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[KeyToMarketsUK]

USDSGD printed an inverted- V shape reversal. Can we expect a double bottom?

• USDSGD printed an inverse V shape reversal .
• Parallel support finds at 1.3900.

USDSGD printed an inverse V shape reversal as shown in the below chart, rejected at 100DMA last week. The cross is trading at 1.3955 on Wednesday Asia session rose marginally 0.05%. The cross made at low at 1.3940 parallel support finds at 1.3900 below this 1.3890 its 100WMA exists.

Over near term trading range remains between 1.3890 and 1.4080 levels.
If price fails at 100WMA, further downward acceleration possible for 1.3820 lower weekly BB and 1.3800 its 100WEMA. The 61.8 fib (August 2016-Jan 2017 rally) coincides with 100WEMA at 1.38.

The cross has been consolidating at 20MA on the months, twice failed to close above.
The RSI on the four-hour chart is extremely oversold. In case of rebound 1.3980 and 1.4000/1.4020 are the initial targets followed by 1.4050 if settles above 1.4000.

The 50DMA is the key driver to bulls incase of rebound. Earlier the price rejected four times by 50DMA (Red line on the above chart).

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[KeyToMarketsUK]

Gold: Parallel resistance seems at 1264, more headroom available

Gold price rose to two-week high, climbs above all daily MA’s and 50WMA’s aswell. From early May low, gold price rebounds more than 5% high made 1262.80 today, facing parallel resistance at 1264 rounded. The price gave an upside breakout through an ascending triangle (H4 chart), the height of the triangle is 21$.

Earlier in our earlier article (May 11th ), we recommended “Bargain hunting expected” at the price of 1220$.

As Geopolitical concerns are growing market participants shifts to gold and JPY. The price manages to hold the four-month ascending trendline (daily chart) rebounds nearly 60% of April fall (1295-1214). The parallel resistance seems at 1264 rounded coincides with 61.8% of April fall (1295-1214).

The hourly RSI (H1&H4) indicates an overbought signal, as a result rally pause at parallel resistance on today’s Asia trade. Over a medium term, the upward momentum remains in play for 1271-1274$, 1280, 1288, 1295 and 1314 it’s 100.0fe (orange line).

Alternatively, support finds at 1254, 1246 and 1238 levels.

Over medium-term, the price has a potential support zone remains between 1214 and 1180, we refer this as “buying zone”. In case of deep correction, weekly lower Bollinger band finds at 1160$.



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To contact the author of this analysis, please email- [email protected], Skype id- jesanand

 

[KeyToMarketsUK]

USDCAD trading between fib levels making a lower low and lower high pattern.

• Thrice fails at 20DMA.
• Gave a symmetrical triangle breakdown on the four-hour chart.
• Canada March retail sales and April CPI in focus today

Canada upcoming events:
The high impact events are March retail sales and April CPI, both scheduled today.

According to Barclays analyst’s, “We forecast inflation to have remained unchanged on the month and the annual rate to fall to 1.35% y/y, on continued weakness of core inflation and seasonally weakness in April”.

TECHNICAL VIEW​

USDCAD trading down marginally 0.05% on Asia session as Crude oil rose nearly a percent. Ahead of today’s events and next week’s OPEC meet USDCAD likely to accelerate the volatility.
The price rejected at 20DMA for three consecutive trading sessions and the daily RSI moving downward are the two bearish factors positioning currently.

Last week, the price slips below 23.6% (1.3220-1.3793 rally) twice, low made at 1.3640 and rebounds to 1.3770. This week the price slips further to 38.2% which is a lower low (1.3220-1.3793 rally) at 1.3571 and rebounds slightly above 23.6% high 1.3670 a lower high. The 50.0% finds at 1.3500 below this 1.3480 its 50DMA exists. Ahead of next week’s OPEC meet and Bank of Canada rate statement which is fully expected to hold the rates the 61.8% act as potential support finds at 1.3440.

The 200MA’s finds between 1.3560 and 1.3530 on the four-hour chart.

Institutional forecast:
According to strategist Nicholas Weng at Deutsche Bank, “CAD shorts were trimmed following the recent oil rally”.

CitiFX analysts forecast (May 18) WTI at 55$ over the medium term.
According to analysts at CitiFX,” we expect to see a re-test of the year’s highs around $54.94-$55.24 and even higher ($62-$65) over the medium term”. The analyst’s also said, “we would expect to see gains by CAD”.

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[KeyToMarketsUK]

Silver: Further head room expected.

• April-May 2017 fall vs Oct-Nov 2015 fall.
• Higher low expected on weekly basis.
• Over near term, expected a bullish bias.

Silver price manage to recover nearly 40% of April – May fall, rose two consecutive weeks. During April to May fall (18.60-16.00$) the price down for 16 days out of 17 trading sessions. It reminds me the October 2015 fall, where the price fell for fifteen straight sessions.The magnitude of the April-May fall was slightly higher than Oct 2015.

