Sample Category Title

Pivot (invalidation): 1.1190

Our preference Long positions above 1.1190 with targets at 1.1230 & 1.1245 in extension.

Alternative scenario Below 1.1190 look for further downside with 1.1175 & 1.1160 as targets.

Comment A support base at 1.1190 has formed and has allowed for a temporary stabilisation.

The precious metal held the weekly gains into Friday’s close. The recovery in gold comes as investor concerns are high on the trade tensions. The markets were in a risk-off mode for the most part last week. This led to a gain in safe haven assets including gold and the Japanese yen.

XAUUSD Stands at a Key Level

Friday’s recovery saw gold prices retracing the intraday losses as price closed back near the 1285 resistance level. This will be key as a strong breakout from this level could indicate a possible shift in the trend. On the other hand, if the resistance area near 1285 holds, gold prices will be looking at further declines. Prices could slip to the 1240–1250 region in the near term.

The Brexit drama and the political fallout eventually lead to the British Prime Minister, Theresa May announcing her resignation on Friday. Her resignation was widely expected amid growing opposition and her failure to deliver Brexit. The British pound reacted positively as the cable jumped 0.45% on the day.

Can GBPUSD Maintain the Upside Bias?

The GBPUSD briefly slipped to a four-month low last week before breaking higher. By Friday’s close, the sterling was seen stalling near the immediate resistance level of 1.2716. With the range being established within 1.2716 and 1.2606, we expect some sideways consolidation. Only a breakout from this range will determine the next direction in the trend. The bias is to the upside if there is a successful breakout above 1.2716 on a daily closing basis.

Oil prices were recovering from the weekly lows as investors booked profit into the close of the week. Oil prices fell after the US weekly crude oil inventories posted a surplus. Furthermore, speculation is rising that OPEC and Russia will cut production at the semi-annual OPEC meeting in June. The decline to the 57.50 level marks an expected correction in the larger term uptrend that oil prices are in right now.

WTI Crude Oil Could Maintain the Gains

The rebound from the 57.50 support level marks a test of the price area. The previously breached support level of 60.33 region could act as resistance if price continues the upward trajectory. In the near term, WTI crude oil could maintain the gains within the said price band. There is a risk that price could eventually retreat which will put the support at 57.50 at risk. It is likely that oil prices will further extend declines down to the 50 handle in the medium term.

The euro rose as investors received the results of Sunday's European elections. The results showed that the turnout increased for the first time in 40 years. They also showed that voters returned a more fragmented pro-EU majority. The traditional center-right and center-left parties lost ground. Parties against the EU made less gains than earlier expected. In France, Marine Le Pen's National Rally defeated Emmanuel Macron's En Marche. In the UK, Brexit party also defeated the traditional Labor and Tory parties. Other countries where anti-establishment parties won were in Poland, Italy and Hungary.

Sterling rose slightly as debate in the UK shifted to the next Prime Minister. This follows Theresa May's resignation announcement which will see her officially step down on June 7. Investors hope that the next Prime Minister can help lead the UK past Brexit. However, the top contenders have argued that the country will be fine even with a no-deal Brexit. They include Boris Johnson, who is the former Foreign Secretary, Dominic Raab, the former Brexit Secretary, and Michael Gove – Secretary of State for Environment, Food and Rural Affairs. Others include Jeremy Hunt, Sajid Javid and Penny Mordaunt. The UK markets will remain closed today for the Spring Bank Holiday.

The price of crude oil declined today as traders weigh up their next options. On Friday, data from Baker Hughes showed that oil rigs declined from 802 to 797 in the previous week. In total, the number of rigs decreased from 987 to 983. Investors will focus on the US inventory data expected tomorrow and on Wednesday. Over the past few weeks, data has shown inventories increasing. Investors will also focus on the developments on trade and on the upcoming OPEC leaders meeting.

EUR/USD

The EUR/USD rose slightly as the European election results were announced. Since Thursday, the pair has risen from a low of 1.1106 to today's high of 1.1215. On the hourly chart, this price was above the 61.8% Fibonacci Retracement level. It was also above the 25-day and 50-day moving averages. It is also slightly lower than the upper line of the Bollinger Bands. The RSI has moved close to the overbought level of 70. The pair looks set to continue the upward momentum although the volumes will be slightly lower because the US markets will be closed for the memorial weekend.

GBP/USD

The GBP/USD pair moved up slightly to a high of 1.2735. This was higher than Friday's low of 1.2602. On the four-hour chart, the price is moving closer to the 23.6% Fibonacci Retracement level. The price is slightly above the 25-day moving average and slightly lower than the 50-day moving average. The accumulation/distribution indicator has started an upward momentum. The pair will likely continue moving higher to the 23.6% Fibonacci level of 1.2788.

XBR/USD

Last week, the price of Brent crude oil declined to a low of 65.98. This was the lowest level since early May. On Friday, the price rose to a high of 68.05. Today, the pair moved slightly lower to 67.42. On the hourly chart, this price is along the 23.6% Fibonacci Retracement level and along the middle line of the Bollinger Bands. It is also below the 50-day moving average, which is along the upper Bollinger Band. Today, the pair will either move higher to the 38.2% Fibonacci level of 68.5 or move lower to Friday's low of 66.20.

