Daily Forex Outlook 08 May 18

The forex markets continue in recent trends, although with weaker momentum. The dollar extended it’s rally against the Euro and the Swiss Franc, but it’s kept in a tight range against Sterling, Aussie, and Loonie.  Yen, is slightly higher today, with EURJPY dipping through last week’s low and GBPJPY and USDJPY both held in a tight range. The economic calendar is not busy today and might provide little inspiration. The volatility trigger could be US President Donald Trump’s decision on the Iran nuclear deal.

Trump to announce a decision on Iran nuclear deal

WTI crude oil jumped to as high as 70.84 yesterday but is now back below 70. Trump said he will announce the decision today on whether to stay in the Joint Comprehensive Plan of Action or pull out of it. The agreement was signed three years ago between the US, UK, France, Germany, Russia, and China, to ease sanctions on Iran in exchange for control over its nuclear program.

EURUSD 080518

The EURUSD Forex pair continues its bearish momentum during the Asian session trading below the 1.20 significant level. As the dollar continues to strengthen against the majors we could see a drop to 1.850 level and if that is breached the next significant level to watch is 1.650. One must take note of the 1.761 as next major support level. A break above the 4hr diagonal resistance level would signal a bigger relief pattern before further downside continuation.

GBPUSD 080518

GBPUSD continues its bearish momentum although one could expect a small pullback to the trendline that was broken last week. Downside momentum in GBPUSD continues to be erased with the stochastic having shown some bullish action over the past 2 days.  If the 1.3588 minor resistance level stays intact, intraday bias remains on the downside for 1.3448 Fibonacci level next target. On the upside, above 1.3588 minor resistance will argue that a short-term bottom is formed. In that case, stronger recovery could be seen back to 4 hour 50 EMA (now at 1.3725) and above before another continuation to the downside.

USDCAD 080518

USDCAD continues to consolidate in its rectangle pattern after the big bullish move 2 weeks ago. With Trump expected to speak today regarding the Iran oil deal and CAD economics are too play an enormous role in the appreciation of the currency in which it will be interesting to see if the pair can gain one more bullish push upside before the next big downfall. With this, continuation upside can be seen however all extended trades will be warranted as short term.

AUDUSD 080518

AUDUSD overall momentum remains bearish with continued downside after the breakout of the ascending channel 2 weeks ago. A weekly close below the 0.75067 support level would warrant the weekly double top formation and one could expect further bearish momentum over the coming weeks.

The Bank of England

The Bank of England is the central bank of the United Kingdom. It was established in 1694 and was privately owned in the beginning, the Bank was nationalized in 1946 so now is completely owned by the UK government. BOE’s main reason to be is to maintain monetary and financial stability in the country. Some of its other tasks are producing secure bank notes, operating asset purchase facility and keeping the inflation low and stable.

The European Central Bank (ECB)

The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is the one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council, and the General Council. Mario Draghi, a member of the Executive Board, is also the President of this organism.

The Federal Reserve Bank (Fed)

The Federal Reserve System (Fed) which is the central banking system of the United States. Fed has two main targets: to keep unemployment rate to their lowest possible levels and inflation around 2%. The Federal Reserve System’s structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.

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