Forex Signals Brief for May 30th – Risk-Off Sentiment Ruling The Market - Forex News by FX Leaders

Forex Signals Brief for May 30th – Risk-Off Sentiment Ruling The Market

Posted Tuesday, May 30, 2017 by
Arslan Butt • 3 min read

The global financial markets were mostly quiet as the world's two biggest economies, the United States and China were closed on the first day of a new week. The trading volume, volatility, and liquidity remained moderate. This market behavior was expected as we reported in our earlier report WTI Crude Oil Completes 61.8% Retracement.

We can understand the emptiness of the market by the fact that even the launch of another ballistic missile test by North Korea failed to trigger the demand for haven assets. It's the 9th missile test this year and the recent one was performed right after the G7 meeting where countries pledged to exert more pressure on North Korea to stop them from launching more tests. Anyhow, the impact of this news is likely to be "priced in" during the early Asian sessions.

Top Economic Events To Watch Today

USD

  • Core PCE Price Index m/m (13:30)
  • Personal Spending m/m (13:30)
  • CB Consumer Confidence (15:00)

EUR

  • German Prelim CPI m/m (All Day)
  • Spanish Flash CPI y/y (8:00)

CAD

  • Current Account (13:30)
  • RMPI m/m (13:30)

CHF

  • KOF Economic Barometer (8:00)

NZD

  • RBNZ Financial Stability Report (22:00)

EUR/USD – Breakout Of Double Bottom

Our Forex Signals Brief May 29th – June 4th is doing well as the EUR/USD fell below $1.1150 and it's on its way to hit the suggested target price of $1.1095.

Yesterday, the most awaited event was ECB President Mario Draghi's speech. He weakened the single currency by saying that inflation in the Eurozone remains soft and ECB still requires ample stimulus to underpin the subdued inflation.

By this, Mario Draghi tempered the expectations for a hawkish policy ahead of the upcoming meeting, which is on June 8th. Since the rate hike sentiment is dumped now, any change in the ECB's tone will surely cause huge fluctuations.

Forex Trading Signal

As suggested earlier, I will look to have a sell position below $1.1150, with a stop loss above $1.1175 and a take profit of $1.1095.

EURUSD Breakout - 4 Hour Chart EUR/USD Breakout – 4 Hour Chart 

Technical Outlook – Intraday

On the 4- hour chart, the EUR/USD has finally broken below a significant support level of $1.1160, the same trading level we suggested monitoring in the previous report.

For now, the pair has entered the oversold zone, since both of the momentum indicators, RSI and Stochastic are trading below 30 and 20 respectively.

The slight retracement is expected until 38.2% Fibonacci retracement level of $1.1145 and even to 61.8% level at $1.1160.

Support     Resistance

1.1137        1.1245

1.1094       1.131

1.1029       1.1353

USD/JPY – Break Out Of An Ascending Triangle

The Safe Haven Yen had a little reaction after the North Korea fired a short-range ballistic missile early on Monday. However, the reaction was muted as the U.S. and Chinese markets were closed.

However, today in the Asian market session, the USD/JPY broke below $111.200 as the investors placed their investments in the haven assets. In addition, we can't ignore the gain in Japanese inflation, which has formed the sentiment that the Bank of Japan (BOJ) is getting closer to achieving its inflation goals. Thereby, they are likely to keep their interest rates on hold which will strengthen the Japanese Yen.

Forex Trading Signal

USD/JPY is holding above a very crucial trading level, therefore, I suggest having a buy position above $110.800 along with the stop loss below $110.500 and take profit of $111.350.

USDJPY - 4 Hour ChartUSDJPY – 4-Hour Chart

Technical Outlook – Intraday

On the daily chart, an ascending trend line is extending a strong support to USD/JPY above $110.850. In addition, we can also see the double bottom pattern exactly around the same trading zone of $110.750/850, which suggests a bullish sentiment in the pair.

The momentum indicators are also trading around oversold zone, supporting the argument that sellers are likely to get exhausted and we may encounter buyers for a short time period.

Support     Resistance

110.74        112.01

110.16        112.7

109.47        113.28

Ending Remarks

Unlike yesterday, the global financial markets are likely to exhibit volatile behavior upon re-opening of the banks after the public holiday. Hence, ongoing political tensions, including between the U.S. and North Korea, will need to be monitored before making any order in the market.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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