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Wednesday, May 25, 2016
Good morning from Hamburg and welcome to our latest Daily FX Report of this week. Asian
index futures climbed amid a rally in U.S. and European shares as sentiment toward the
prospect of higher American interest rates shifted, with investors focusing on evidence of
strength in the worlds biggest economy. The dollar held gains and oil rose. Mounting conviction
that the Federal Reserve will boost borrowing costs some time in the next two months propelled
the greenback higher against major peers, including the yen. Japanese index futures jumped 1.6
percent in Osaka, while contracts on other Asian stock gauges also rallied as the S&P 500 Index
surged the most in two months.

Anyway, we wish you a successful trading day!

Market Review Fundamental Perspective
The dollar remained near a two-month high against the euro as traders boosted wagers that
U.S. interest rates will rise, starting as early as next month. The greenback strengthened versus
most of its major peers Tuesday after Federal Reserve Bank of Philadelphia President Patrick
Harker said Monday he could see two to three rate increases this year, echoing remarks by the
San Francisco Fed Banks John Williams. Futures are indicating for the first time since March a
better-than 50 percent chance that the Federal Open Market Committee will raise rates by its
July meeting. The U.S. currency is getting a boost as officials talk up the possibility of tighter
policy, reigniting speculation that dollar-denominated assets will benefit from policy divergence
with central banks in other parts of the world that are either extending or maintaining monetary
stimulus. Futures trading signals a 45 percent chance of a deposit-rate cut by the European
Central Bank this year. The dollar was little changed at $1.1142 per euro as of 7:49 a.m. in Tokyo
from Tuesday, when it reached the strongest level since March 16. It was unchanged at 109.99
yen. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers,
slipped less than 0.1 percent. The currencys gains follow the greenbacks most prolonged slump
since 2013. The dollar sank more than 8 percent from mid- January through early May,
prompting analysts and investors to question whether the divergence trade had run its course.
With Fed speakers increasingly signaling a hike in the next few months, that trade has reignited.
Gold fell a fifth day, with bullion for June delivery slipping 1.8 percent to $1,232.20 an ounce. The
prospect of higher U.S. rates damps the precious metals appeal as a store of value.

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Daily Technical Analysis
EUREX.FDX (H1)
The german stock index found in the beginning of May a support at around 9782 points. After
reaching this level, bears covered shorts and a strong pullback started but bulls failed to exceed
the 10K level sustainable. Yesterday this support was confirmed the 4th time and a strong rally to
the upper range started. A sustainable break out over 10100 points should be considered.

Support & Resistance (Hourly)

Support Levels around

Resistance Levels around

9782

10102

N/A

N/A

N/A

N/A

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USD/CZK (Daily)
This exotic currency pair declined with very strong movements over the last months. While the
greenback slumped down to new lows, the Relative Strength Index were touched three times at
the oversold area, as you can see on the bottom. Bears started catching profits while the value
has fallen close to 23 CZK. This constellation could be a very interesting reversal setup.

Support & Resistance (Daily)

Support Levels around

Resistance Levels around

23.4

24.8

N/A

25.5

N/A

N/A

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EUR/JPY (D1)
The shared currency weakened over the last six months very sharply versus the Japanese yen.
Until now, the bearish trend is very sustainable but slowed down in this month. If the one
important support around 121.8 JPY stops the bears, it might be possible that a correction will
start above the next resistance level.

Support & Resistance (Daily)

Support Levels around

Resistance Levels around

121.8

126.2

N/A

128.1

N/A

131.8

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Daily Calendar & Key Events

Date

Time (GMT)

Economic Indicator

Last

Survey

25/05/2016

08:00

GE IFO Business Climate

106.6

106.8

25/05/2016

14:00

CA Bank of Canada Rate Decision

0.5%

0.5%

If you have any questions, please contact us for further assistance. 24 hours a day:
German:

+49 40 66 86 49 96

English:

+49 40 66 86 49 96

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