By Orbex
Daily Forex Market Preview, 22/05/2018
The U.S. dollar continued to strengthen on Monday. The gains came as the markets opened to the weekend news reports about the U.S. Treasury Secretary announcing that the U.S. had put on hold its trade war against China. Both administrations are expected to chalk out a mutually beneficial deal which includes China increasing its imports from the U.S. to reduce the trade deficit.
On the economic front, the data was rather limited. From the Eurozone, Italy continues to remain a key factor for investors.
Looking ahead, the economic calendar for the day will see the release of the UK’s Public sector net borrowing data. Estimates show that public sector net borrowing is expected to rise 7.2 billion. This is later followed by the UK’s inflation report heading.
The U.S. trading session is relatively quiet with the release of the wholesales sales report from Canada followed by the U.S. Richmond Fed manufacturing index. Estimates point to a robust increase in the Richmond Fed manufacturing index to 9 following a decline to -3 previously.
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EURUSD intra-day analysis
EURUSD (1.1787): The EURUSD currency pair fell to the major support level at 1.1730 before the currency pair managed to bounce back strongly. Despite the rebound in price action, we expect the common currency to continue showing weakness around this level. However, in the event that the EURUSD manages to post a higher low above the support level, then we expect to see a retest of the resistance level formed near 1.1846 – 1.1824 region. Only a breakout above this level will signal further continuation to the upside.
USDJPY intra-day analysis
USDJPY (110.84): The USDJPY currency pair was seen giving up the gains as the currency pair drifted lower after the gains stalled near the resistance level of 111.18 – 110.85 level. A break down below this level could signal a correction in the currency pair toward 109.57 – 109.43 region. This correction would mark a retest of the support level which previously served as resistance. To the upside, any gains are likely to be limited to the resistance level for now.
XAUUSD intra-day analysis
XAUUSD (1291.01): Gold prices extended the declines to the next support level at 1282 but price action bounced back higher. We notice that gold prices are likely to consolidate around this support level in the near term. To the upside, the resistance level at 1304 – 1301 region is most likely to be tested for resistance. If gold prices slip below the support level of 1282, then further declines could eventually push prices down to 1250.
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