Weekly Outlook | Strong earnings and positive risk sentiment 

Important events this week:

Despite the important news events throughout last week financial markets traded in a rather sideways pattern. US equities went to the upside again and also the German DAX continued to trade higher similarly to the European Euro Stoxx index. Gold prices finally came lower and after the previous rise in prices the trend to the downside might now continue. In particular a stronger Dollar might cause the downside to escalate soon. This might also cause oil prices to weaken and should the upcoming economic data suggest that a recession is around the corner that might also push prices further towards lower levels. In particular both interest rate decisions from the Bank of England as well as the Federal Reserve from the US might shake up markets.

This week also major earnings reports will follow again. Among those are Ford, Palantir, AMD, Disney and Coinbase just to name a few. Last week’s data was positive causing the further uplift especially in equites. Rate cuts of the Fed might further add positive momentum to markets as cheaper liquidity would support the strong trend. 

– US- FOMC interest rate decision– It is not expected that Fed will cut interest rates during the upcoming meeting this week. On the other hand, recent economic data suggests that inflationary pressure is weakening further. Recent jobs data shows that the economic momentum seems to remain stable. An impact of the recently added tariffs might soon cause some impact in markets.

EURUSD weekly chart

The weekly chart of the EURUSD currency pair might suggest that a correction will be on the cards. The technical pinbar candlestick pattern, which capped the market from rising above the 1.1500 level might now cause downside momentum. Also, the fresh month of May might also cause prices to weaken initially. A cut in rates would be a surprise but given the added pressure of US President Trump might also cause Jerome Powell to take action during this meeting. The rate decision will be held on Wednesday, May 07 at 19:00 CET.

– UK- BoE interest rate decision– The Bank of England is expected to cut interest rates during the meeting this week. Rates are expected to move from 4.50% down to 4.25%.

GBPUSD monthly chart

Similarly to the EURUSD currency pair also the GBPUSD might move lower for now. The monthly chart above sows a strong technical resistance zone, which can be found at 1.3400. A break of that zone might be found later but a rate cut could add some pressure on the GBP causing the currency pair to weaken for now. A test of the psychological 1.3000 zone might hence follow before the market will trade higher again. The interest rate decision will be held on Thursday, May 08 at 12:00 CET.