Solid ECN | Professional Market Analysis | *Video*

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Current trend
This week, the EURUSD pair continued to decline and is currently testing the 1.0864 mark (Murray [1/8]). The movement of the pair has recently been influenced by expectations of further actions from the US Fed and the European Central Bank (ECB).

The comments of the officials of the American regulator and the minutes of its last meeting look much more "hawkish" than a similar document of the European department, which became a catalyst for strengthening the US currency. Last week, the governor of the US Fed, Lael Brainard, the head of the Federal Reserve Bank of San Francisco, Mary Daly, and the chairman of the Philadelphia Fed, Patrick Harker, spoke in favor of continuing to raise interest rates and sharply reducing the regulator's balance sheet. The protocols indicated that it could begin in May and would amount to 95B dollars per month. At the same time, the correction of the indicator may reach 0.50%. Investors fear that too rapid tightening of monetary policy may lead to a downturn in the economy, but officials are confident that it will stand the test, since the recorded growth is strong enough.

Against this background, the European currency looks less attractive for investment, experiencing significant pressure due to the Ukrainian crisis. The most negative of its consequences is an increase in inflation, which affects household incomes and reduces demand, however, unlike the US Fed, the ECB has not yet taken active actions to reduce price growth. At the last meeting of the regulator, officials agreed to stop buying bonds in Q3 2022, but did not make specific decisions on further tightening of monetary policy, probably still considering the factors of inflation growth temporary, although bidders have long been expecting the start of a rate hike cycle. Moreover, earlier, the EU authorities decided to abandon the supply of Russian coal, which can only increase energy inflation.
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Support and resistance​

Consolidation of the price of the EUR/USD pair below the 1.0864 mark (Murray [1/8] the middle line of the Bollinger Bands) will give the prospect of continuing the decline to the levels of 1.0742 (Murray [0/8]) and 1.0620 (Murray [-1/8]). The key for the "bulls" is the 1.0986 mark (Murray [2/8], the middle line of the Bollinger Bands), the breakout of which will allow the instrument to strengthen to 1.1108 (Murray [3/8]), 1.1230 (Murray [4/8]). Technical indicators do not give a single signal: the Bollinger Bands are reversing downwards, the MACD histogram is increasing in the negative zone, but the Stochastic is preparing to leave the oversold zone and form a buy signal.

Resistance levels: 1.0986, 1.1108, 1.123 | Support levels: 1.0864, 1.0742, 1.062​

 

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The US dollar is showing weak "bearish" dynamics during the Asian session, correcting after a three-day rally that took the instrument to new highs from March 22. Sales of the Canadian currency this week intensified after a local decline in oil prices.

However, according to data for February, exports of Canadian "black gold" increased by 7.8%, amounting to 58.75 billion Canadian dollars, while imports were fixed at around 56.08 billion Canadian dollars, which indicates the continuation of the trade surplus. The growing geopolitical tension will continue to contribute to an increase in energy prices against the backdrop of a continuing shortage of supply, which will allow the Canadian dollar to regain the interest of the "bulls".

Today, investors are focused on the March report on the Canadian labor market. Analysts' forecasts are quite modest, and therefore the national currency is unlikely to receive significant support from the publication. It is assumed that the Net Change in Employment in March will show an increase of only 80K, slowing down from the previous increase of 336.6K. At the same time, the Participation Rate is expected to remain at the same level of 65.4%, while the Unemployment Rate may drop from 5.5% to 5.4%.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is almost unchanged, but it remains rather spacious for the current level of activity in the market. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic shows a similar dynamics but the indicator line is approaching its highs, which reflects risks of the overbought USD in the ultra-short term.

Resistance levels: 1.26, 1.265, 1.27, 1.275 | Support levels: 1.2538, 1.245, 1.24, 1.235

 

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The US dollar shows strong growth against the Japanese yen during trading in Asia, continuing the development of the "bullish" trend from April 1. At the moment, USDJPY is updating local highs from March 28 and is again preparing to test strong resistance at 125.

At the beginning of the week, the "bulls" are very optimistic, but the growth factors change slightly: the US dollar is still receiving support as a "safe" asset, becoming more attractive to investors as the US Federal Reserve tightens its monetary policy. Earlier, representatives of the regulator spoke in favor of raising the rate by 50 basis points at once during the May meeting. At the same time, as expected, a program of quantitative tightening may be launched in order to reduce the balance sheet of the Fed.

