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Yesterday, currency majors showed multidirectional dynamics. At the moment, the dollar index (#DX) is consolidating near monthly highs. The euro was supported by reports that Donald Trump could delay his decision on imposing tariffs on imported cars and parts by up to six months. According to Eurostat, the estimate of eurozone GDP growth in the first quarter met market expectations and counted to 0.4% (q/q).

Greenback was under pressure after a weak report on US retail sales. In April, retail sales declined by 0.2%. The core retail sales index slowed down to 0.1% compared with a forecasted value of 0.7%. Today, during the Asian trading session, ambiguous statistics on the labor market were published in Australia. At the moment, financial market participants have taken a wait-and-see attitude before the publication of important economic releases from the US. These statistics may affect the dynamics of currency majors in the short term. We also recommend following up-to-date information regarding trade negotiations between the US and China.

Oil quotes show positive dynamics. At the moment, futures for the WTI crude oil are testing $62.35 per barrel.

Market Indicators

• Yesterday, the bullish sentiment was observed in the US stock market: #SPY (+0.59%), #DIA (+0.43%), #QQQ (+1.41%).
• The 10-year US government bonds yield is declining. Currently, the figure is at 2.36-2.37%.

The news feed on 2019.05.16:

• Statistics on the real estate market in the US at 15:30 (GMT+3:00);
• Philadelphia Fed manufacturing index at 15:30 (GMT+3:00).

Cable accelerated lower in early European trading on Thursday and hit new three-month low, driven by negative sentiment on rising pressure on PM May to step down.

Decision to hold another parliamentary vote on Brexit (likely in early June) adds to pound's negative tone.

Wednesday's close below former low at 1.2865 (25 Apr) generated negative signal and bears now focus key support at 1.2773 (Fibo 61.8% of 1.2397/1.3381/14 Feb trough).

Bearish daily techs favor further downside with violation of 1.2773 pivot expected to generate strong bearish signal for extension of bear-leg from 1.3179 (3 May lower top).

Falling and thickening weekly Ichimoku cloud maintains strong pressure, as bears look for Friday's close below broken weekly Kijun-sen (1.2889) that would confirm bearish scenario.

Meanwhile, adjustment may precede fresh weakness as daily stochastic bottomed in deep oversold territory. Falling 5SMA marks solid resistance at 1.2905 and guards pivotal 200SMA barrier (1.2957).

Res: 1.2851, 1.2865, 1.2905, 1.2957
Sup: 1.2820, 1.2791, 1.2773, 1.2745

Investor sentiment has swung back and forth this week due to the persistent uncertainty and ever-changing jigsaw puzzle that is being mapped out around global trade developments.

Asian shares are mostly mixed during early Thursday trade amid the contrasting signals that are being delivered to investors in regards to US-China trade tensions. While there is hope on one side of the table that there will be a handshake between the US and Chinese authorities at the G20 next month to smoothen the recent escalation, this is being met with news that the US government will ban Huawei's access to the US markets over national security concerns.

The conflicting signals over trade are likely to simply spark more uncertainty and confusion in the market, and investors will continue to scatter and reassess their appetite towards taking on risk as a result.

Market sentiment is poised to remain fragile over the next month in the lead-up to the meeting between Presidents Trump and Xi Jinping at the G20 summit late June. Will the world’s two largest economies ever find a middle ground on trade or a tension destined to intensify further throughout the year? This is a question nobody has the answer for. And this is why investors are nervous, especially following the spectacular swerve that has occurred over the past two weeks.

Whatever the outcome of the hotly anticipated Xi-Trump meeting, it will certainly have a lasting impact on market sentiment for the second half of the year.

Euro unable to hang on to gains

Investors who were looking for a quick opportunity to push the Euro higher were given the thumbs up yesterday following reports that President Trump could delay auto tariffs by six months.

However, the Euro’s upside gains are limited with prices trading around the 1.12 level against the Dollar as of writing. Even though the first estimates on the Eurozone and Germany’s Q1 GDP prints met market expectations, the continent’s growth outlook is expected to remain challenged by external factors in the form of trade tensions.

