Weekly Forex Analysis: May 15th to 19th 2017


EUR/USD

 

Weekly Analysis: Last week started strong for the bears, who managed to take the pair into 1.0850 support but most of the US Dollar gains were erased Friday on the back of disappointing U.S. data and rumors that the ECB may start to taper its quantitative easing.

Technical Outlook

 

This week we will probably see another test of 1.1000 zone, as current momentum seems to belong to the bulls. If this resistance area can be surpassed, the next destination will become 1.1100 – 1.1120 but we have a slow economic week ahead and this may generate ranging movement, without major advances to either side. To the south, the first notable zone of support is the confluence between 1.0800 level and the 50 days Exponential Moving Average. A break of this zone may trigger an extended move down.

 

Fundamental Outlook

 

The first notable event of the week is the release of the Eurozone Flash version of the Gross Domestic Product, scheduled Tuesday and followed later in the day by the U.S. Building Permits. Wednesday we take a look at Eurozone inflation with the release of the Final version of the Consumer Price Index, which although is the least important of the three versions, can still generate strong movement.

Thursday we take a look at the U.S. Unemployment Claims, showing the number of people who asked for unemployment benefits during the previous week, but because this is a weekly indicator, it tends to have a low-to-medium impact. Friday is yet another slow day, without major economic releases, similar to the rest of the week.

 

GBP/USD

 

Price action was choppy last week, with a bearish bias that took the pair into the support at 1.2850. The Bank of England kept the rate unchanged and did not signal a hike in the near future.

Technical Outlook

 

The move up started in March is overextended and in need of a deeper retracement. If 1.2850 support can be broken early in the week, we expect a quick move into 1.2770 and possibly into the 50 days Exponential Moving Average but it must be noted that an uptrend is in place as long as the pair is trading above 1.2770 and the Moving Average. The first major upper barrier is represented by the level at 1.3050.

 

Fundamental Outlook

 

The Pound will be affected by three important releases this week: Tuesday the British Consumer Price Index comes out, showing changes in the price that consumers pay for the goods and services they purchase. The indicator acts as the main inflation gauge and usually has a strong impact on the Pound.

Wednesday’s highlight is the Average Earnings Index, an indicator that shows changes in the price that businesses pay for labor and the last release of the week is the British Retail Sales, scheduled Thursday. Overall, we have a rather slow fundamental week all around but this doesn’t necessarily mean that volatility will be low.

 

Written by: Bogdan Giulvezan