to growth this year. So far, the strength should continue into the second quarter as there are many positive drivers. First, real wage growth should boost the economy. This happens when wages rise faster than inflation, which should be the case in the second quarter and beyond, as inflation is expected to fall near 2% while nominal wage growth rises to around 6%.

The only downside to this is that higher wage growth may limit Bank of England policy, especially if inflation bounces back as Governor Bailey warned last Thursday. The second positive wind blowing into the UK economy comes from the fading of the mortgage crisis. Disposable income should rise as a result.

Although the situation looks much better for 2024, it raises questions about why the Bank of England is rushing to cut interest rates. At a meeting last Thursday, Bailey said: “No interest rate cuts for banks in June have been ruled out or planned,” which certainly leaves the door open in both directions. However, the overall message was that they would respond to the data, and Bailey added: “There are two more versions of inflation before the June decision.” Thus, we can assume that if the CPI data is cold enough and shows moderation in services inflation, the interest rate will be cut in June. Therefore, this possibility may affect the British pound in May.

• 

According to the results of the Economic Calendar data, it seems that the data in the United States and the United Kingdom are always moving in opposite directions. When Britain was suffering from a technical recession at the end of last year, the United States of America was strong, and now when the United Kingdom is returning to growth, American economic data has changed. There is no doubt that this situation is still far from recession levels, but signs of flexibility are accumulating. On Thursday, job claims reached 231,000, the highest weekly reading since August of last year. This adds to the negative trend with a weaker US jobs report and lower PMIs and GDP estimates.

Overall, the reaction in the US dollar and stock markets was clear. The Standard & Poor’s 500 index rose to new highs in May, while the US dollar broke a three-day winning streak with a sharp decline. Moreover, markets see this as one reason for the Fed to cut interest rates sooner rather than later. Therefore, US CPI data is scheduled to be released this week and could make or break the Fed’s policy perception and dollar weakness. As noted by ING Bank, a cut in September remains the most likely, but if inflation falls enough, July could be the focus.

Technical forecasts for the GBP/USD pair today:

As mentioned before, the stability of the British pound against the US dollar “GBP/USD” will remain around and below the support level of 1.2500, incentivizing bears to control the direction. Meanwhile, a real reversal of the overall downward trend won’t occur without bullish movement towards resistance levels at 1.2775 and 1.2830 respectively. Technically, the GBP/USD exchange rate may continue to stay stable within narrow ranges with a downward bias until the reaction to the announcement of US inflation figures later this week.

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• The US Dollar has continued to sell off slowly over recent hours, off the new lower resistance level at 105.28.
• The Euro and the British Pound are the strongest currencies today, suggesting the best opportunities might be long trades in either of these currency pairs.
• The US Dollar Index has several support and resistance levels close by, so its price action will likely be choppy today.

• 

The US Dollar has been falling slowly since the start of this calendar month. This bearish movement has seen a new lower resistance level print at 105.28.

The short-term price action looks bearish. However, there is nearby support close by at 104.72 so it is not clear how much further the downwards movement will go. There is reason to expect anything will happen today to change that sentiment. Any movement today in the greenback is likely to be choppy.

The table below shows that the Euro has been the strongest major currency so far today, while the New Zealand Dollar has been the weakest. The overall numbers are low though, suggesting this may not be significant.

The US Dollar has suffered from a feeling in recent days that the recent bullish run was overdone, as expectations for a rate hike shift to slightly sooner rather than later. According to the CME Fedwatch tool, the consensus forecast for the initial rate cut has shifted from the Fed’s November meeting to the September meeting.

Recent losses by the US Dollar have been expressed most strongly against the weak New Zealand Dollar, which has declined in recent hours against every major currency. This may have something to do with the fact that New Zealand Inflation Expectations data released earlier today showed a meaningful decline in the expected rate of inflation there.

Traders will probably be wise to look for trades in non-Dollar currency crosses, or short of the US Dollar in short-term day trades if the current weak selling of the greenback continues. Another alternative would be to trade another asset class, such as major US stock market indices which have been moving quite bullishly, suggesting trades on the long side might be a good opportunity.

There seems to be a little residual weakness in the Japanese Yen, which declined notably last week. The price has been making a bullish consolidation above the support level at ¥155.28. There might be a chance to enter a long trade there in the USD/JPY currency pair, but the success of that would probably depend upon Yen weakness and not Dollar strength.

