First, last week's review:
“Retreat immediately.” That's exactly what President Trump did on May 14. Before that, he talked often and often about the advantages of a weak dollar, which would increase the competitiveness of US products in foreign markets and push the Fed towards a softer monetary policy. And now, he suddenly declared in an interview with Fox TV: “Right now it's good to have a strong dollar. Having a strong dollar right now is great!”
The Federal Reserve Chairman, Jerome Powell, also supported it, saying that the regulator did not consider and does not consider the possibility of a shift to negative interest rates, and the main reason for this shift is that the crisis caused by the COVID-19 pandemic has significantly increased interest in the dollar as a safe haven currency, in addition to In addition, the US authorities have run the printing press at full capacity, which is very important for them now to maintain their interest in their own currency. They are afraid that someone will simultaneously throw a large number of dollars into the secondary market, and to avoid this, they carefully feed the confidence of investors that this currency will grow. , the euro/dollar rates do not change much, because the euro is not a Turkish lira or a Brazilian real, but a currency similar to the dollar in terms of size and reliability
The range of fluctuations in the pair has now decreased to 1.0770-1.0890. It is gradually consolidating around 1.0800, forming a triangle on the 2-month chart and putting a final chord for the week at 1.0820.
GBP / USD
Pound expectations still coincide with the facts. The British currency is under pressure, the problems related to Britain's exit from the European Union have repeatedly increased due to the coronavirus pandemic, and the decline in GDP. The GBP/USD pair lost about 285 pips during the week, striving to break the lower bound of the seven-week lane 1.2165-1.2650, to end the trading session at 1.2120.
USD / JPY
The USD/JPY pair is consolidating around 107.00, confirming the assumption that the yen is a safe haven for investors like the euro or the dollar. Moreover, the Japanese currency has a clear advantage over the euro: if the European currency was losing its positions against the dollar in the last one and a half to two months, then the yen, on the contrary, was regaining them. The EUR/JPY has fallen more than 500 pips since the end of March (from 121.00 to 116.00). Last week, the Japanese currency remained in a fairly narrow range of 106.50-107.75 yen to the dollar for the entire five-day period, ending at 107.20.
Next week's forecast:
Weak risk sentiment and the selling of exchange-traded funds are strengthening the dollar. It is now supported by US President Trump, with his threats to cut off any ties with China at all, and the Federal Reserve, which has refused to lower the key interest rate to negative values. Even Germany's Constitutional Court judge, Peter Huber, helped the US currency, saying that the European Central Bank was not a "master of the universe" to comply with all of its decisions.
All this pushed 65% of analysts backed by 60% oscillators and 100% trend indicators on D1 to the downside and vote down for EUR/USD. The closest targets are 1.0750 and 1.0650.
10% of experts voted for the neutral, that the pair will continue to consolidate at 1.0800. Finally, the remaining 25% of analysts expect the pair to return to the upper boundary of the side corridor 1.0750-1.1000, backed by 10% of the oversold oscillators on D1.
GBP / USD
According to most experts, the pound is not at all a currency that is worth investing in even with a decrease in the sense of risk. It has long ceased to be a haven from financial storms. The European Union is currently preoccupied with the process of forming its seven-year budget and its fiscal problems, the European Central Bank is involved in a conflict with the German Constitutional Court, and the United Kingdom, in addition to exiting the European Union, also has a constantly declining GDP, high unemployment and a negative balance in foreign trade.
As a result, 65% of experts expect further weakness of the British currency and its decline to the horizon of 1.2000. In the event of a breach of this important level, the pair will push back to the March lows: 1.1640 and 1.1450. The downtrend is also supported by indicators on H4 and D1, 85% of oscillators and 100% of trend indicators are colored red.
The opposite view is supported by 35% analysts with the support of 15% oscillators that indicate the pair is oversold, and technical analysis on both time frames. In their opinion, the breakdown of the lower boundary of the channel 1.2165-1.2650 is a mistake, and the pair is expected first to return to the central zone of this channel 1.2245-1.2465, and then, perhaps, rise to the upper bound.
The yen froze, waiting for the next round of the US-China trade and political war to develop. We must not forget that its prices are strongly influenced by the level of risk sentiment in the market. There is also a correlation with 10-year US Treasuries, and the Japanese economy's dependence on oil prices. Such an abundance of factors does not yet make it possible to determine the most likely direction for a breach of the consolidation area at 107.00. At the moment, proponents of the pair's growth have a slight advantage (40%) backed by 65% of oscillators on H4. 20% of analysts are in favor of a downside and 40% to be neutral. The closest support levels are 106.75, 106.00 and 105.00. The resistance levels are 107.45, 108.00, 108.50 and 109.35.