Forex Week Ahead Analysis : 22nd May

In this week’s Week Ahead Analysis we take a look at the key charts of the week with #GBPUSD,  #GBPJPY, #GOLD and more!

Watch the video to learn more…

Title: The Week Ahead: US Debt Ceiling, Fed Insights, and Key Central Bank Announcements

As we brace ourselves for another dynamic week in the financial markets, investors will find themselves navigating through a host of key events that will likely influence market sentiment. From US debt ceiling negotiations and the release of Federal Open Market Committee (FOMC) meeting minutes, to central bank interest rate decisions, it promises to be a week brimming with consequential market updates.

US Debt Ceiling Stalemate Continues

One of the most critical events will be the ongoing US debt ceiling negotiations. The hope for a swift resolution was thrown into disarray last Friday when Republican negotiators exited a meeting, claiming the White House’s demands were unrealistic. This deadlock, a clear sign of the deep-seated political rift in Washington, raises concerns about potential economic fallout. Market participants will be closely observing these discussions, as an inability to raise or suspend the debt ceiling could result in a US default, an event that would send shockwaves throughout the global markets.

Federal Reserve’s FOMC Minutes & Powell’s Remarks

Another key development to watch is the release of the FOMC meeting minutes. Investors are hoping for insights into the Federal Reserve’s future actions, particularly in the context of potential changes to the monetary policy. Understanding the Fed’s current thinking could provide significant clues about the timeline and scale of any future policy changes.

Furthermore, Federal Reserve Chair Jerome Powell’s recent comments may signal a shift in stance towards potential interest rate hikes. Powell’s admission that such hikes may pose undue pressure on the US banking sector could suggest that the Fed might consider other policy tools to combat inflationary pressures. This new perspective provides food for thought for investors and market analysts alike.

RBNZ & Bank of England: Central Bank Watch

Over in New Zealand, the Reserve Bank of New Zealand (RBNZ) is expected to raise interest rates from 5.25% to 5.50%. If confirmed, it would represent yet another instance of the RBNZ’s aggressive monetary tightening, continuing its trend of countering inflationary pressures with policy adjustments.

In the United Kingdom, the spotlight will be on Bank of England Governor Andrew Bailey, who is slated to speak twice this week. Given the BOE’s balancing act between rising inflation and the ongoing economic recovery, Bailey’s speeches will likely be a focal point for investors. Every hint on the direction of the BOE’s monetary policy will be scrutinized and is expected to shape investor sentiment for the UK markets.

USD Index Analysis

The price on the chart has traded through multiple technical levels and some observations included:

• The price of USD Index is trading above 103.00 resistance.
• Debt ceiling negotiations pushed prices lower on Friday, if this continues, price could trade back below the 103.00 resistance.
• If however, it gets resolved, price could break higher towards 105.00.

GBPUSD Analysis

The price on the chart has traded through multiple technical levels and some observations included:

• The price of cable traded through a bullish channel support.
• Price was trading towards support of 1.2350, which could be targeted this week if price continues lower.
• If USD weakens, GBPUSD could break back within the bullish channel.

GBPJPY Analysis

The price on the chart has traded through multiple technical levels and some observations included:

• GBPJPY is on to watch from the currency strength meter.
• JPY and GBP are both in reversal zones, favoring GBPJPY upside.
• Recent economic events could see investors rush to safe havens, helping JPY strengthen.
• Price is trading below 171.50 currently, if price breaks above this then price could trade to 176.00.
• A hold below this level could influence selling back to 169.00.

Gold Analysis

The price on the chart has traded through multiple technical levels and some observations included:

• Gold moved lower in line with the recent USD strength.
• Price is trading at the $1950.00 support level.
• If US debt negotiations continue to be problematic, then Gold could find support here. 

Have you watched our interview with EURUSD analysis? You can see it here. 

About The Author

Jonathan Kibbler

Jon Kibbler, our Senior Market Analyst, boasts over a decade of trading experience. He specializes in dissecting the intricacies of financial markets and sharing his expertise with precision. Jon’s insights have been featured at renowned events and platforms like Coindex, Forex Analytix, and Forex.com.

See author's posts