The Euro has been the strongest major currency today. We are seeing a weakly bullish consolidation below $1.0800 and above $1.0758.

As the Euro is strong and the Dollar is showing some weakness, the best opportunity in the EUR/USD currency pair might be a long trade from a retracement to $1.0758 followed by a bullish bounce. However, I think this is unlikely to happen except maybe right at the end of today’s session.

The British Pound is the second strongest major currency today, after the Euro, so a long trade will probably be preferable. The opportunity that really stands out in the price chart below for the GBP/USD currency pair is the level at $1.2538. The price action is quite tightly compressed by this resistance level, so a bullish breakout beyond it could be a great signal to enter a long trade, as the price would likely then rise to at least $1.2575.

I will enter a long trade here is we get two consecutive hourly closes above $1.2538 during today’s London session.

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• EUR/USD fluctuates above 1.0750 in the European morning on Monday.
• The USD could hold its ground in case Fed policymakers push back against September policy pivot.
• The near-term technical outlook points to a lack of bullish momentum.

EUR/USD fluctuates in a narrow channel above 1.0750 to start the new week. Comments from central bank officials could impact the pair’s action in the near term. The Producer Price Index (PPI) and the Consumer Price Index (CPI) data from the US on Tuesday and Wednesday, respectively, could trigger the next big action in EUR/USD.

Ahead of the weekend, hawkish comments from Federal Reserve (Fed) policymakers helped the US Dollar (USD) erase some of the losses it suffered following the disappointing Jobless Claims data on Thursday.

Fed Board of Governors member Michelle W. Bowman said on Friday that she doesn’t see rate cuts as warranted this year, adding that she would want to see a number of months of better inflation data. Meanwhile, Minneapolis Fed President Neel Kashkari reiterated his doubts on whether the policy was restrictive enough and noted that he can’t rule out the possibility of another rate hike this year.

Later in the day, Fed Vice Chair of the Board of Governors Phillip Jefferson and Cleveland Fed President Loretta Mester will be delivering speeches. According to the CME FedWatch Tool, markets are pricing in a 40% probability that the Fed will leave the policy rate unchanged in September. If Fed officials push back against the expectations for a rate cut in September, the market positioning suggests that there is room for US Dollar (USD) gains.

EUR/USD Technical Analysis

EUR/USD faces key resistance at 1.0790-1.0800 (Fibonacci 50% retracement of the latest downtrend, psychological level). If the pair manages to stabilize above this region, 1.0830 (Fibonacci 61.8% retracement) and 1.0900 (Fibonacci 78.6% retracement) could be seen as next hurdles.

On the downside, first support is located at 1.0750 (Fibonacci 38.2% retracement, 200-period Simple Moving Average (SMA) on the 4-hour chart) before 1.0720 (100-period SMA) and 1.0700 (Fibonacci 23.6% retracement).

 

• EUR/USD fluctuates above 1.0750 in the European morning on Monday.
• The USD could hold its ground in case Fed policymakers push back against September policy pivot.
• The near-term technical outlook points to a lack of bullish momentum.

EUR/USD fluctuates in a narrow channel above 1.0750 to start the new week. Comments from central bank officials could impact the pair’s action in the near term. The Producer Price Index (PPI) and the Consumer Price Index (CPI) data from the US on Tuesday and Wednesday, respectively, could trigger the next big action in EUR/USD.

Ahead of the weekend, hawkish comments from Federal Reserve (Fed) policymakers helped the US Dollar (USD) erase some of the losses it suffered following the disappointing Jobless Claims data on Thursday.

Fed Board of Governors member Michelle W. Bowman said on Friday that she doesn’t see rate cuts as warranted this year, adding that she would want to see a number of months of better inflation data. Meanwhile, Minneapolis Fed President Neel Kashkari reiterated his doubts on whether the policy was restrictive enough and noted that he can’t rule out the possibility of another rate hike this year.

Later in the day, Fed Vice Chair of the Board of Governors Phillip Jefferson and Cleveland Fed President Loretta Mester will be delivering speeches. According to the CME FedWatch Tool, markets are pricing in a 40% probability that the Fed will leave the policy rate unchanged in September. If Fed officials push back against the expectations for a rate cut in September, the market positioning suggests that there is room for US Dollar (USD) gains.

