Trading plan for 16/05/2017

Trading plan for 16/05/2017:

The overnight publication of the RBA minutes did not cause higher volatility during the Asian session. Significant strengthening was noted by the Chinese Yuan, whose exchange rate was set by the central bank at 6.877 per Dollar at the end-April minima. Among the Asian stock indices, the Nikkei 225 (0.3%) is dominant as it tried to break through 20,000 points.

On Tuesday 16th of May, the event calendar is busy with some important data releases, so market participants will pay attention to the CPI data from the UK, ZEW Economic Sentiment data from Germany, and Building Permits data from the US.

GBP/USD analysis for 16/05/2017:

The CPI data are scheduled for release at 09:30 am GMT and market participants expect a nice increase from 2.3% to 2.6% in the reported month. This better than the last month data was signaled last week during the Bank of England inflation report, where they indicated a significant uptick in inflationary pressure. If the data is in line with the consensus, then the British Pound could appreciate higher across the board.

Let's now take a look at the GBP/USD technical picture on the H4 timeframe. The market is still trading above the technical support between the levels of 1.2705 - 1.2772. As long as this zone is not clearly violated, the outlook remains bullish. Currently, the price is trying to rally towards the 1.3000 level again, after the successful golden trend line test. If the data will be in line or better than expectations, then the 1.3000 might be reached easily. The next support is seen at the level of 1.2881.

EUR/USD analysis for 16/05/2017:

The German ZEW Economic Sentiment and overall Eurozone ZEW Economic Sentiment are both scheduled for release at 10:00 am GMT. Market participants expect the sentiment to improve from 19.5 points to 22.3 points in Germany and from 26.3 points to 29.1 points in the Eurozone. The main reason for the sentiment improvement is Emmanuel Macron's win in the presidential election in France, which pushed away Marine LePen from ruling the France.

Let's now take a look at the EUR/USD technical picture on the H4 timeframe. The bulls have managed to make a new high at the level of 1.1026 at the time of writing, without even trying to fill the gap between the levels of 1.0730 - 1.0820. Nevertheless, the market conditions are overbought and the rally might be short-lived. The next important resistance is seen at the level of 1.1298 and the immediate support is seen at the level of 1.1020 and 1.0996.

Market snapshot: USD/CAD is trading around yesterday's low

After the Crude Oil rally towards $50, the USD/CAD pair moved lower and currently is trading slightly above the support at the level of 1.3601. The trading conditions look oversold, but there is no visible bullish divergence yet. If the price of Crude Oil keeps advancing higher, then USD/CAD should follow lower towards the next technical support at the level of 1.2529.