Trading plan for 30/05/2017:
The Euro lost ground overnight amid mounting political risks. The EUR/USD pair slumped overnight to 1.1130 with rising pressure on Greece, Italy, and the ECB. The Chinese market is still closed for the holiday, but general sentiment in Asia is cautious with a slight risk aversion. The commodity market continues to move sideways due to the closure of major stock exchanges.
On Tuesday 30th of May, the event calendar is quite busy with important economic releases, so global investors will pay attention to French GDP data, German Preliminary CPI data, Canadian Current Account data, CB Consumer Confidence, and Financial Stability Review presented by Reserve Bank of New Zealand.
EUR/USD analysis for 30/05/2017:
The French GDP data are scheduled for release at 06:45 am GMT and German Preliminary CPI is scheduled for release at 12:00 am GMT. The CPI is the headline inflation figure that indicates the strength of domestic inflationary pressures and assesses changes in the cost of living by measuring changes in the prices of consumer items. Market participants expect the CPI to decrease -0.1% from 0.0% a month ago and on a yearly basis the CPI is expected to decline from 2.0% to 1.6%. These market expectations mean the inflationary pressure should decrease, which is not a good data for European Central Bank because they expect the inflation to increase up to 2.0% on a yearly basis, so they could change the current accommodative monetary policy. This means the ECB will still support the current accommodative monetary policy as long as necessary. Any change in inflation, especially to the upside might cause Euro to rally across the board.
Let's now take a look at the EUR/USD technical picture on the H4 time frame. The market has broken the technical support at the level of 1.1159 and now this level will act as a technical resistance for the price. The next technical support is seen at the level of 1.1075, but the trading conditions on this time frame are starting to look oversold a little, an intraday bounce might be in play now. The upside momentum is still weak and it is confirmed by RSI indicator. In a case of a bigger sell-off, please mind the gap between the levels of 1.0820 - 1.0730.
USD/JPY analysis for 30/05/2017:
The CB Consumer Confidence data are scheduled for release at 02:00 pm GMT and market participants do not expect any drastic changes in the sentiment. The number expected by the market is at the level of 120.1 points which is very close to the last month figure of 120.3 points. So the mood among consumers remains bullish, but this month the figure indicates the fourth time that the benchmark has held in a relatively tight range. The reason for this behavior is a growing number of doubts about whether Trump's administration can fulfil its promises such as to spur economic growth, decrease regulation, and implement a tax reform. Any data below 120 points might start to suggest these doubts are starting to get serious and the US Dollar might decrease in value even more.
Let's now take a look at the USD/JPY technical picture on the H4 time frame. The market broke out of the rising wedge formation but soon bounced from the nearest technical support at the level of 110.85. Nevertheless, the move down does not look completed as the market conditions are not oversold yet. The next important support for the bears is the level of 110.22, so if the CB Consumer Confidence data will be worse than expected, then this level might be tested soon. The nearest technical resistance is seen at the level of 111.44.
Market Snapshot: GBP/JPY bounces from 50% Fibo
The price of GBP/JPY pair had bounced from the 50% Fibo at the level of 141.03 and now is trying to test the technical resistance at the level of 143.08. The trading conditions look oversold and the momentum is clearly pointing to the north, so the current intraday move might reach the resistance. Nevertheless, there is still a chance for an extended drop towards the 61% Fibo at the level of 140.36. Only a sustained break out of the golden channel would change the bias to bullish.
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