Weekly Outlook: 2014, May 25 - June 01

USD/JPY forecast for the week of May 26, 2014, Technical Analysis

The USD/JPY pair fell during the bulk of the week, testing the 101 level. That being the case, we bounced enough to form a hammer, which of course looks very bullish. At the end of the day though, we think that the market is probably stuck between the 101 and the 103 levels, meaning that we may very well find this area to be a bit of a “summer range.” Nonetheless, we have no interest in selling this pair, and do believe ultimately that we will reach the 105 level given enough time.

USD/CAD forecast for the week of May 26, 2014, Technical Analysis

The USD/CAD pair rose during the course of the week, but as you can see found enough resistance to turn things back around and form a shooting star. That being the case, the market looks like it’s trying to break down a little bit here, but we need to get below the 1.08 handle in order to take it seriously. We could see the 1.06 handle if that happens, and as a result would be sellers. On the other hand, if we get back above the 1.10 handle, that would be extraordinarily bullish. At that point time, we would expect to see 1.12 or so.

NZD/USD forecast for the week of May 26, 2014, Technical Analysis

The NZD/USD pair fell during the bulk of the week, but seemed to stall right around the 0.8550 level. There is a significant amount of support below at the 0.85 handle as well, so quite frankly we don’t really see an opportunity to sell this market. That being the case, we are waiting for some type of supportive candle just below current levels in order to start buying again. Ultimately, watch risk appetite in general as it typically will push the New Zealand dollar around in a positive correlation.

GBP/USD forecast for the week of May 26, 2014, Technical Analysis

The GBP/USD pair went back and forth during the course of the week, forming a shooting star right after forming a hammer. We now have a pattern where we have 2 shooting stars and one hammer recently, and as a result we feel that this market is probably going to struggle to get above the 1.70 level, but it will do so eventually. A break above that level census market much higher probably going to the 1.75 handle given enough time. A pullback to the 1.65 level is rather supportive, and as a result we feel that would probably be a buying opportunity as well.

EUR/USD forecast for the week of May 26, 2014, Technical Analysis

The EUR/USD pair initially tried to rally during the week, busting back above the 1.37 handle. However, we found enough resistance above to push the market back down and form a negative candle. It now appears that we are heading towards the 1.35 handle where we would test significant support again. That being the case, we are bullish of this market and fully anticipate supportive candles to be reason enough to start buying on short-term charts with a longer-term bias. Ultimately, if we get below the 1.35 level, things get really ugly.

Forex - Weekly outlook: May 26 - 30

The euro fell to three-month lows against the dollar on Friday and hit the lowest level in 17 months against the pound after weak German business sentiment data underlined expectations that the European Central Bank will ease monetary policy at its next meeting in June.

The drop in the euro came after a report showed that the German Ifo business climate index declined to 110.4 in May; the lowest reading this year, from 111.2 in April, indicating that economic activity could slow in coming months.

The data came one day after a report showing that manufacturing activity in the euro zone expanded at the slowest rate in six months in May.

Recent comments by senior ECB officials have signaled that the bank is open to acting as soon as June to stop inflation in the currency bloc from falling too low.

On Thursday, ECB Governing Council member Jens Weidmann said the bank is prepared to take unconventional measures to counter the risks of low inflation in the euro zone.

EUR/USD hit lows of 1.3616, the weakest since February 13 and settled at 1.3630, 0.18% lower for the day. For the week, the pair lost 0.60%.

EUR/GBP touched lows of 0.8082, the lowest since December 2012 before pulling back to 0.8099 at the close, ending the week 0.69% lower.

Meanwhile, EUR/JPY ended Friday’s session at 139.02, not far from the three-and-a-half month trough of 138.13 struck on Wednesday.

The dollar moved higher against the yen, with USD/JPY up 0.24% to 101.96 late Friday, recovering from the three-and-a-half month lows of 100.81 reached on Wednesday. The pair ended the week with gains of 0.49%.

The dollar was boosted after data on new home sales added to signs of a recovery in the housing market.

The Commerce Department reported that sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of decline. Analysts had been expecting a figure of 425,000. March's number was revised up from 384,000 to 407,000.

The upbeat data boosted the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, to a six-week high of 80.49 before easing back to 80.40 at the close.

In the coming week, markets in the U.K. will be closed for a public holiday on Monday, while U.S. markets will also be closed for the Memorial Day holiday. Investors will be looking ahead to revised data on U.S. first quarter growth, while Tuesday’s report on consumer confidence will also be in focus.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, May 26

• New Zealand is to publish data on the trade balance, the difference in value between imports and exports.
• The Bank of Japan is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
• Market research group Gfk is to publish a report on German consumer climate. Elsewhere in the euro zone, ECB President Mario Draghi is to speak at an event in Portugal; his comments will be closely watched.
• Markets in the U.K. are to remain closed for a public holiday, while U.S. markets will also be closed, for the Memorial Day holiday.

