May-11, 2022, Daily Currency market technical analysis and forecast, by forex forum.
All attention will now be focused on inflation data in the US, on which the further direction of the pair depends. In the event of a decrease in price pressure, as economists expect, the demand for risky assets will increase, which will lead to an upward movement of EUR/USD and a re-growth in the area of 1.0571. If the situation turns out to be not as favorable as many expect, the pressure on the euro will return, because the US dollar will continue to strengthen its position with increased price pressure, which will force the Federal Reserve System to act more aggressively - even an increase in interest rates by 0.75% immediately in June this year is not excluded.
A breakout and a top-down test of 1.0571 form a new signal for entering long positions, strengthening buyers, and opening up the opportunity for further growth of EUR/USD to the area of 1.0638, where I recommend fixing the profits. A more distant target will be the 1.0691 area. In the event of a decline in EUR/USD and the absence of buyers at 1.0519, the optimal scenario for buying will be a false breakdown near this year's low of 1.0473.
I advise you to open long positions on the euro immediately for a rebound only from 1.0426, or even lower - around 1.0394 with the aim of an upward correction of 30-35 points inside the day.
On the other hand, Economists at Commerzbank are seeing depreciation pressure for the Chinese yuan over the coming year. They forecast USD/CNY at 6.70 and 6.80 by the year-end of 2022 and 2023 respectively.
A weakening bias for CNY“A strong dollar due to policy tightening is likely to the main theme in the coming years, while China has much smaller room to maneuver which implies a downside risk for the Chinese currency.”
USD/CAD KEY TECHNICAL LEVELS
Moreover, Looking at USD/CAD, its no secret that the US dollar has been running hot, buoyed by the initial safe-haven appeal of the Ukraine invasion, now being supported by an aggressive rate hiking cycle by the Federal Reserve Bank. Earlier today we have seen what can be described as the market front-running a potentially lower inflation data print as USD/CAD reversed off the topside of the zone of resistance at 1.3030.
Resistance currently lies at 1.3030 but could move to 1.2960 if we witness a move lower in USD/CAD after the inflation print.
The weekly USD/CAD chart underscores the significance of the zone of resistance (blue rectangle) as it coincides with prior resistance of 1.2960 and the 38.2% Fib level of the March 2020 major move lower.
USD/JPY Technical analysis
Elsewhere, USDJPY move back above its 200 and 100 hour moving averages The USDJPY has moved higher on the back of the dollar buying after the CPI data showed higher than expected inflation last month. Technically, the price moved back above its 200 hour moving average at 130.17. The price also extended back above its 100 hour moving average at 130.421. That 100 hour moving average is being breached to the downside as I type. Technically, that neutralizes the bias as the price now trades below the 100 but above the 200 hour moving average.
The high price today extended to 130.806 which was a swing high going back to last Friday's trade. That was also the high for the trading week. Sellers leaned against that level on the 1st test. It would take a move above that level to increase the bullish bias going forward.
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