David Long

Risk appetite is weakening – Forex Trading News – May 21st 2014

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Forex Market News

Risk appetite is weakening but it is weird out their overnight. I am not sure why the money is moving into low yield safe haven assets. Russia is all rhetoric as it pulls back troops from Ukrainian borders, so no threat there. Thailand has a few internal issues but…well, not exactly a global threat is it. However, yen strengthened and greenbacks weakened as bonds rallied and stocks fell. I get the sense that the risk off is perhaps concerned about the topping out of the stock market, but VIX is on its lows, so no indication there either. A quiet and odd night indeed.

However, things will ramp up today with the BOJ (usually out around 3pm Sydney time), the votes from the BOE (unlikely to surprise), UK retail sales and the FOMC minutes.

DATA HIGHLIGHTS TODAY – BOJ, BOE, UK retail sales, FOMC minutes.

AUDUSD – Phase 2 pullback has completed. The last run up failed to make a HH so the first signal of the uptrend being finished is now confirmed. A trade below the low of May 2nd, 9201, would be the 2nd signal and final nail in the coffin that the trend is done and dusted. Before going short though we need a cycle under the ema.
Resistance: 9460/9522
Support: 9200/9085/8900

EURUSD – A little low test bad but in reality it is sideways and has been for months now, more so in last 5 trading days.
Resistance: 13890/14050/14260/14320
Support: 13700/13646/13565/13488

GBPUSD – An engulfing buyer bar and so we wait. Inflation was strong and healthy, leaning towards hot which means Carney and the BOE will act soon to reduce the Asset Purchase Program (quantitative easing). A dissent in the votes later today might signal this.
Resistance: 1.70/1.7060/1.7370
Support: 1.6820/1.66/1.63

NZDUSD – Also has completed phase 2, but unlike Aussie it hasn’t broken structure yet. Is still making HH’s in each run away from the ema. So, we may get a buy signal in days to come.
Resistance: 8745/8842
Support: 8523/8434/8090

USDCAD – Moving up and away from the support, back to the topside of the range. Loonie weakness is being driven pretty much by the same factors affecting the Aussie, that is the dropping commodity prices with Iron Ore under US$100 per tonne for first time in a long time.
Resistance: 11170/11233
Support: 10802/10715

USDJPY – Inside seller bar gives no indication. With BOJ out, stay out until after. If they do nothing the yen could break support here. Obviously, if they add to stimulus this pair will rally hard.
Resistance: 105.57/108.35/110.50
Support: 101.40/100.62/100/99.80

GOLD – No reason to break the $30 trading range yet.
Resistance: 1427/1480
Support: 1,265/1,180/1,040

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