Market Sentiment Recovers on US Easing of Huawei Restrictions | Webinar

Market sentiment news and analysis:

  • The US has eased trade restrictions on Chinese technology company Huawei temporarily, boosting market confidence.
  • However, sentiment remains poor on fears that the US-China trade dispute could yet escalate further.

Market confidence lifted by US easing of curbs on Huawei

Trader sentiment has improved Tuesday on news that the US has granted Huawei a license to buy US goods until August 19 but confidence remains poor as the US-China trade dispute rumbles on.

In this webinar, I looked at the charts of the major currencies, stock markets and commodities, at the sentiment indicators likely to influence markets for the rest of the week and at the latest positioning data.

Resources to help you trade the forex markets:

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— Written by Martin Essex, Analyst and Editor

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London Markets: London markets move higher as pound hits four-month low

London markets shook off a weakening pound and a disappointing industrial orders figure to erase Monday’s decline.

How did markets perform?

The U.K.’s FTSE 100

UKX, +0.76%

 is higher at 7,366.1, rising 0.8% to more than wipe out Monday’s 0.5% decline.

The pound

GBPUSD, -0.2200%

 was hit harder, shrinking 0.3% to $1.2685, a four-month low.

What’s moving the markets?

U.S. officials granted Huawei a temporary reprieve from some of the restrictions imposed on Friday. The Chinese telecommunications company caught in the U.S.-China trade dispute was granted a 90-day window to purchase equipment and parts needed to maintain existing activities, which may be renewed.

The “new and improved” Brexit deal promised by U.K. Prime Minister Theresa May is expected to contain promises on workers’ rights and environmental protections, and will seek cabinet approval on the concessions, according to the latest report in The Times. The move will put pressure on opposition Labour Party leader Jeremy Corbyn as some M. P.s may now support the bill, but many in the rank-and-file will staunchly oppose it.

The U.K. pound took a drubbing Tuesday, falling to a four-month low. Brexit uncertainty and U.S. dollar strength were the two key drivers.

In economic data, the CBI industrial trends total orders survey showed that in May, orders fell to -10, a sharp decline after a run-up in manufacturing driven by stockpiling for the now-aborted March 29 Brexit date. The figure was the lowest since October 2016.

Which stocks are active?

Entertainment One Ltd.

ETO, -5.21%

 fell 2% after reporting fiscal 2019 earnings, as pretax profit fell 43% year over year. The Peppa Pig franchise owner blamed the dip on one-off charges.

Tesco Bank, the lending arm of supermarket chain Tesco PLC

TSCO, +1.36%

said Tuesday that it was exiting the mortgage market and looking for a buyer of its existing mortgage assets, citing “challenging market opportunities”. Shares in the unit’s parent traded 0.6% higher.

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Offshore Yuan hitting 7 top of headlines, but what about Dollar Index above 100?

The turn for the worst that has transpired with the unforeseen breakdown in US-China trade relations over the past two weeks has accelerated a flurry of selling momentum in the offshore Yuan. The question that continues to linger in financial market headlines following the brutal period of late for the Chinese currency stands as a matter of when, and not if the offshore Yuan will weaken beyond 7 against the Greenback.

The USDCNH stands at time of writing marginally close to levels that have previously acted as the last line of defence for the Offshore Yuan; but what if authorities had a trick up its sleeve in the ongoing tit-for-tat tariffs and allowed the Yuan to freely weaken? This is a scenario that might still appear as unlikely and one that has not been priced in, but it is something that shouldn’t be ruled out following the escalation and it is a scenario that would lead to a round of shock for global investors.

Think about it from the perspective of the Chinese economy. You thought, like the majority that a trade deal should by all accounts be concluded by end of the quarter but you now face headwinds from additional tariffs that were not expected just two weeks ago. These tariffs are serious headwinds to the Chinese economy and a threat that realistically puts a question mark on whether the 6-6.5% government target for economic growth in 2019 should be reassessed.

China will not be able to match the tariffs that the United States has put on its goods blow-for-blow and this is something that we have all been aware about since the trade tensions erupted over a year back. But, China could offset the upcoming economic pressures that the mainland economy will face in light of additional tariffs by allowing the Yuan to weaken further.

The likelihood of the trade tensions extending into the second half of the final year for the decade also highlights the potential that we should be preparing ourselves for an attempt by the Dollar Index to make another run for 100.

