Financial Market Analysis of the Week

An Unforgettable Event Elevating Trading Education 

The week of May 27 to June 2, 2024, was marked by several significant events that impacted global financial markets. Among the most relevant factors are the downward revision of the US GDP, the increase in inflation in Europe, and the expectations regarding the upcoming OPEC+ meeting. These events not only affected the prices of financial assets but also had a notable impact on major currencies, including the US dollar (USD), Japanese yen (JPY), euro (EUR), and British pound (GBP). Below is a detailed analysis of what happened in the financial market this week and a specific technical analysis of three key currencies: USD/JPY, EUR/USD, and GBP/USD.

Key Events:

US GDP Revision:

  • The downward revision of the US GDP for the first quarter raised concerns about the health of the economy, leading to a drop in the dollar’s value. This revision indicated slower-than-expected growth, negatively affecting stock and currency markets.

Inflation in Europe:

  • Inflation in Spain showed a significant increase, pressuring the European Central Bank to consider adjustments to its monetary policy. This inflationary increase affected the perception of the euro against other currencies.

OPEC+ Expectations:

  • The anticipation of the OPEC+ meeting created uncertainty in the energy markets. Expectations of possible production cuts influenced crude oil prices and the volatility of global financial markets.

Movements in Emerging Markets:

  • In Colombia, the dollar showed volatility due to the presentation of a pension reform and changes in the government’s fiscal policy. Although the Colombian peso strengthened at the beginning of the week, it ended with a sharp drop due to this news.

Important Currency Analysis

USD/JPY (US Dollar / Japanese Yen)

The USD/JPY pair has shown a bearish trend during the week, moving from 138 to 135. The 20-day Simple Moving Average (SMA) shows a negative slope, confirming the bearish trend. The RSI is at levels close to 30, indicating oversold conditions. Support at 135 and resistance at 138.

The weakness of the dollar and the safe-haven status of the yen have driven the bearish trend in this pair. The current support and resistance levels suggest that if the 135 support is broken, there could be a further decline.

EUR/USD (Euro / US Dollar)

The EUR/USD pair has shown an upward trend, moving from 1.08 to near 1.11. The RSI is at levels close to 70, indicating overbought conditions. The MACD shows a bullish crossover, suggesting positive momentum. Support at 1.08 and resistance at 1.11.

The increase in inflation in Europe and the weakness of the dollar have driven the rise of the euro. However, overbought conditions suggest there could be a short-term correction before continuing the upward trend.

GBP/USD (British Pound / US Dollar)

The GBP/USD pair has shown an upward trend, rising from 1.25 to 1.28. The MACD is in positive territory, indicating bullish momentum. The 50-day SMA is starting to rise, confirming the positive medium-term trend. Support at 1.25 and resistance at 1.28.

The British pound has shown resilience despite political and economic uncertainties in the United Kingdom. The upward trend remains, with technical indicators supporting a continuation of the positive movement, as long as the 1.25 support remains firm.