Technical analysis by forex traders.

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The US Bureau of Economic Analysis will release gross domestic product on November 24, 2021. Economists predict that it might remain 2.1% in the third quarter of the year compared to last quarter reading of 2%.

The US GDP Annualized Figure Report represents the average value over time of commodities, products, and manufacturing systems manufactured within the US.

 

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For the Japanese Yen Retail sales figures drew interest in the early hours.

According to the Ministry of Economy, Trade and Industry,

Retail sales rose by 0.90% in October, year-on-year, versus a forecasted 1.10% increase. In September, retail sales had been down by 0.50%.

The Japanese Yen moved from ¥113.747 to ¥113.735 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.16% to ¥113.560 against the U.S Dollar.

 

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The GBP/USD recently collapsed to its lowest support level of the year


Bearish momentum continues to dominate the GBP/USD amid a general risk aversion in global markets as investors balance the strength of the new COVID variant and its impact on the future of the global economic recovery. The GBP/USD recently collapsed to its lowest support level of the year, 1.3194, and is settling around the 1.3290 level as of this writing. Despite global concerns, all Covid-19 cases, hospitalizations and deaths in the UK are declining, but the population is still in fear.

 

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At current levels, the EUR/USD trades broadly flat on the day and conditions are likely to be subdued on Friday given expectations for very low market volumes and a complete lack of any notable data releases. But FX strategists are warning that this week’s dollar weakness, which saw EUR/USD rally above 1.1300 from earlier lows under 1.1250, may ultimately prove short-lived. The Fed’s hawkish pivot in December has opened the door for a potential rate hike in March, which leaves the Fed on course to outpace the ECB when it comes to monetary normalisation by a significant margin.

On the other hand, The UK economy is dealing with surging COVID-19 infections thanks to the outbreak of the omicron variant, but markets are beginning to look past the recent wave. Data suggests that cases are proving mild, implying that there won’t be a materially negative health outcome – nor an economic one, either.

As such, traders are squarely focused on UK economic data, which for all intents and purposes has been solid over the past few weeks. The UK Citi Economic Surprise Index is currently at +53.4 after having started the month at +55.2. The final reading of 3Q’21 UK GDP came in above expectations at +6.8% y/y, and with UK inflation rates still running higher, the Bank of England appears poised to raise rates when they meet for the first time in 2022: there is a 91% chance of a 25-bps rate hike.

 

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The Pound Euro (GBP/EUR) exchange rate has continued its downward trajectory through today's session as Covid worries weigh on GBP sentiment.​

Although the UK has avoided further restrictions so far, pressure is mounting on the NHS. Covid-related staff absences have led to multiple NHS trusts declaring critical incidents, with hospitals and ambulance services asking retired workers and staff on annual leave to help keep vital services running.

On the other hand, It seems like EURUSD is "under zero gravity"; investors are waiting for signals.​

The major currency pair is consolidating on Wednesday. The current quote for the instrument is 1.1317.

The price range of EURUSD is not very wide – the "greenback" was rising yesterday in the afternoon but lost its "profit" by nightfall. Market players are saving their strengths in anticipation of the US labour market data, for example, the ADP Non-Farm Employment Change, as well as the FOMC Meeting Minutes to be published later today.

 

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INFLATION AND THE FED REMAIN THE FOCUS IN Q1 2022​

For USD/JPY, the road ahead in the first quarter of 2022 will likely remain heavily glued to market expectations of how hawkish the Federal Reserve will be. In December, the central bank doubled the pace of tapering asset purchases, which will now see it end in early 2022. This will likely give the central bank maneuverability should it need to raise rates sooner than expected.

This will of course depend on how inflation evolves. Headline price growth is at its fastest pace in almost 40 years in the United States. Expectations are that price growth will remain above the central bank's target next year, with Core PCE running around 2.7% in 2022. However, a key risk could come if inflation expectations become "de-anchored."

 

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The British pound took some impetus from expectations of the future of tightening the Bank of England policy, in addition to the easing of fears of the new Corona variable, despite its widespread. The sterling did not notice much of the criticism of British Prime Minister Johnson and his government. A leading independent economic think tank says British Prime Minister Boris Johnson remaining in office could cause greater economic repercussions than if he were to leave. Capital Economics sees little prospect of a shift in material policy under a new PM which could allow the economy to continue to recover over the coming months.

Chief UK economist at Capital Economics is looking for two potential flashpoints over the coming days: The first is the release of Sue Gray's report on what happened and whether the rules were broken. The implications for Johnson of being accused of breaking the law cannot be underestimated. Another hot spot to watch is the resignation of cabinet members, which is usually a source of pressure on the prime minister.