In turn, the Bank of Japan is far from a possible start of tightening monetary policy. Last week, the regulator's former chief economist, Hideo Hayakawa, predicted that the agency could change current parameters as early as July as worries about the depreciation of the yen and rising inflation rise. Hayakawa's views stand in stark contrast to those of Bank of Japan Governor Haruhiko Kuroda, who has repeatedly stated the regulator's intention to maintain an ultra-loose monetary policy even after other major central banks such as the US Federal Reserve and the Bank of England raise interest rates.

The macroeconomic statistics released in Japan on Friday provided little support to the yen. Eco Watchers Current Situation Index in March rose from 37.7 to 47.8 points, which turned out to be 10 points better than market expectations. Eco Watchers Outlook for the same period strengthened from 44.4 to 50.1 points, while the forecast was 43.5 points.

Bollinger Bands on the daily chart show a steady increase. The price range is slightly expanding, but it fails to catch the surge of "bullish" sentiment at the moment. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, having reached its highs is reversing into a horizontal plane, indicating overbought USD in the ultra-short term.

Resistance levels: 125.09, 125.6, 126, 126.5 | Support levels: 124.50, 124, 123.02, 122

 

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The New Zealand dollar shows ambiguous dynamics of trading against the US dollar during today's Asian session, consolidating near the opening levels and 0.6835. NZDUSD fell sharply on Friday, recording its first fall in four weeks. Investors' fears about a series of aggressive interest rate hikes by the US Federal Reserve, as well as changing commodity prices were the catalysts for the sales of the currency. In addition, the negative dynamics of the instrument was provoked by a reduction in the spread between government bonds of New Zealand and the United States. 10-year New Zealand Treasury bonds at the end of last week showed a yield of 3.274%, and 10-year US bonds showed 2.740%.

The pressure on NZD/USD is exerted by weak macroeconomic statistics from New Zealand. Electronic Card Retail Sales in March decreased by 1.3% after a sharp decline of 7.8% a month earlier. Analysts had expected negative dynamics to remain at -0.6%. In annual terms, sales decreased by 0.5% after rising by 1.1% in February. Markets projected a sharp 9.7% growth. Later, buying activity on the instrument was supported by encouraging statistics from China. The Consumer Price Index in China in March showed an increase of 1.5%, accelerating from 0.9% shown in February. The real dynamics turned out to be noticeably better than analysts' forecasts at 1.2%.

Another "bullish" factor is the new EU sanctions policy on the Russian economy. In particular, New Zealand coal exporters positively perceived the possibility of introducing restrictions on the supply of solid fuel from the Russian Federation this summer. Currently, New Zealand exports more than a third of all coal mined in the country.

On the D1 chart Bollinger Bands are reversing into the descending plane. The price range is expanding but it fails to conform to the surge of "bearish" activity at the moment. MACD is going down preserving a stable sell signal (located below the signal line). The indicator is about to test the zero level for a breakdown. Stochastic, having reached its lows, reversed into the horizontal plane, indicating risks of oversold NZD in the ultra-short term.

Resistance levels: 0.6874, 0.6924, 0.696, 0.7 | Support levels: 0.6812, 0.6766, 0.6732, 0.67

 

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The AUDUSD pair is falling to the support level of 0.7430 after strengthening the US dollar due to "hawkish" statements by the US Federal Reserve members.

Thus, Cleveland Fed President Loretta Meister is confident that the country will be able to avoid a recession, as the regulator will continue to tighten monetary policy, even though inflation is likely to exceed the target value of 2% next year. The dollar was further supported by the US Initial Jobless Claims, published last Thursday: the figure consolidated around 166K, which is significantly less than the forecast of 200K and lower than the previous value of 171K. Positive dynamics reflect a strong recovery national labor market.

The Australian dollar lost ground after the correction in oil prices, and the pair AUD/USD fell to 0.7430. However, according to the country's financial stability report published last Friday, large borrowers expect an increase in interest rates of the Reserve Bank of Australia, which could push the national currency quotes up to renew the last year's high.

The long-term trend is upwards. After reaching 0.7650, the instrument corrected to 0.7430. If it holds, the growth will continue with the first target at the high of the previous week. The breakdown of the support level of 0.7430 allows a correction to the 0.7300 area.

