Currency Report: Tuesday, May 22
EURUSD: The EURUSD was able to find support after moving through 1.29 and reaching a high of 1.29555. Price action was able to cross through the 50 EMA on the 4H and has held as support. On the daily chart, the 23.6 percent Fibonnaci level was successfully supported after repeated failures to break. 1.3018 is still a possibility, but the issue with the euro is that these quick moves are common – more so before big news reports.
Today, existing home sales and FOMC minutes are on the books. Fed Chair Ben Bernanke is testifying in front of Congress, as well.
GBPUSD: After seeing red across the board, the UK seen retail sales sharply decline MoM (-1.3 v. 0 estimate) and YoY(.5 v 2 estimate). Also, private lending beats estimates (8B v. 7B estimate), but is almost cleaved in half from the previous month.
The Pound-dollar is currently 1.5088, -65 or .43 percent. Support is at 1.5084. If broken, the next level of support is 1.5016.
USDJPY: Even with bond yields at 5Y highs, the Bank of Japan affirms to double it’s monetary base over the next two years and expand the supply of money by roughly 70 trillion yen per year. The USDJPY is higher on the day: 102.89, +38 or .37 percent. Support for the USDJPY is slightly lower at 102.46 with the dollar-yen expected to revisit the recent high of 103.28. If Bernanke undermines the dollar or the markets are not please with the FOMC minutes, we can see the dollar weaken and USDJPY to reach newer highs.
AUDUSD: The Aussie is down, like many days before, to .7948, -38 or .40 percent. AUDUSD was marginally down yesterday, but it continued to fall after the decline in the Westpac consumer sentiment. Currently sitting on support, the Aussie is more than likely to slide to .7907. Yearly targets for the Aussie is .9665 and .955.
Look out for the FMOC minutes and Bernanke’s testimony. These will play heavy on the dollar, which is slightly up. The weakness of the green back will play through all dollar majors, but the duration will be hard to determine. Do not trade the news, and wait until the dust settle. Remember to analyze fundamentally and trade technically!