EUR/USD Technical Analysis

EUR/USD faces key resistance at 1.0790-1.0800 (Fibonacci 50% retracement of the latest downtrend, psychological level). If the pair manages to stabilize above this region, 1.0830 (Fibonacci 61.8% retracement) and 1.0900 (Fibonacci 78.6% retracement) could be seen as next hurdles.

On the downside, first support is located at 1.0750 (Fibonacci 38.2% retracement, 200-period Simple Moving Average (SMA) on the 4-hour chart) before 1.0720 (100-period SMA) and 1.0700 (Fibonacci 23.6% retracement).

 

• GBP/USD trades in a narrow channel above 1.2500 in the European session.
• The 200-day SMA forms key pivot level at 1.2540.
• The UK’s ONS will release employment data on Tuesday.

After fluctuating wildly in the second half of the previous week, GBP/USD seems to have stabilized above 1.2500 at the beginning of the new week. The near-term technical outlook fails to offer directional clues, while the pair struggles to pull away from the 200-day Simple Moving Average (SMA), currently located at 1.2540.

The dovish tone seen in the Bank of England’s (BoE) policy statement following the decision to maintain the bank rate at 5.25% on Thursday made it difficult for Pound Sterling to find demand. The US Dollar (USD) selloff that was triggered by disappointing US data later in the day, however, helped GBP/USD find support and allowed the pair to rise above 1.2500.

BoE Governor Andrew Bailey said that he was optimistic that things were moving in the right direction for a rate cut, adding that they had encouraging news on inflation.

Ahead of the weekend, several Federal Reserve (Fed) officials delivered hawkish remarks and capped GBP/USD upside. Minneapolis Fed President Neel Kashkari repeated his doubts over the restrictiveness of the policy and noted that he can’t rule out the possibility of another rate hike this year. Additionally, Fed Board of Governors member Michelle W. Bowman said on Friday that she doesn’t see rate cuts as warranted this year, adding that she would want to see a number of months of better inflation data.

The economic calendar will not offer any high-impact data releases on Monday. Fed Vice Chair of the Board of Governors Phillip Jefferson and Cleveland Fed President Loretta Mester are scheduled to speak in the early American session. In case these officials stick to a similarly hawkish language, GBP/USD could stay on the back foot. In the early European morning on Tuesday, the UK’s Office for National Statistics will release labor market data.

GBP/USD Technical Analysis

The 200-day Simple Moving Average (SMA) stays intact as near-term resistance at 1.2540. In case GBP/USD rises above that level and confirms it as support, 1.2590-1.2600 (Fibonacci 50% retracement of the latest downtrend, psychological level) could be seen as next resistance before 1.2635 (May 3 high).

On the downside, 1.2500 (psychological level, 100-period SMA on the 4-hour chart) aligns as first support before 1.2450 (Fibonacci 23.6% retracement) and 1.2400 (static level, psychological level).

 

Most Read: US Dollar Gains Ahead of US CPI Data; Setups on EUR/USD, USD/JPY, GBP/USD

After a subdued performance earlier this month, the U.S. dollar (DXY index) advanced this past week, climbing roughly 0.23% to 105.31. This resurgence was buoyed by a slight uptick in U.S. Treasury yields and a prevailing sense of caution among traders as they await the release of April’s U.S. consumer price index (CPI) figures, scheduled for this Wednesday.

The greenback could build upon its recent rebound if the pattern of consistently hotter-than-expected and sticky inflation readings observed this year repeats itself in next week’s fresh cost of living data from the Bureau of Labor Statistics.

Consensus forecasts indicate that both headline and core CPI registered a 0.3% uptick on a seasonally adjusted basis last month, resulting in the annual readings shifting from 3.5% to 3.4% for the former and from 3.8% to 3.7% for the latter—a modest yet encouraging step in the right direction.

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US dollar shorts, aiming to thwart the currency’s comeback, need to see an in-line or preferably softer-than-anticipated CPI report to launch the next bearish assault. Weak CPI figures could rekindle hopes of disinflation, bolstering bets that the Fed’s first rate cut of the cycle would come in September, which traders currently give a 48.6% chance of occurring.

FOMC MEETING PROBABILITIES

Source: CME Group

In the event of another upside surprise in the data, we could see yields rise across the board on the assumption that the Fed could delay the start of its easing campaign until much later in the year or 2025. Higher interest rates for longer in the U.S., just as other central banks prepare to start cutting them, should be a tailwind for the U.S. dollar in the near term.

