Daily Analysis - US and European Markets Closed Today

[B]Economic News [/B]

[B]USD[/B]

Last week’s main news came from the housing market, which delivered mixed signals as New Home Sales came in much stronger than expected at 981K on Thursday, and Existing Home Sales was released at a much lower figure of 5.99M with expectations for 6.14M. The news caused the greenback to retreat a bit and it weakened against most major currencies, yet in a quiet manner, as the market movements were not radical last week. Today, US markets will be closed for Memorial Day and no economic news is expected to be released today. Traders should expect low liquidity and almost no major price movement coming from the USD side of the world. The rest of the week as oppose to today will be packed with valuable news as we should be expecting Consumer Confidence tomorrow, the ADP employment index, GDP, FOMC Minutes, and the Nonfarm Payroll release on Friday. Regardless of the weak start, it is going to be an exciting week for the Greenback, which will most probably continue the weakening trend for now.

[B]EUR [/B]

The EUR gained some strength last week, after the German Consumer Confidence came in at a much higher than expected 7.3, and the EUR/USD topped at 1.3470 after going through a downtrend for several days before. The GBP Price movement was very low on Monday as the UK GDP correlated with expectations and was released at 0.7%. The European market trading will begin quietly today, as no news is expected to come from Europe today due to whit Monday. The tranquil market behavior will continue today on top on the US markets being closed as well, and will focus the rest of the attention to the Asian markets.

[B]JPY [/B]

The JPY continued to weaken last week, and carry trades continued steadily on the back of the CPI release, which came slightly weaker than expected on Friday. The Corporate Services Price Index (CSPI), which measures the rate of inflation experienced by corporations when purchasing services, was released last night at a much higher than expected figure of 1.1% with expectations of 0.6%. It looks as if the ongoing weakening trend continues today, with carry trades at full steam. The movement might even be sharper than usual as the Japanese markets will be in focus today with the US and UK markets closed today.

[B]Technical News [/B]

[B]EUR/USD[/B]

After the 1.3410 low last Friday, the pair is showing its first major signals of correction and is now consolidating around 1.3450. The hourly studies are turning bullish, and the dailies are unwinding from an oversold status. It looks as if the next target price will be around 1.3500.

[B]GBP/USD [/B]

The pair has failed to break the 1.9800 bottom for the last three days, which set a strong support around that area. The dailies bullish and the hourlies are responding accordingly. It looks as if we are heading back to the 1.9950/2.0000 levels again.

[B]USD/JPY [/B]

The pair has been going up non-stop since the beginning of March, and now shows some signs of consolidation. There is a bearish cross forming on the daily Slow Stochastic, which indicates that a correction down is inevitable but might not be imminent. The hourlies are still neutral, and selling on highs might be preferable.

[B]USD/CHF [/B]

Last week the pair peaked at 1.2320, and than initiated a local downtrend, which appears to be steaming up and taking the pair back to the 1.2200 levels. The hourlies and the dailies support the notion that the move is down, yet due to low liquidity on the USD side, the move might be delayed a bit.

[B]The Wild Card

GBP/JPY [/B]

After an extremely radical uptrend we see the first signals of price consolidation for the pair at the 241.30 levels. There is a clear bearish cross forming on the 4 Hour chart which provides Forex traders with the opportunity to get in the market at a very strong resistance level that might be the starting point of a local correction, or a long run reversal.

Written by [B][I]FOREX[/I]YARD[/B]