The mid-term trend may reverse downwards as the price trades below the key support at 0.7496–0.7479. If the AUD/USD pair rate consolidates below the support, zone 2 (0.7331–0.7314) will become the sell target. If quotes return to the 0.7496 area this week, the uptrend will intensify, and the new target will be 0.7655.

Resistance levels: 0.765, 0.78 | Support levels: 0.743, 0.73

 

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The Australian dollar is showing a weak corrective growth against the US dollar during the Asian session, recovering from a four-day "bearish" rally. The instrument is testing the level of 0.7420 for a breakout, retreating from its local lows of March 22. The positions of the asset remain under pressure from the development of a new wave of coronavirus incidence in China. The country's government has announced strict quarantine measures that will also affect Shanghai, a major financial and industrial center, which consumes about 4% of all oil purchased by China. As a result of the lockdown, many companies such as Tesla Inc., Bayerische Motoren Werke AG, Volkswagen AG, as well as some suppliers to Apple Inc. were forced to stop their activities. In total, a record 130K new cases of COVID-19 infection have been detected in Shanghai since March 1 this year.

Nevertheless, the Australian dollar was supported at the beginning of the week by optimistic macroeconomic statistics from China. The Consumer Price Index in China in annual terms in March accelerated from 0.9% to 1.5%, which was better than market expectations at 1.2%. On a monthly basis, however, inflation showed only zero dynamics after rising by 0.6% in February. Today's data support the buying mood for the instrument with strong statistics from Australia. National Australia Bank's Business Conditions in March strengthened from 9 to 18 points, while the Business Confidence index for the same period rose from 13 to 16 points, with a slowdown forecast to 8 points.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is expanding, however, it does not keep up with the activity of trading in the last few days, which signals in favor of the development of corrective dynamics. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic, having reached its lows, is reversing upwards, indicating risks of a strongly oversold instrument in the ultra-short term.

Resistance levels: 0.745, 0.75, 0.755, 0.76 | Support levels: 0.7398, 0.7366, 0.73, 0.725

 

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Activity on the market remains quite high, but trades in the short term are mostly flat. Today, investors are waiting for the publication of data on consumer inflation in the US. The yield on 10-year US Treasury bonds rose above 2.81% amid "hawkish" plans by the US Federal Reserve to raise interest rates at a meeting in May and the beginning of a reduction in assets against the background of 40-year record inflation in the country. Markets are confident that the regulator will tighten its monetary policy even faster to curb inflation. Along with fears that the recent surge in commodity prices will further exacerbate consumer inflation, it has pushed US Treasury yields to new multi-year highs. According to analysts, the regulator will decide to raise the rate immediately by 0.50% at the May meeting, but much will depend on the economic situation.

The Bank of Canada and the European Central Bank (ECB) will also meet this week. Experts expect the Canadian agency to raise the interest rate by 0.5%, while the ECB is likely to keep a wait-and-see position again. Nevertheless, inflation in the EU continues to beat records, which means that pressure on the position of the European regulator is increasing, and traders expect to hear clear plans for further prospects for monetary policy. The original plans to launch a rate hike cycle in June may be revised.

On the daily chart, Bollinger Bands are moving flat. The price range remains virtually unchanged but remains spacious enough for the current level of activity in the market. The MACD indicator grows, keeping a very poor buy signal (the histogram is above the signal line). Stochastic reversed downwards at 80, reacting to the "bearish" nature of trading at the end of last week.

Resistance levels: 0.9320, 0.9352, 0.9381, 0.9430 | Support levels: 0.93, 0.9279, 0.925, 0.9219.

 

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Despite the positive macroeconomic statistics from New Zealand, the NZD/USD pair declines, trading near the level of 0.6829. Yesterday, Stats NZ published a report on e-card spending, according to which the country increased its spending by 124M New Zealand dollars last month, up 1.6% from February. The positive dynamics were noted in the tourism and healthcare industries, where electronic payments grew by 14.5%, while the same indicator, which considers transport trips, added 2.7% due to higher fuel prices.

At tomorrow's meeting of the Reserve Bank of New Zealand on monetary policy, interest rates are expected to rise to 1.25% from 1.00%, which was announced by officials earlier as part of a program to combat high inflation. Analysts are divided on whether the regulator will raise rates by 25 bps or 50 bps, although money market pricing favors the latter.

