FX.co ★ Trading plan for 23/05/2018

The Trump - Kim summit is still uncertain, so the dollar is slightly stronger in an environment of heightened risk aversion. USA 10Y debt yield is 3.05% on Wall Street and Asian floors, the sellers clearly dominate. The dollar restores appreciation as the EUR/USD returns to 1.1750, GBP/USD drops to 1.3400. Commodity currencies, which in the last few days have been the leader in the major's space, are now again under stronger pressure, and at least they have shown the best chance of breaking the negative tendencies: AUD/USD goes back under 0.7550. USD/JPY is not able to use the new impulse and due to the deterioration of investment sentiment falls to 110.50 slowly questioning the direct growth scenario.

The Wall Street drops about 0.5%, but futures on the SP500 at the Asian session additionally deepen the decline and are already under 2720 points. Nikkei 225, Shanghai Composite and Hang Seng are currently slashing jointly about 1.0%.

The WTI oil price drops today at USD 72 per barrel as the API report pointed to a drop in inventories by 1.3 million barrels while gasoline inventories increased. Copper and most precious metals are cheaper, but gold is stable and its ounce costs USD 1291.

On Wednesday 23rd of May, the main event of the day is the FOMC Meeting Minutes release in the late evening, but there is plenty of data to be released before that. The series of PMI Manufacturing and Services data from the Eurozone will catch the global investors attention, together with Consumer Price Index and House Price Index data from the UK. Despite the FOMC Minutes release, the US will post Crude Oil Inventories data, ISM Manufacturing data, Final Services PMI and Composite PMI data and New Home Sales data.

EUR/USD analysis for 23/05/2018:

Today's morning will be marked by data from the Eurozone. The global investors will get to know the PMI values in industry and services for EU countries. The most important will be readings from France and Germany (at 7:00 and 7:30 am GMT respectively). Economists expect slightly weaker data than before. At 11:00 am GMT data will be published for the entire euro area. In the previous months, the sentiment in the Eurozone has been very positive due to a stable economic growth across the Eurozone, but the recent macroeconomic data has cast a shadow regarding the future outlook. Soon the market participants will find out whether there is something to worry about.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market has managed to retrace 38% of the previous swing down and established a local top at the level of 1.2829 before falling again towards the recent swing lows at the level of 1.1755. The short-term golden trend line resistance has been violated, so the next target for bears is the key support at the level of 1.1716. Only a sustained breakout through the level of 1.1829 would change the bias from bearish to bullish, but even then, there is still the key resistance zone waiting for bulls at the level of 1.1889 - 1.1897.