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EUR/USD FORECAST – TECHNICAL ANALYSIS

EUR/USD rose modestly this past week, but so far has been unable to break above its 50-day and 200-day simple moving averages at 1.0790, a solid technical barrier. Bears will have to continue to defend this ceiling firmly; failure to do so could result in a rally toward trendline resistance at 1.0810. On further strength, the spotlight will turn to 1.0865, the 50% Fibonacci retracement of the 2023 decline.

In the scenario of price rejection from current levels and subsequent downward shift, support areas can be identified at 1.0725, followed by 1.0695. On a pullback, the pair could find stability around this floor before initiating a turnaround, but should a breakdown occur, we could see a rapid drop towards 1.0645, with the possibility of a bearish continuation towards 1.0600 if selling momentum intensifies.

EUR/USD PRICE ACTION CHART

EUR/USD Chart Created Using TradingView

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Change in	Longs	Shorts	OI
Daily	-1%	2%	1%
Weekly	-20%	19%	5%

What does it mean for price action?

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USD/JPY FORECAST – TECHNICAL ANALYSIS

USD/JPY regained strength and climbed past 155.50 this past week. If we see a follow-through to the upside in the days ahead, resistance awaits at 158.00 and 160.00 thereafter. Any rally towards these levels should be viewed with caution, given the risk of FX intervention by Japanese authorities to support the yen, which has the potential to trigger a sharp and abrupt downward reversal if repeated again.

On the flip side, if sellers mount a comeback and prices begin to head south, initial support materializes at 154.65, followed by 153.15. Further losses below this threshold could boost selling interest, paving the way for a move towards trendline support and the 50-day simple moving average positioned slightly above the 152.00 handle.

USD/JPY PRICE ACTION CHART

USD/JPY Chart Created Using TradingView

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GBP/USD FORECAST – TECHNICAL ANALYSIS

GBP/USD declined slightly this past week, but managed to hold above support at 1.2500. To thwart a drop of greater magnitude, bulls must resolutely protect this technical floor; any lapse in defense could quickly precipitate a plunge towards 1.2430. Additional downside progression from this point onward could lead to a retreat towards the April lows at 1.2300.

Conversely, if buyers step in and drive prices above the 200-day SMA, confluence resistance extends from 1.2600 and 1.2630 – an area that marks the convergence of the 50-day simple moving average with two prominent trendlines. Surmounting this barrier might pose a challenge for bulls, but a breakout could usher in a move towards 1.2720, the 61.8% Fib retracement of the July/October 2023 downturn.

GBP/USD PRICE ACTION CHART

GBP/USD Chart Created Using TradingView

USD/JPY Forecast Video for 26.06.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied slightly against the Japanese yen during trading on Friday, as it looks like we are going to continue to see a little bit of noisy behavior, but at the end of the day, there is a major difference between the 2 when it comes interest-rate differential, and therefore I think we continue to see this pair go higher. The ¥142.50 level being broken above on Thursday is a very bullish sign and does open up a move to much higher levels. In fact, when you look at the market, you can see that we recently have broken out of a bullish flag that measures for a move to ride around the ¥149 level, and then, of course, we have the previous ascending triangle that should offer a similar “measured move.”

At the top of the previous consolidation ascending triangle, we have the 50-Day EMA; therefore, it looks like we have plenty of support. All things being equal, it looks like any short-term pullback offers value that you can take advantage of, and therefore you should treat this market as such. If you are a longer-term trader, you can hold onto this and get paid positive swap, and get paid to hang on to this pair. I have no interest in shorting this market, as the Bank of Japan has reiterated its desire to continue with quantitative easing.

Furthermore, several Federal Reserve officials have suggested that monetary policy will see a couple of interest rate hikes this year, so it’s likely that we will continue to see a lot of upward pressure on the US dollar against the Japanese yen, perhaps even most other currencies. As bond markets continue to price in higher rates, we have seen the Bank of Japan stubbornly fight the rest of the world. As long as they keep those interest rates so low, that continues to put downward pressure on the value of the yen itself, not only against the US dollar, but against most currencies in general. It may take a lot of patience but we should continue to go much higher over the next several months.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

More From FXEMPIRE:

• The British pound initially pulled back during the trading session on Friday to test the crucial 1.25 level.
• The 1.25 level of course is a large, round, psychologically significant figure that a lot of people will be paying attention to, as it has been important multiple times. Now that we have bounce from there, it does suggest that perhaps we are going to continue to see a lot of momentum to the upside, and of course perhaps go looking to the moving averages above.

