Trading signals 11/5/17

Strong US job data suggests two rate hikes this year, looks like the market has already priced this in. Euro moves to consolidation; Brent recovers back to ​​$52.

USD/JPY
Weak inflation data in Japan may weaken JPY.

• BoJ's head comments is a negative factor for the Japanese yen (Kuroda is confident in accelerating inflation);
• The Bank of Japan intends to continue its supportive policy; 
• The divergence of the monetary policy of the BoJ and the Fed is increasing, which also puts pressure on the Japanese yen;
• Return of risk appetite for emerging markets is also a negative short-term factor for the Japanese currency.

Technical analysis and recommendations: Long if USD/JPY pulls back from the nearest resistance of 114.40-114.80.
The pair faced strong resistance level at 114.40-114.80. A quick passing above this level is unlikely. We expect a technical rollback for profit taking. The first support is located at 113.60. The next support is located at 113.00. Cautious longs in case if the pair pulls back can be interesting.

EUR/USD
European political risks have decreased and that will support the euro in the medium term, attention shifts to the monetary policy of the European regulator.

• Centrist Macron won the French presidential election from an ultra-right candidate which significantly reduced political uncertainty in Europe;
• Draghi said he intends to adhere to the current stimulating monetary policy at least until the end of 2017. However, the inflation growth in Europe is a positive factor for the European currency;
• The US dollar is gradually recovering, the dollar index is moving to the level of 100 points.

Technical analysis and recommendations: Longs at 1.0830 level with the target of 1.1015.
The pair is heading for consolidation around the levels of 1.0850-1.0900. Despite the neutral fundamental picture, we expect that the market will choose an upward breakout. The nearest significant support level is in the region of 1.0830. The nearest resistance is in the region of 1.0890.

Brent Oil
The latest data on US oil inventories came out positive (reserves decreased by 5.2 million barrels, gasoline also decreased) that together with the oversold market returned futures for Brent oil above $50 to the area of ​​$50.70. Brent market continues to look bullish.

• The monthly OPEC report is in the market's focus today. 

Technical analysis and recommendations: Long with $52 aim and above.
The $51 level is the nearest resistance. However, it is unlikely that $51 will stop the market gain. The goal of the current upward momentum is $52.

Fort Financial Services
This trading analysis is for informational purposes only and is not intended to be a strict recommendation for action or an offer for the purchase or sale of any currency, future or stock. Publishing the information we do not try or to attract any funds or deposits. We share our analytical view of current market situation and we don’t have any open position in instruments discussed and no plans to open any positions. Any person considering this research should carefully consider the risks associated with this and the level of trading experience.