US: State Department Press Conference Underway Shortly

• RES 4: 1.3550 High Feb 24 ‘22
• RES 3: 1.3510 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
• RES 2: 1.3402/3444 High May 6 / High Apr 28 / 29 and the bull trigger
• RES 1: 1.3360 High May 14   
• PRICE: 1.3272 @ 19:24 BST May 16
• SUP 1: 1.3140 Low May 12   
• SUP 2: 1.3110 50-day EMA
• SUP 3: 1.3041 Low Apr 14  
• SUP 4: 1.2968 Low Apr 11 

GBPUSD is unchanged. Recent weakness appears corrective. Last Tuesday’s gains highlight a possible reversal pattern - a bullish engulfing candle. The pattern remains valid and if correct, signals the end of the corrective cycle and a resumption of the uptrend. Key support to watch is 1.3110, the 50-day EMA. A continuation higher would refocus attention on the key resistance and a bull trigger, at 1.3444, the Apr 28 / 29 high. 

• RES 4: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
• RES 3: 1.1608 High Nov 9 2021
• RES 2: 1.1440/1573 High Apr 23 / 21 and the bull trigger
• RES 1: 1.1266/1381 High May 14 / High May 2 - 6  
• PRICE: 1.1144 @ 19:09 BST May 16
• SUP 1: 1.1094/65 50-day EMA and a pivot level / Low May 12 
• SUP 2: 1.1026 38.2% retracement of the Feb 3 - Apr 21 bull cycle 
• SUP 3: 1.0943 Low Apr 10    
• SUP 4: 1.0857 50.0% retracement of the Feb 3 - Apr 21 bull cycle

EURUSD continues to trade above last week’s low. Recent weakness appears corrective and key trend signals highlight an uptrend. Note that a key support at the 50-day EMA, at 1.1094, remains intact. A clean break of this average would undermine the uptrend. A key resistance to watch is 1.1381, the May 2 - 6 high. Clearance of this level would signal the end of the correction and highlight a bullish break.

Moody's has downgraded the US's long-term credit rating to Aa1 trom Aaa. The move may not have been fully expected today. But it was the last holdout among they S&P and Fitch to demote the USA from the top rating, and they placed negative outlook on the US last year (now stable). Fiscal deterioration, both past and anticipated as Congress wrangles with the Republican fiscal bill, is cited as the key factor. From the release (link):

• “While we recognize the US’ significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics."
• "This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns...We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration."
• "If the 2017 Tax Cuts and Jobs Act is extended, which is our base case, it will add around $4 trillion to the federal fiscal primary (excluding interest payments) deficit over the next decade. As a result, we expect federal deficits to widen, reaching nearly 9% of GDP by 2035, up from 6.4% in 2024, driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation."
• "We anticipate that the federal debt burden will rise to about 134% of GDP by 2035, compared to 98% in 2024."
• "Federal interest payments are likely to absorb around 30% of revenue by 2035, up from about 18% in 2024 and 9% in 2021. The US general government interest burden, which takes into account federal, state and local debt, absorbed 12% of revenue in 2024, compared to 1.6% for Aaa-rated sovereigns."