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Dean's Daily FX Update – 25 May 2017
In the Zone
- EURUSD
- AUDUSD
- NZDUSD
- USDCAD
- USDCHF
Noteworthy News
- The Fed Minutes last night suggested that almost all the members were in agreement that we could see further rate hikes in June, and that the shrinking of the balance sheet should begin in 2017.
Recap
Yesterday was a busy day as we heard from three central banks, happy to report that we got through the day unscathed and looking forward to some trading opportunities. Although we heard from both the ECB and BOC, the entire market was waiting on the FOMC meeting minutes – I have mentioned this before but I am not certain as to why the market pays that much attention to this release as most of the details have been released. The report did confirm that the Fed are serious about tapering the balance sheet, there was little in the way of details but I suspect that this would be a slow process. There was also confirmation that another rate hike in June is on track, although it remains to be data dependant – I am still not convinced that this hike is as certain as what the market is thinking.
Despite these headlines, the dollar continued to weaken and remained as the weakest currency yesterday. The political cloud still hangs over the White House, although I do see this dollar move starting to taper off somewhat – the equity markets are also starting to price in that they expect this cloud to blow over.
The EURUSD moved back above the 100 hour MA at 1.1200 yesterday and this will be the pivotal level for the morning, the bulls will want to see price remain above this level to stay in control. We have a new wave of bids building at 1.1160 which suggests that this is the level that the market feels more comfortable to take long positions.
Cable is once again trading above the 200 hour MA at 1.2958, there is a lot of choppy trading action in this pair at the moment and it still very much in a range. Just like a year ago, I believe that this range bound trading may continue until 8 June. The ceiling for this range trades between 1.3000 – 1.3010 whilst the floor trades at 1.2925, there are some that are happy to play those ranges for now but I would prefer to look for opportunity elsewhere.
The BOC left rates unchanged yesterday, it has been unchanged since July 2015, although the press statement was somewhat more hawkish than what we have seen over the last 12 months. This allowed the CAD to continue its resurgence against the dollar. It is interesting that the ceiling traded at 1.3540 yesterday, and although we have some major strength I would not be surprised to see buyers build bids around 1.3400.
We have the OPEC meetings that start today and we should get some market moving headlines over the next two days, I do suspect that an agreement in some format will be agreed. From a technical viewpoint, both the USDCAD and oil looked set to reverse some of the recent gains and so these trades could very well be a, “buy the rumour, sell the fact,” trade.
Daily Ranges 25/05/2017
Majors
EURUSD
Resistance1.1230 – 1.1250
Support1.1180 – 1.1160
GBPUSD
Resistance1.2990 – 1.3010
Support1.2950 – 1.2930
AUDUSD
Resistance0.7490 – 0.7520
Support0.7450 – 0.7430
NZDUSD
Resistance0.7030 – 0.7040
Support0.6970 – 0.6950
USDCAD
Resistance1.3480 – 1.3500
Support1.3400 – 1.3370
USDJPY
Resistance111.90 – 112.20
Support111.20 – 111.00
USDCHF
Resistance0.9750 – 0.9770
Support0.9700 – 0.9690
Rand
USDZAR
Resistance13.0350 – 13.0700
Support12.9000 – 12.8550
EURZAR
Resistance14.6450 – 14.6700
Support14.5040 – 14.4500
GBPZAR
Resistance17.0080 – 17.0560
Support16.7060 – 16.6560
Minors
AUDCAD
Resistance1.0090 – 1.0110
Support1.0030 – 1.0010
AUDJPY
Resistance83.70 – 83.90
Support83.30 – 83.10
EURCHF
Resistance1.0930 – 1.0940
Support1.0900 – 1.0880
EURGBP
Resistance0.8660 – 0.8680
Support0.8600 – 0.8580
EURJPY
Resistance125.40 – 125.60
Support124.55 – 124.30
GBPJPY
Resistance145.40 – 145.70
Support144.20 – 144.00
GBPCAD
Resistance1.7490 – 1.7520
Support1.7400 – 1.7370
GBPCHF
Resistance1.2660 – 1.2680
Support1.2620 – 1.2600
Indices
DE30
Resistance12680 – 12700
Support12550 – 12520
UK100
Resistance
Support
US500
Resistance2415 – 2430
Support2390 – 2380
US30
Resistance21100 – 21200
Support20900 – 20870
SA40
Resistance48400 – 48700
Support47800 – 47600
Commodities
BRENT
Resistance54.40 – 54.60
Support53.40 – 53.10
XAUUSD
Resistance1250.00 – 1270.00
Support1240.00 – 1220.00
XAGUSD
Resistance17.10 – 17.30
Support16.80 – 16.60
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