Analyst Articles – Forex News 24

AUDUSD Risks Return to Flash Crash Lows as RBA Commits to Rate Cut
Euro Price Slide Set to Continue as European Elections Draw Closer
Australian Dollar May Extend Drop as Yen Gains on OECD Outlook
DAX 30 & CAC 40 Technical Update: Support, Patterns to Watch
GBPUSD Rate Breaks Bearish Sequence Despite Cautious BoE Rhetoric
Samsung Lifts KOSPI on US Huawei Ban, FTSE 100 Outlook More Bearish
S&P 500 Repeats Gap Down on Trade War News, Oil Cautious on US-Iran
AUD/USD Downtrend Eyed as RBA Minutes Hint Rate Cut Possibility
Bullish Silver Price Outlook Suggests US Dollar May Turn Weaker
Crude Oil Prices Up on US-Iran Strain, Yen Eyes Huawei Extension

AUDUSD Risks Return to Flash Crash Lows as RBA Commits to Rate Cut

Posted: 21 May 2019 03:45 AM PDT

AUD Analysis and Talking Points

RBA Governor Lowe Commits to Easing Bias
Australian Dollar Technical Analysis | Return to Flash Crash Lows

DailyFX Q2 2019 Trading Forecasts for AUD

RBA Governor Lowe Commits to Easing Bias

Overnight, the RBA Governor explicitly stated that the central bank has an easing bias, something we have flagged for some time now (full story). Governor Lowe highlighted that lower rates would support employment and help lift inflation towards target, as a reminder, the RBA stated that a rate cut scenario would need to see inflation remain weak, while the unemployment rate would need to tick up, as such, with this being the case, a rate cut looks to take place at the June 4th meeting. However, with markets near enough fully priced in for a rate cut at the upcoming meeting the focus however will be on the outlook for further easing, which expectations are for another 25bps cut to be delivered by November.

Source: RBA

Australian Dollar Technical Analysis | Return to Flash Crash Lows

The outlook for the Australian Dollar remains soft, particularly given that the RBA are gearing up for cutting interest rates, while trade war tensions between the US and China have also escalated. Consequently, there is a risk that AUDUSD could make a return towards flash crash levels. On the weekly timeframe, the the pair remains weak. Focus in on last weeks lows at 0.6865, in which a break below opens up for a test of support 0.6830. Below there sees little in the way of notable support till 0.6740.

AUDUSD PRICE CHART: Weekly Time Frame (Oct 2017 – May 2019)

AUD TRADING RESOURCES:

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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2019-05-21 10:31:00

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Euro Price Slide Set to Continue as European Elections Draw Closer

Posted: 21 May 2019 02:25 AM PDT

EUR price, news and analysis:

EURUSD is continuing the drift lower of the past week on concerns that the latest European Parliament elections will see a rise in populism and Euro-skepticism.
That's bad news for the Euro, which could yet lose more ground against a backdrop of trade wars and Brexit.

Euro price weakness may persist

European Parliament elections take place this week, beginning Thursday and ending Sunday, with the results likely to confirm the rise of populism and Euro-skepticism. That could spell further losses for the Euro, which has already dropped to its lowest level since May 3 and has been easing for the past week.

EURUSD Price Chart, Hourly Timeframe (May 13-21, 2019)

Chart by IG (You can click on it for a larger image)

Click on this link for a preview of the main events in the Eurozone this week

And here for the technical outlook for the Euro

For traders, one caveat is that this expected move away from the EU's mainstream political parties may be already priced in to the EURUSD exchange rate. A second is that price volatility remains low and the elections look unlikely to boost it.

However, investors will have time to analyze the election outcome thoroughly between the results Sunday and the opening of markets Monday – particularly necessary as the results will be clouded by national concerns in each EU country, with the debate centering on Brexit in the UK, for example. Still, looking further ahead, a good showing by far-right political parties will likely raise doubts again about the stability of the EU.

There could also be a power vacuum as a move away from center-right and center-left politicians leaves whichever party wins the most seats having to rely on resurgent Green parties for a majority.