Tuesday, May 27

• Switzerland is to release data on the trade balance and the employment level.
• The U.K. is to publish a private sector report on mortgage approvals.
• ECB President Mario Draghi is to speak at an event in Portugal; his comments will be closely watched.
• The U.S. is to produce data on durable goods orders, house price inflation and consumer confidence.

Wednesday, May 28

• BoJ Governor Haruhiko Kuroda is to speak at an event in Tokyo.
• New Zealand is to release private sector data on business confidence, while Australia is to produce a report on completed construction work.
• Switzerland is to release data on first quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.
• In the euro zone, France is to release data on consumer spending, while Germany is to publish a report on unemployment change. The euro zone is to release data on M3 money supply and private loans.
• The U.K. is to publish private sector data on retail sales.

Thursday, May 29

• Japan is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• Australia is to publish data on private capital expenditure.
• Canada is to produce data on the current account.
• The U.S. is to release revised data on first quarter GDP, as well as the weekly government report on initial jobless claims and data on pending home sales.

Friday, May 30

• New Zealand is to release data on building consents.
• Japan is to release preliminary data on industrial production, as well as reports on household spending and inflation.
• In the euro zone, Germany is to publish a report on retail sales. Elsewhere in Europe, Switzerland is to publish its KOF economic barometer.
• Canada is to publish the monthly report on GDP growth.
• The U.S. is to round up the week with a report on personal income and expenditure and revised data from the University of Michigan on consumer sentiment.

USD/JPY weekly outlook: May 26 - 30

The dollar rose to more than one-week highs against the yen on Friday as upbeat data on U.S. new home sales added to signs of a recovery in the housing market.

USD/JPY was up 0.25% to 101.96 late Friday, recovering from the three-and-a-half month trough of 100.81 struck on Wednesday. The pair ended the week with gains of 0.49%.

The pair is likely to find support at 101.34, Thursday’s low and resistance at 102.27.

The dollar was boosted after the Commerce Department reported that sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of decline.

Analysts had been expecting a figure of 425,000. March's number was revised up from 384,000 to 407,000.

The dollar fell to three-and-a-half month lows against the yen on Wednesday as expectations for more stimulus by the Bank of Japan diminished, while declines in U.S. Treasury yields also pressured the dollar lower.

At the conclusion of its two-day policy meeting, the BoJ said its stimulus program has been working as intended and that the economy is showing signs of weathering the impact of a sales tax increase that came into effect on April 1.

Meanwhile, Wednesday’s minutes of the Federal Reserve’s April meeting indicated that the bank continues to see a slow improvement in the economy, but reiterated that rates are likely to remain on hold at record lows for some time after its asset purchase program ends.

Elsewhere, EUR/JPY ended Friday’s session at 139.02, not far from the three-and-a-half month trough of 138.13 struck on Wednesday.

The euro weakened after weak German business sentiment data underlined expectations that the European Central Bank will ease monetary policy at its next meeting in June.

The week ahead will be shortened, with U.S. markets staying shut on Monday for the Memorial Day holiday. Revised data on U.S. first quarter growth and reports on U.S. consumer confidence will be in focus, while data on inflation and retail sales from Japan will also be closely watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, May 26

• The BoJ is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
• U.S. markets are to remain closed for the Memorial Day holiday.

Tuesday, May 27

• The U.S. is to produce data on durable goods orders, house price inflation and consumer confidence.

Wednesday, May 28

• BoJ Governor Haruhiko Kuroda is to speak at an event in Tokyo.

Thursday, May 29

• Japan is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• The U.S. is to release revised data on first quarter GDP, as well as the weekly government report on initial jobless claims and data on pending home sales.

Friday, May 30

• Japan is to release preliminary data on industrial production, as well as reports on household spending and inflation.
• The U.S. is to round up the week with a report on personal income and expenditure and revised data from the University of Michigan on consumer sentiment.

USD/CHF weekly outlook: May 26 - 30

The dollar rose to more than three month highs against the Swiss franc on Friday, as better-than-forecast data on U.S. new home sales bolstered the outlook for the broader economic recovery.

USD/CHF hit highs of 0.8972, the most since February 13 and was last up 0.15% to 0.8951. For the week, the pair advanced 0.38%.

The pair is likely to find support at 0.8922, Thursday’s low and resistance at 0.9000.

The dollar was boosted after the Commerce Department reported that sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of decline.

Analysts had been expecting a figure of 425,000. March's number was revised up from 384,000 to 407,000.

The upbeat data boosted the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, to a six-week high of 80.49 before easing back to 80.40 at the close.

The dollar index was also bolstered by the greenback’s strong gains against the euro.

The euro fell to three month lows against the dollar after weak German business sentiment data underlined expectations that the European Central Bank will ease monetary policy at its next meeting in June.

The German Ifo business climate index declined to 110.4 in May; the lowest reading this year, from 111.2 in April, indicating that economic activity could slow in coming months.

Recent comments by senior ECB officials have signaled that the bank is open to acting as soon as June to stop inflation in the currency bloc from falling too low.