The price made a bottom ahead of Fed’s rate hike in 2015. This time we have June Fed meeting and I expect the price likely to bottom between 16-15.60$ and change the direction for 17.40 and 17.90 initially. Further strength will be available if the price settles above 50MA on the monthly chart.

Earlier the price rejected thrice at 50MA (monthly) and in the current situation since February the price rejected thrice (Feb, Mar, and April). Over the medium term, the price has a potential resistance between 17.90 and 18.80 (50MA and 100EMA, monthly chart) and potential support finds between 16.00-15.60$. If fails at Dec 2016 low 15.60$, parallel support levels finds between 15.20 and 15.00. In an extreme bearish scenario, fails at 15$ drag the Silver to 13$ but the chances are remote.

Over near term, trading range remains between 17.40 and 16.00. Today (May 22) on early Asia trade, the Silver price suddenly spikes more than a percent, high was 17.14$ later erased the gains mostly. At the time of preparing the article (12:00 PM AEDT), the price is trading with 0.20% gains at 16.85.

Trading support finds at 16.80, 16.40 and 16.00$. The 20DMA finds at 16.65 and higher swing low (four-hour chart) finds at 16.40. In case of a dip towards 20DMA is a buying opportunity with sl 16.40 for 17, 17.30/17.40 initially, later 17.70/17.90 expected. Until the price close above 16$ on weekly basis, we can mark it as higher low expect a strong rebound for 18.80/19$ over the medium term. Alternatively, if the price fails at 16$, focus shifts to 15.60 and 15$.

As shown on the daily chart, the daily RSI and oscillators are bullish favors and the weekly chart (below) spotted with a symmetrical triangle.

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[KeyToMarketsUK]

Brent: Resistance seems between 54.30-54.50$

Oil price hits a highest more than a month.
OPEC meeting on May 25th in focus.
Brent oil enters resistance zone.

FUNDAMENTAL NEWS​

Traders are anticipating that OPEC output cuts are likely to be extended nine months. Oil price continues to climb after major sell-off triggered on the other Friday (May 05), rose nearly 17% from early May lows.

Earlier this week, Saudi Arabia and Russia announced that they have agreed to extend output cuts for further nine months, until March 2018.

Saudi Arabia’s energy minister said on Sunday that “extending the supply cuts by a further nine months until next March, and adding one or two small producers to the pact, should reduce oil inventories to their five-year average” reported by Reuters.

OPEC meets this Thursday, May 25. Market participants expected that production cut will be extended for nine months. Earlier on November 30, 2016, OPEC reached its first deal to cut oil production since 2008. The deal cut oil production from OPEC members by 1.2 million barrels a day.

Analyst at Nomura forecast ‘OPEC likely to extend cuts”. In a Nomura research note, the analyst also forecast “We see scope for continued oil price support if an extension is agreed on, and think oil prices have a few more months of positive narrative before US production concerns resurface”.

CFTC leveraged positioning: Net long crude oil positions fell for the consecutive week despite a pick-up in prices, reported By ANZ.

According to the Reuters, “OPEC and other oil producers are on course to agree on an extension of supply cuts at a meeting on Thursday, with Saudi Arabia saying most participants are on board with the plan to rein in a global supply glut.”

TECHNICAL VIEW​

Crude oil prices continue to climb to one-month high as optimism over OPEC meeting (May 25) are growing. The bulls strength was sapped after rebounds more than 17% from early May 05 lows.


Before climbing higher to 100DMA on Monday session, the price rejected at 52.40 (last week). But we forecast 53.70$, as a result, the price move above our target price made a high at 54.20 enters to supply zone.

We have been recommending to buy oil price for about a month, this theme generated good returns over near term. Despite the sharp sell-off, the theme remains bullish over medium term.

The price gave an inverted H&S pattern breakout on the four-hour chart last week, but facing strong resistance at 100DMA. Parallel resistance seems at 54.30 Feb 08 low above this falling trend line in focus (daily).

The daily RSI and Oscillator are remained bullish however on the four-hour chart they are overbought. Ahead of the OPEC meeting, charts are giving a mixed signal.

If the price fails to settle above 54.30, retracement expected to earlier breakout level or neckline finds at 52.40/52.60 below this 52/51.80 and 51.20/51 expected. Additional support levels finds at 50.80 and 50.40. Further bullish confirmation available if the price settles above 54.50 then 55,55.40 and 55.90/56 expected.

NUTSHELL: Resistance moved to 54.30-54.50 earlier was 52.60-52.40. A re-test of year’s high is highly likely.



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[KeyToMarketsUK]

[EURUSD Weekly Market Profile]

The Point Of Control (POC) from last weeks stands at 1.1110.

 

[KeyToMarketsUK]

USDCHF: Buying opportunity available at year’s lowest level

• The relentless dollar selling finally pause.
• USDCHF respects 200WEMA.
• One and two-year trend lines in focus.
• Symmetrical triangle breakout on H1.

TECHNICAL VIEW​

Before 3% retracement in eight sessions, USDCHF rejected twice at 20WMA extend the losses on the third straight month. The cross rejected four times at 100EMA (monthly) finally settles below 20MA(monthly) as well.