From a long-term technical perspective, the downtrend that began eight months ago remains in place and a further decline to 1.10 looks possible. Sentiment data also point to a weaker EURUSD, with 59% of retail traders long and just 41% short – a bearish signal from a contrarian viewpoint.

Euro price outlook worsens as Italian politics move into focus

Resources to help you trade the forex markets:

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:

— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

2019-05-21 09:15:00

Australian Dollar May Extend Drop as Yen Gains on OECD Outlook

Posted: 21 May 2019 01:48 AM PDT

AUD, NZD, RBA, LOWE, RBNZ, US-CHINA TRADE WAR, OECD, USD – TALKING POINTS:

The Australian Dollar underperformed in Asia Pacific trade after minutes from May's RBA policy meeting signaled that the central bank may be ready for a rate cut as soon as next month. A subsequent speech from the central bank's Governor Philip Lowe seemed to make the case for easing even more explicit. He went so far as to confirm that policymakers have an "easing bias".

The New Zealand Dollar followed its Aussie cousin downward. That might have reflected investors extrapolating the two economies' broadly analogous profiles to mean that the RBA's defensive stance might portend RBNZ rate cuts too. Both countries are cycle-sensitive commodity exporters on the front lines of a slowdown in global growth and an escalating US-China trade war.

AUD, NZD MAY EXTEND DROP AS YEN GAINS ON OECD OUTLOOK

Looking ahead, commodity bloc currencies might face further pressure as the OECD issues an updated set of economic forecasts. A raft of downgrades seems likely. Timely PMI survey data puts the pace of worldwide manufacturing- and service-sector growth near a three-year low. Meanwhile, a measure of overall macro data flow reveals it has tended to undershoot baseline forecasts by meaningful margin.

A downbeat revision might weigh on market-wide risk appetite, inspiring another round of systemic de-risking. The Yen is likely to gain in this scenario as carry trades funded in terms of the perennially low-yielding Japanese unit are unwound. Meanwhile, the US Dollar might rise as liquidation puts a premium on the benchmark currency's unmatched liquidity.

Did we get it right with our latest FX market forecasts? Get them free to find out!

CHART OF THE DAY – US DOLLAR GAINS REFLECT HAVEN DEMAND

Currencies are typically expected to fall when their central banks are seen pivoting to a more dovish policy stance. The US Dollar has marked a clear exception to the rule. It has jumped to a seven-year high against an average of its major counterparts even as the priced-in policy outlook implied in Fed Funds futures flounders alongside benchmark 10-year Treasury bond yields.

The bellwether S&P 500 fell in tandem, implying a backdrop of risk aversion. In this scenario, it is not unusual to see lending rates decline as haven flows lift Treasuries while tightening prospects – such as they are – fizzle. That the Greenback has managed to thrive in this environment seems to clearly mark it out as a haven asset. If investors' mood counties to sour, it may have scope to probe headier highsstill.

FX TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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2019-05-21 06:30:00

DAX 30 & CAC 40 Technical Update: Support, Patterns to Watch

Posted: 21 May 2019 01:13 AM PDT

DAX 30/CAC 40 Technical Highlights

DAX sell-off brings December trend-line into play
CAC 40 could be in the process of creating an H&S pattern

Check out the DailyFX Q2 Trading Forecasts to find out where our team of analysts see the Euro, DAX, and other markets are headed in the coming weeks.

DAX 30 sell-off brings December trend-line into play

The DAX taking a hit yesterday has important trend-line support in play again. The trend-line running up from December was proven to be a worthy line of support last week when the DAX posted a swift reversal-day on Wednesday.

Further weakness will quickly have the trend-line back in play, followed by the most recent swing low at 11844. The area right around there has held on several occasions since the April 3 gap. A break below would have the trend-line broken and a lower-low taking shape. This would be reason to look for a sell-off to deepen.

But as always, support is support until broken. We may very well see another strong stance by buyers should trend, horizontal support get tested here again soon. Should that be the case, then would-be longs may have another opportunity to buy the market with a solid backstop in place to use for assessing risk.

All-in-all, the next few sessions could bring further clarity as to how the DAX wants to shape up for the foreseeable future. Right now, it is pretty clear that the aforementioned levels are important, it's just a question of how the market wants to respond to them on any further testing.

