Fundamental Weekly Forecasts for US Dollar, USDJPY, AUDUSD and GOLD - dollar pairs start off at high profile levels with a view to GDP

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Sergey Golubev, 2015.05.23 12:35

Forex Weekly Outlook May 25-29 (based on forexcrunch article)

The US dollar made a comeback and the greenback was a big loser in a week that saw trends change. And now, US Durable Goods Orders, Consumer Confidence as well as UK, Canadian and US GDP data stand out. These are the highlight events in Forex calendar. Here is an outlook on the main market-movers for this week.

The Federal Reserve released minutes from its April 28-29 policy meeting, revealing the planned rate hike will not take place in June. Despite growing confidence in the US economic recovery, the recent data suggest a temporary slowdown. Weaker consumer spending, slow growth and employment data led policy makers to postpone their decision on raising rates. Fed officials were also disappointed that falling oil prices did not spur growth as anticipated and that the recent dollar softness muted inflation. The Fed has reiterated it will not raise rates until it is “reasonably confident” that prices are moving toward its 2% target. Will the US economy rebound from its recent soft patch? In the euro-zone, talk about front-loading QE hit the euro in particular. The common currency reversed its previous gains. In the UK, inflation dipped below 0% and in Japan GDP came out better than expected.

1. US Durable Goods Orders: Tuesday, 12:30. The U.S. manufacturing sector rebounded in March amid expansion in the transportation industry. New orders for long-lasting manufactured goods increased by 4.0%, to $240.2 billion, following a 1.4% decline in February. However, core durable goods orders, excluding the volatile transportation sector, declined 0.2% to $159.9 billion. The weak core figure followed seven months of negative readings, indicating the second quarter may not be as strong as forecast. A drop of 0.4% in orders and a gain of 0.5% in core orders is on the cards.
2. US CB Consumer Confidence: Tuesday, 14:00. Consumer confidence fell unexpectedly in April to 95.2 from 101.4 in March amid weak job growth. While economists expected sentiment to rise to 102.5, sentiment plunged to the lowest level in 2015. Fuel prices continue to remain below last year’s prices contributing to growth but the soft patch in the US labor market overshadowed this positive development. 95.3 is expected now.
3. Canadian rate decision: Wednesday, 14:00. The Bank of Canada kept its overnight rate unchanged at 0.75%. Governor Stephen Poloz forecast a positive outlook for the Canadian economy, despite the current weakness related to the collapse in oil prices. The central bank cut its original 1.5% growth forecast for the first quarter of 2015, to non- growth. However, Poloz insisted the economy would rebound in the second half of the year. Nonetheless, many economists believe the oil prices collapse will have a longer effect on Canadian growth.
4. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits increased by 10,000 claims last week, reaching 274,000. Analysts expected a smaller rise to 271,000. Despite last week’s increase, the number of claims remained below 300,000 indicating the labor market continues to strengthen for the 11th week. The four-week moving average fell 5,500 last week to 266,250, reaching the lowest level since April 2000. A similar level of 272K is estimated now.
5. UK GDP: Thursday, 8:30. According to the preliminary release for Q1 2015, the economy expanded by only 0.3%. The figure will likely be upgraded to 0.4% this time. It’s important to note that this growth rate is lower than seen beforehand.
6. Canadian GDP: Friday, 12:30. Canada’s economy stalled in February showing no-growth, after contracting 0.2% in January. The mild improvement in the service sector was offset by contraction in goods-producing industries. Both manufacturing and energy sectors shrank in February suggesting the energy sector is not the sole cause for Canada’s economic weakness, as implied by the Central Bank. Economists believe the BOC will have to cut rates later this year to spur growth. An advance of 0.2% is on the cards now.
7. US GDP: Friday, 12:30. According to the first release for Q1, the economy grew at an annual rate of only 0.2%, below expectations. Things are expected to turn even lower, with a downgrade to contraction of around 0.9% this time . Fed Reserve chair, Janet Yellen also discussed the possibility of raising rates if the employment market will show substantial signs of growth.

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Sergey Golubev, 2015.05.23 12:39

Gold forecast for the week of May 25, 2015, Technical Analysis (based on fxempire article)

Gold markets fell during the course of the week, testing the $1200 level again. Because of this, we feel that the markets probably going to grind around in this area, and we are not ready to make any longer-term trades as a result. We believe that short-term traders will continue to pushes market around, and as a result it is probably best left to those who play short-term charts. Ultimately though, we do think the gold will offer value, so picking up some physical metal might not be a bad move.

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Sergey Golubev, 2015.05.23 12:42

USD/JPY forecast for the week of May 25, 2015, Technical Analysis  (based on fxempire article)

The USD/JPY pair broke higher during the course of the week, as we closed out the 121.50 area. That being the case, it now looks as if we are ready to break out above the potential ascending triangle that it appears on the weekly chart. That of course would be a very bullish sign, as the height of the triangle measures roughly 650 pips. Because of this, we believe that the USD/JPY pair will be very bullish soon, and a break above the 122 level is enough to get us to start buying again. We believe at that point in time that the market should head to roughly 128 given enough time.

