The #Forex Market Wrap is here!
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In this week’s Forex Market Wrap, we’ll look at how some currencies played out.
Looking at EUR/USD first, the market has pulled back slightly. However, we saw some bullishness come through as there was poor retail sales data out of the US today. This resulted in the US Dollar falling lower.
In this week’s Forex Market Outlook, we spoke about the potential of the market to move towards 1.23 as the US Dollar was looking weak. There’s no change since the market continued to form higher lows.
The only problem here is that the price is getting stuck at 121.60. If the price breaks above that and makes a new high, then we’re more likely to push towards this 1.23 outlook.
EUR/USD continued to remain in an uptrend despite the early positive CPI data from the US earlier this week. This data strengthened the USD initially, but this soon faded when the market saw poor retail data. The USD looks like it will remain weak. Meanwhile, the EUR/USD could be heading towards 1.2300 if the price breaks higher.
The US Dollar is looking weak, so that could continue. Let’s look for a breakout next week. But EUR/USD is still looking strong in the daily uptrend.
Moving on to GBP/USD. We actually posted a video about GBP/USD yesterday where we talked about two areas that you could watch.
The second area was hit this afternoon. The market formed a really nice Head and Shoulders pattern, then the price broke down. We’re retesting that neckline and the price is finding some resistance. We could see a short-term downside there.
GBP/USD formed a Head and Shoulders pattern on the four-hour timeframe. At the 1.4100 resistance, the price reached the neckline and we could see a short-term reversal here. However, the USD weakness could force the market to move higher.
The first level that we spoke about was 1.4062 for a day trading possibility. If you watched that level, the price came into the resistance and sold off nicely into the previous support.
Now, the price came back up to that key neckline area. We could see some short-term downside.
The only problem I’ve got with this is that the US Dollar is looking weaker. So, for the price to go at this, we may not see a lower high play out nor see a move lower. We may see a breakout of those highs, but only time will tell.
The GB Pound is usually the worst-performing currency in May. So, we may get that lower high and a move down, but we’re going to have to look at how the US Dollar is performing for that to play out because we need the US Dollar to get stronger for the price to move back down towards the supporting zone.
Going into USD/CHF then. We were looking for its potential to come back to 0.9104 for a short opportunity. Unfortunately, the price didn’t make it, and we’re starting to see a trend continuation.
USD/CHF was on our watchlist from the Forex Market Outlook this week as we watched the key level of 0.9104. However, the price did not reach the level, but the downtrend continued. This is another sign of USD weakness.
The markets were making lower lows and lower highs. I don’t see much change in this market until the price goes back down to the previous structure lows.
We spoke about XAU getting a potential pullback. This relied heavily on the US Dollar performing well.
The CPI data was good, and we started to have a retracement phase. However, retail sales were poor, so we’re starting to see US Dollar sell-off again.
So, we could be extending higher up to the 1850 level where we could see a reversal coming into play. If we want to buy the trend on XAU, I’d be a buyer down at the 1781.50 level.
Gold (XAU) was also on the watchlist this week as we expected the trend to form a retracement phase and move down to the previous structure. Again, the poor USD data halted this and the price looks like it will head towards the key level of $1850.00.
The price suggests that this isn’t going to play out right now. Instead, we’re more likely heading towards a double top at the moment. But, we’ll have to see how the price reacts to these highs first.
If we get a bearish daily close and a rejection of those highs, then a downside could play out. But at the moment, it’s a no-go until the US Dollar gains strength.
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