Daily Forex Market Preview, 28/05/2018
The markets were seen trading on the back foot on Friday amid an array of rising global political risks. Investors were seen facing risks from the proposed U.S. and North Korea talks that President Trump called off. While in Italy, the newly formed populist government brought a more cautious note to the markets. The Corruption scandal from Spain was another factor that added to the common currency’s woes.
On the economic front, data on Friday saw the release of second revised GDP estimates. Data showed that the UK’s economy grew at a pace of 0.1% in the first quarter, unchanged from the preliminary estimates. In the U.S. core durable goods orders rose 0.9% on the month beating estimates of a 0.5% increase. However, headline durable goods orders fell 1.7% on the month which was more than expected.
Looking ahead, the economic calendar is quiet today with the UK and the U.S. markets closed. Data from the Eurozone is sparse and we expect trading to also reflect the slow day in the markets.
EURUSD intra-day analysis
EURUSD (1.1718): The EURUSD currency pair extended strong losses on Friday as price action broke past the 1.1672 handle. However, with price closing around 1.1649, a rebound off this level is expected. In the near term, we expect the EURUSD to consolidate within 1.1730 and 1.1650 region ahead of a potential retracement in prices. Further declines in price action could send the common currency lower, targeting 1.1500 handle. On the 4-hour chart, price action continues to post steep losses which could trigger a strong pullback in the near term. Above 1.1730, the EURUSD could be seen testing the resistance level at 1.1846 – 1.1824.
USDJPY intra-day analysis
USDJPY (109.40): The Japanese yen was seen strengthening sharply on Friday with price action turning quite volatile below the 109.57 – 109.43 handle of resistance. This consolidation is expected to continue. However, an upside breakout out could trigger a possible retracement toward the 110.85 level of resistance. To the downside, the USDJPY could be seen targeting the lower support at 108.90 price level where support is most likely to be established.
XAUUSD intra-day analysis
XAUUSD (1298.75): Gold prices stalled the gains after price action hit the resistance level of 1304 – 1301 level. The consolidation at this place will see gold prices retesting the breached support level of resistance. A lower close off this level could trigger the downtrend being resumed. However, with the bottom being formed at 1282 handle, we expect to see the declines limited to this level. In the near term, gold prices could be seen posting a sideways movement unless we see a clear breakout above 1304 – 1301 resistance level. In this case, gold prices could be attempting to test the resistance at 1325.