DAX 30 Daily Chart (t-line, 11844)

CAC 40 could be in the process of creating an H&S pattern

The CAC 40 is presenting the possibility of a head-and-shoulders top with its most recent turn lower. It is only a scenario at this time until we see the neckline broken, but one worth tracking. A break below the neckline would likely coincide with the DAX breaking support. For now, in wait-and-see mode…

CAC 40 Daily Chart (Possible H&S pattern)

Want to learn more about trading the DAX? Check out 'How to Trade the DAX', and join me weekly for technical updates in the Indices and Commodities webinar.

Forex & CFD Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market AnalystYou can follow Paul on Twitter at @PaulRobinsonFX

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2019-05-21 08:05:00

GBPUSD Rate Breaks Bearish Sequence Despite Cautious BoE Rhetoric

Posted: 21 May 2019 12:01 AM PDT

British Pound Talking Points

GBP/USD remains under pressure ahead of the European Parliament elections as Prime Minister Theresa May struggles to make progress on the Brexit deal, but recent price action raises the risk for a rebound in the Pound Dollar exchange rate as it snaps the series of lower highs & low from earlier this month.

Image of daily change for major currencies

GBPUSD Rate Breaks Bearish Sequence Despite Cautious BoE Rhetoric

Image of daily change for gbpusd rate

It remains to be seen if the EU election will impact the Brexit negotiations as households select fresh representatives to the European Parliament, and the ongoing rift between U.K. lawmakers may produce headwinds for the British Pound as it puts pressure on the Bank of England (BoE) to abandon the hiking-cycle.

A recent speech by Deputy GovernorBen Broadbent suggests the BoE will remain on the sidelines as the Monetary Policy Committee (MPC) member points out that 'business investment fell in every quarter last year and surveys suggest the underlying trend is still negative.' In turn, the BoE may stick to the same script at the next meeting on June 20 as the committee 'judges that there is currently a small margin of excess supply in the economy,' and the wait-and-see approach for monetary policy may continue to drag on the British Pound as Governor Mark Carney and Co. reiterate that 'the economic outlook will continue to depend significantly on the nature and timing of EU withdrawal.'

Image of DailyFX economic calendar

However, fresh updates to the U.K. Consumer Price Index (CPI) may prop up the British Pound as both the headline and core reading for inflation are expected to pick up in April, and signs of sticky price growth may keep the BoE on track to further normalize monetary policy as 'the Committee judges that, were the economy to develop broadly in line with its Inflation Report projections, an ongoing tightening of monetary policy over the forecast period, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2% target at a conventional horizon.'

With that said, GBP/USD may face increased volatility over the coming days, but the near-term decline in the Pound Dollar exchange rate appears to have shaken up market participation as retail sentiment remains stretched.

The IG Client Sentiment Report shows 81.7%of traders are net-long GBP/USD compared to 73.7% at the end of April, with the ratio of traders long to short at 4.47 to 1. Keep in mind, traders have remained net-long since March 26 when GBP/USD traded near 1.3210 region even though price has moved 3.3% lower since then.

Profit-taking behavior may explain the ongoing decline in net-short interest as GBP/USD sits near the monthly-low (1.2711), but the extreme reading in net-long position suggests the retail crowd is still attempting to fade the recent decline in the pound-dollar exchange rate as its sits near the highest reading for 2019.

The persistent tilted in retail interest offers a contrarian view to crowd sentiment especially as GBP/USD snaps the bullish trend from late-2018, with the Relative Strength Index (RSI) highlighting a similar dynamic, but recent price action raises the risk for a near-term rebound as the exchange rate fails to extend the series of lower highs & lows from the previous week.

GBP/USD Rate Daily Chart

Keep in mind, the broader outlook for GBP/USD is no longer bullish as the exchange rate snaps the upward trend from late last year after failing to close above the Fibonacci overlap around 1.3310 (100% expansion) to 1.3370 (78.6% expansion).
In turn, the advance from the 2019-low (1.2373) may continue to unravel as the Relative Strength Index (RSI) highlights a similar dynamic, with the oscillator now tracking the bearish formation carried over from March.
The break/close below the Fibonacci overlap around 1.2760 (38.2% retracement) to 1.2800 (50% expansion) brings the 1.2610 (23.6% retracement) to 1.2640 (38.2% expansion) region on the radar, but will keep a close eye on the RSI as it struggles to push into oversold territory, with failure to hold below 30 raising the risk for a rebound in the exchange rate.

