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AETOS Market Commentary 23/05/2019

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EURUSD

The Euro closed lower on Wednesday, closing at 1.1155(-9 pips) against the greenback. The euro was influenced heavily with Brexit yesterday, leaving the EUR/USD pair confined to familiar levels, with the range exacerbated by the lack of relevant news. Indeed, the US Federal Reserve released the Minutes of its latest meeting in the US afternoon but failed to surprise reaffirming the 'patient' stance.

The statement was overshadowed ahead of the release by Powell's comments late Monday, indicating that policymakers are in no rush to make a move, even if the economy improves. Tensions between the US and China escalated following a report indicating that the US Government is studying to add to a blacklist some Chinese surveillance tech firms.

The market's sentiment deteriorated as the day went by, leading to losses in European and American indexes. The European macroeconomic calendar will be quite busy this Thursday, offering German Q1 GDP, expected to be confirmed at 0.4% for the first three months of the year, and the preliminary May's Markit PMI for both Germany and the EU. Although manufacturing output is still foreseen in contraction territory, the indexes are expected to post modest recoveries when compared to the previous month. Germany will also publish the May IFO Business Climate survey, seen decreasing to 99.1 vs. the previous 99.2.

The US session will bring the usual weekly unemployment figures, New Home Sales, and the Markit preliminary PMI for May

EURUSD 4 Hour Chart

EURUSD-4-Hour-Chart-23-05-2019

In the short term, and according to the 4 hours chart, the bearish potential is also present, as the price seesaws around a mild bearish 20 SMA and below the larger ones, while technical indicators lost their upward strength after reaching their midlines, lacking clear directional strength yet leaned lower.

GBPUSD

The cable pair fell further on Wednesday, closing at 1.2663(-43 pips) against the greenback. Political chaos undermined the Sterling as starting early London, news made the rounds about the end of PM May's leadership, amid discontent over the 'new' Brexit deal May would present next Friday. The first round of news pointed to a Cabinet coup, as ministers pushed May to quit.

Later in the US afternoon, rumors made the round that Mrs. May could resign before Wednesday ends. The 1922 committee will meet by the end of the day, with several members of its executive pushing for party rule changes to allow an immediate vote of confidence in Mrs. May that could force her departure. Adding pressure on Sterling, UK April's inflation increased by less than expected, up by 0.6% MoM and by 2.1% YoY. The UK won't be releasing relevant data this Thursday, although Pound traders will have more than enough with Brexit-related headlines.

GBPUSD 4 Hour Chart

GBPUSD-4-Hour-Chart-23-05-2019

The GBP/USD pair is extremely oversold in the daily chart, which means that the risk of an upward corrective movement has increased, even though there're no technical signs that the decline is over. Nevertheless, the Brexit chaos will likely keep it under pressure.

The short term picture for the pair remains bearish, as, in the 4 hours chart, it settled below a bearish 20 SMA(Blue Line), while technical indicators lack directional strength well into negative ground, with the RSI consolidating near oversold levels.

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Thursday, 23 May, 2019 / 8:10

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Source : https://www.aetoscg.com/en/market-commentary

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