We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
Gold
Bullish
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • Currency Strategist,@PaulRobinsonFX is a Swing trader. What is your #tradingstyle? Take the quiz and let us know: https://t.co/LPBOcS0Vtd https://t.co/WzRYeqRhUL
  • Despite what your #tradingstyle is, you should be keeping a trading journal. How can you start keeping a trading journal? Find out: https://t.co/0akgWbyJEw https://t.co/4ehMlN4zv1
  • The Euro’s struggle to move higher against a range of currencies continues and without further support this is likely to continue into the year-end. Get your $EURUSD market update from @nickcawley1 here: https://t.co/myZ7R0eGUb https://t.co/12WJd53Cx4
  • The #Dow Jones moved confidently higher last week as it added onto recent gains. Now, #stocks will aim to continue their rally while enjoying support from prior all-time highs. Get your technical analysis on #equities from @PeterHanksFX here: https://t.co/Qb89HIWxBY https://t.co/HMguTvD157
  • How can you trade #forex after a major release? Find out: https://t.co/sdxcXb8q60 #tradingstyle https://t.co/LNcbvVhIc2
  • Have you been catching on your @DailyFX #podcast "Global Markets Decoded"? Catch up on them now, before new episodes release! https://t.co/mk1w1DM2Rh https://t.co/m763epaH2C
  • Crude #oil prices, $NOK and $SEK may rise if Donald Trump’s speech on trade war developments amplifies market buoyancy against the backdrop of critical US CPI and retails sales data. Get your market update from @ZabelinDimitri here:https://t.co/5rdK7xsQNq https://t.co/YnlQjKNZdS
  • RT @next_china: U.S., China chief trade negotiators spoke by phone on Saturday, Xinhua reports https://t.co/dMQtd0g4jY
  • The $AUDUSD and $EURUSD downtrend may prolong as traders counterintuitively buy into their descent. Meanwhile, the USD/CAD uptrend may accelerate on rising net-short bets. Get your market update from @ddubrovskyFX here: https://t.co/dlzJ31kf3f https://t.co/xp8P9MmCgb
  • As we head into next week, Cable is continuing to digest the massive leg higher last month, which at some point soon could mean another surge. Get your $GBPUSD technical analysis from @PaulRobinsonFX here: https://t.co/LJ42YhDe3X https://t.co/5hGwhGBpLB
Currency Rally Expected to Stall Out In Favor of Fresh US Dollar Buying

Currency Rally Expected to Stall Out In Favor of Fresh US Dollar Buying

2011-05-19 04:37:00
Joel Kruger, Technical Strategist
Share:

The market correction in currencies that we had been talking about in recent days has been playing out, with the Euro breaking back above 1.4300 on Thursday and poised for a little more upside. However, any additional gains from here are seen as limited, with the greater risk for a lower top in favor of the next major broad based upside extension for the buck.

There is very little to talk about so far on the day, with Sterling continuing to underperform on the back of a weaker employment report on Wednesday. Nationwide consumer confidence has also just come out and this data is also weaker, to put added pressure on the Pound. The softer economic data out of the UK has done a good job of discouraging those in the hawkish camp, and it doesn’t look as though the Bank of England will be raising rates any time soon. UK retail sales is the big economic release in European trade today, and the data will need to exceed expectation for bulls to find any relief.

Elsewhere, the topic of Greece and its “soft restructuring” remains at the forefront of investor minds’, with fears of contagion intensifying in recent days. European Central Bank President Trichet will be on the wires today discussing European integration and stability, and as always, the central banker will have the opportunity to move markets. Also out on the official circuit today will be Bank of England’s Tucker and Bean, while in the US, speeches are due from Fed’s Dudley, Fisher and Evans.

On the data front, Aussie weekly earnings rose but at a slower pace than the previous print. Meanwhile, in New Zealand, the 2011 and 2012 budget was released with the government outlining an austere set of measures to return to a budget surplus by 2014/15. Nevertheless, Fitch maintains its negative outlook on New Zealand’s sovereign rating, but did concede that the budget looked appropriate given the circumstances.

Looking ahead, as mentioned above, UK retail sales will be the big release in Europe, with the Swiss ZEW and UK CBI also out in the session. In North American trade, US initial jobless claims, existing home sales, leading indicators and the Philly Fed will be in focus. US equity futures and commodities prices are trading flat into the European open.

ECONOMIC CALENDAR

opening_comment_body_Picture_5.png, Currency Rally Expected to Stall Out In Favor of Fresh US Dollar Buying

TECHNICAL OUTLOOK

opening_comment_body_eur.png, Currency Rally Expected to Stall Out In Favor of Fresh US Dollar Buying

EUR/USD: The corrective rally out from 1.4050 continues with the market breaking back above 1.4300 thus far. However, any additional gains from here should limited to the 1.4400-1.4500 area, and we would be looking for the formation of a fresh lower top in favor of the next major downside back below 1.4050. Ultimately, only a daily close back above 1.4500 would delay.

opening_comment_body_jpy2.png, Currency Rally Expected to Stall Out In Favor of Fresh US Dollar Buying

USD/JPY: After undergoing a fairly intense drop off from the 85.50 area several days back, the market looks to have finally found some support by the bottom of the daily Ichimoku cloud and could be in the process of carving out some form of a base. Look for setbacks to continue to be well supported in the 80.00’s with only a close back below 79.50 to give reason for concern. From here we see the risks for a fresh upside extension back towards the recent range highs at 85.50 over the coming days.

opening_comment_body_gbp2.png, Currency Rally Expected to Stall Out In Favor of Fresh US Dollar Buying

GBP/USD: The market is starting to give way, with the price now dropping back below the 50-Day SMA to warn of additional declines over the coming sessions. Look for deeper setbacks below 1.6000, with any rallies now expected to be well capped ahead of 1.6400. Ultimately, only back above 1.6520 gives reason for concern.

opening_comment_body_swiss1.png, Currency Rally Expected to Stall Out In Favor of Fresh US Dollar Buying

USD/CHF: Starting to show signs of basing off of the recently established record lows by 0.8550, with the market putting in a solid bullish close for two consecutive weeks and breaking back above the previous weekly high. Next key resistance comes in by 0.9000 and a break above will further confirm recovery structure and open the door for a move back towards a medium-term lower top at 0.9340. Look for any intraday setbacks to be well supported above 0.8700 on a daily close basis. Ultimately, only a daily close back below 0.8700 delays and gives reason for concern.

Written by Joel Kruger, Technical Currency Strategist

If you wish to receive Joel’s reports in a more timely fashion, email jskruger@dailyfx.com and you will be added to the distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.