For more in-depth analysis, check out the 2Q 2019 Forecast for GBP

Additional Trading Resources

Are you looking to improve your trading approach? Review the 'Traits of a Successful Trader' series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

2019-05-21 06:30:00

Samsung Lifts KOSPI on US Huawei Ban, FTSE 100 Outlook More Bearish

Posted: 20 May 2019 10:13 PM PDT

Asia Pacific Markets Wrap Talking Points

Equities higher in Asia, KOSPI gains as Samsung welcomes US ban of Huawei
ASX 200 fails to find much upside momentum despite firming RBA rate cut bets
FTSE 100 outlook bearish on brewing technical signals ahead of BoE speech

Find out what retail traders' equities buy and sell decisions say about the coming price trend!

Top Asia Market Developments

Equities generally rose during Tuesday's Asia Pacific trading session after earlier in the day, the US announced a temporary 90-day extension granted to Huawei before it gets blacklisted for national security reasons. This helped to ease tensions that have left markets in a state of anxiety given recent escalation in US-China trade war fears.

China's Shanghai Composite performed well, rising more than 1.5% heading towards the close. Another solid performer due to the Huawei situation was South Korea's benchmark KOSPI index (+0.9%). This was thanks to a more-than 4% surge in Samsung Electronics shares after M. S. Hwang, an analyst from the company, noted that a ban on Huawei could boost sales of their smartphones in Europe and China.

Elsewhere, the ASX 200 struggled to find upside momentum despite decidedly dovish RBA meeting minutes and commentary from Governor Philip Lowe. These two developments have greatly increased the probability that the central bank might deliver a rate cut in June. What is not much of a surprise is that AUD/USD inched closer to trimming this week's upside gap following local federal elections.

The Remaining 24 Hours

A top-tier event risk over the remainder of the day will be an upcoming speech various Bank of England members, including Governor Mark Carney. Lately, fading confidence in a Brexit deal has extensively weakened the British Pound with the FTSE 100 down from April peaks. We shall see what policymakers have to say given how much the central bank has expressed interest in hiking that is only being clouded by EU-UK divorce talks.

FTSE 100 Technical Analysis

Looking at FTSE 100 daily chart below, we can see what appears to be the formation of a bearish head and shoulders pattern. The right shoulder could be created under 7360 if the index falls through what seems to be a key psychological barrier between 7267 and 7227. Countering this development is a bullish-contrarian signal from IG Client Sentiment readings, but this may change soon with 50% of net-positioning short.

Want to learn more about how trader positioning may drive the FTSE 100 and various other equities? Tune in each week for live sessions as I cover how sentiment can be used to identify prevailing market trends!

FTSE 100 Daily Chart

Chart Created in TradingView

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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2019-05-21 05:00:00

S&P 500 Repeats Gap Down on Trade War News, Oil Cautious on US-Iran

Posted: 20 May 2019 08:58 PM PDT

Trade Wars Talking Points:

A weekend for reflection on trade war ‘improvement’ around autos and USMCA led to another S&P 500 gap lower rather than relief
With both US and Chinese parties unwilling to repair their trade rift, the impact on markets and economy is registering more palpably
Growth will have its highlights this week, but it may be political risk that truly shapes the market landscape ahead

See how retail traders are positioning AUDUSD, EURUSD, S&P 500 along with the other FX majors, indices, gold and oil intraday using the DailyFX speculative positioning data on the sentiment page.

