USD Trading Outlook (26-05-2015)

Last week and especially Friday, the USD staged an impressive comeback against most pairs, reminding everyone that the US is the only G7 economy that is close to a rate hike. While a June hike is extremely unlikely, traders now believe that this year should show the first interest hike in more than 5 years.

Latest inflation data out of the US show that prices are increasing with fastest pace since January 2013. This, combined with better employment is a basic condition for the FED to start hiking rates. On the other hand, EUR was down talked by ECB officials who mentioned that negative deposit rates are not an issue for the ECB.

As a result, EURUSD trades near 1.0915 at time of writing, down from 1.1466 9 sessions ago. Technical indicators have turned sharply to the downturn. Next support is 1.0870.

Strong Retail Sales released on Thursday in the UK, were not sufficient to keep the GBPUSD on an upwards track. The broad USD strength on Friday send the pair 200 pips to 1.5470. Next support is at 1.5400 followed by 1.5360.

USDJPY soared to 122.28 (yearly high) after hibernating at the 120 level for about 2 months.

For this week, traders will mostly focus on US Durable Goods Orders on Tuesday as well as housing data both on Tuesday and Thursday. Biggest news of the week is, Q1 GDP in the US on Friday.

Trading Quote of the Day: “Profits aren’t as important as preserving your capital.”