Litecoin has moved to a fresh 2019 trading high after buyers performed a bullish weekly price close above the psychological $100.00 resistance level. The LTCUSD pair has ignited a bullish pattern on the four-hour time frame and may soon target towards the $125.00 level. Sellers will need to force price back under the $100.00 level to change the strong intraday bullish bias surrounding the cryptocurrency.

The LTCUSD pair is only bullish while trading above the $100.00 level, key resistance is found at the $125.00 and $135.00 levels.

If the LTCUSD pair trades below the $100.00 level, key support is found at the $94.00 and $85.00 levels.

The euro is gaining traction above the 1.1190 level against the US dollar as the pair continues to benefit from weakness in the greenback. EURUSD bulls are now testing the pairs 200-period moving average on the four-hour time frame, with the 1.1235 level the next key resistance area to watch above. A sustained move above the 1.1265 level will likely trigger heavy technical buying towards at least the 1.1290 level.

The EURUSD pair is only bullish while trading above the 1.1190 level, key technical resistance is found at the 1.1235 and 1.1265 levels.

If the EURUSD pair trades below the 1.1190 level, key technical support is found at the 1.1165 and 1.1135 levels.

The US dollar has opened early Monday trading under downside pressure against the Japanese yen after the pair suffered its softest weekly price close since January 2019. If USDJPY sellers can force the price below the 109.00 support level, the 108.40 level will then start to come into focus. USDJPY bulls need to move price above the 109.80 level to negate the heavily bearish sentiment surrounding the pair.

The USDJPY pair is heavily bearish while trading below the 109.00 level, key support is found at the 108.40 and 107.70 levels.

If the USDJPY pair trades above the 109.80 level, key intraday resistance is found at the 110.00 and 110.30 levels.

The Euro has opened the new trading week marginally higher against the Greenback following initial results from the Parliamentary elections in Europe, suggesting that the mainstream have managed to hold ground against the feared outcome of another populist wave in the European Union.Provisional results indicate some narrowing of support for populist and Euro-sceptic parties and thissuggests that momentum for the anti-establishment is relatively constrained, at least for now, meaning the Eurodollar should find some initial support from hopes of policy continuity in Europe.

These European Parliamentary election results do not suggest a near-term shock is awaiting for Eurozone politics, highlighting that the direction of the Euro over the longer-run will be determined by global forces, such as what happens next in the narrative with the US-China trade outlook.

President Trump visit to Japan not a warning shot of US-Japan trade tensions to come

As United States President Donald Trump continues his four-day visit to Japan the theme of what happens next with the global trade outlook is very much the question that remains on the mind of global investors.

President Trump's tour has of course been followed closely by the shadow around what could be next to come in the global trade outlook, but the meetings between the United States President and Japanese Prime Minister Shinzo Abe do not suggest that there will be a sudden shift in market anxiety to a US-Japan trade breakout quite yet.

China warns not to short the Yuan!

The offshore Chinese Yuan managed to climb briefly below the 6.90 level for the first time since May 15 after a stark warning from the head of China's banking and insuranceregulator that those who short the Yuan will “inevitably suffer a huge loss”. This has been broadly digested as a warning shot for investors that even following the escalation in the tit-for-tat tariffs this month that China has not changed its view on allowing the offshore Yuan to weaken in defence of more tariffs.

Seven overall remains the magic number in the USDCNH and the comments made by the head of China's banking and insurance provide guidance that Chinese authorities will not hesitate to intervene in the FX markets should they feel the need to do so.

This is not only seen as Yuan-positive but also expected to come to the aid of currencies throughout the Asian region that have needed to contend with unexpected downside risks this month following the downside pressure in the Yuan. This warning from China presents just as positivea wave of momentum for the likes of the Malaysian Ringgit, Indonesian Rupiah andSingapore Dollar as it does for the Chinese Yuan.

South African President Ramaphosa vows “new era” at inauguration

The European Parliamentary elections and United States President Trump visit to Japan are not the only political events to have taken place over the weekend, with Cyril Ramaphosa declaring his intention to bring “hope and renewal” to South Africa in his inauguration speech as President of South Africa.

Since Mr Ramaphosa took charge of South Africa close to a year ago from Jacob Zuma he has been under the spotlight to improve a South African economy that has underwhelmed for years, and continues to lag behind the progress emerging markets in other areas of the world have made in the past decade.

EURUSD is flirting with the 40-day simple moving average (SMA) today, after the aggressive rebound on the two-year low of 1.1106, achieved last Thursday. Currently, the pair has been developing within a narrow range of 1.1110 – 1.1260 as it failed several times to break from these obstacles. The technical structure suggests further upside movement as the MACD surpassed the trigger line and is moving towards the zero line, while the stochastic oscillator entered the overbought zone.

Should the price continue the upside reversal, immediate resistance would likely come from the 1.1260 resistance and the 23.6% Fibonacci retracement level of the downleg from 1.1815 to 1.1110 near 1.1275. A break above these levels could shift the short-term neutral bias and the medium-term descending outlook to a more bullish one, touching the 1.1325 barrier.

If prices return lower, support should come from first from the 20-day SMA around 1.1190, before slipping towards the two-year low of 1.1106. More losses could lead the price to test the lower bound of the downward sloping channel around 1.1000.

In brief, EURUSD is heading higher over the last two days in a consolidation area, while in the medium-term, it should continue its downside trend.