That being said, I also recognize that this is a market that will continue to be noisy, especially as the Monetary Policy Committee had two of its members vote for an interest rate cut this past week, so that does put a little bit of negativity into the British pound, but on Friday we have the market reacting to the University of Michigan Consumer Sentiment numbers coming out much lower than anticipated, and this course has people already starting to try to price in the idea of the Federal Reserve cutting rates. This of course is nonsense, but it was the catalyst on Friday.

• 

Choppy Conditions Ahead

I suspect that we are going to continue to see a lot of choppy action in this pair, as well as the rest of the Forex world, as people simply have no idea where to price risk at the moment. Ultimately, the Federal Reserve is going to stay tighter for longer, despite the fact that we did see a crack in consumer confidence. Quite frankly, it’s going to take a lot more than that to get the Federal Reserve to start moving again.

In the short term, we have the 200-Day EMA and the 50-Day EMA just above, and then of course we have resistance near the 1.26 level. Any signs of exhaustion in that area would probably get jumped upon, as a potential shorting opportunity. If we can break above there, then the market could very well find its way back to the 1.27 level above. That being said, it’s going to be noisy regardless and you have to keep an eye on the fact that any geopolitical tension almost always favors the US dollar anyway.

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I wrote on 5^th May that the best trade opportunities for the week were likely to be:

1. Long of the AUD/JPY currency cross. This gave a win of 1.21%.
2. Long of the CAD/JPY currency cross. This gave a win of 1.97%.
3. Long of the CHF/JPY currency cross. This gave a win of 1.69%.
4. Long of the EUR/JPY currency cross. This gave a win of 1.90%.
5. Long of the GBP/JPY currency cross. This gave a win of 1.68%.
6. Long of the NZD/JPY currency cross. This gave a win of 2.00%.

The overall result was a net win of 10.45%, resulting in a win of 1.74% per asset.

The last weeks saw lower volatility in the Forex market.

Last week’s key takeaway was the souring of risk-on sentiment due to expectations in the USA of higher inflationary pressure over the short-term as well as US Consumer Sentiment data which came in at a six-month low.  This souring did not come until the end of the week, and it is unclear how negative it is, as most assets over the entire week showed a risk-on rally.

It is unclear what sentiment will be like as the new week gets underway. It is likely that markets will be so fixated on the upcoming US CPI data release that nothing much will happen in the market before that.

The two major data releases last week were policy meetings at two central banks: the Bank of England and the Reserve Bank of Australia. Both central banks kept their interest rates unchanged, but the Bank of England vote was a little more dovish than expected. The RBA stated that inflation risk remains to the upside but that on balance they considered another rate holding to be the correct action. However, both banks effectively indicated a rate hike was out of the question.

Other important data releases were:

1. US 30-Year Bond Auction – this produced a slightly lower yield, which should be slightly bullish for risk.
2. UK GDP – this came in notably better than expected, with a month-on-month increase of 0.4% instead of the expected 0.1% increase.
3. US Unemployment Claims – this was slightly worse than expected.
4. Canadian Unemployment Rate – this was better than expected, with the unemployment rate remaining unchanged at 6.1% due t the creation of more net new jobs than was expected.

• 

The most important item over this coming week will be the release of US CPI (inflation) data on Wednesday. Apart from that, there are several other important releases scheduled, listed in order of likely importance:

1. US PPI
2. US Retail Sales
3. US Empire State Manufacturing Index
4. US Unemployment Claims
5. Australia Wage Price Index
6. New Zealand Inflation Expectations
7. UK Claimant Count Change
8. Australia Unemployment Rate

As May got underway, the long-term trend in the US Dollar was still unclear, so I made no monthly forecast.

Last week, I forecasted that the Japanese Yen would decline against the Euro, Pound, New Zealand Dollar, Swiss Franc, Canadian Dollar, and Australian Dollar. All of these were excellent winning trades, giving a large overall gain of 10.45%, as outlined earlier.

Directional volatility in the Forex market decreased last week, with 27% of the most important currency pairs fluctuating by more than 1% last week.

Last week, the Australian Dollar showed relative strength, and the Japanese Yen showed relative weakness.

You can trade these forecasts in a real or demo Forex brokerage account.