Trade War Enthusiasm Doesn’t Benefit a Weekend to Reflect

There was no small sense of surprise for many through the end of this past week when reports of ‘breakthrough’ on certain fronts of the global trade war failed to trigger a relief rally for the speculative benchmarks. It seems a weekend of reflection wouldn’t thaw that reticence any further. In fact, we opened the new week with speculative appetite on a backfooting with hesitation for most and an explicit squelch of pain from equities. The US benchmark indices opened Monday with another gap lower – the S&P 500’s drop from previous session close to new day’s open matched the slump on Friday. Equities retain more speculative premium relative to many other key risk assets, and the United States indices in particular maintain the greatest advantage among global shares milestones. This may be a cause of excessive risk exposure bleeding off, or it could reflect a market with a unique exposure to the chief fundamental risks moving forward. While both scenarios are plausible, I am of the mind that the former is more likely. That says something of the motivations of our markets. Watching for trade war updates may stir volatility, but it will struggle to generate trends if the market is not simply waiting for a cue on the theme. Alternatively, should momentum build behind a broad effort at ‘de-risking’, the abstract concept could place sheer speculative drive at the helm of systemic trends.

Regardless of whether the market moves forward with systemic bullish or bearish trends via collective speculation or behind the banner of an overt fundamental theme, we cannot afford to ignore the fundamental sparks as they ignite in the open market. As it stands, trade wars still poses the most pervasive and costly threat to the global economy. From the developments that could be labeled ‘relief’ from last week, there was still as little favorable market response for the assets more directly exposed to the headlines as from the broader ‘risk’ benchmarks themselves. The Canadian Dollar and Mexican Peso were still spinning their tires against the Greenback Monday, maintaining remarkably contrite ranges to bounce around. Meanwhile, the deferred decision by the Trump administration on auto tariffs translated into no significant lift in the Euro. What is far more surprising is that the reprieve didn’t prevent a drop from the DAX German equity index and German auto-manufacturer BMW continued its tumble lower. That isn’t to suggest that auto tariffs are the only risk that requires evaluation, but it is arguably one of principle concerns at hand.

S&P 500 Repeats Gap Down on Trade War News, Oil Cautious on US-Iran

It seems the speculative compass continues to favor the mood in US-China relations. There were no overt escalations to the trade war tab like there had been the past week – the US raising tariffs on $200 billion in Chinese imports to 25 percent on May 10th and China matching the tax rate on $60 billion in US goods on May 13th. However, rhetoric was clearly souring between the two. President Trump tweeted that there would be no 50-50 outcome in negotiations while China accused the US negotiators as harboring extravagant expectations’ and was in no rush to restart talks. In the meantime, the actions to ban Huawei in the US were keeping the company’s shares to bear trend while industry groups started to use the label of a ‘tech cold war’. A new industry has requested exclusion from the Trump tariffs: apparel companies asked the White House to keep footwear off the list. As we keep tabs on general risk benchmarks, it will also be important to monitor USDCNH as it menaces the politically-important 7.0000 level.

S&P 500 Repeats Gap Down on Trade War News, Oil Cautious on US-Iran

Growth and Political Risks Threaten to Amplify Market Movement

While there are different prevailing fundamental winds that will compete for market influence, there is little probability that these cross currents will shift the weight to a competing theme. That said, there is a strong probability that these significant developments can amplify the charge that we manage to generate. Sheer economic activity is a theme that is bound to draw significant attention this week. Thus far, the picture is mixed. Japan’s 1Q GDP update offered thwarted fears of recession with a robust 0.5 percent quarterly expansion that contrasted to the -0.1 percent contraction forecasted. Similarly, the annualized reading registered 2.1 percent growth against a -0.2 percent showing. How enthusiastic we should be in this reading given that consumer spending and business investment floundered which left a much weaker imports growth than export to do the heavy lifting is up for debate. For the United States, the Chicago Fed’s National Activity Index for April was unambiguous in its poor showing with a -0.45 versus -0.20 forecast. That does not support the outlook for an economy hosting a strong 1Q figure but struggling for sustained sources of growth moving forward. Ahead, the OECD will offer up an economic forecast Tuesday during European hours which will spur speculation for Thursday’s PMI figures from Japan, Europe and the US.