In our last week’s article, we forecast “0.9750 and 0.9720/0.9700 if bulls fail at 100WMA” the price made a low at 0.9690 and changed the direction. The immediate support finds at 0.9660 its 100MA (monthly).

Currently, we change the stance from selling to buying as the hourly charts forming a base between 0.97 and 0.9690. Overnight the price gave a breakout through symmetrical triangle on the hourly chart.

The price is trading neutral at 0.9758 on early Asia session (May 24) trying to give an another upside breakout through the lower end of the falling channel (daily). We expect the rally might extend for 0.9800/0.9820 initially, later 0.9850 expected.

In the extreme case 0.9950 expected, we will analyze once the price settles above 0.9850. Over near-term support finds at 0.9700/0.9690 and 0.9660 these are demand zones or buyers zone.

In a scary situation, if dollar index loose the breaks again, we forecast around 0.9550 USDCHF offers longer term support.

Trade: A buying opportunity available at year’s lowest level

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[KeyToMarketsUK]

EURUSD offers room for downward correction over near term

Spotted with a double top, resistance seems between 1.1270 and 1.1300.
Trading range remains between 1.1160 and 1.1300.
Extended euro longs.
Room for downward correction over near term.

Data Review:

GfK predicts the consumer climate to reach 10.4 points in its forecast for June, which is 0.2 points higher than in May.

Upcoming data:

Given the lack of EUR macroeconomic data it is understandably a quiet day in the markets today. Things should pick up rapidly by tomorrow however as we have a number of high-impact U.S data releases to look forward to, starting with the U.S unemployment claims and U.S Prelim GDP QoQ basis.

Friday,May 26
U.S Prelim GDP QoQ basis

HSBC: We expect Q1 GDP growth to be revised up to 0.9% at an annualised rate, up from the initial release of 0.7%.

U.S April Durable goods orders

HSBC: We forecast that durable goods orders fell 1.6% in April and core durable goods orders rose 0.5%.

TECHNICAL VIEW​

Deutsche Bank: Dollar selling was the dominant theme this week, as funds extended euro longs.

The weaker US dollar and less euro area political risk offers decent support to the EUR. Focus is shifting to the central bank meetings in June.

Bulls strength sacked at 1.1270 rounded it’s 161.8 daily fe above this 1.1300 are the other potential resistance exists. Over near term, there is a room for downside correction as the daily RSI printing lower high.

On the downside potential support finds between 1.1180 and 1.1160 below this selling pressure accelerates for 1.1100/1.1075 and 1.1020 in the extreme case.

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[KeyToMarketsUK]

USDCAD manages to hold the 50.0% (Jan-May rally). CAD likely to outperform.

• The tone of the BOC (May 24)assessment appears to be more upbeat.
• USDCAD manages to hold the 50.0% (Jan-May rally).
• Oil is expected to trade flat, with risks rising in 2018.

USDCAD made a low at 1.2460 a year ago, rose 61.8% (1.4689-1.2460 fall). As the CAD bearish sentiment eases slightly, USDCAD risk available to the downside.

Recent Canada economic data is encouraging and Bank of Canada being more positive on the domestic growth outlook.

BOC said “The Canadian economy’s adjustment to lower oil prices is largely complete and recent economic data have been encouraging, including indicators of business investment”.

According to Nomura, “CAD has been supported by the BoC being more positive on the domestic growth outlook”.

Deutsche Bank: We continue to expect the BoC to hike just once this year, most likely in Q4.

But Morgan Stanley has a contrarian view, “Stable BoC policy and limited developments in oil markets failing to provide a directional short-term catalyst”.

In a research note to clients, Dara Blume Strategist at Morgan Stanley said “We argue that headwinds to Canadian output growth and continued labor market slack will keep inflation low, forcing the BoC to stay on hold while the output gap closes by mid-2018 on the BoC’s estimates”.

The upcoming Canadain economic events outcome likely provide a clear picture over medium term price action.

Risk events:

Tue, May 30

Current account

Wed, May 31

GDP

Deutsche Bank: We expect Q1 real GDP growth to show a 3.5% annualized gain

Fri, June 02

Trade Balance

Besides, we got May ADP employment (June 01) and Non- Farm Payrolls (June 03).

TECHNICAL VIEW​

Ahead of the key events volatility likely to accelerate and trading range remains between 1.33/1.3250 and 1.36/1.3620.

On Thursday session, the price respects the parallel support available at 1.3387 rebounds nearly 100 pips but fails to close at 50DMA. If settles above 1.35 earlier swing high seem at 1.3535 and 1.3590/1.36 are the potential resistance exists to test the bulls.
Additional selling available below 1.3350 for 1.3300 and 1.3260 as the daily and even at higher time frames oscillator remains bearish.

Over near term, the price has the nearest support zone remains between 1.3387-1.3350 below this 1.3260-1.3250 exists.


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[KeyToMarketsUK]

Gold: Price action triggered multiple bullish developments ahead of huge events.

TECHNICAL VIEW​

Gold price ended last week on a bullish note, extend the gains for a third consecutive week. The price closed above all daily and weekly moving averages, which confirms the continuation of the bullish trend in the coming weeks.

