During the previous week we saw some correction of the US dollar competitors. On Monday market participants discussed that International Monetary Fund chief Dominique Strauss-Kahn was taken into custody last weekend. Dominique Strauss-Kahn therefore could not be present at the planned meeting of the Financial Ministers of the Euro-zone, where the European budget crises and Greece bail out issues were supposed to be discussed. As a result, the greenback strengthened against the euro and the EUR/USD reached the $1.4050 level on Monday. Later on the concerns connected with the arrest of the head of the IMF weakened, and the euro strengthened. The EUR/USD pair grew to the $1.4150 mark. Sterling strengthened and the GBP/USD pair grew and reached the $1.6222 maximums during the European trading session on the same day.
The released Euro-zone Consumer price index showed unexpected growth, which reinforced expectations for the Euro-zone interest rate increase. As a result, the EUR/USD almost reached the $1.4250 maximums during the American trading session on Monday. At the same time the released US data could not support the American dollar. The Empire manufacturing suddenly dropped to 11.90 against the expected 19.70.
Thereleasedon Tuesdayresults of the RBA meeting confirmed that at some point the Reserve Bank of Australia would need to continue increasing principal rates in Australia in order to slow down the inflation rate growth.
Euro was supported on Tuesday and one of the influencing factors was the agreement that has been reached during the meeting of the Euro-zone Financial Ministers in Brussels on Monday – financial support plan for Portugal has been approved. Sterling received temporary support from the publication of the UK fundamental release on the same day. The Consumer price index for April grew to 4.5% against the expected 4.1%. As a result, the GBP/USD pair reached the $1.6300 maximums. Expectations for the principal rates increase by the Bank of England grew.
Japanese yen was under pressure after the statement of the Bank of Japan managing director, Masaaki Shirakawa, who mentioned that “Japanese economy was in a very serious condition”.
Investors were discouraged by the release of the negative US fundamentals on Tuesday during the American trading session. The US housing starts for April decreased to 523K against the forecasted 569K. Building permits level dropped as well.
GBP/USD pair dropped on Wednesday from $1.6290 to minimums of $1.6133 during the European trading session. A number of factors influenced this drop of the pound. UK jobless claims for April grew for the record-breaking amount of 12.4K. Claimant count rate increased for 4.6% against the forecasted increase for 4.5%. The released minutes of the Bank of England meeting showed, that most of the members voted for keeping the interest rate at the previous level.
The released on Tuesday New-Zealand statistical data rendered considerable support to the national currency on Wednesday. The Producer price inputs and Producer price outputs showed unexpected growth for the first quarter.
Sterling received considerable support against the euro and the US dollar after the release of the strong UK fundamentals on Thursday. The published UK Retail sales turned out to be much higher expectations. Retail sales inc auto fuel for April demonstrated the level of 1.1% against the forecasted 0.8% and previous month’s 0.3%.
Swiss frank was under pressure after the release of the ZEW Survey for May, which showed unexpected decrease to – 11.5.
Japanese yen dropped on Thursday after the release of the Annualized Gross Domestic Product for the first quarter, which decreased for 3.7% against the forecasted drop for only 1.9%. Japanese industry and consumer expenses were pressured as a result of the earth-quake and tsunami.
The American trading session on Thursday showed changes in the trading dynamics of the major currency pairs. The release of the weak US fundamentals pressured the US dollar. Existing home sales decreased in April when the forecast showed increase, Philadelphia Federal index dropped below expectations. Under this negative influence even the drop of the Initial jobless claims could not support the greenback. Therefore, the EUR/USD grew above the $1.4300 mark and the GBP/USD demonstrated maximums above the $1.6200 level.
At the end of the week the EUR/USD pair decreased to the $1.4130 level after the reduction of the Greece credit rating to B+ level by Fitch credit agency. But the release of the negative US fundamentals on Friday pressured the greenback and investors’ demand for the high-risk assets grew.
Weekly technical analysis for 23 – 27.05
EURUSD
The pair has declined to 1.41130 and trying to close below this level. It may bring pair to 1.37441.
Resistance: 1.44835, 1.47697, 1.50676
Support: 1.41130, 1.37441, 1.33427
GBPUSD
The pair is aiming to Moving Average (100) at 1.59962.
Resistance: 1.64274, 1.68504, 1.72652
Support: 1.59962, 1.52523, 1.48532
USDCHF
The pair is aiming to median line at 0.91074.
Resistance: 0.91074, 0.93264, 0.96597
Support: 0.88022, 0.85633, 0.82723
USDJPY
The pair is aiming to 83.330.
Resistance: 83.330, 86.836, 90.909
Support: 80.244, 76.535, 73.126
AUDUSD
If the pair is trying to stay below 1.05810 this may bring pair to 1.03847. Strong support is at 1.01873.
Resistance: 1.07806, 1.09604, 1.11831
Support: 1.05810, 1.03847, 1.01873