Technical Analysis 24/5/2017 -EUR/USD GBP/USD
By Antonis Vasloos
Euro, Commodities Poised for Gains Amid Pervasive Dollar Weakness
Renewed weakness in the US dollar has allowed the euro to mount an impressive rally, with prices piercing through the 1.1250 US range earlier this week. The EUR/USD lost some of its zeal Tuesday as the pair ran into overbought resistance. However, the pair is in a major uptrend, and is poised to test new highs in the short term. The outlook is bullish, as the market sets its sights on 1.13.
Gains in the British pound slowed earlier this week, with the GBP/USD trending in the opposite direction of its most recent uptrend. However, prices have since recovered from intraday lows near 1.2950, with prices last seen hovering near 1.30. Sterling’s short-term momentum indicators are largely positive, signaling strong technical support. However, the extent of this bullish bias will depend on cable’s ability to sustain growth north of the psychological 1.30 level.
Crude has benefited from strong tailwinds in recent weeks, culminating in a double-digit percentage increase that has taken prices back above the critical $50 mark. The West Texas Intermediate (WTI) contract for US crude futures extended gains Tuesday, with prices pulsating through the $51.50 range. Price action is accelerating, with the 20-day and 100-day simple moving averages on clear upward trajectories. Gains are expected to run into overbought resistance in the short term, according to the Relative Strength Index (RSI).
A plunging US dollar has failed to resonate with gold, as the metal continues to struggle for upward momentum despite generally favourable market forces. Prices fell below the 50% Fibonacci retracement on Tuesday as bullion approached oversold levels on the RSI. The reversal came after another failed attempt at breaking through the 61.8% Fibonacci level, a necessary prerequisite for future advances back toward the April swing high.