Recently, we have been providing bullish views on precious metal space (Gold and Silver) and we are expecting more headroom available over the medium term. On the lower and higher time frames, there are multiple bullish developments triggered.We initialed “bargain hunting” on May 11th later medium targets forecast for 1271-1274$, 1280, 1288, 1295 and 1314$.
According to the CFTC leveraged positioning for the week ending May 23, 2017, net long gold positions picked up after four consecutive weeks of net selling.

Along with the bullish factors, we got one bearish factor aswell.

Bullish Developments:

• On the hour chart, the price settles above symmetrical triangle.
• On the four hour chart, inverted H&S pattern breakout visible. The pattern target aims for 1278$ and April high 1295$ until holding above 1247$. The price erases the five-month descending trendline, eleven-month trendline in focus around 1280-1282$.
• On the daily and weekly charts, the price settles above all moving averages.
• The other week, the price spotted with a Golden cross (May 17).

Bearish factor: On the four-hour chart, the price action spotted with a negative divergence. Parallel resistance seems at 1271.

If the price fails to surpass 1271, the negative divergence likely to drag the price to support levels 1263, 1259 and 1252. Alternatively, clearing above 1271 aim for 1278 and 1295 levels.

Key data and events scheduled this week :

Fri, Jun 02

U.S May employment report

Barclays forecast, “We expect nonfarm and private payrolls to rise by 175k (cons.: 176k; last: 211k) and 170k (cons.: 171k; last: 194k) respectively, and we look for the unemployment rate to hold steady at 4.4% (cons./last: 4.4%). We and consensus forecast average hourly earnings to increase 0.3% m/m.

RBC Capital Markets forecast ,”we expect headline and private NFP to come in at 200K for the month. The unemployment rate should remain unchanged at 4.4%
following a sharp tick lower last month.”

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[KeyToMarketsUK]

EURUSD- Fell below the 100 pips trading range, what to watch now.

French election outcome and latest data releases in the euro area continues to support the EUR. We forecast near-term depreciation, as investors focus shifting to the central bank meetings in June.

FUNDAMENTAL NEWS​

Review of the previous week data: Flash Services PMI increases in EZ, Germany, and France.

M3 decreased to 4.9% in April 2017, from 5.3% in March.
GfK predicts German consumer climate to reach 10.4 points in its forecast for June, which is 0.2 points higher than in May.
Flash EZ Services PMI slightly falls to 56.2 vs 56.4 in April, 2-month low.
Flash EZ Manufacturing PMI increases to 57.0 vs 56.7 in April, a 73-month
Flash Germany Services PMI falls to at 55.2 vs 55.4 in April, 3-month low.
Flash Germany Manufacturing PMI increases to 59.4 vs 58.2 in April, a 73-month
Flash France Services PMI increases to 58.0 vs 56.7 in April, 72-month
Flash France Manufacturing PMI falls to 54.0 vs 55.1 in April, 2-month low.

Upcoming data:

Key data releases for this week include May inflation in the Eurozone (May 31), and the US May labour market report (Jun 02). We do not expect inflation data will accelerate the market volatility ahead of the US labor data (June 02) and next week ECB meeting. (June 08)

Wed, May 31

Germany

CPI YoY basis

Core CPI

Analysts forecast EA inflation likely to fall back moderately along with core CPI. The following are the analyst’s forecast:

UniCredit: Headline inflation will probably decline to 1.5% YoY from 1.9% and Core inflation is likely to drop back towards 0.9-1.0%.

RBC Capital Markets: we expect the headline rate to fall back to 1.6% y/y from April’s 1.9%. we Would expect core inflation to fall back to 0.9–1.0% this month, approximately the level at which it has held for most of the last two years.

Barclays: We look for euro area ‘flash’ HICP inflation (Wednesday) to drop to 1.4% y/y from 1.9% y/y in April. We also expect core HICP inflation to fall to 1.0% y/y from 1.2% y/y.

UBS: Inflation in the Euro area to moderate to 1.70% y/y (prev.1.90%, cons. 1.50%), while core inflation is expected to edge down to 1.0% (prev.1.20%, cons. 1.0%).

Eurozone Unemployment Rate.

According to Armando Armenta Strategist at UBS, Eurozone unemployment rate to continue trending downwards to 9.4% in April from 9.5% in the prior month.



FX POSITIONING

CFTC leveraged positioning data is for the week ending 23 May 2017 reveals, Funds reduced their overall net EUR short positions, the lowest since May 2014. This is the fifth consecutive week of EUR buying and if it continues, we could see leveraged funds turning net long EUR for the first time in three years, reported by ANZ.

TECHNICAL VIEW​

We forecast near-term depreciation, as investors focus shifting to the central bank meetings in June. Ahead of this week’s NFP and next week’s ECB June meeting investors likely to book profit on longs.

According to Barclays, “The ECB seems to be indicating only a very slow change to its guidance in June” besides “US economists expect the Fed to begin a balance sheet runoff in September (previously expected in December) and to raise the target range for the federal fund’s rate by 25bp in June and December.

