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On Thursday, the Japanese Yen depreciated 0.71% against the Greenback, as the US economic data came better-than-expected. On Friday's morning, the currency pair reached the upper boundary of the long-term descending channel at 111.80.

From a theoretical point of view, the pair should reverse south from the given boundary and step lower towards the weekly PP at the 111.47 mark.

However, if the given channel does not hold, a bullish momentum prevails in the market, and the rate renews the 2019 maximum, currently located at 112.00.

During yesterday's trading session, the price for gold dropped to the psychological level at 1,290.

Given that the XAU/USD exchange rate is pressured by the 200-hour SMA at 1,295.67, it is likely, that some downside potential prevails in the market for the short run. A possible downside target is the psychological level at 1,285.00.

On the other hand, the price for gold could trade sideways, trying to surpass the given resistance level.

It is the unlikely case, that the rate breaches the given resistance and jumps higher than 1,300.00 level due to the resistance formed by a combination of the 55– and 100-hour SMAs, as well the monthly PP

German Economy Ministry said in the April Economic Report today that the economy continues to show a "mixed picture". Service and construction are "expanding strongly". However, "global oriented manufacturing is still in a weak phase".

The reported note that both global industrial production and world trade were on the decline at the end of 2018. And this "continued in January 2019 in industrial production. Trade had a "slightly recovery" but remained below last year's level.

PMI was at lowest since June 106 while Ifo reflected a "gloomier mood". And, "in light of the indicators and the accumulation of global risks, international organizations are predicting a less dynamic, but still upward, global trend."

Also, "industrial economy is likely to remain subdued in the face of declining foreign demand and high international risks."

Full report here.

Crude oil prices were down 1.6% on the day on Thursday. The Energy Information Administration reported that demand for oil would be hit due to slowing global demand. This comes just days after the IMF cut global growth forecasts including key economies such as the US and the eurozone. OPEC is now mulling over raising production if Venezuela and Iran’s supplies fall further.

How Far Can Oil Prices Correct?

WTI Crude oil has clearly pulled back from the highs and formed a minor support level at 64.09 – 63.91 region. In the near term, oil prices could briefly retest this level. If resistance forms here, then we expect price to correct lower. The near term support is at 63.18. Price needs to rebound off this level in order to maintain the bullish momentum. There is scope for further upside. But a failure to stall the correction at 63.18 could trigger an even stronger decline to 62.06.

Gold prices fell 1.2% on the day on Thursday as it erased the previous three days’ gains in a single session. It has been trading weaker since early Thursday morning after the Fed minutes released the day before saw some mixed signals. This was accentuated by comments from Fed Vice Chairman Richard Clarida who said the US economy was in a good spot despite muted inflation.

Has XAUUSD Reversed Direction?

The declines in the precious metal saw price breaking out to the downside from the resistance area. The sharp declines will likely push gold prices lower to test the 1285 support area in the near term. However, price needs to post a decline below this level in order to confirm the downside.

The common currency managed to hold up against a stronger greenback on Thursday. While prices initially slipped, the euro quickly reversed the losses. The final inflation report for March from Germany and France showed that consumer prices rose 0.4% and 0.8% respectively, matching the initial flash estimates.

Can the EURUSD Maintain the Upside?

The currency pair initially fell on Thursday but stopped short of retesting the previously tested support area. A quick reversal saw price action breaking past the resistance area of 1.1276. At the time of writing, EURUSD is extending gains higher and we expect the momentum to see price action targeting 1.1330 in the near term.

EUR/USD

Current level - 1.1284

The bias remains positive, for a test of 1.1340 zone. Crucial on the downside is 1.1250 low.

USD/JPY

Current level - 111.82

The break above 111.25 has confirmed a reversal of the whole slide since 111.80 peak and the outlook is positive, for a test of 112.15 high. Minor support lies at 111.66.

GBP/USD

Current level - 1.3057

The intraday bias is neutral and only a violation of 1.3120 will allow a test of 1.3200 area. Crucial support lies at 1.2960.

Cable is holding near the lowest point of near-term congestion which extends into fourth straight day on Friday, following triple rejection ad daily cloud top and Thursday's close in red.

Thick falling weekly cloud also weighs, keeping near-term risk shifted lower.

Daily momentum remains negative and studies are in bearish setup, adding to negative outlook.

Fresh weakness probes below trendline support (1.3057) which kept the downside protected in past two weeks and firm break here would unmask key support provided by 200SMA (1.2978).

A cluster of barriers between 1.3080 and 1.3130 keep the upside limited and only break above would neutralize downside risk.

Res: 1.3080, 1.3091, 1.3130, 1.3140
Sup: 1.3042, 1.3000, 1.2978, 1.2942

The Euro surged in Asia and hit new 2 ½ high at 1.1294, boosted by news about increased demand for the currency on Japanese bank plans for multi-billion purchase business from a German bank.

Fresh advance probes above converging 20/30SMA’s (1.1273/78) and through strong Fibo barrier at 1.1284 (38.2% of 1.1448/1.1183 / 10WMA) which capped multiple attacks in past few sessions.

Improved sentiment could help bulls along with rising momentum, but close above these barriers is needed to confirm bullish signal and open way towards next key barrier at 1.1216 (daily cloud base / 50% retracement / daily Kijun-sen).

The pair is on track for bullish weekly close that would also complete reversal pattern on weekly chart and signal further recovery.

Caution on repeated failure at 1.1284 that would signal extended sideways mode and make the downside more vulnerable.

Rising 10SMA (1.1241) underpins the action and marks pivotal support, loss of which will be bearish.

Res: 1.1294, 1.1316, 1.1348, 1.1385
Sup: 1.1273, 1.1251, 1.1241, 1.1210

Pivot (invalidation): 111.50

Our preference Long positions above 111.50 with targets at 111.80 & 112.00 in extension.

Alternative scenario Below 111.50 look for further downside with 111.35 & 111.15 as targets.

Comment The RSI advocates for further upside.