Currency Analyst since 2010

Forex trading plan for May 24

US dollar traded sideways on Monday under the impact of comments from the Federal Reserve’s members. St. Louis Fed President Bullard suggested the economy is growing below trend around 2% while he sees the economy decoupling from risks overseas. San Francisco Fed President Williams said 2-3 rate hikes this year and 3-4 hikes in 2017 seems ‘right’. He also showed concerns that inflation expectations could be losing momentum.

EUR/USD is hovering around 1.1200. The euro zone’s May PMI turned out to be mixed, though the region’s manufacturing index missed the forecast making the composite index hit 16-months low. The euro met resistance at 1.1240 and looks vulnerable for decline to 1.1156/40, next support will be at 1.1100 (200-day MA). Further resistance is at 1.1300. Watch the release of German ZEW economic sentiment indicator at 09:00 GMT. In addition, the European finance ministers will meet to decide whether to grant Greece the next piece of bailout.

GBP/USD continued to decline after it reversed last week from the 1.4560 area. Support is at 1.4365. The UK will release public sector net borrowing data at 08:30 GMT. The pound is still affected by Brexit concerns. The Bank of England’s Governor Mark Carney will testify on inflation and the economic outlook before Parliament's Treasury Committee at 09:00 GMT.  

USD/JPY found some support at 109.50, though the picture on the daily chart still looks rather negative. Last week the pair failed to fix above the 55-day MA. To gain power the bulls need to overcome resistance at 110.50.  Support is at 108.60.

AUD/USD was once again testing levels below 0.7200. Reserve Bank of Australia’s Governor Stevens will speak at 03:05 GMT. After the RBA surprisingly cut the benchmark interest rate this month and reduced inflation forecasts, the words of Stevens will draw much attention. Aussie is supported by 61.8% Fibonacci retracement of this year’s advance. Below 0.7175 (May 19 low) the next target will be at 0.7065. Resistance is at 0.7260 and 0.7330.  

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