The US currency was as close as possible to this year's key level of around 100 points in the index before the publication of today's inflation data. The consumer price index is forecast to rise to 8.4% from 7.9% a month earlier, while the core consumer price index, which excludes fuel and food, is expected to rise to 6.6% from 6.4%. Implementation of expectations will negatively affect both the dollar rate and the state of the US economy.

The asset moves within the local Expanding formation pattern, completing the eighth wave. After working out a local sell signal, technical indicators are uncertain: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram is close to the transition level.

Resistance levels: 0.6871, 0.6987 | Support levels: 0.6742, 0.6337​

 

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USDJPY, March high update​

In April, the "bulls" managed to renew the March high around 125, but technical indicators signal that the current uptrend in USDJPY is coming to an end. Further strengthening of the US dollar against the Japanese yen in the long term is beyond doubt; however, before a new impetus, traders need to make a set of positions at favorable prices.

The correction may be facilitated by today's inflation data in the US. The consensus forecast assumes that the Consumer Price Index in the country in March will rise to a new high of 8.4% in annual terms, and the Core Consumer Price Index will grow 6.6%. For some market participants, such data will signal the inability of the US Fed to cope with inflation, and the uptrend in the US currency may reverse. At the same time, the rhetoric of members of the regulator confirms the intention to raise the interest rate up to 2.50% by the end of the year. If the actions of the US Federal Reserve coincide with the statements of its representatives, then the dollar will begin to strengthen again after the correction.

Next week, on April 21, Japan's Consumer Price Index for March will be published. Starting from September 2021, inflation in the country left the negative zone and began to gradually increase, reaching its high at 0.9% in February. Despite the fact that the values of the indicator are still very far from the target level of the Bank of Japan of 2%, further growth in the Consumer Price Index may support the yen, which has fallen against the US dollar by 13.6% over the past year.

The long-term trend is upward. At the moment, the "bulls" are trying to break through the resistance level of 125.75 and, if successful, the next target will be 127.00. The RSI indicates that the market is overbought, which implies the development of a correction for the instrument in the medium term.

The medium-term trend is upward. Target zone 7 (124.47–124.22) was broken out last week. The next buy target is target zone 8 (127.06–126.80). New long positions on the instrument can be considered after a test of the key trend support at 122.68–122.38.

Resistance levels: 125.75, 127 | Support levels: 123.7, 121.5

 

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GBPUSD, pending statistics on the dynamics of consumer prices​

The British pound traded with an uptrend against the US currency during the morning session, trying to regain a foothold above 1.3. Activity on the market remains quite low, as market participants are waiting for the publication of a block of macroeconomic statistics from the UK on the dynamics of consumer prices.

Inflation is one of the key indicators today, since the world regulators largely rely on it when choosing the vector of monetary policy. According to current forecasts, the UK Consumer Price Index in March will accelerate from 6.2% to 6.7%, updating record highs.

At the moment, the positions of the pound are supported by relatively optimistic data on the UK labor market, which were published the day before. ILO Unemployment Rate unexpectedly decreased from 3.9% to 3.8% with a neutral forecast. Average Earnings Excluding Bonus for the same period accelerated growth from 3.8% to 4.0%, which coincided with analysts' forecasts. Average Earnings Including Bonus increased from 4.8% to 5.4%. Only BRC Like-For-Like Retail Sales were noticeably disappointing, dropping 0.4% in March after rising 2.7% a month earlier.
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Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is slightly narrowing, reflecting the emergence of multidirectional trading dynamics in the short term. MACD is declining keeping a weak sell signal (located below the signal line). Stochastic remains horizontal for some time, holding close to the level of "20". The indicator readings signal the risks of the pound being oversold in the ultra-short term.

Resistance levels: 1.305, 1.31, 1.315, 1.32 | Support levels: 1.3, 1.296, 1.29, 1.285​

 

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The European currency continues to trade in a downtrend around 1.0833 amid poor macroeconomic reports.​

Thus, the index of current economic conditions from ZEW in Germany in April fell to –30.8 points from –21.4 points, and the index of economic sentiment in Germany fell to –41.0 points from –39.3 points, while the same indicator in the euro area fell to –43.0 points from –8.7 points a month earlier. ZEW spokesman Achim Wambach said business is pessimistic about the current economic situation and expects it to continue to worsen as the threat of stagflation persists. Also, the region is experiencing record inflation growth: in Germany, the indicator added 2.5% for March after rising by 0.9% for February and has already reached a record 7.3% YoY. The single European currency is also under pressure from possible disruptions in Russian oil and gas supply to the EU countries. European Commission President Ursula von der Leyen and EU diplomat Josep Borrell announced their intention to extend EU sanctions on oil exports, including them in the sixth package of restrictions against the Russian economy.