Needless to say, the market should have a bit of resistance at the 125 level though, and we don’t necessarily think that it will be the easiest move. However, by the end of the week we started to see US dollar strength just about everywhere, and as a result it seems as if the market is suddenly in favor the US dollar overall again. The US Dollar Index broke above the 96 handle, which of course is very bullish, and the EUR/USD pair suddenly testing the 1.10 level, an area that is indeed important. Ultimately, we have to wait to see what happens on a daily close, but it certainly looks as if the USD/JPY is ready to continue the longer-term uptrend.

Even if we fell from here, we believe that there is enough support below to keep this market going higher, and as a result we look at pullbacks as potential buying opportunities. We think that the absolute “floor” in this market is somewhere near the 115 handle, and with that we have no intentions of selling this pair anytime soon. In fact, we believe that a lot of traders are starting to think longer-term “buy-and-hold” type of thoughts when it comes to this currency pair. Ultimately, the market should continue to find itself well supported, especially considering that the Bank of Japan is so dovish at the moment.

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Sergey Golubev, 2015.05.24 05:39

A Fundamental Push for Key EURUSD, GBPUSD and USDJPY Levels? (based on dailyfx article)

• US Dollar Forecast– US Dollar Recovery Fighting Liquidity, Growth Headwinds
• Japanese Yen Forecast – USDJPY Stands at 2015 High With Fed and BoJ Policy in the Forefront
• Australian Dollar Forecast – Australian Dollar Recovery May Resume After US-Linked Interlude
• Gold Forecast – Gold Outlook Remains Supportive Above 1200- All Eyes on FOMC, GDP

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Sergey Golubev, 2015.05.25 10:49

Forex technical analysis: AUDUSD makes a break back below the 100 day MA (based on forexlive article)

The AUDUSD made another stride in the bears direction by falling below the 50 % retracement of the move up from the April 1 low and the  100 day MA (blue line in the chart above). Those levels come in at 0.7847 and 0.78415 respectively. This is the new risk defining level for the pair. Stay below and the bears remain in control. Move above and the waters get more muddy.

The pair has been down 6 of the last 7 days.  The high corrective price today, stalled right at the 100 hour MA (blue line in the chart below). Traders short from that risk defining level, were rewarded with a kick lower after the US CPI data. Next support target at 0.7800, then 0.7772 (61.8% of the move up).

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Sergey Golubev, 2015.05.25 18:34

Yellen's Words Fuels The Greenback's Rise (based on forbes article)

"The U.S. dollar hit a two-month high against the yen and is holding firm against other Group of 10 currencies on Monday after Federal Reserve Chair Janet Yellen suggested late last week the central bank will raise interest rates in 2015."

"With U.S. markets and most of Europe on holiday today, the thinned trading conditions will have most investors looking ahead to tomorrow’s forward-looking U.S. durables data, and Friday’s release of second estimate of U.S. gross domestic product (GDP) as key fundamental touch points for the dollar’s direction. Obviously, any news on Greece or of a potential Grexit will have an immediate impact on the EUR, similar to what happened in the overnight session in Asia."

"Yellen argued that the slowdown in first-quarter GDP growth was “largely” due to temporary factors, such as the record cold weather and a port dispute. The market took “largely” as being more important or convincing than Yellen’s “in part” verbiage that was used in the most recent FOMC statement (there will be a rebound in growth in the second quarter)."

"Yellen repeated her assessment that “it will be appropriate at some point this year to take the initial step to raise the federal funds target.” Not a very transparent statement on timing, but if you include rebounding economic growth, plus a pickup in consumer prices that’s supported by wage growth, you have a fixed-income market now pricing in a rate hike no later than September."

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Sergey Golubev, 2015.05.26 06:12

Sell AUD/USD At S/T Resistance; Sell EUR/USD At Breakout Zone - Credit Suisse (based on efxnews article)

Credit Suisse looked at the technical setups for AUD/USD, and EUR/USD where CS is bearish near-term, and recommends selling limit-orders on approaching specific technical levels.

AUDUSD

Starting with AUD/USD, CS notes that the immediate focus turns towards a cluster of supports at .7790/74.

"AUDUSD has reversed its early gains, completing a bearish “outside” session to weigh on a cluster of supports at .7790/74 - the early May low, 61.8% retracement and 55-day average support – where we would expect fresh buying to show here". "A direct break lower though can trigger further selling for .7683 initially, followed by a stronger support from the range lows at .7555/33. Near-term resistance moves lower to .7861/67, followed by .7936. Above can target .7976/86 and then .8030/63 which we look to ideally cap".

CS runs a limit order to sell AUD/USD at 0.7855, targeting a move to 0.7605.

EURUSD

"We look for further weakness here to test the 55-day average at 1.0918 at first, through which can aim at the 61.8% retracement level at 1.0849/43, followed by the low end of the former range at 1.0660/14". "Near-term resistance moves to 1.1062, then 1.1101 with price and “neckline” resistance at 1.1208/48 expected to cap to keep the trend lower. Strategy: Flat. Sell at 1.1060, stop above 1.1248 for 1.0525".