Another more open-ended fundamental risk in our immediate future is the scope of political risk across the global spectrum. Faltering diplomatic relations between the US and China certainly count for this category as do the impending EU elections. That said, there is more nebulous risk at play in the form of the growing threat between US President Trump and Congress. The latter is pressuring the former on financial information, testimony from his former staff and leveling threats against his family (son-in-law). There is high political drama to draw from this situation, but the economic implications are increasingly overlooked as the chances for infrastructure spending are increasingly jeopardized. Perhaps the most intense risk in this vein at present is the threat that a cold economic war between the US and Iran turns into a ‘hot’ military engagement between the two. Despite the frayed nerves and the contribution to troubled risk trends, oil prices are notably in check. Should this situation escalate, however, don’t expect the market to remain so detached.

Separating Volatility from Trend Intent for Euro, Pound, Aussie and Bitcoin

As we reach stronger fundamental developments moving forward, it is worth assessing what has greater potential for sheer (short-term) volatility and what is capable of hitting escape velocity on trend. The Euro has made a feeble effort to generate a clear trend with just the Eurozone and Italian current account balance figures to generate movement. Both series beat expectations significantly, but that does little to draw our attention away from far more systemic issues at hand. Thursday brings the start of the EU Parliamentary elections which threaten to further destabilize confidence in the shared currency already drawing fire from Italy’s anti-EU stance. Consumer confidence in the session ahead, Wednesday’s Draghi rhetoric and even Thursday’s PMIs are unlikely to draw our attention away from this systemic influence for too long.

S&P 500 Repeats Gap Down on Trade War News, Oil Cautious on US-Iran

The situation for the Pound is much the same. The Sterling has extended its slide to an 11th consecutive daily loss on an equally-weighted basis. That is an extreme move for the currency as it has only seen one other such move of that magnitude on the bearish course some 12 years ago. Here too, there is interim event risk to keep track of in the form of the Bank of England (BOE) member rhetoric and the upcoming inflation data, but that will seriously struggle to distract from the implications of the same Parliamentary elections on the UK. Having had to extend the Article 50 cut off for the Brexit, the United Kingdom was forced to participate in the elections, leveraging discontent to even greater heights. If there is serious concern that the UK will come out of this event with even stronger pressure for an ‘exit at all costs’ (no deal), the Pound could absolutely lose more altitude.

Far more limited in their respective volatility are the Australian Dollar and Bitcoin. The commodity currency offered up a remarkable surge to start the new trading week. The bullish gap for the equally-weighted measure was the largest since February 2016 while the ASX 200 similarly received a boost with a push to highs only overwhelmed by the records set back in 2007. The spark for this bullish view was the news that the Australian Federal election had settled with the government leadership unchanged. Markets prefer the status quo, but that doesn’t mean they can leverage that comfort to dynamic trend development. Australia is still beholden to commodities and China for its future. A similar, serious caveat has to be applied to Bitcoin. The cryptocurrency has drawn remarkable attention fr the extreme volatility of the past week. That level of activity has not come with any meaningful promise of trend, so tread carefully. We discuss all of this and more in today’s Trading Video.

S&P 500 Repeats Gap Down on Trade War News, Oil Cautious on US-Iran

If you want to download my Manic-Crisis calendar, you can find the updated file here.

2019-05-21 02:47:00

AUD/USD Downtrend Eyed as RBA Minutes Hint Rate Cut Possibility

Posted: 20 May 2019 07:06 PM PDT

AUD/USD, RBA Minutes Talking Points

AUD/USD falls on RBA minutes, erasing earlier gains on APRA news
Policymakers see a rate cut as likely if no gains made in labor market
AUD/USD decline may extend on RBA Governor Philip Lowe speech

Trade all the major global economic data live as it populates in the economic calendar and follow the live coverage for key events listed in theDailyFX Webinars. We'd love to have you along.

The Australian Dollar finds itself back to square one following the minutes of the RBA interest rate decision, which sent AUD/USD lower. Earlier in the session, the Australian Prudential Regulation Authority (APRA) proposed amending mortgage buffer laws. This lowered RBA rate cut bets as local front-end government bond yields rallied, sending AUD higher.

This reversed on the RBA minutes which revealed that policymakers saw a rate cut as "likely appropriate" if there are no further improvements in the labor market. As a reminder, in May the central bank unexpectedly left benchmark lending rates unchanged. That caught markets off-guard and sent AUD/USD rallying. However, the RBA brought up concerns on unemployment trends.