With the outlook for the Euro fundamentally bearish amid growth concerns and the European Central Bank (ECB) adopting a cautious stance, the EURUSD is positioned for further downside. A solid weekly close below the 1.120 level is likely to signal a move towards 1.113 and 1.100, respectively.

Commodity spotlight – Gold

Disappointing economic data from the United States and China added to the negative mood yesterday, which in turn was a welcome development for safe-haven assets.

Gold bulls remain supported by trade uncertainty and concerns over slowing economic growth and this continues to be reflected in the metal’s valuation. Prices have the potential to test the psychological $1300 level again in the coming days as market caution accelerates the flight to safety.

Focusing on the technical picture, the precious metal is bullish on the daily charts. A solid weekly close above $1300 should invite a move higher towards $1310 and $1324, respectively. With the catalysts that can significantly reverse the ongoing flight-to-safety in the near term being limited, Gold bulls remain in the driver’s seat.

Gold prices were seen trading flat on Wednesday as the tensions between the US and China eased. Treasury Secretary, Mnuchin, said that both nations would resume talks. He also said that an understanding with Mexico and Canada to resolve the steel and aluminum tariffs was also close. Tariffs on automobiles were also deferred by up to six months.

Can Gold Regain the Momentum?

The decline in global tensions is likely to see gold prices turning flat. The new range of 1300 and 1285 is likely to be tested in the near term. Gold prices briefly rallied to intraday highs of 1300 before easing back. We expect the downside momentum could push the precious metal to test the 1285 support in the near term. But for the moment, the upside gains look to be capped.

Crude oil prices gained 1.25% by Wednesday's close. The gains came after the US Energy Information Administration (EIA) reported a buildup of 5.4 million barrels against forecasts of an unchanged print. The buildup in inventory follows a draw of 4 million barrels in the week before.

Crude Oil Inches Closer to the Resistance Level

The rebound in oil prices has pushed price action close to the resistance level. A retest of the 62.85 resistance level could potentially seal the upside in oil prices. However, in case price breaks past this level, we expect to see further gains. The next main upside target is towards the 64.65 level. To the downside, the declines could stall at the support level of 60.33.

The common currency was down 0.3% on the day on Wednesday. The revised GDP estimates for the first quarter came out at 0.4%. This was an unchanged print from the preliminary release. The quarterly employment change showed a 0.3% increase, beating estimates of 0.2%. Various regional indicators showed that growth was relatively stable. German GDP rose 0.4% while French GDP was up 0.3%.

EURUSD Consolidates Near the Trend Line

EURUSD currency pair was retracing the gains from the day before. Price briefly recovered to test the breached minor trend line. Overall, the currency pair remains trading within 1.1250 and 1.1140 levels. We expect this range to continue in the near term. There is scope for the common currency to potentially dip lower in the near term.

Pivot (invalidation): 61.70

Our preference Long positions above 61.70 with targets at 63.05 & 63.30 in extension.

Alternative scenario Below 61.70 look for further downside with 61.25 & 60.95 as targets.

Comment The RSI is bullish and calls for further advance.

Pivot (invalidation): 14.7100

Our preference Long positions above 14.7100 with targets at 14.8600 & 14.9000 in extension.

Alternative scenario Below 14.7100 look for further downside with 14.6700 & 14.6000 as targets.

Comment The RSI lacks downward momentum.

Pivot (invalidation): 1293.00

Our preference Long positions above 1293.00 with targets at 1300.00 & 1303.00 in extension.

Alternative scenario Below 1293.00 look for further downside with 1289.50 & 1287.00 as targets.

Comment A support base at 1293.00 has formed and has allowed for a temporary stabilisation.

Pivot (invalidation): 2831.25

Our preference Long positions above 2831.25 with targets at 2871.75 & 2890.00 in extension.

Alternative scenario Below 2831.25 look for further downside with 2820.00 & 2802.00 as targets.

Comment The RSI is bullish and calls for further upside.