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The steady climb in the Dollar Index over the past week or so hasn’t been documented that much, but I do think investors are hedging on the Greenback in anticipation of the trade conflict between the United States and China potentially extending into 2020. 100 in the Dollar Index would be a painful migraine for all currencies in the developing world, one which would make the second half of 2019 a troublesome end to the decade for emerging market currencies.

An advance towards 100 in the Dollar Index would stand as the final nail in the coffin in even the most doubtful of spectators that the offshore Yuan would not be allowed to weaken beyond 7. It would also marginalise buying demand for emerging markets at a time where they have not yet adapted to the incoming external headwinds, with restricted buying demand for emerging markets causing pain for currencies stretching from the Malaysian Ringgit to the South African Rand and even as far as the Brazilian Real.

Upcoming European elections to signal another push for right-wing in Europe; swing lower in Euro ahead?

The Euro has opened yet another week with low volatility as traders brace themselves for the upcoming European elections. Things have been quiet for Euro volatility in the FX space for a very long time, and one must wonder whether the upcoming European elections could be what the doctor ordered to inject some life back into a Eurodollar that has been asleep for most of the past year.

I am going to take the contrarian view and look at the upcoming European elections as the warning lights that risk the Euro falling to 1.10 for the first time since May 2017. The recent history of European politics suggests that the European elections will signal more power moving towards far-right political parties and this isn’t something that investors will be able to ignore forever.

If the European Elections do threaten the stability of the European Union, a great deal of concerning views on the outlook of the Euro can even lead to the discussion over Eurodollar parity making their way again.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

SP500 falls led by technology

By IFCMarkets

US stock market pullback continued on Monday led by technology shares hurting from ban on business with Huawei Technologies. The S&P 500 lost 0.7% to 2840.23. Dow Jones industrial slid 0.3% to 25679.90. The Nasdaq composite tumbled 1.5% to 7702.38. The dollar weakened after data showed Chicago Fed’s national activity index slipped to a negative 0.45 in April, down from an upwardly revised positive 0.05 in March: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, edged down 0.03% to 97.93 but is higher currently. Futures on US stock indexes point to higher openings today.

European stocks slide accelerated on Monday as slump in technology shares dragged equity markets. Both EUR/USD and GBP/USD turned higher but are lower currently. The Stoxx Europe 600 index declined 1.2% with technology sector dropping 3%. The DAX 30 fell 1.6% to 12041.29. France’s CAC 40 tumbled 1.5%. UK’s FTSE 100 lost 0.5% to 7310.88.

Asian stock indices are mixed today. Nikkei closed 0.1% lower at 21272.45 despite enduring yen slide against the dollar. Markets in China are mixed despite news US has decided to extend 90-day exemptions to some US companies from the technology export ban announced last week: the Shanghai Composite Index is up 1.2% while Hong Kong’s Hang Seng Index is 0.1% lower. Australia’s All Ordinaries Index extended gains 0.4% as Australian dollar resumed its slide against the greenback.

HK50 testing MA(200)  05/21/2019 Market Overview IFC Markets chart

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Brent futures prices are edging higher today on US-Iran tension with global markets slump capping gains. Prices fell yesterday despite Middle East tensions: July Brent crude lost 0.3% to $71.97 a barrel on Monday.

Market Analysis provided by IFCMarkets

This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.

DAX recovers as U.S. eases restrictions on Huawei

The volatility continues for the DAX index this week. Currently, the index is at 12,176, up 1.1% on the day, after falling 1.6% on Monday. For a second successive day, there are no major German or European events on the schedule. The eurozone releases consumer confidence, which is expected to remain in negative territory, with a forecast of -8.

The DAX had a dismal start to the week, but has rebounded on Tuesday, as the U.S. lowered tensions over the Huawei crisis. The Trump administration had announced it was imposing trade sanctions on the Chinese telecom giant, a move which sent stock markets reeling on Monday. However, the U.S. Commerce Department has taken a step back, saying that it will provide 3-month exemptions to U.S. companies that sell to Huawei. The tussle over Huawei has exacerbated the trade war between the two economic giants, and risk appetite will remain soft until the sides resume negotiations.