As expected earlier, the US currency has overcome the index's psychological mark of 100 points and is now trading around 100.300 points. Positive dynamics were facilitated by data on inflation in the United States, which reached the maximum of 1981, consolidation for March at 8.5% YoY, which exceeded even the bold forecast of analysts at 8.4%. Thus, the value added another 1.2% to the March figure. The largest value growth was recorded for used cars (+35%) and energy products (+32%).

The instrument moves within a wide downward channel, approaching the support line. Technical indicators maintain a global sell signal: fast EMAs on the Alligator indicator are below the signal line, while the AO oscillator histogram remains in the sell zone, forming down bars.

Resistance levels: 1.0912, 1.1155 | Support levels: 1.08, 1.06

 

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This week, the AUDUSD pair is trading at 0.7445 (Fibonacci correction 23.6%, Murrey [6/8]) and cannot move away from it yet. Investors expect specific steps to tighten monetary policy from the US Federal Reserve and the Reserve Bank of Australia (RBA), so the instrument quotes are in a state of relative equilibrium.

US inflation data for March released yesterday was ambiguous: the consumer price index rose from 0.8% to 1.2% MoM and from 7.9% to 8.5% YoY, the most serious increase since 1981. However, the core consumer price index fell from 0.5% to 0.3% MoM and corrected from 6.4% to 6.5% YoY, which is lower than experts' expected value of 6.6%. This statistic aroused hope among investors that prices would slow down. Some experts believe that the March rise in prices has become a peak, and a correction will follow in the future. US Federal Reserve Governor, Lael Brainard, noted that the slowdown in the growth of the core index might be an omen of the coming decline in inflation, but these comments look like an attempt to find at least one positive moment in the current difficult situation. Prices, especially for energy, gasoline, and food, continue to skyrocket, necessitating decisive action on the part officials.

The position of the Australian currency looks relatively stable. It is supported by high prices for raw materials and a decrease in the incidence of coronavirus, which creates favorable conditions for doing business. According to March data, the country's business conditions index rose from 9 to 18 points and the business confidence index – from 13 to 16 points. However, rising inflation, which is beginning to curb consumer demand, prevents the national currency from strengthening. The Westpac Consumer Sentiment Index for April, released today, only confirmed this: the index fell for the fifth month in a row, this time by 0.9%.

The key "bearish" level is 0.7385 (Murrey [5/8]). Its breakdown will give the prospect of further decline to 0.7263 (Murrey [3/8]) and 0.7200 (Murrey [2/8], Fibonacci retracement 61.8%). If the middle line of Bollinger bands (0.7475) is broken upwards, the growth may continue to 0.7568 (Murrey [8/8]) and 0.7660 (April highs). The indicators do not give a single signal: Bollinger bands are directed upwards, the MACD histogram decreases in the positive zone, and Stochastic prepares to leave the overbought zone and form a buy signal.

Resistance levels: 0.7475, 0.7568, 0.766 | Support levels: 0.7385, 0.7263, 0.72​

 

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The European currency shows moderate growth against the US dollar during the Asian session, developing a "bullish" signal formed the day before, when the instrument retreated from its March 7 local lows.

The growth of buying activity in the single currency is facilitated by technical factors, as well as some correction of the US dollar after the publication of consumer and industrial inflation, which, as expected, renewed record highs. The Producer Price Index released the day before rose by 1.4% in March after rising by 0.9% a month earlier. Analysts expected an acceleration of only up to 1.1%. In annual terms, the growth rate of producer prices accelerated from 10.3% to 11.2%, which was also higher than the market forecast at 10.6%. Such statistics once again confirm the fact that many politicians and economists were mistaken last year, arguing that the rapid rise in prices is only a temporary phenomenon.

Support for the single currency is also provided by the meeting of the European Central Bank (ECB), which will be held today. Despite the fact that analysts' forecasts do not imply any changes in the vector of the monetary policy of the European regulator, the comments of its representatives will be extremely important. Traders are primarily interested in the timing of the start of the rate increase, since the central banks of developed countries have already managed to resort to tightening monetary policy. Investors will focus on a statement by the ECB President Christine Lagarde, including information on how long after the end of the quantitative easing program a cycle of rate hikes could begin, given the complex combination of inflation far above the target and a slowdown in the national economic recovery due to a sharp jump in energy prices.

