Filed Under:  Technical Analysis

CapitalStreetFX | Daily report on May 31, 2016

31st May 2016   ·   0 Comments

Crude prices gained slightly on early Tuesday due to the increasing demand for oil ahead of the summer driving season, although fuel markets were weighed down by rising output in the Middle East. U.S. West Texas Intermediate (WTI) crude oil futures climbed 17 cents to as high as $49.50 per barrel, while Brent crude oil inched up 0.07% to $50.29 in comparison with their last settlement.

The US dollar stayed firm today, hovering around the highest level in two months against the basket of major currencies. Market expectations of a US rate hike in June are growing day by day, especially after Federal Reserve Chair Janet Yellen said that a rate increase would be appropriate if the US economy and labor market continued to show positive signals.

The dollar index, measuring the strength of the currency against its rivals, jumped to as high as 95.968 on Monday, adding 4.4% from the 15-1/2 month low hit earlier this month at 91.919.

Meanwhile, the sterling has been supported in recent weeks, as a series of polls have reported the “Remain” camp leading over the “Leave” side. The pound was lifted to the highest level in more than 3 months against the US dollar at around $1.47298 last week.

In Japan, data reported by the Ministry of Economy Trade and Industry on Tuesday, indicated that factory output gained 0.3% in April compared with the previous month, beating market expectations for a 1.5% drop, as the earthquakes in the South seemed to have had minimal impact on production. The better-than-expected data has supported the Yen, pushing the US dollar off its one-month peak against the Japanese currency.

Technicals

GBPUSD

 

Fig. GBPUSD H4 Technical Chart

Currently, sterling is in an up-move against the greenback after the pair GBPUSD hit the support of 1.45861 yesterday. However, the stochastics chart shows that the pair has approached overbought territory and a pullback is likely to happen as the %K (blue line) reversed and may soon cross over the %D line (red line). For the rest of the day, the price is anticipated to surge higher, retesting the resistance of 1.47398. After that, a reversal may occur.

Trade suggestion

Buy stop at 1.47018, Stop loss at 1.46761, Take profit at 1.47327

EURJPY

 

Fig. EURJPY H4 Technical Chart

Ahead of the ECB Press Conference on June 02, EURJPY has been tiptoeing lately, after rising from the three-week low of 122.206 on Friday. However, the bull seems dominant against the bear as indicated by a higher-than-average RSI (14). The pair is expected to stay gingerly for a bit and then resume its uptrend. A long position is encouraged by the green tread signal arrow under the price chart.

Trade suggestion

Buy stop at 124.035, Stop loss at 123.793, Take profit at 124.348

 

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