Voters in all 28 members of the European Union will head to the polls for a 4-day election, beginning on Thursday, to elect members to the European Parliament. Election turnout has been on the decline, with only 43% of eligible voters casting a vote in 2014. Key issues included the economic slowdown, the migrant crisis and the rise in Euroskpeticism. Euro-skeptics increased their representation in parliament from 12% to 25% in the last election, and with the dramatic increase in strength of populist parties, this trend could well continue. A strong showing by parties with an anti-EU agenda could weaken the euro. As well, the outcome of the vote could have an impact on the choice of the new head of the ECB, as Mario Draghi steps down in October, after an eight-year term.

RBA’s Lowe caps Aussie’s election rally

The empire strikes back?

Economic Calendar

Tuesday (May 21)

  • 10:00 Eurozone Consumer Confidence. Estimate -8

*All release times are DST

*Key events are in bold

DAX, Tuesday, May 21 at 6:45 DST

Previous Close: 12,041 Open: 12,101 Low: 12,066 High: 12,176 Close: 12,175

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dow futures pop 150 points after US eases trade restrictions on Huawei

**Reminder to sign up for OANDA’s Live Market Analysis Webinar on Tuesday, May 21st at 7:30 am ET. Senior Market Analyst Ed Moya will discuss key themes impacting financial markets and provide real-time analysis. Register Here

U.S. stock index futures were higher Tuesday morning, as market participants continue to monitor trade developments between the world’s two largest economies.

At around 6:20 a.m. ET, Dow futures indicated a positive open of about 150 points. Futures on the S&P and Nasdaq were both seen higher, as well.

On Monday, the U.S. government temporarily eased some trade restrictions imposed on China’s Huawei Technologies last week. The move sought to minimize disruption for the telecom company’s customers around the world.

The U.S. Commerce Department said it would allow Huawei to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets until August 19.

The temporary easing of trade restrictions won some respite with market participants ahead of Tuesday’s opening bell. However, an increasingly fraught atmosphere between Washington and Beijing has continued to keep financial markets on edge, with investors abandoning any hopes of an early resolution to the protracted trade dispute.

On the data front, the Philadelphia Fed non-manufacturing survey for May is set to come out at around 8:30 a.m. ET, followed by existing home sales figures for April at around 10 a.m. ET.

In corporate news, Home Depot, AutoZone, and TJX Cos.are among some of the companies expected to release their latest quarterly results before the opening bell.

Nordstrom, Toll Brothers, and Pure Storage are all set to report their latest figures after market close.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏

Ed Moya

Ed Moya

Sterling Trades at Five Month Lows on Brexit worries

Tuesday May 21: Five things the markets are talking about

European equities along with U.S. futures are trading a tad higher following a mixed session in Asia overnight as the Sino-U.S trade-war rhetoric and actions continue. The ‘big’ dollar remains better bid in a contained trading range while U.S Treasury yields are steady.

Yesterday, U.S markets ended broadly lower amid focus on Huawei suppliers and chipmakers, however, granting tech equities relief overnight was the White House permitting a temporary three-month reprieve to U.S companies doing business with Huawei.

In FX, the AUD has erased most of its surprise weekend election gains as the RBA minutes indicated the possibility of a rate cut at next month’s monetary policy meeting, while in Turkey, authorities again made another attempt to support the beleaguer TRY. In the U.K, sterling has fallen to a new five month low as PM May attempts to gain support for her Brexit Withdrawal Bill.

In commodities, crude oil remains better bid on signs that OPEC+ will extend production cuts beyond next month.

Note: Bank of England (BoE) Governor Mark Carney’s planned inflation hearing appearance before Parliament today has been postponed and has yet to be rescheduled.

On tap: NZD retail sales (May 21), U.K CPI, CAD retail sales & FOMC meeting minutes (May 22), Fr. & Gr. flash services & manufacturing PMI, Day 1 EUR parliamentary elections (May 23), GBP retail sales, Day 2 EUR parliamentary elections & U.S durable goods (May 24), Day 3 EUR parliamentary elections (May 25).

1. Stocks mixed performance

In Japan, the Nikkei slipped overnight as the U.S blacklisting of Huawei took a heavy toll on suppliers to the Chinese telecoms’ equipment maker, but the downside was limited after the U.S temporarily postponed trade restrictions. The Nikkei ended -0.1% lower, while the broader Topix dropped a deeper -0.3%.

Down-under, Aussie shares advanced overnight, supported by financials after mortgage rules were eased in a bid to spur borrowing and the chance of an RBA June interest rate cut increased. The S&P/ASX 200 index closed out +0.4% higher. In S. Korea, the Kospi stock index ended firmer, snapping eight sessions of net selling, with gains in heavyweight Samsung supporting the benchmark. The index closed up +0.24%.

