Data wise this week’s primary focus is on the release of CPI for the US, UK and EZ and UK unemployment rate. Addition to the data risk, the brand new week wraps with the G3 central banks FOMC (Wed), ECB and BOJ (Thu) monetary policy meetings.
FX comments: The commodity currencies AUD and NZD were off marginally from weekly highs against the greenback last week whereas CAD strengthens across the board. The major EURUSD has snapped the seven-weeks falling streak and GBPUSD facing resistance at 23.8% fib reaction. Fully established Brent oil breaks the H&S and Ascending triangle patterns and lost the height rapidly. US T10s remained below 3.0% last week.
Crucial additional risk events: Trump-Kim Summit (Tue) and MPS prepare to vote on Brexit amendments (Tue and Wed). FX volatility could be expected on USDJPY and GBP crosses.
Central bank meetings: Ahead of the three central bank meetings USD, EUR and JPY crosses need more attention.
FX : We forecast EURUSD (buying the dip), EURJPY (Neutral) and USDJPY (Neutral) in the Q2.
Especially in EUR crosses, EURJPY (limited upside), EURGBP (remained in a tight range) and EURCHF (buying the dip at 1.13) favors the trend. The USD and JPY crosses are exposed to data and central bank meetings risk.
Chart of the week: We continue to favor being buying the dip in the medium and long-term. Whereas in the near term we remain cautiously NEUTRAL as we continue to study the action. The further return of USD weakness, which should allow EUR to perform better continuation from the last week with resistance seems at 1.20. Flip side supports are at 1.1590 and 1.1500.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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