On the D1 chart, Bollinger Bands demonstrate a tendency to reverse into a horizontal plane. The price range is also trying to consolidate, but within a fairly wide range, fully consistent with the observed dynamics. MACD is reversing upwards and forming a new buy signal (located above the signal line). Stochastic is showing the same dynamics being located in the middle of its area.

Resistance levels: 1.09, 1.0957, 1.1, 1.1051 | Support levels: 1.086, 1.0835, 1.08, 1.0767

 

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The US dollar shows a slight decrease against the Japanese yen in Asian trading, retreating from the record highs updated the day before and again testing 125.00 for a breakdown. The decline of the US currency is largely due to technical factors, while the general news background changes slightly.

The day before the US released a block of statistics on producer inflation, which, as expected, reflected the rise in prices to new record highs at 9.2%. The US Federal Reserve has less and less freedom of action at the upcoming meeting in May, where, as expected, the rate will be raised immediately by 50 basis points. Similar measures were taken by the Bank of Canada and the Reserve Bank of New Zealand, bringing their interest rates to 1% and 1.5% respectively.

The Japanese yen came under pressure as the Fed's expected aggressive monetary tightening contrasts sharply with the Bank of Japan's ultra-soft stance, but the general inflation situation around the world could push the Japanese economy, which has long suffered from deflation, to rise (consumer prices in March grew by 0.4% year-on-year). Bank of Japan Governor Haruhiko Kuroda acknowledged that the recent rise in inflation, fueled by higher import costs, could hurt the national economy. It is still premature to say when the regulator will think about raising the interest rate, and therefore the dollar will remain more in demand as a safe-haven currency for a long time to come.

Today, investors are waiting for the publication of statistics on jobless claims in the US. In addition, March Retail Sales figures will be released, promising a significant increase compared to February.

Bollinger Bands in D1 chart show moderate growth. The price range expands from above, freeing a path to new record highs for the "bulls". MACD indicator tries to reverse downwards and to form a new sell signal (the histogram is about to consolidate below the signal line). Stochastic is showing a more confident decline, signaling a strongly overbought USD in the ultra-short term.

Resistance levels: 125.6, 126.3, 127 | Support levels: 125.09, 124.5, 124, 123.02

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GBPUSD, UK inflation hits 30-year high​

Yesterday, the pound made one of the most serious upswings for the current year and has now reached 1.3135. Investors are focused on the statistics from the UK on inflation, which has long gone beyond the target levels of the Bank of England and therefore creates only additional threats to the economic recovery process after the coronavirus pandemic.

Thus, CPI for March rose by 1.1% after rising by 0.8% a month earlier, although analysts had expected a value of 0.7%. It reached new record highs at 7% YoY, while market forecasts suggested an increase from only 6.2% to 6.7%. Thus, the March inflation in the UK was a record for the last 30 years – since March 1992. PPI also rose to 19.2% YoY from 15.1%, but the sharpest jump was recorded for prices that include homeowners' costs for their living space. According to the calculations of the special index CPIH (inflation, taking into account the costs of homeowners for its maintenance) for February and March, the indicator corrected immediately by 11.7%. Experts believe that rising inflation will put additional pressure on the Bank of England, forcing officials to accelerate the pace of raising interest rates.

Meanwhile, after reaching the key mark of 100.000 points in the USD Index, the US currency could not hold its position for a long time and returned to the current levels around 99.600. Today, data on initial jobless claims will be published, which will help assess the local state of the labor market and predict the prospects for the movement of dollar quotes for the next week.
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The pair continues to trade within the global downward channel, but after reaching the support line at 1.3000, it reversed and began to form a new upward wave. Technical indicators keep the weakening sell signal. Indicator Alligator's EMA fluctuations range narrows, and the histogram of the AO oscillator approaches the transition level.

Resistance levels: 1.3259, 1.3616 | Support levels: 1.3, 1.28​

 

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AUDUSD shows a moderate decline during the Asian session, testing 0.74 for a breakdown. The instrument is preparing to finish yet another trading week in the "red" zone; however, due to the active growth of the Australian currency last Tuesday, the total losses can be characterized as insignificant.