In China, stocks gained as investors “took heart” from the temporary easing of U.S trade restrictions on Chinese telecoms firm Huawei. At the close, the Shanghai Composite index was up +1.23%, while the blue-chip CSI300 index ended +1.35% higher.

In Hong Kong, investors had a different reaction. The Hang Seng index ended at its lowest close in nearly 16 weeks as investors worried about the risk of escalating Sino-U.S trade tensions and this despite a temporary easing of restrictions on China’s Huawei. At the close of trade, the Hang Seng index was down -0.47%, while the Hang Seng China Enterprises index closed +0.01% higher.

In Europe, regional bourses are trading mostly positive on news that Huawei has been granted a temporary 90-days license in the U.S.

U.S stocks are set to open in the ‘black’ (+0.25%)

Indices: Stoxx600 +0.37% at 378.86, FTSE +0.47% at 7,345.56, DAX +0.63% at 12,117.25, CAC-40 +0.26% at 5,372.76, IBEX-35 +0.21% at 9,219.00, FTSE MIB +0.50% at 20,642.50, SMI +0.25% at 9,605.80, S&P 500 Futures +0.25%

2. Oil higher on escalating U.S-Iran tensions

Oil remains better bid on escalating U.S-Iran tensions and amid market expectations that OPEC+ will continue to withhold supply this year. However, gains are been capped by investor concerns that a prolonged Sino-U.S trade war could lead to a global economic slowdown.

Brent crude futures are at +$72.18 per barrel, up +21c, or +0.3% from yesterday’s close. While West Texas Intermediate (WTI) crude futures are up +31c, or +0.5% at +$63.41 per barrel.

After a rocket attack in Iraq’s capital Baghdad yesterday, President Trump has threatened Iran with “great force” if it attacked U.S interests in the Middle East. Iran has said today “that it would resist U.S pressure,” declining further talks under current circumstances.

The crude market has already been tight, supported by OPEC+ withholding supply since the start of this year.

Note: An OPEC+ meeting has been scheduled for June 25-26 to discuss the policy, but the group is now considering moving the event to July 3-4, as the Studies signal a willingness to continue withholding output.

Prices have been capped by investor worries that the U.S and China are “digging in for a long, costly trade war” that could result in a broad global slowdown.

Ahead of the U.S open, gold prices have eased a tad after touching their two-week low yesterday, on increasing bets that the Fed will ‘not’ cut interest rates this year which is supporting the USD and hurting the ‘yellow metals’ safe-haven appeal. Spot gold edged -0.1% lower to +$1,275.81 per ounce, while U.S gold futures have also eased -0.1% to +$1,275.40 an ounce.

3. German Bund yields edge up but remain in negative territory

German 10-year Bund yields have backed up a tad, but remain comfortably in negative territory, as range-trading continues. Macroeconomic and political risks have been sovereign bonds key drivers, with supply emerging as another potential mover. The 10-year Bund yield trades at -0.08%, up +0.6 bps.

E.U bond issues have seen strong demand this year given a backdrop of weak economic growth and expectations that the ECB will maintain its “ultra-easy” monetary policy stance for the foreseeable future.

Global yields have fallen sharply on the back of renewed U.S./China trade tensions and Brexit uncertainty, however, a perception that central banks will have to take further action to support means that any rise in yields should be limited for now.

Elsewhere, the yield on U.S 10-year Treasuries is unchanged at +2.42%, the highest in more than a week. In the U.K, the 10-year Gilt yield has gained +1 bps to +1.067%, while in Italy, the 10-year BTP yield increased +1 bps to +2.709%.

4. Cable falls to new five-month low

The ‘big’ dollar is holding atop of its three-week high as we head stateside, supported by higher U.S yields and as intensifying trade frictions between the U.S and China support investors’ appetite for the “safe-haven” greenback.

Sterling (£1.2693) has dropped to a new five-month low as PM May faces her cabinet ministers today in a last effort to convince them to support her Brexit deal. MP Rees-Mogg says he will not be backing her Withdrawal Agreement Bill, saying it is a “very bad deal.” The pound remains the worst-performing currency in the G10 this month. PM May is also expected to update her cabinet on the progress of cross-party talks with the Labour party which ended last week.

Note: May’s Conservatives are expected to experience a defeat of “historic proportions” at this week’s EU parliamentary elections on May 23.