On the other hand, The Euro (EUR) firmed early last week amid a drop in Eurozone unemployment, a weaker US Dollar (USD) and a risk-off market mood.​

The single currency then wavered through much of the week. A retreating US Dollar buoyed EUR while a dovish European Central Bank (ECB) and an improving market mood offset the upside.

Finally, EUR lost ground to GBP by the end of the week. The Eurozone reported its first trade deficit since January 2014, while German GDP data confirmed that Europe's largest economy remains below pre-pandemic levels.

 

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May-11, 2022, Daily Currency market technical analysis and forecast, by forex forum.​

All attention will now be focused on inflation data in the US, on which the further direction of the pair depends. In the event of a decrease in price pressure, as economists expect, the demand for risky assets will increase, which will lead to an upward movement of EUR/USD and a re-growth in the area of 1.0571. If the situation turns out to be not as favorable as many expect, the pressure on the euro will return, because the US dollar will continue to strengthen its position with increased price pressure, which will force the Federal Reserve System to act more aggressively - even an increase in interest rates by 0.75% immediately in June this year is not excluded.

A breakout and a top-down test of 1.0571 form a new signal for entering long positions, strengthening buyers, and opening up the opportunity for further growth of EUR/USD to the area of 1.0638, where I recommend fixing the profits. A more distant target will be the 1.0691 area. In the event of a decline in EUR/USD and the absence of buyers at 1.0519, the optimal scenario for buying will be a false breakdown near this year's low of 1.0473.

I advise you to open long positions on the euro immediately for a rebound only from 1.0426, or even lower - around 1.0394 with the aim of an upward correction of 30-35 points inside the day.

On the other hand, Economists at Commerzbank are seeing depreciation pressure for the Chinese yuan over the coming year. They forecast USD/CNY at 6.70 and 6.80 by the year-end of 2022 and 2023 respectively.

A weakening bias for CNY​

“A strong dollar due to policy tightening is likely to the main theme in the coming years, while China has much smaller room to maneuver which implies a downside risk for the Chinese currency.”


USD/CAD KEY TECHNICAL LEVELS

Moreover, Looking at USD/CAD, its no secret that the US dollar has been running hot, buoyed by the initial safe-haven appeal of the Ukraine invasion, now being supported by an aggressive rate hiking cycle by the Federal Reserve Bank. Earlier today we have seen what can be described as the market front-running a potentially lower inflation data print as USD/CAD reversed off the topside of the zone of resistance at 1.3030.

Resistance currently lies at 1.3030 but could move to 1.2960 if we witness a move lower in USD/CAD after the inflation print.

The weekly USD/CAD chart underscores the significance of the zone of resistance (blue rectangle) as it coincides with prior resistance of 1.2960 and the 38.2% Fib level of the March 2020 major move lower.

USD/JPY Technical analysis​

Elsewhere, USDJPY move back above its 200 and 100 hour moving averages The USDJPY has moved higher on the back of the dollar buying after the CPI data showed higher than expected inflation last month. Technically, the price moved back above its 200 hour moving average at 130.17. The price also extended back above its 100 hour moving average at 130.421. That 100 hour moving average is being breached to the downside as I type. Technically, that neutralizes the bias as the price now trades below the 100 but above the 200 hour moving average.

The high price today extended to 130.806 which was a swing high going back to last Friday's trade. That was also the high for the trading week. Sellers leaned against that level on the 1st test. It would take a move above that level to increase the bullish bias going forward.

Thank You

 

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Gold spot (XAU/USD) recovers some ground after slipìng below the $1800 mark on Friday, on higher US Treasury yields, which during the session are sliding, thus lifting the prospects of the non-yielding metal. XAU/USD is trading almost flat, around $1811.02 a troy ounce at the time of writing.

Gold Price Forecast (XAU/USD): Technical outlook​

Interestingly, the Gold Price jumped near the YTD low at around $1786 and is forming a “gravestone doji,” which is perceived as a signal of “indecision.” Also, it’s worth noting that an almost-two-year-old upslope trendline, previous support, has been broken. Unless gold bulls reclaim the aforementioned, XAU/USD is vulnerable to further downward pressure.

If XAU/USD’s bulls reclaim the upslope trendline, they will find resistance levels around the 200-DMA at $1837, followed by May 3 cycle low at $1850, and then the $1890 barrier.

On the flip side, XAU/USD’s first support would be $1800. Break below would expose May 16 daily low at $1786, followed by the YTD low at $1780 and then December’s 15 cycle low at $1752.35.

USD/JPY Technical Analysis:

On the other hand, USD/JPY bearish – there are good reasons to expect the currency pair to fall, and the trade seems more straightforward than other ones.

It has begun trading in a downtrend channel, with lower highs and lower lows. Momentum on the 4h-chart has turned negative, the RSI has failed to climb above the 50 level, and the price is capped at the 100-SMA – after falling below the 50-SMA.

