Trading plan for 11/05/2017:
The main event of the Asian session was a sell-off in the New Zealand dollar after the Reserve Bank of New Zealand announced its interest rate decision. WTI oil remains strong on the back of the US Department of Energy report. A barrel is priced at $47.50. EUR/USD is 20 pips above yesterday's 1.0850. USD/JPY momentum has diminished, but the rate is still above 114.00
On Thursday 11th of May, the main event of the day is the Bank of England interest rate decision, the inflation report, and the monetary policy statement. Moreover, later in the US session more data will be released: PPI index and the unemployment claims from the US and the new housing price index from Canada.
Analysis of GBP/USD for 11/05/2017:
The Bank of England interest rate decision, the inflation report and the monetary policy statement are scheduled for release at 11:00 am GMT. Market participants do not expect any interest rate hike, so it should remain unchanged at the level of 0.25%, together with the asset purchase program at 435 billions of pounds. The question remains whether the BOE inflation report will signal further acceleration, hinting a possibility of a rate hike. The UK inflation has been moving above the central bank's 2.0% target in recent months. The other factor is the uncertainty over next month's general election in the UK.
Let's now take a look at the GBP/USD technical picture on the H4 timeframe. The market is still trading close to 1.3000 between the levels of 1.2859 - 1.2990. An unexpected rate hike or a hawkish tone of the inflation report might easily cause a rally past 1.3000 level. On the other hand, if the BoE maintains the current policy stance, the market will likely return to the trading range or perform a small pullback towards the lower range boundary at the level of 1.2828.
Analysis of EUR/USD for 11/05/2017:
The producer price index and the initial jobless claims are scheduled for release at 12:30 pm GMT. Market participants anticipate the PPI increased by 0.2% after falling by 0.1% a month ago, so a slight inflationary pressure is expected. The US labour market is showing signs of strength again, so today's weekly update on new filings for unemployment benefits is expected to confirm the rebound. The jobless claims are forecasted to rise slightly from 238k to 245k, so this numbers will provide more arguments to the Fed in favor of a rate hike at the next month's FOMC meeting.
Let's now take a look at the EUR/USD technical picture on the H4 timeframe. The market is trading below the golden trend line, just above the important technical support at the level of 1.0851. Market conditions are oversold and there is a slight bullish divergence visible between the price and the momentum oscillator. Therefore, it is possible that the price will bounce from the current level before reversing downward again. The next resistance is seen at the level of 1.0914.
Market snapshot: Crude Oil broke above the resistance
Amid the yesterday's data, oil bulls have managed to violate the important technical resistance at the level of $47.10 and now the price is rallying towards the next resistance at $48.18. Market conditions are about to become overbought, so the breakout and pullback for a test from the upside is the preferred scenario for oil now.
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