The US Dollar Index printed a small inside candlestick last week which closed slightly higher with a relatively large upper wick, signifying indecision. The candlestick is close to being a bearish pin bar. There is no true long-term trend here, as the price is above its level from 3 months ago but remains below its price of 6 months ago, making the US Dollar relatively unreliable to trade on a trend basis.

The weekly price chart below shows that the dollar has been swinging but has been in a consolidation pattern for quite a while, and the consolidation seems to be getting stronger and constricting.

However, it is worth noting that there is a confluence of a bearish descending trend line and a key horizontal resistance level at 105.81 which is not far from the current price. If the Us Dollar can get established above that level, it could be a significant bullish breakout. It could happen this week if the release of US CPI (inflation) data is notably higher than expected.

I expected that the GBP/USD currency pair would have potential support at $1.2449.

The H1 price chart below shows how this support level was rejected right at the start of last Monday’s London / New York session overlap by a bullish doji, marked by the up arrow in the price chart below, signaling the timing of this bullish rejection. This was then followed by an inside candlestick, which broke bullishly during the next time period. This can be an excellent time of day to enter a trade in a currency pair which involves the US Dollar such as this one.

This trade has been somewhat profitable, with the maximum reward-to-risk ratio reached so far depending greatly upon the positioning of the stop loss. If only the inside candlestick was used for the stop, the trade would have had an OK ratio.

The USD/JPY currency pair was active this week, as were all the Yen crosses. This is due to volatility remaining within the Japanese Yen after its recent massive price movements, with the volatility goosed by two suspected interventions from the Bank of Japan.

The Yen is weakening everywhere, and so of course it also weakened against the US Dollar. However, several other currencies gained even more against the Yen last week.

Technically we see the bullish momentum starting to evaporate into a consolidation below ¥156.00.

Yen weakness is quite likely to persist over the coming week. Whether this is the best pair to use to be short of the Yen is debatable. However, if the Yen does stay weak, long trades from bounces at support levels in this currency pair are likely to be good trades.

The price of Gold rose quite firmly last week, printing a bullish engulfing candlestick of good size, although Friday saw Gold give up some of its gains through a short-term topping out. The weekly price chart below shows some upper wick on the weekly candlestick. However, the price closed notably higher, and is not very far from making a record high weekly close, which was last made 4 weeks ago at $2392.

We do not yet have bullish breakout conditions, but long trades do look more likely to succeed than short ones, and there is certainly a long-term bullish trend here.

I think we could see a good point to enter a new long trade if we get either:

• A daily close above $2400, or
• A retracement to any of the support levels above $2290.

The price of Silver rose quite firmly last week, printing a bullish engulfing candlestick of good size, although Friday saw Silver give up some of its gains. The weekly price chart below shows some upper wick on the weekly candlestick. However, the price closed notably higher, and is not very far from making a record multi-year high weekly close, which was last made 4 weeks ago at $28.69.

We do not yet have bullish breakout conditions, but long trades do look more likely to succeed than short ones, and there is certainly a long-term bullish trend here.

I think we could see a good point to enter a new long trade if we get either:

• A daily close above $29, or
• A retracement to either of the support levels at $27.72 or $27.46, with $27.46 looking especially strong due to its confluence with $27.50.

After major US equity indices dropped quite sharply 4 weeks ago after making new all-time highs, US stock markets have been rising slowly but surely, and last week saw quite good performances, especially here in the broad, benchmark S&P 500 Index. It is worth noting that this Index outperformed the NASDAQ 100 Index, which is unusual in a bear market and suggests that the tech sector currently has some vulnerability.

The weekly price chart below shows a bullish candlestick that closed quite near its high. There was some upper wick, but nothing unduly large for bulls to worry about.

There is clearly a long-term bullish trend coupled with mostly bullish short-term momentum. The issue for bulls here is likely to be that the price is near the recent record highs which could provide resistance and trigger another bearish reversal if reached.

For this reason, I will only consider entering a new long trade here if we see a new record high daily close. I prefer a daily close above 5265 which would be a new record high.

We have seen renewed risk-on sentiment in recent days, which is benefiting stocks and precious metals. Gold and silver are positively correlated with stock market performances historically.

I see the best trading opportunities this week as follows:

1. Long of the S&P 500 Index following a daily close above 5265.
2. Long of Gold following a daily close above $2400.
3. Long of Silver following a daily close above $29.00.

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