On Thursday, ECB Governing Council member Jens Weidmann said the bank is prepared to take unconventional measures to counter the risks of low inflation in the euro zone.

The euro was little changed close to one week lows against the Swiss franc late Friday, with EUR/CHF at 1.2207.

In the week ahead, U.S. markets will remain closed on Monday for the Memorial Day holiday. Revised data on U.S. first quarter growth and reports on U.S. consumer confidence will be in focus. Switzerland is to release official data on first quarter growth, as well as trade and employment.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, May 26

• U.S. markets will be closed for the Memorial Day holiday.

Tuesday, May 27

• Switzerland is to release data on the trade balance and the employment level.
• The U.S. is to produce data on durable goods orders, house price inflation and consumer confidence.

Wednesday, May 28

• Switzerland is to release data on first quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.

Thursday, May 29

• The U.S. is to release revised data on first quarter GDP, as well as the weekly government report on initial jobless claims and data on pending home sales.

Friday, May 30

• Switzerland is to publish its KOF economic barometer.
• The U.S. is to round up the week with a report on personal income and expenditure and revised data from the University of Michigan on consumer sentiment.

USD/CAD weekly outlook: May 26 - 30

The U.S. dollar ended Friday’s session lower against the Canadian dollar after data showing that Canadian inflation rose in line with expectations in April.

USD/CAD ended Friday’s session down 0.31% to 1.0860, the lowest level since May 19. For the week, the pair slipped 0.12%.

The pair is likely to find support at 1.0850 and resistance at 1.0929, Thursday’s high.

The Canadian dollar was boosted after Statistics Canada reported that the annual rate of inflation rose to the central bank’s target of 2% for the first time in in two years in April, up from 1.5% the previous month.

The annual core rate, which excludes volatile elements such as some food and energy prices, rose 1.4%, as expected.

Canadian consumer prices rose 0.3% in April from a month earlier, also in line with forecasts.

The data sparked expectations that the Bank of Canada could tone down its view on 'downside risks to inflation', possibly as soon as its next rate review in June.

In the U.S., upbeat new home sales data added to signs of a recovery in the housing market.

The Commerce Department said sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of decline. Analysts had been expecting a figure of 425,000. March's number was revised up from 384,000 to 407,000.

The week ahead will be shortened, with U.S. markets staying closed on Monday for the Memorial Day holiday. Revised data on U.S. first quarter growth and reports on U.S. consumer confidence will be in focus, while Canada is to publish its monthly report on economic growth on Thursday.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Wednesday as there are no relevant events on this day.

Monday, May 26

• U.S. markets will remain closed for the Memorial Day holiday.

Tuesday, May 27

• The U.S. is to produce data on durable goods orders, house price inflation and consumer confidence.

Thursday, May 29

• The U.S. is to release revised data on first quarter GDP, as well as the weekly government report on initial jobless claims and data on pending home sales.

Friday, May 30

• Canada is to publish the monthly report on GDP growth.
• The U.S. is to round up the week with a report on personal income and expenditure and revised data from the University of Michigan on consumer sentiment.

AUD/USD weekly outlook: May 26 - 30

The Australian dollar ended Friday’s session near a three-week low against its U.S. counterpart, after better than expected data on new home sales in the U.S. added to signs of a recovery in the housing market.

AUD/USD hit 0.9207 on Wednesday, the pair’s lowest since May 2, before subsequently consolidating at 0.9231 by close of trade on Friday, 0.04% higher for the day but down 1.43% for the week.

The pair is likely to find support at 0.9207, the low from May 21 and resistance at 0.9272, the high from May 22.

The Commerce Department reported that sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of decline. Analysts had been expecting a figure of 425,000. March's number was revised up from 384,000 to 407,000.

The upbeat data added to signs of a recovery in the housing market and bolstered the outlook for the broader economic recovery.

Meanwhile, in Australia, minutes of the Reserve Bank’s May meeting published earlier in the week indicated that rates are likely to remain on hold for an extended period.

Sentiment also remained shaky after ratings agency Standard & Poor’s warned that Australia’s coveted AAA-rating was at risk unless substantial cuts were made to the budget.

Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the Australian dollar in the week ending May 20.

Net longs totaled 19,462 contracts, compared to net longs of 17,127 in the preceding week.

In the week ahead, U.S. markets will remain closed on Monday for the Memorial Day holiday. Revised data on U.S. first quarter growth and reports on U.S. consumer confidence will be in focus.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, May 26

• U.S. markets will be closed for the Memorial Day holiday.

Tuesday, May 27

• The U.S. is to produce data on durable goods orders, house price inflation and consumer confidence.

Wednesday, May 28

• Australia is to produce a report on completed construction work.

Thursday, May 29

• Australia is to publish data on private capital expenditure.
• The U.S. is to release revised data on first quarter GDP, as well as the weekly government report on initial jobless claims and data on pending home sales.

Friday, May 30

• The U.S. is to round up the week with a report on personal income and expenditure and revised data from the University of Michigan on consumer sentiment.