Forex Signals Brief for May 23rd – Weaker Dollar & Choppy Market
Arslan Butt • 3 min read
After having a hard week, the greenback is finally trading with a neutral/bullish bias against other currencies. However, this behavior is slightly different from the single currency Euro, as the dollar remained on its lower side.
With that said, the bullishness in the dollar isn't triggered by any of latest development, but due to the fading impact of earlier geopolitical tensions, and particularly, the political uncertainty in the United States.
We are having bad luck with our forex trading signals. Yesterday, the crude oil was trading exactly as planned, but all of a sudden the market dipped for a few seconds for no known reason and hit our stop loss. Surprisingly, right after that, the prices reversed to our entry level. Yet, our trading signal on gold remained supported and stayed on the green side.
Top Economic Events To Watch Today
- FOMC Member Evans Speaks (1:10)
- FOMC Member Kashkari Speaks (13:00)
- New Home Sales (14:00)
- FOMC Member Kashkari Speaks (19:00)
- FOMC Member Harker Speaks (21:00)
- French Flash Manufacturing PMI (7:00)
- French Flash Services PMI (7:00)
- German Flash Manufacturing PMI (7:30)
- German Flash Services PMI (7:30)
- German Ifo Business Climate (8:00)
- Flash Manufacturing PMI (8:00)
- Flash Services PMI (8:00)
- Public Sector Net Borrowing (8:30)
- Inflation Report Hearings (9:00)
- Wholesale Sales m/m (12:30)
EUR/USD – Three White Soldiers
The Euro is consolidating within its pre-weekend range, as is seems investors are waiting for fresh developments. Yesterday, as we shared in our Forex Signals Brief May 22 – 28, the Eurogroup Meetings was a very important event.
In addition, German Chancellor Angela Merkel's remarks underpinned the demand for the single currency. She said that the single currency is "too weak" due to the accommodative monetary policy of European Central Bank. As a consequence, the EUR/USD gained because investors considered the remarks hawkish.
Forex Trading Signal
I'm sticking to the same plan – sell position at $1.1285 with a stop loss above $1.1310 and a take profit below $1.1225.
EURUSD – 4 Hours Chart
Technical Outlook – Intraday
On the 4-hour chart, the EUR/USD is continuing a strong bullish momentum. Though both of our momentum indicators, the RSI & Stochastic are trading above 70 & 80 respectively, suggesting that the pair has entered the overbought trading zone. Therefore, we can expect a retracement below a strong resistance level of $1.1285.
Lastly, the pair is about to form a Three White Soldiers on the daily chart, which signifies that a strong bullish trend is imminent.
USD/JPY – Bears Dominated Currency Pair
The safe haven currency pair traded unchanged in a narrow trading range of $110.850 – $111.550. The bearish momentum weakened due to a lack of major economic events from the United States and Japan. The drop in equities, especially in the U.S. and Asia, extended a major support to the Japanese Yen & Gold.
At the moment, we need to look for fresh fundamental releases to decide the market's further trends. Consequently, the New Home Sales from the United States acquires the utmost importance among the U.S. events.
Forex Trading Signal
As advised earlier, it would be best to take up a sell position below $111.500 with a stop loss of $111.850 and take profit of 110.500.
USDJPY – 4-Hour Chart
Technical Outlook- Intraday
On the 4-hour chart, we can see that the USD/JPY has stuck in a narrow trading range of $110.840 – $111.500. Moreover, the pair has already completed the 38.2% Fibonacci retracement at $111.630, and the same level is pushing the pair deeper into the selling area.
The lagging indicator, the 50-periods moving average, is suggesting a bearishness in the pair. The leading indicators are sharing the same bias.
The market is likely to release several economic events which will ultimately lead to the initiation of new trends and momentums. All we need to do is to keep a close eye on the Eurozone and U.S. as both of these economies are under the spotlight today.