In addition to the rising US dollar, quotes are under pressure from weak macroeconomic statistics from Australia, published the day before. Employment Change in March was recorded at around 17.9K, which was below market expectations at the level of 40K and significantly inferior to 77.4K shown in February. At the same time, Full-Time Employment decreased from 121.9K to 20.5K, while the dynamics of Part-Time Employment improved from -44.5K to -2.7K. The Unemployment Rate remained at 4%, while many experts were confident that it would stay below this psychological level. At the same time, Consumer Inflation Expectations rose from 4.9% to 5.2% in April, while analysts had projected a decline to 4.6%.

Investors continue to monitor the consequences of the Russian-Ukrainian conflict. The Australian government imposed targeted financial sanctions on 14 Russian state-owned enterprises of strategic and economic importance. In particular, PJSC Gazprom, PJSC Rostelecom, JSC United Shipbuilding Corporation, JSC Ruselectronics, PJSC Novorossiysk Commercial Sea Port, PJSC Alrosa, JSC Russian Railways, and others were included in the list.

On the daily chart, Bollinger Bands are moderately declining. The price range expands, making way to new local lows for the "bears". MACD is preserving a stable sell signal (located below the signal line). Stochastic, having tried to reverse upwards at the beginning of the current week is directed downwards again, indicating the continuing risks of the instrument being oversold in the ultra-short term.

Resistance levels: 0.745, 0.75, 0.755, 0.76 | Support levels: 0.74, 0.7366, 0.73, 0.725

 

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USDJPY, the US dollar updates record highs

The US dollar shows a moderate growth in Asian trading, renewing new record highs and approaching 127.00, but there are no drivers for its breakout yet. Last week, April 13, the yen reached its lowest level against the US currency since 2002, losing about 40% in value compared to the 2011 high.

Investors are returning to the market after the Easter week and are still inclined to buy safer assets, given that the fundamental background does not contain positive signals. The greatest support for currencies at the moment comes from the actions of world central banks, which are rapidly adjusting the current monetary policy in the hope of containing record inflation rates. In particular, it is expected that during the May meeting, the US Federal Reserve will announce an increase in interest rates by 50 basis points at once, and will also launch a quantitative tightening program.

Meanwhile, the ultra-soft monetary policy of the Bank of Japan against the backdrop of relatively low inflation in the country keeps the national currency in a weaker position. The regulator is expected to raise its inflation forecast for fiscal year 2022 to above 1.5% from the current 1.1%, while national economy growth expectations will be lowered from 3.8%. Statistics on inflation in Japan will be published on Friday. It is predicted that by the end of March, the national Consumer Price Index may accelerate from 0.9% to 1.3%.

Along with this, the Bank of Japan is exploring the possibility of launching its own digital currency (CBDC). Bank of Japan Chief Executive Shinichi Uchida said financiers will look at features to set a limit on the amount of transactions as a safeguard against unpredictable movement of deposits from financial institutions, as well as the possibility of rewarding token holders. At the same time, it is emphasized that the digital yen will not be used to achieve a negative interest rate.

Bollinger Bands on the daily chart show a steady increase. The price range expands slightly from above, freeing a path to new record highs for the "bulls". MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic has been near its highs for a long time, indicating the risks of the US dollar being overbought in the ultra-short term.

Resistance levels: 127, 127.5, 128 | Support levels: 126.3, 125.6, 125.09, 124.5

 

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XAUUSD shows moderate growth during the morning session, updating local highs from March 14. The "thin" market encourages the purchase of safe assets, so the US dollar and gold strengthen their positions. The precious metal is moving higher for the second week in a row, as statistics on consumer prices in the US, where inflation in March reached 8.5% on an annualized basis, which is the highest since 1981, increases the attractiveness of XAUUSD for hedging risks in anticipation of the next financial crisis. The situation on the market changes little, as the news background after the Easter week remains quite calm.

Demand for the metal is supported by general tension, which is expressed primarily by investors' concern about global inflation rates. Due to the military conflict in Ukraine and subsequent sanctions against the Russian economy, energy quotes rushed up sharply, which provoked an increase in consumer and production prices in the global economy, which had just begun to recover from the period of the coronavirus pandemic. Under these conditions, gold actively added in price. In turn, an increase in the yield of treasury bonds, as well as expectations of further tightening of monetary policy by the US Federal Reserve, is holding back "bullish" sentiment on the instrument. Monthly bonds showed the maximum increase, having added 8.68% and amounted to 0.4108%, while the yield on 10-year bonds increased by 2.01% to 2.864%.