In our Friday’s article (May 26), we forecast “downward correction over near term”.

Bull’s strength sacked at 1.1270 (rounded) it’s 161.8 daily fe over near term, there is a room for downside correction as the daily RSI is printing lower high.

The price gave a breakdown (Descending triangle on H1 chart) of 100 pips trading range, low made 1.1123. The price has immediate support finds at 1.1100 its 100WEMA below this parallel support finds at 1.1075 and 20DMA finds at 1.1050 exists. Ahead of EA inflation data EUR has potential support zone remains between 1.1100/1.1050 and 1.0990 levels. Alternatively, resistance seems at 1.1170/1.1200, 1.1250 and 1.1300.

Over the medium term, potential support finds at 1.0900/1.0870 below this 1.0830/1.08 exists. EUR momentum remains strong aiming at the two-year descending trendline or 1.1400/1.1430.

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​

 

[KeyToMarketsUK]

EURJPY: Developing multiple bearish factors

TECHNICAL VIEW:​

Spotted with a double top.
Erases the five-week ascending trendline.
Ascending triangle formation spotted.

Before retrace to 123.15 (May 30) the cross spotted with a double top on the daily and weekly charts and rejected twice at 200EMA (weekly). Over near and medium term the cross has potential resistance seems between 125.80 and 126 above this 126.20/126.40 exists.

The daily RSI making lower high appears limited upside risk. Today on Asia session EURJPY trading with 0.20% gains high 124.28 facing resistance at 20DMA seems at 124.30. Ascending triangle formation spotted on the daily chart, if settles below 122.50 distribution pattern likely to be confirmed.

This week’s Monday (May 29) fall brought the cross below the five-weeks ascending trendline. Multiple technical factors deliver “limited upside risk” theme.

FX POSITIONING:

According to Strategist Ran Ren and Scott Dingman at CITI FX “Hedge funds sold EUR during every trading session last week”. The strategists also said “Weekly EUR selling was the strongest since early April and on a 4-week basis, leveraged clients are reversing from the positive territory” in a note to clients (May 30).

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[KeyToMarketsUK]

USDCAD: CAD shorts were pared for the third consecutive week from record shorts.

Symmetrical triangle breakout visible.
Erases a month falling channel.

USDCAD snaps the 3-month winning formula fell more than a percent for the month of May, but remains above 20MA (monthly). Earlier USDCAD rejected at 61.8% (1.4690-1.2460 fall) as the CAD bearish sentiment eases slightly.

FUNDAMENTAL NEWS​

Recent Canada economic data is encouraging and Bank of Canada being more positive on the domestic growth outlook.

BOC said “The Canadian economy’s adjustment to lower oil prices is largely complete and recent economic data have been encouraging, including indicators of business investment”.

According to Nomura, “CAD has been supported by the BoC being more positive on the domestic growth outlook”.

Deutsche Bank: We continue to expect the BoC to hike just once this year, most likely in Q4.

But Morgan Stanley has a contrarian view, “Stable BoC policy and limited developments in oil markets failing to provide a directional short-term catalyst”.

In a research note to clients, Dara Blume Strategist at Morgan Stanley said “We argue that headwinds to Canadian output growth and continued labor market slack will keep inflation low, forcing the BoC to stay on hold while the output gap closes by mid-2018 on the BoC’s estimates”.

Data Review:

Canada March GDP increased 0.5%, following no change in February.
Current account deficit (on a seasonally adjusted basis) widened by $2.3B in the Q1 to $14.1B, as the goods balance moved from a surplus to a deficit.

Upcoming risk events:

Fri, June 02

Trade Balance

Besides, we got May ADP employment (June 01) and Non- Farm Payrolls (June 02).

US May ADP employment is forecast for 180k.

TECHNICAL VIEW​

Last week, the price hold the parallel support available at 1.3387 rebounds above 1.35. The price has been rejected at 50DMA for four trading session out of five. On Wednesday session, high made at 1.3520 rejected at parallel resistance seems at 1.3540 above this 1.3590/1.3600 exists.

Over near term, the price has the support zone remains between 1.3450/1.3430 below this 1.3387-1.3350 and 1.3260-1.3250 exists.

According to Nicholas Weng a Strategist at Deutsche Bank, “CAD shorts were pared for the third consecutive week from record shorts”.

In the four hour chart, the price gave an upside breakout through the symmetrical triangle and erased a month falling channel .The price likely to cap between 1.3560-1.3600 levels.

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​

 

[KeyToMarketsUK]

Risk reward favors short EURGBP

FUNDAMENTAL VIEW​

UK politics has taken the center stage this week, with opinion polls showing Theresa May could lose the majority. Renewed Brexit concerns and latest polls reveal Theresa May landslide victory might not possible, are the two factors drag the pound recently.

According to Nomura analysts (June 01), “In the event of a Labour victory, we think the pound would at first head lower, as increased uncertainty would lead to reduced inflows. However, as austerity would be removed and “softer Brexit” hopes would return higher real yields may offset this and GBP would be higher”.