Down-under, the Reserve Bank of Australia (RBA) minutes overnight revealed a softening in language with outlook “less favorable” with an easing policy in the next six-months. RBA Governor Lowe said the “board will consider the case for a rate cut in June.” AUD is -0.39% lower at A$0.6880.

TRY (-0.31% at $6.0455) is weaker after the CBoT lowered the swap market lira interest rate and opened a repo auction for the first time in a fortnight, reversing a policy tightening step it had taken to support the currency.

5. U.S/China need to reverse course in trade row to help economy

According to a report by the OECD this morning, economic growth in China and the U.S could be -0.2-0.3% lower on average by 2021 and 2022 if the “two countries do not row back on tit-for-tat tariffs” in their dispute that has dampened the global economic outlook.

In its biannual Economic Outlook, the OECD said that “the global economy would grow by only +3.2% this year as growth in trade flows is nearly halved this year to only +2.1%.”

That would be the slowest pace of global economic growth in three years and was down marginally from their last forecast in March for growth of +3.3%.

However, they expect the world economy “should fare slightly better next year with a growth rate of +3.4%, but only if the U.S and China pull back from tariff hikes announced this month.”

Forex heatmap

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Yen keeps enemies close

USD/JPY bears are supported by the risks of global stock indexes correction due to trade wars

The world’s large banks are still bullish on the yen, though the USDJPY has risen up from the zone of its three-month lows. Morgan Stanley and Citigroup recommend buying the yen against the US dollar, while Deutsche Bank AG recommends buying it versus the British pound and the Chinese yuan. Bank of America Merrill Lynch expects the Japanese currency to rise against the euro. At initial stages of trade wars, investors preferred the greenback, but they are now lured to other safe-haven assets due the shift of the Fed’s policy outlook.

The yen became the best performing G10 currency in 2018; however, most of its success is associated with the first half of the year, when investors were drawing parallels with the 1970s and the 1990s. Last century, trade conflicts supported the strengthening of the Japanese currency, however the marked skipped such factors as the Fed’s aggressive monetary tightening and the strength of the US economy, supported by massive fiscal stimulus. Finally, the greenback has taken away the status of the main safe haven form the yen and has almost caught up with it at the finish. However, in 2019, it won’t benefit from the federal funds rate hike and the 3% GDP growth, affected by the tax reform. The market responds to the decline in global risk appetite in a usual way, the USD/JPY is sliding down.

With this regard, it is natural that the pair’s quotes are rising amid the recovery of the US stock indexes, as Donald Trump has proposed to delay a decision to impose tariffs on autos and auto parts, imported from the EU and Japan. I wonder how long it will be rising. The trade wars will hardly end in June, and the Japanese economy looks shaky. Japan’s GDP was up from 1.6% to 2.1% Y-o-Y in the first quarter due to the positive changes in private inventories, public expenditures and the fact that exports fell at a slower rate than imports.

Weak imports indicate weak domestic demand, which is confirmed by the fact that a smaller contribution to the GDP growth came from private consumption. The GDP rate increase doesn’t look persistent, and the situation may change a lot in the second quarter; especially since positive economic data allow the government to raise sales tax. A similar tax reform resulted in the recession in 2014.

Dynamics of the contribution of imports and net exports to Japan’s GDP

Source: Bloomberg

Along with the change in the Fed’s policy outlook, escalation of trade wars and a potential decline in the Japanese GDP, which should press global risk appetite even lower, the yen’s advantages also include investors’ willingness to boost the share of safe havens in their portfolios. They used to be too confident in a soon end of the US-China trade war and a continuous rally of global stock indexes; so, they are revising their strategies now. An increased demand for hedging is a bearish factor for the USDJPY. In addition, higher political risks in the euro area make the restoration of the USDJPY short-term downtrend be just a matter of time. I suggest selling on the rise as a main trading scenario. Initial targets might be set at 108.45 and 108.05.

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Price chart of USDJPY in real time mode

Yen keeps enemies close

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EURUSD, GBPUSD, USDJPY & Gold Price Levels in Play

The U.S. Dollar is looking stronger against pretty much everything except perhaps the Japanese Yen. The Euro is slowly rolling over towards last month’s low, while GBPUSD is on the verge of testing an important inflection point that may induce a bounce. Gold price is testing the August trend-line, a failure to hold could quickly lead to lower levels.

