USD Trading Outlook (20-05-2015)

USD has recovered significant ground that was lost last 2 weeks. The EURUSD pair was hit by all sides, as initially the pair slid below 1.12 on comments from an ECB official that the ECB is ready to accelerate Bond Purchases for seasonal reasons. He also mentioned negative deposit rates. Also, bad ZEW figures for Germany weighed on the common currency. The USD was widely supported also by the unexpectedly good US housing data. Today the Fed will release minutes of its April meeting. It is not expected the central bank is to signal a June rate hike, but once again say that all will depend on the economic data.

Weak inflation readings in the UK (inflation now negative for first time in more than 50 years) and USD strength, weighed on the GBP which fell to 1.5445 before bouncing back above 1.5500 again. Resistance is at 1.5535.

USDJPY has returned from hibernation. Good US and strong Japan GDP has brought the pair back close to 121.00 so this one will certainly be a pair to watch from now on.

Elsewhere, not much action in the AUD which remains under pressure from the RBA comments that rates may be cut further.

Overall, as mentioned before, the market is completely data dependent. Good US data will likely lead to a stronger USD, weak data, to a weak USD. Keep an eye on BoE and FED minutes today but also German PPI, and US crude oil inventories if you like trading the black Gold

Trading Quote of the day: Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars. (Bernard Baruch)