Besides, EUR was fully priced for ECB’s forward guidance in its June meeting scheduled next week.

TECHNICAL VIEW​

The cross spotted with a double top but consolidating above the five-month trendline. The cross rallied for two consecutive weeks, printed the strongest monthly gains in six months. Over near, resistance zone remains between 0.8750-0.8785 March high and 50.0% of Oct-Dec fall above this 0.8850 Jan high exists.

Alternatively, support finds at 0.8680 and 0.8650 below this downside risk open for 0.8600 and 0.8570/0.8550. Trend reversal occurs below 0.8500 for 0.8350/0.8330 levels.

According to analysts at Barclays, “Markets are too positive EUR and have turned too negative GBP; risk reward favors short EURGBP”.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?
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[KeyToMarketsUK]

Brent: Potential support finds at 48.50 and 47.70.

FUNDAMENTAL NEWS​

Oil price fell nearly a percent on Monday session on the diplomatic clash between Qatar and three Arab allies. Following the OPEC meeting (May 25) oil slumps more than 10% from May high.
Before retracing a percent on Monday session, Oil price rose nearly 1.5% led by tensions in the Middle East. A political rupture raises the price volatility but manages to remain above Friday low.

According to JBC Energy analysts said in a note, "While we would not want to read too much into this in terms of looming trouble for OPEC, the fact that Qatar's stance towards Iran is a key element in this issue does make for a potentially more complicated setup at future meetings should the issue not have been resolved in due time".

For the week ending to May 30, the CFTC) said on Friday “Hedge funds raised bullish wagers on U.S. crude oil for the second straight week to a near one-month high”. The data showed, “Money managers raised their combined futures and options position in New York and London by 17,555 contracts to 239,049” reported by Reuters.

TECHNICAL VIEWS​

The weakness in recent prices coupled with the scale of growth in US drilling activity. As we forecast in our last article, the price tested our potential support finds at 48.50, low made at 48.60 and spotted with a positive divergence on the four-hour chart. Brent oil price retraces more than 70% (46.32-54.55 rally) likely to place a bottom between 48.50 and 47.80 levels.

We forecast a rebound to 49.30 and 49.50 in a day or two as the hourly oscillator remain bullish. The bulls must propel above 49.80/50.00 to escape further correction, in this case 50.40/50.60 and 51 are highly likely. Alternatively, fails at 48.50 additional support finds between 48.10-47.90.

We forecast an inverted H&S pattern on the daily RSI.

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[KeyToMarketsUK]

Commodity trades

• Brent oil erased the two-week falling channel.
• Symmetrical triangle breakout visible and spotted with a triple bottom..
• We forecast a rebound for 49.50 but price exceeds.
• Gold and Silver finally succeeded to meet our targets.

Oil price edge upward more than 2% on Tuesday session and spotted with a trip bottom on the daily chart. On our yesterday’s article, we forecast a rebound for 49.30 and 49.50 but the price made a high at 49.96.

Readers can remind our forecast post-OPEC meeting for 48.60$, low made at 48.59$ and again updated “Wait for a dip to buy”.

Before further up move, the price likely to consolidate between 50 and 48.50 levels to capture buying interest.

The bulls must propel above 50.00 to escape further correction, in this case, 50.40/50.60 and 51 are highly likely. Alternatively, fails at 48.50 additional support finds between 48.10-47.90.

We forecast an inverted H&S pattern on the daily RSI.

For a trading perspective, support finds at 49.20, 48.80 and 48.50. Alternatively, resistance seems at 50.00, 50.40 and 51$. Yesterday’s breakout was an initial sign of renewed interest, but we still need to wait for bullish confirmation to confirm the bottom.

Gold price finally succeeded to meet our target at 1295$ recorded at 1220$ odd levels. The price witness a clear five-year trendline breakout but a weekly close above the same need to confirm further headroom.

The immediate resistance seems at April high above this 1300$ mark exists. A weekly close above 1300$ confirms the continuation of the bullish trend in the coming weeks for 1315 and 1319 initially and next in line 1324, 1337$ and 1352$.

Alternatively, support finds at 1287, 1280 and 1273. As the hourly RSI and oscillator are exhausted and appears overbought a healthy correction needed to accelerate upward momentum again.

If we look into the Silver, finally succeeded to complete our target at 17.70$ recorded at 16.80$ odd levels. The price made a high at 17.75 (June 06) facing resistance at 200WMA and 50MA (monthly) above this 17.90 50WMA exists.

Further headroom available for 18.30,18.50 and 19$ if propels above 18$.

Potential support finds between 17.30 and 16.90 levels.

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[KeyToMarketsUK]

EUR technical view against JPY and USD ahead of ECB meeting

Wednesday’s EUR depreciation might fully priced the inflation downgrade forecast.
ECB sounds less dovish and more symmetric forward guidance.
EURUSD failed to overcome 1.1285 resistance.
EURJPY got two bullish indicators along with the multiple bearish themes.

FUNDAMENTAL NEWS​

Market participants focus on today’s (June 08) ECB meeting expecting to change its wording, growth and inflation forecast.

