Forex Major Currencies Outlook (May 26, 2014)

US new home sales came in stronger than expected, giving the currency a bit of support during the New York session, as the figure showed a 433K gain versus the 425K estimate. There are no reports lined up from the US economy today as banks are on a Memorial Day holiday.

EUR

The euro continued to edge lower to its counterparts despite the recent credit rating upgrades. S&P upgraded Spain’s credit rating to BBB with a stable outlook while Fitch upgraded its rating for Greece from B- to B also with a stable outlook. Elections that took place over the weekend appear to have had a negative effect on the euro, as traders are also positioning ahead of the potential ECB stimulus announcement next month. Only ECB head Draghi’s speech is the major event lined up for today, but Germany is due to print its GfK consumer climate figure.

GBP

The pound showed signs of retreat towards the end of the trading week, despite the lack of data from the UK economy. There are no reports lined up from the United Kingdom today, as banks are closed in observance of Spring Bank Holiday, which suggests that the pound might be in for a bit of consolidation or further weakness.

CHF

The franc put up a good fight but eventually gave way to dollar strength on Friday, as there were no reports to give it any support. There are still no reports due today so the franc could continue to edge lower to its counterparts or be stuck in consolidation.

JPY

 The yen was off to a turbulent start this week as pair spiked higher then eventually resumed their selloff. Minutes of Japan’s latest monetary policy meeting appear to have caused the sudden surge in volatility, although the report showed no major changes to policy biases. There are no other reports lined up from Japan today, leaving yen pairs mostly at the mercy of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

 The comdolls remained under selling pressure, with the exception of the Canadian dollar which was supported by CPI gains. The headline CPI showed a 0.3% increase while the core CPI printed a 0.2% rise. There are no reports lined up from Australia, New Zealand and Canada today.

By Kate Curtis from Trader's Way