Last week this was underpinned when the Australian unemployment rate unexpectedly climbed alongside an uptick in the labor force participation. While the nation added overall more jobs than expected, this was due to gains in part-time positions while more favorable full-time ones contracted.

With that in mind and with AUD/USD back to square one on the chart below, whether or not it can make or break its direction falls onto the shoulders of RBA Governor Philip Lowe. He will be hosting a speech later today at 3:10 GMT. If he highlights concerns over last week's jobs report, the Aussie Dollar risks extending losses.

AUD/USD Price Reaction to RBA Minutes

Chart Created in TradingView

AUD/USD Technical Analysis

As noted in this week's Australian Dollar technical forecast, AUD/USD may be targeting 2009 lows in the medium-term. On the daily chart below, the pair finds itself being guided lower by a falling resistance line from the middle of April. If it holds, the pair may take our August 2015 and January 2016 lows ahead. You can follow me on Twitter for the latest updates in AUD here at @ddubrovskyFX.

AUD/USD Daily Chart

Chart Created in TradingView

Australian Dollar Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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2019-05-21 01:30:00

Bullish Silver Price Outlook Suggests US Dollar May Turn Weaker

Posted: 20 May 2019 06:26 PM PDT

The silver price outlook is bullish against a backdrop of trend changing towards a weaker US Dollar.

The video above is a recording of a US Opening Bell webinar from May 20, 2019. We focused on the Elliott Wave patterns for key markets such as silver, gold, DAX 30, S&P 500, DXY, EURUSD, and USDJPY.

Silver prices hover in bullish reversal zone

Our last silver price update was April 29, when we stated "little progress has been made since April 15 and the waves do not appear motive. Therefore, we will not be surprised if silver makes a deeper cut and one more jab towards lower prices."

Lower prices were cut indeed. Remember, back on March 25, silver prices were trading near 15.53 and we discussed the potential for another wave lower into the 14.40-14.80 price zone which may lead to a strong bullish reversal. Now that silver prices have arrived, we have the minimum waves in place to count the three-month long correction as over.

You see, the corrective wave to unfold since February 2019 high is a bearish zigzag pattern. Wave 'c' of this zigzag pattern is an ending diagonal. There are a lot of wave relationships showing up near 14.40 (which was the bottom edge of our reversal zone identified March 25).

78.6% retracement of the November 2018 to February 2019 uptrend is at 14.39
In the zigzag, wave 'c' is equal to the length of wave 'a' at 14.40
The trend line connecting wave (i) and (iii) in the diagonal pattern crosses near 14.40 (green line)

As a result, there is a lot of evidence in a relatively small zone suggesting a bullish reversal and pivot.

When anticipating a reversal in trend, waiting for the new trend to strengthen and push above resistance (in this case) will help shift the likelihood a low has been established. In this case, the green parallel line hovering near 14.75 is the level that if broken, suggests a meaningful low has been established.

Therefore, the current Elliott wave for silver prices is that wave 2 or (B) is nearing a termination point (if it hasn't ended yet). Once this ending diagonal pattern finalizes, we are anticipating a multi-month bullish wave to carry to 16.70 and possibly 18.15.

US Dollar Index Pauses at 98

The recent strength in the US Dollar Index is likely a temporary move of strength. It is a little early in the pattern, but we are following the potential for a bullish ending diagonal pattern. Diagonal patterns are five waves of zigzags or multiple zigzags. It appears we have waves 1 and 2 of the five-wave diagonal in place. If this is correct, then DXY is advancing now in wave 3 of (c). Overall, this is a corrective advance that we eventually expect to be completely retraced.

Some topside targets to keep in mind include 100.40. There are a couple of wave relationships showing up near there. DXY does not need to advance that high so we are in a state of counting the waves until they are completed. If wave 5 of (c) can be counted as complete near 100, then we will be on alert for a large correction for US Dollar that may work down to the low and mid 80's.

An alternative scenario we are following is that if DXY reverses now, this current high could be wave B of (B) and may only dip to 92-94.

Elliott Wave Theory FAQ

How does Elliott Wave theory work?