We expect that ECB sounds less dovish and more symmetric forward guidance. ECB likely to upgrade its economic assessment and acknowledge that risks to the growth outlook have moved from the downside to broadly balanced. We guess Wednesday’s EUR depreciation might fully priced the inflation downgrade forecast.

If the ECB evade changing its forward guidance today, further EUR deprecation is possible.

TECHNICAL VIEW​

EURUSD rejected at 1.1300 moved lower but rebound from parallel support on Wednesday session.

The EURUSD manages to hold the parallel support finds at 1.1200 rounded, low made at 1.1204 and rebound sharply to 1.1280.
Since four straight sessions, EURUSD failed to overcome 1.1285 resistance and draft the trading range between 1.1200 and 1.1285. The last five trading sessions price action reveals, upside risk is weakening and a downturn possible. The daily RSI and oscillator remain bearish, appears upside risk is limited.


Initial support finds at 1.1220/1.1200 below this 1.1160 and 1.11/1.1075 next in line. Alternatively settles above 1.1300, set of resistance levels next in line are 1.1330, 1.1360 and 1.14. We expect spikes would not be sustainable and likely to give up some of the gains over near term.

Ahead of the ECB (June 08) and Fed meeting (June 15), we forecast the price likely to cap between 1.13/1.1360 or 1.14/1.1430 levels.

Readers can remind, we have been recommending “buying EUR on dips” still remains the same strategy.

EURJPY:
Societe Generale: The BOJ will hold the line and keep policy easy enough for long enough for us to see significantly higher levels in EUR/JPY in due course.

The cross has been consolidating in a narrow range between 125.80 and 122.50 for four weeks. Before retrace to 122.50, the cross spotted with a double top on the weekly chart and rejected twice at 200WEMA.

Over near term 121.70 and 121.20 are the potential supports next in line. Alternatively, to regain the bullish momentum back the cross must close above 124.50 on a daily basis to aim for 125.20/125.40 and 125.80. Over medium term the cross has potential resistance seems between 125.80 and 126 above this 126.20/126.40 exists.

The daily RSI making lower high appears limited upside risk. Symmetrical triangle breakdown spotted on the daily chart, if settles below 122.50 distribution pattern likely to be confirmed.

The other week (May 29) fall brought the cross below the five-weeks ascending trendline (four-hour) and Tuesday’s (June 06) fall brought the cross below symmetrical triangle on the daily chart.

Along with the multiple bearish themes, we got two bullish indicators on the four-hour chart. RSI and oscillator remain bullish.

Multiple technical factors deliver “limited upside risk” theme.

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[KeyToMarketsUK]

The June central bank actions likely to soften the EURUSD uptrend over near term.

EUR has been sliding after ECB meeting and extends the losses on Friday early trade, down 0.15% low made at 1.1196 (9:20 AM, AEST). EUR active into UK general election results in early Asia trade against GBP.

ECB review:

As expected ECB left its monetary policy settings unchanged on Thursday (June 08). ECB fell short to meet market’s hawkish expectations.

The ECB kept policy rates and its QE program unchanged but changed forward guidance on interest rates now expected to “remain at present” levels for an extended period.

Regarding non-standard monetary policy measures, the Governing Council confirms that the net asset purchases to run until the end of Dec 2017, or beyond, if needed, until we see a sustained adjustment in inflation.

Key takeaways:

• Last monetary policy meeting confirms a stronger momentum in the euro area economy.
• The risks to the growth outlook are now broadly balanced.
• ECB lowering its inflation projection, for 2018 was lowered to 1.3% from 1.6% previously, while the forecast for 2019 was revised down by 0.1pp to 1.6% bringing it even further away from the 2% target.
• The outlook for GDP growth was revised upward to 9% in 2017, by 1.8% in 2018 and by 1.7% in 2019.

Comments post ECB policy decision:
Danske Bank:

We still expect the ECB to continue its QE program next year but to reduce its purchases to EUR40bn per month starting from January 2018 and continuing for at least six months. In our view, it is still premature to discuss rate hikes from the ECB.

Barclays (Antonio Garcia Pascual and Philippe Gudin) :

We expect an extension of QE into 2018 but also reduction of its pace to €3540bn in H1 18 and €1520 in H2 18, as well as two 10bp hikes in the deposit rate, in Q2 18 and Q4 18. In other words, we expect both QE and negative deposit rates to still be in place throughout 2018, even if at less accommodative levels than in 2017.

TECHNICAL VIEW​

Following ECB meeting EUR down below 1.12 but manage to close at1.1214. Lowering inflation projection and lack of rate hike clues pressure the EUR on Thursday session.

The upside momentum has stalled since five straight sessions, EURUSD failed to overcome 1.1285 resistance. Recent price action reveals upside risk is weakening and a downturn possible. The daily RSI and oscillator remain bearish, appears upside risk is limited.

Initial support finds at 1.1170 below this 1.1120/1.11 and 1.1075 next in line.

Today on Asia session EURUSD down 0.25% low made at 1.1180 trading tad below 20DMA. Alternatively resistance seems at 1.1220, 1.1240 and 1.1285.

