Weekly Forex Forecast - Sunday, May 15

10 and 20 us dollar bill

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EUR/USD

The euro broke significantly to the downside over the course of last week, slicing through the 1.05 level. We saw it break down below the 1.04 level, but it then turned around to show signs of life on Friday.

Regardless, I think that we will sooner or later get a bounce that gets sold into, especially near the 1.05 handle, and then the 1.06 level. This is a market that is negative for a reason, and until something fundamentally changes between the Federal Reserve and the ECB, I will be looking for rallies that I can short. Ultimately, this is a market that could very well go down to parity until the Federal Reserve loosens its monetary policy.

EUR/USD


GBP/JPY

The British pound has bounced hard toward the end of the week, as it looks like we are trying to stay above the previous resistance. That being said, the market looks as if we are ready to go higher, but we need to get above the JPY160 level. If we break above that level, then it is likely that we can go looking to the JPY165 level.

On the other hand, if we turn around and break down below the JPY157 level, it is likely that we could go looking lower towards the JPY155 level given enough time. You should also keep in mind that risk appetite has a major influence on what happens here, as well.

GBP/JPY


AUD/USD

The Australian dollar broke through significant support during the week, and it looks to me as if we are more likely than not going to go lower. Keep in mind that the Australian dollar is highly sensitive to commodity markets, and therefore global growth.

The 0.70 level above should offer resistance as it has been serving as the massive support we have been paying attention to. Because of this, I will be looking for signs of exhaustion anywhere near that area. On the downside, the 0.68 level is an area that could offer a little bit of support.

AUD/USD


USD/JPY

The US dollar has fallen hard during the week to reach the JPY127.50 level. However, we have seen it turn around to show signs of life again, and now we can see that it has formed a bit of a hammer. That being said, the JPY130 level continues to be a bit of an issue, so I think we are likely going to continue to see a lot of sideways trading, as we need to digest some of the excess froth from the parabolic move higher.

USD/JPY

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