Elliott Wave theory is a trading study that identifies the highs and lows of price movements on charts via wave patterns. Traders analyze the waves for 5-wave moves and 3-wave corrections to determine where the market is at within the larger pattern. Additionally, the theory maintains three rules and several guidelines on the depth of the waves related to one another. Therefore, it is common to use Fibonacci with Elliott Wave analysis. We cover these topics in our beginners and advanced Elliott Wave trading guides.

After reviewing the guides above, be sure to follow future Elliott Wave articles to see Elliott Wave Theory in action.

—Written by Jeremy Wagner, CEWA-M

Jeremy Wagner is a Certified Elliott Wave Analyst with a Master's designation. Jeremy provides Elliott Wave analysis on key markets as well as Elliott Wave educational resources. Read more of Jeremy's Elliott Wave reports via his bio page.

Join Jeremy in his live US Opening Bell webinar where these markets and more are discussed through Elliott wave theory.

Follow Jeremy on Twitter at @JWagnerFXTrader .

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2019-05-21 01:05:00

Crude Oil Prices Up on US-Iran Strain, Yen Eyes Huawei Extension

Posted: 20 May 2019 05:50 PM PDT

Asia Pacific Market Open Talking Points

Crude oil prices aiming for resistance as Trump reiterates threat on Iran
Asia markets may rise, US grants Huawei 90-day extension. Yen at risk
Australian Dollar is looking to RBA meeting minutes and Lowe speech

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Crude Oil Prices Rise as Trump Reiterates Threat on Iran

Crude oil prices rose in early Tuesday trade as US President Donald Trump reiterated hawkish commentary on Iran. As a reminder, over the past 24 hours, Mr Trump threatened the nation saying that it will "be the end" of the Islamic Republic if Tehran wants a fight. Since then, the US President added that any action from Iran 'would be met with a great force' and that 'there are no talks going on' with the nation.

Read my weekly crude oil fundamental forecast to learn more about what is in store for the commodity this week and stay updated by following me on Twitter @ddubrovskyFX

Crude Oil Technical Analysis

On a daily chart, crude oil prices are aiming higher following a bounce on support above 60.26. This leaves the commodity eyeing near-term resistance around 64.54 which acted as former support back in August 2018. Do keep in mind that the rising trend line from the end of last year (red line below) was broken, hinting that the dominant move may be lower in the medium-term.

Crude Oil Daily Chart

Chart Created in TradingView

Fed Chair Jerome Powell Speech

The US Dollar showed a muted reaction to commentary from Fed Chair Jerome Powell. Mr Powell noted that the economy is showing continued growth with job creation “strong”. He noted that wages are rising in the context of rather “muted” inflationary pressures. With that in mind, the focus turns to this week's FOMC meeting minutes.

Other Key FX News Monday

The Australian Dollar was the best-performing major on Monday as it gapped higher following a surprise victory as local Prime Minister Scott Morrison held onto power in federal elections over the weekend. Australia has gone through frequent changes in leadership in recent history and this was a source of political uncertainty for AUD. With Scott Morrison's coalition gaining more seats, this could mean less of that ahead.

The pro-risk Aussie could have had a better day if it weren't for pessimism in equities across the board. Fears of a US-China trade war as talks stalled last week combined with the US blacklisting Huawei on national security grounds likely dented the appeal of equities. The S&P 500 closed 0.67% to the downside, but the anti-risk Japanese Yen underperformed due to weakness in Monday Asia trade.

Tuesday's Asia Pacific Trading Session

Following Wall Street close, reports crossed the wires that the United States Commerce Department granted Huawei, along with 68 entities, a temporary license that will expire in about 3 months. S&P 500 futures are now pointing cautiously higher suggesting that there may be gains to had in Asia equities. This could bode well for the sentiment-linked Australian Dollar.

With that in mind, the Aussie still has the RBA meeting minutes and speech from the central bank's Governor, Philip Lowe, to await. Traders are watching for hints of a rate cut in the near-term after last week's lackluster employment report. While the minutes will detail an interest rate decision from before the jobs report, commentary from Mr Lowe may extend the AUD/USD downtrend if he brings up concerns on the latest employment report.

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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2019-05-20 23:30:00