The upcoming Fed meeting outcome likely to drive the price lower again. The June central bank actions likely to soften the EURUSD trend over near term.



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[KeyToMarketsUK]

GBPUSD: Additional pressure likely to be added this week, room for further fall.

UK general election raises GBP volatility, cable drafted bearish outlook.
Surprise UK election results set in the reality could soften the BREXIT outcome.
The cable manages to hold 100MA but settled below 20&50DMA.

The astonishing UK election results raise near-term GBP volatility. The election outcome brings forward challenges for the Brexit negotiation and GBP as well with downside bias as political uncertainty dominated the theme.

What’s on this week?

Tue, June 13

CPI YoY Basis

Barclays:

We forecast headline and core inflation to increase to 2.9% y/y (consensus: 2.7%) and 2.5% y/y (consensus: 2.3%), respectively, in May.

Wed, June 14

April labor data

Barclays:

We and consensus forecast the unemployment rate to remain unchanged at 4.6%. Average weekly earnings picking up to 2.5% 3m/y (consensus: 2.4%), although core average earnings are likely to moderate slightly to 1.9% 3m/y (consensus: 2.0%).

Thu, June 15

May Retail Sales

Barclays:

Retail sales are likely to drop 0.5% m/m in May.

In U.S, June FOMC (Thu, June 15 AEST) is the another key trigger for GBPUSD.

Barclays:

At the June FOMC meeting, we expect the Fed to raise the target range for the federal funds rate 25bp, to 1.0-1.25%.

Michael Gapen at Barclays, Given our expectation of a rate hike in June and balance sheet runoff in September, we find it unlikely that the Fed will deliver a dovish message on the outlook.

TECHNICAL VIEW​

We saw the initial move lower in GBP following results outcome and the medium GBP forecast casts on PM’s stance on BREXIT.

The cable manages to hold the 100DMA 1.2618 on Friday session, made a low at 1.2634 and closed at 1.2740. Today (June 12) on Asia session the cable rose 0.20% (11:00 AM AEST) high made at 1.2747.

Over near-term support, zone remains between 1.2620/1.2600 and 1.2575 its 200DMA. Ahead of the key economic events, additional pressure will be added below 200MA as a result GBP likely to fall further to 1.2520/1.2500 and 1.2460 levels.

In our earlier article “we forecast 1.2620” cable made a low at 1.2634, now wait for a rise to enter another sell trade.

Over the medium term, April 18th (election was announced) low 1.2516 likely to act as a pivotal (1.2500 rounded) below this 1.2440 (50.0% of the 1.1824-1.3047 rally) and 1.2360 exists. Currently, the cable is trading at 1.2740 still trading higher than a pre-election announcement, a room for further correction is highly likely.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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​

 

[KeyToMarketsUK]

BRENT : A daily close above 48.30 needed to throw a near term bullish projections.

The price respects the nine-month ascending daily trendline.
The daily RSI making a higher low and the oscillator appear bullish.
Trading range remains between 44-55 over medium term.

The recent diplomatic clash between Qatar and its neighbors could limit the Brent trading range between 46 and 49.50/50 over the near term and 44-55 over medium term.

Oil price rose 1.70% rapidly on Monday session (June 12) during Europe trading time, high made at 48.89 but erased the spikes gradually by the end of the day and closed with marginal losses.

FUNDAMENTAL NEWS​

Signs of inventory declines in U.S, a supply disruption in Nigeria and news that Saudi Arabia will limit volumes of crude to some Asian buyers in July (Reuters) are the key drivers lifted the oil price on Monday session.

By the end of the session, Brent closed with 0.2% losses from day high fell nearly 2% as news from EIA drag the price down.

According to the EIA monthly drilling productivity report, Oil production from seven major U.S. shale plays is predicted to rise by 127,000 barrels a day to 5.475 million barrels a day in July from the previous month.

The Wall Street Journal reported, Qatar’s energy minister said Sunday the country remains committed to limiting its oil output through March 2018 under an agreement with other big oil producers, despite the severing of its diplomatic relations with OPEC allies Saudi Arabia and the United Arab Emirates.

Reuters reported Speculators raise U.S crude oil net longs-CFTC

Speculators raised its combined futures and options position in NY and London by 3,160 contracts to 242,208 for the week to June 06, CFTC said on Friday.

TECHNICAL VIEW​

The price respects the nine-month ascending daily trendline made a low at 47.16 and rebounds. The daily RSI making a higher low and the oscillator appear bullish.

Earlier the price erases the two weeks descending trendline. On yesterday session, the price gave a breakout through the inverted H&S pattern. Earlier breakout (trendline) and the latest developments suggest downtrend is easing.

Support level finds at 47.60, 47.10/47 and 46.30/46.00. Additional selling pressure arises below May low, next in line are 45.70, 45 and 44.50.

A daily close above 48.30 needed to throw an initial bullish forecast. In this case, 48.90/49, 49.60 and 50$ are highly likely, extreme case 50.40/50.60 is expected.

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