Support is at 128.70, which cushioned the pair twice in May. The monthly low of 127.50 is the next level to watch, and it also converges with the 200-SMA. Further down, 126.90 and 126.40 are noteworthy. Resistance is at 1.2950, and then at 130.90.

Elsewhere, The European Commission’s Spring Forecast for 2022 revised Eurozone inflation upward to 6.1% in 2022 as expected with forecasts expected to decline to 2.7% in 2023. Growth projections in the region were subsequently lowered to 2.3% from 2.7% in February.

Initial reaction from the Euro was positive with higher inflation potentially leading to a more aggressive ECB. Money markets are looking more hawkish than last week Friday with roughly 94bps priced in for 2022 as opposed to 80-85bps on Friday. The ECB’s Villeroy added support for the Euro stating that the June meet will be “decisive” while moving towards a “neutral rate”.

Technically, there is a struggle for the 1.043–1.0435 area on the EURUSD daily chart. Closing above it is a reason to buy euros in the short term. In this scenario, there is a risk of a pullback in the direction of 1.047, 1.051, and 1.054. From there, it makes sense to sell the pair in the medium term on the rebound from the resistance. The formation of a Double Bottom pattern on the 1-hour timeframe gives hope for euro bulls.


GBP/USD Analysis

GBP/USD was steady around 1.2250 on Monday at the start of the week which was not good for risk assets following the release of lower-than-expected Chinese economic data, amid testimony from the Governor of the Bank of England (BoE) before the UK Select Treasury Committee.

China's April industrial production came in at –2.9% YoY, a far cry from last March's 5.0% figure. The actual figure was also lower than the expected 0.5% increase. In addition, retail sales also fell – 11.1% from the previous – 3.5% and lower than the expected decline of – 6.6%. It seems that the impact of China's zero Covid-19 policy has taken an economic toll.

USD/CAD Technical analysis​

The USDCAD has moved to the lowest level since May 6th in the current hourly bar. The new low moved below the low from Friday at 1.28882. The low price reached 1.28857, but has already bounced and currently trades back above the 1.2900 level at 1.2913 currently

The move to a new low also took out the earlier Asian session low of 1.2894. That low in the Asian session led to a rally up to 1.29805 before rotating back to the downside in the European and early New York session.

Thanks

 

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May-17, 2022, Currency Market Daily Analysis and Forecast, by forex forum.​

The market mood in the New York session remains positive, carrying on the mood from the Asian and European sessions. US equities are recording gains between 1% and 2.67%.

EUR/JPY Price Forecast: Technical outlook​

On Tuesday, the EUR/JPY surged above the 50-day moving average and the head-and-shoulders neckline in the 134.95-135.25/35 area, threatening to invalidate the chart pattern. In the near term, the bias, which shifted to neutral-upwards, as of writing is upwards.

With that said, the EUR/JPY’s first resistance would be 137.00. Break above would expose 138.00, followed by May 9 swing high at 138.32. On the flip side, the EUR/JPY first support would be 136.00. A breach of the latter, the next support would be the head-and-shoulders neckline around 135.25-35, followed by April’s 27 daily low at 134.77.

On the other hand, The dollar fell for a third straight day on Tuesday, pulling back from a two-decade high against a basket of major peers, as an uptick in investors' appetite for riskier bets diminished the U.S. currency's appeal.

Upbeat earnings views from Home Depot (NYSE:HD) and United Airlines along with optimism around the easing of China's crackdown on tech and COVID-19, helped to lift risk sentiment.

The U.S. Dollar Currency Index, which tracks the greenback against six major currencies, was down 0.7% at 103.41, its lowest since May 6. The index hit a two-decade high last week supported by a hawkish Federal Reserve and worries over the global economic fallout from the Russia-Ukraine conflict.

GBP/USD

Elsewhere, The British Pound soared on Tuesday, buoyed by broad-based U.S. dollar weakness, but more importantly, strong UK economic data. In late trading during the New York session, GBP/USD was up 1.3% to 1.2482, posting its largest single day rally since October 2020.

Earlier today, UK employment figures showed that the country added 83,000 workers in February, beating expectations for a net increase of 5,000 jobs handsomely. With this result, the unemployment rate fell 3.8% to 3.7%, hitting its lowest level in nearly half a century.

Technical Analysis

GBP/USD rebounded from 1.2250, the 2022 low, rising above 1.23. The bullish crossover on the MACD is keeping buyers hopeful of more upside.

Bulls will look to retake 1.2410, the April 28 low, before 1.25, the 20 SMA, and then 1.2635, the May high.

Failure to retake resistance at 1.2410 could see the price rebound lower, back below 1.23. A fall below 1.2155 is needed to create a lower low.

Thank You

Source: https://www.forum.forex/threads/for...lysis-and-daily-forecast.874/page-5#post-6914