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Daily FX Brief, May 17 – Market Wrap & Top Trade Setups Today

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FX Market Recap

The euro surged against its peers during Thursday afternoon trading session in response to U.S. President Trump statement to social media to announce that he may delay the implementation of auto import tariffs of 25%, on autos from Europe, for six months.

The dollar index was steady versus a basket of six major currencies at 97.832 after reaching 97.882 on Thursday, its highest since May 3.

Gold stretched its bearish trend to trade around 1,288 over a firmer dollar, and as a reliable U.S. data, corporate results expanded investor appetite for riskier assets.

GBP/USD – Double Bottom Breakout Driving Sellers

Cross-party Brexit discussions in the limelight following uncertainty over UK PM May’s fate is being sidelined for now. The GBP/USD is most likely to follow technical indicators, considering fewer details on the economic calendar to follow.

With that, the volatility in the GBP/USD pair remains thin as traders remain less active around 1.2790 support zone. Investors are still uncertain about the U.K. fate as Brexit talks between the Conservatives and Labour failed to reach consensus.

On the technical side, the pair is surrounding April low of 1.2865 which is likely to provide an immediate resistance, a break of which can push the cable towards 1.2930.

On the flip side, mid-February support near 1.2775 and 1.2700 could offer support and a break of which opens the door to the towards 1.2670.

R3: 1.2942
R2: 1.2877
R1: 1.2837
Key Trading Level: 1.2812
S1: 1.2772
S2: 1.2747
S3: 1.2682

GBP/USD – Trade Tip
Consider selling below 1.2810 with an immediate target 1.2770 and 1.2722.

EUR/USD – Bulls Looming Around Support as Investors Await CPI

The European economy is due to release Final CPI and Final Core CPI data during the London Session. Both of the economic events have improved so far and have come out of the negative territory.

Economists aren’t expecting any significant change in the inflation figures, which is why the investors focus stays on the technical levels. So far, the EUR/USD is on the back foot, having violated essential ascending trendline support on Thursday. It adds to the risk of falling to levels below 1.1150 as the dollar is gaining momentum on reports stating that China is no longer interested in trade talks with the U.S.

The single currency fell from 1.1220 to 1.1166 and finished beneath the trendline joining April 26 and May 3 lows on Thursday, as the 10-year treasury yield surged from 2.36% to 2.41% on the back of robust U.S. figures and the probability of a Fed rate cut by December, indicated by Fed fund futures, dropped from 130% to 120%.

R3: 1.1304
R2: 1.1246
R1: 1.121
Key Trading Level: 1.1188
S1: 1.1152
S2: 1.113
S3: 1.1072

EUR/USD – Trade Tip

EUR/USD may find immediate support around 1.1165, and a bearish breakout can trigger further sell-off until 1.11280. While buying can be seen above 1.1190 to target 1.1220. All the best for today!

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