Further to comments from FOMC officials yesterday, the US dollar currently is extending its uptrend after moving languidly over the last two trading sessions. At the Official Monetary and Financial Institution Forum in Beijing, James Bullard, President of St. Louis Fed stated that financial markets may turn unstable if the interest rate is kept too low for too long. The market is now building in a strong expectation that a rate hike is firmly on the table at the FED meeting next month.
Early this morning, the Japanese Yen surged higher as Finance Minister Taro Aso stated that there would be no further measures applied to devalue the yen currently. In addition, weak stocks and falling commodities resulting from the FED’s hawkish comments also contributed to provide the safe-haven yen an added lift.
Data released by the Markit Institution on May 23 reported that economic activity in the euro area continues to remain subdued. The flash PMI for May posted a 16-month low of 52.9, compared with the reading of 53.0 in the preceding month. In particular, the PMI for the services sector stayed unchanged at 53.1, while declining 2 points to 51.5 in manufacturing sector.
In today’s trading session, oil prices continue skidding as a firmer dollar continues to weigh on the markets. Brent, was down to $48.60/barrel, 0.5% lower than the previous close. Gold, also witnessed a fall of 0.3% from the last settlement and is trading at $1245.17/oz.
Fig. EURUSD H4 Technical Chart
Falling from a nine-month high of 1.16146, EURUSD is currently stuck in the range between the level 0 and 23.6% of Fibonacci retracement. The signal trend indicator has signaled a short position since May 13, via a red arrow above the price chart. The pair is expected to move sideways for a while before pulling back. The level 23.6% of the Fibonacci retracement is currently acting as a solid resistance for the price.
Buy Digital Call Option at 1.11875 valid until May 24, 2016
Buy Digital Put Option at 1.11719 valid until May 24, 2016
Fig. GBPJPY H4 Technical Chart
The Stochastics chart shows that the pair GBPJPY has been in oversold territory for some time now, and is bouncing back as the %K line (blue line) has already crossed the %D line (red line). Sterling is on its way to strengthening against the yen, leading the pair to climb up from the support of 157.980 formed yesterday. However, the red arrow hanging over the price chart hints that the price may drop soon after this consolidation.
Buy Digital Call Option at 159.582 valid until May 24, 2016
Buy Digital Put Option at 158.724 valid until May 24, 2016
Fig. USDCAD H4 Technical Chart
After testing the support of 1.27666 on May 12, USDCAD has been surging higher, thanks to a strengthening greenback. ADX (14) is at 42.1932, indicating that the uptrend is holding firm. The price is supposed to continue edging up, supported by the two moving averages below.
Buy Digital Call Option at 1.32000 valid until May 24, 2016
Buy Digital Put Option at 1.31543 valid until May 24, 2016
Fig. GOLD H4 Technical Chart
GOLD is extending its recent down-move, and currently trades at 1245.77. RSI (14) keeps moving above the 30 threshold but has never fallen too low beyond this bar. This implies that the bear is overwhelming but not strong enough to push the price down drastically. The price is likely to test the support at 1238.17, the lowest level in about one month once it breaks through the support at 1243.60. A short position has been encouraged by the signal trend indicator since last Wednesday.
Buy Digital Call Option at 1243.69 valid until May 24, 2016
Buy Digital Put Option at 1240.33 valid until May 24, 2016
Fig. COPPER H4 Technical Chart
COPPER is currently witnessing a consolidation after a powerful downtrend which has resulted in 157-pip fall. RSI (14) has ticked up to the average but is likely to fall back soon. The price may continue the flat trend for a while, and then head down. However, as we can see, the support at 2.0390 has restrained the metal from losing heat. A reversal is expected once the price rises up to around 2.0645.
Buy Digital Call Option at 2.0887 valid until May 24, 2016
Buy Digital Put Option at 2.0650 valid until May 24, 2016
Fig. SP500 H4 Technical Chart
SP500 is fluctuating un-decidedly in a wide range, after hitting the support of 2024.34 on May 19. RSI (14) stands at 48.0298, suggesting no clear direction in the price movement. However, the red arrow has formed above the price chart since May 13, signaling a short position. The index is anticipated to go down soon, to cover the wide gap created last week.
Buy Digital Call Option at 2054.48 valid until May 24, 2016
Buy Digital Put Option at 2045.97 valid until May 24, 2016