Market Review for the week from 29 April to 3 May

The U.S. dollar weakened his position during the period from April 29 to May 3, as deteriorating economic data signals that that the timing of completion of the program of quantitative easing relegated to an indefinite period in the future. Moreover, the Federal Open Market Committee Federal Reserve has made changes in its official statement made on the basis of the next meeting. U.S. regulators allowed the possibility of expanding the program if the economic activity will continue to slow. Against such a background USDX dollar index in the first half of the day on Friday, May 3 lost 0.6% over the previous week’s close.

The EUR/USD after a lull at the beginning of the week was noted very volatile dynamics on Wednesday and Thursday. On the eve of the announcement of the results of the ECB is strengthened, despite projected decrease in the discount rate, testing the resistance at 1.3245. The regulator took a step down, lowering it to the level of 0.50%, and also made it clear that considering the possibility of additional stimulus. Accordingly, the single currency came under pressure and «rolled back» in the area of ​​1.3060. After the release of data on the labor market of the United States on May 3, it was quoted at 1.3120 area, which is 0.8% higher than at the close of last week.

The British pound strengthened its position after the purchasing managers’ index in the three main sectors of the economy were better than expected. GBP/USD has tried resistance at 1.56, ignored the weakening of the euro, during the subsequent press conference, Mario Draghi, and preparing for the next leap up.

The Australian dollar has made an attempt to recover, but in the absence of proper fundamental support, she was unsuccessful. After testing the resistance of 1.0390, where the 200-day moving average, with AUD/USD once again «pulled back» to the support of 1.0250. Positive labor market data from the U.S. increased more appetite for risky assets, and the pair hit 1.0320 closer to the end of the week.

The Japanese yen continued to strengthen, but this move looks very weak and uncertain. USD/JPY pair has found good support in the 50-dnevnyo simple moving average, from trying to resume the upward movement.

Forecast, 6 — 10 May

On the coming week is not scheduled release of important macroeconomic statistics that can have a significant impact on the dollar. Of the main events can be identified only regular summit «Big Seven», which kicks off on Friday May 10. Currency market participants continue to digest the events of the previous week. Of the dollar as many are determined by the dynamics in the stock markets. However, the correlation coefficient between them, which considerably increased in March, again starts to decrease. Stock markets continue to grow, despite the lowering of forecasts for economic growth, but the U.S. does not feel its former self. We are inclined to believe that in the coming weeks, the U.S. currency will not be able to form stable trends across the board, with the exception of the Japanese yen.

Traders on the European currency future week also has the potential to be calm. Mario Draghi will deliver a speech in Rome on Monday. However, even on Thursday, 2 May, he answered all the important questions of journalists during a press conference on the results of the next meeting of the Governing Council. Accordingly, we believe that this event is unlikely to give markets a new food for thought. Eighth and ninth of May in France holiday business day, and in Germany only eighth. We expect a decline in liquidity and activity in the market during this period. From the standpoint of technical analysis for the EUR/USD pair seems logical sideways in a range 1,2990-1,3240. In case of breaking the lower limit of the possible formation of an impulse to the level of 1.2860.

The British pound is expected outcome of the next meeting of the Monetary Policy Committee of the Bank of England. Britain managed to avoid recession with a triple-bottom after the data on GDP growth for the first quarter were in positive territory. However, the economic situation remains difficult. Industry and construction sectors, as shown by indices of PMI, yet are in a recession. Economic growth is achieved by the service sector. The Bank of England is in some disarray. On the one hand, he expresses a desire to support economic growth, and the other does not seek to expand the quantitative easing program, relying on its Funding for Lending Scheme (Financing Loan), which also demonstrates the questionable effectiveness. Accordingly, the results of the meeting the British regulator can present any surprises. From the standpoint of technical analysis, the pair GBP/USD is in an uptrend. Overcoming resistance of 1.56 could open the way to 1.5720.

For the Australian dollar in the economic calendar, provided important events. AUD/USD has tried to restore some of the lost after the price of gold positions, but it was unsuccessful. In the case of overcoming the 1.0250 support can be expected to decline in the area of ​​1.0150.

The pair USD/JPY continues to be corrected, but holding support at its 50-day moving average, which currently stands at 96.72. If the upward movement from this point will be sustained, its intensity will gradually increase. Fundamental prerequisites for the weakening of the yen is still relevant. We allow the possibility of another test technically and psychologically important level of 100 yen per dollar. At the same time, «breaking through» support down 96.70 quotations can move to the area of ​​95.60.


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Market Review for the week from 29 April to 3 May | Web Trade For All - Forex trading, analytical reviews of the market and help for beginners