Weekly Forex technical forecast June 1 - 5

Positive sentiment is growing across financial markets nowadays and the Foreign Exchange is not an exception. European currencies gained strength versus the greenback, Japanese yen remained almost flat, commodity and emerging markets currencies stayed in the positive tone last week. Major stock indices rallied on the back of positive news and fundamental environment, the price of gold rebounded, and the oil market kept recovering. The upcoming trading week will kick off summertime, which is traditionally calm and quiet, so the volatility is expected to ease. Below is our traditional weekly outlook for several currency pairs in the week ahead.

GBP/USD: Neutral


The British Pound added 168 pips to the exchange rate versus the US dollar as the overall FX market sentiment was to sell the greenback and invest in developing countries. Political uncertainty is still weighing on Sterling as the Brexit story is not finished yet. On the other hand, the GBP/USD currency pair approached the key resistance curve (simple moving average with a period of 89 days) coming at 1.2473. This would be a third test of the threshold dividing growth from decline, and if buyers were able to breach it, then the Sterling might have a boost of optimistic buying in the week ahead.

From a technical point of view, the bias has changed to positive as the MACD trend indicator’s histogram turned green, lines crossed the zero level from below. RSI oscillator went above the 50% threshold, promising further appreciation of the pair. Once the trigger was cleared, GBP/USD could keep soaring toward the next target of 1.2650 in the upcoming week. Here is the daily chart.

Weekly Forex technical forecast June 1 - 5

NZD/USD: Upside swing


The Kiwi recovered after the false breakout on the downside after dovish comments of the Reserve Bank of New Zealand two weeks ago. The daily chart below shows that the bearish slide was false (green arrow) and the upside recovery continues in the mid-term perspective. On top of that, NZD/USD breached the 89-days SMA, opening the road to further upside run.

Technical indicators are mixed though. The ADX and DI indicator points to a positive surplus between the red and green lines, and the mainline is heading toward the threshold. Once it was cleared, then the pair would gain a positive momentum. On the other hand, the Stochastic RSI oscillator is extremely overbought and needs time to reload the power in order to proceed with the uptrend recovery. Therefore, buyers should be cautious of putting all eggs into one basket in terms of buying the only pair. NZD/USD could be attractive for the buy-lows trading approach.

Weekly Forex technical forecast June 1 - 5

CAD/JPY: Shifting sentiment


The Looney had an essential day on May 18 when the CAD/JPY cross-rate surged +1.48% and entered into the Ichimoku Cloud. Besides, the pair crossed both resistance lines from below, signaling a shift of the technical sentiment. The leading span had a bullish crossover as well (see two arrows on the daily chart below). The rate kept rising inside the cloud, while Conversion and Baselines followed. This pattern means a positive sign for further recovery with the nearest target at the upper band of the cloud at 79.279 yens per Canadian dollar. Support levels are coming at 77.59 and 76.72.

Weekly Forex technical forecast June 1 - 5
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