Technical Highlights:

  • EURUSD looking towards April lows
  • GBPUSD nearing big inflection point
  • USDJPY posting potential bear-flag
  • Gold price hanging on August t-line

Fresh Q2 Forecasts are out for major markets and currencies. Check them out on the DailyFX Trading Guides page.

EURUSD looking towards April lows

The Euro continues to weaken as most currencies are against the Dollar, with the April low around the 11110 mark as the next level of meaningful support. Just below there lies a series of underside trend-lines to be mindful of if weakness should carry the Euro down there. For months the pattern has been for a drop to a new swing-low, then an immediate bounce. I’ll continue to expect this to be the case until we see definitive signs of a change in behavior.

EURUSD Daily Chart (April lows, underside t-lines near)

EURUSD, GBPUSD, USDJPY & Gold Price Levels in Play

Find out where our analysts see the Euro heading in the coming weeks based on both fundamental and technical factors – Q2 EUR Forecast

GBPUSD nearing big inflection point

Cable has a big spot to watch in the 12660s, where the August 15 low and January 15 spike-low arrive within only a few pips of one another. The fact the August low held meaning and that we had a 200-point reversal-day at the same level, make it a worthy spot to watch for a reaction. Furthering this notion is the fact that GBPUSD has been beaten down quite a bit lately and large swings for some time now have seen strong countertrend moves at the least.

GBPUSD Daily Chart (12860s big inflection point)

EURUSD, GBPUSD, USDJPY & Gold Price Levels in Play

USDJPY posting potential bear-flag

USDJPY is countering its recent downdraft, but in doing so it is working on a possible bear-flag on the 4-hr chart. Price needs to drop below the lower parallel to validate it, first. For even more confirmation, a closing candle below the most recent swing-low at 10980 is preferred before looking for another swing lower.

USDJPY 4-hr Chart (potential bear-flag)

EURUSD, GBPUSD, USDJPY & Gold Price Levels in Play

Find out where our analysts see USD heading in the coming weeks based on both fundamental and technical factors – Q2 USD Forecast

Gold price hanging on August t-line

Gold price is in a precarious spot with it back at the August trend-line. It’s to be trusted as support until broken, but trust is wearing thin. A break below will have the double-bottoms at 1266 in focus, followed by the 200-day at 1257. The thinking is this, whether we first see a bounce or not gold will likely trade lower at some point soon.

Gold Price Chart (Testing August trend-line)

EURUSD, GBPUSD, USDJPY & Gold Price Levels in Play

Find out where our analysts see gold heading in the coming weeks based on both fundamental and technical factors – Q2 Gold Forecast

Resources for Forex & CFD Traders

Whether you are a new or an experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

AUDUSD Risks Return to Flash Crash Lows as RBA Commits to Rate Cut

AUD Analysis and Talking Points

  • RBA Governor Lowe Commits to Easing Bias
  • Australian Dollar Technical Analysis | Return to Flash Crash Lows

DailyFX Q2 2019 Trading Forecasts for AUD

RBA Governor Lowe Commits to Easing Bias

Overnight, the RBA Governor explicitly stated that the central bank has an easing bias, something we have flagged for some time now (full story). Governor Lowe highlighted that lower rates would support employment and help lift inflation towards target, as a reminder, the RBA stated that a rate cut scenario would need to see inflation remain weak, while the unemployment rate would need to tick up, as such, with this being the case, a rate cut looks to take place at the June 4th meeting. However, with markets near enough fully priced in for a rate cut at the upcoming meeting the focus however will be on the outlook for further easing, which expectations are for another 25bps cut to be delivered by November.

AUDUSD Risks Return to Flash Crash Lows as RBA Commits to Rate Cut

Source: RBA

Australian Dollar Technical Analysis | Return to Flash Crash Lows

The outlook for the Australian Dollar remains soft, particularly given that the RBA are gearing up for cutting interest rates, while trade war tensions between the US and China have also escalated. Consequently, there is a risk that AUDUSD could make a return towards flash crash levels. On the weekly timeframe, the the pair remains weak. Focus in on last weeks lows at 0.6865, in which a break below opens up for a test of support 0.6830. Below there sees little in the way of notable support till 0.6740.

AUDUSD PRICE CHART: Weekly Time Frame (Oct 2017 – May 2019)

AUDUSD Risks Return to Flash Crash Lows as RBA Commits to Rate Cut


— Written by Justin McQueen, Market Analyst

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