Today's macroeconomic statistics from China did not support the instrument significantly. GDP in Q1 2022 showed a slowdown from 1.5% to 1.3%, which, however, turned out to be noticeably better than the expected 0.6%, while in annual terms, the Chinese economy accelerated from 4.0% to 4.8%, ahead of analysts' forecasts at 4.4%.

Bollinger Bands in D1 chart show moderate growth. The price range is expanding but it fails to conform to the surge of "bullish" sentiments at the moment. MACD indicator is growing keeping a buy signal (located above the signal line). Stochastic retains an upward direction but is located in close proximity to its highs, which indicates the overbought instrument in the ultra-short term.

Resistance levels: 2000, 2015.3, 2030, 2050 | Support levels: 1974.22, 1952.53, 1930, 1900

 

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The British pound is falling during the morning session, testing the strong support at 1.3 for a breakdown. GBPUSD updates local lows from April 13, when the asset showed a sharp increase.

The US currency is supported by expectations of further tightening of monetary policy by the US Federal Reserve and an increase in the key rate by 50 basis points at once during the May meeting of the regulator. In addition, investors are still reluctant to redirect their capital into risky assets, fearing a further deterioration in the global economy. Despite the unprecedented sanctions against Russia, the special military operation on the territory of Ukraine continues, and at the moment the peace talks have faded into the background. The parties, apparently, hope to take more advantageous positions in the negotiation process, having shown success at the front.

Meanwhile, Western countries continue to introduce more and more restrictive measures. In the near future, EU officials will discuss the sixth sanctions package, which may relate to the most painful issue, restrictions on the import of oil and oil products. In the EU, there is still no consensus on the embargo on Russian supplies, due to the significant dependence on imported energy resources, but the general trend towards a gradual phase-out is still emerging. According to the forecasts of the operator of the united British energy system National Grid, the UK is ready to send significant volumes of natural gas to European countries in order to minimize their losses after the imposition of sanctions, using its terminals and the national system of gas transportation. Summer exports are expected to reach 5.1 bcm, well above the 2021 figure of 0.7 bcm.

Today, investors are waiting for the speech of the representative of the Bank of England Catherine Mann, as well as the Governor of the British regulator Andrew Bailey.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is narrowing, limiting the prospects for the development of the "bearish" trend in the short term. MACD is going down having formed a new sell signal (trying to consolidate below the signal line). Stochastic shows a more confident decline, but is quickly approaching its lows, indicating the risks of the oversold pound in the ultra-short term.

Resistance levels: 1.305, 1.31, 1.315, 1.32 | Support levels: 1.3, 1.296, 1.29, 1.285

 

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The New Zealand dollar shows a slight increase against the US dollar during the Asian session, retreating from the local lows of February 28, updated the day before. The positive dynamics of the instrument today is largely of a technical nature, while the news background remains quite modest and does not encourage investors to buy risky assets. However, the New Zealand dollar is under pressure from rising US bond yields, with 10-year yields climbing to 2.85% and 30-year yields to 2.93%, the highest level since April 2019. The USD Index gained over 0.20% to hit 100.975, testing the 2022 top. The US currency is also supported by the expectations of a more rapid tightening of monetary policy by the US Federal Reserve in comparison with other leading world central banks. Traders drew attention to today's publication of Business NZ PSI. In March, the indicator unexpectedly strengthened from 48.9 to 51.6 points, which turned out to be better than the average analysts' forecasts.

In addition, investors continue to evaluate macroeconomic statistics released yesterday from China. In Q1 2022, the country's GDP grew by 1.3% in quarterly terms and 4.8% in annual terms, which turned out to be noticeably better than market expectations at the level of 0.6% QoQ and 4.4% YoY. In turn, the pace of Industrial Production in China in March slowed down from 7.5% to 5%, while Retail Sales showed a sharp decline by 3.5% after an increase of 6.7% in February. Analysts attribute the decline in Retail Sales dynamics to quarantine, which China was forced to introduce in some provinces in response to an outbreak of coronavirus.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is expanding, having difficulty keeping up with the surge of the "bearish" moods in the short term. MACD is going down, keeping a fairly stable sell signal (located below the signal line). Stochastic, having reached its lows is reversing into the horizontal plane, indicating risks of oversold NZD in the ultra-short term.

Resistance levels: 0.6770, 0.6812, 0.6874, 0.6924 | Support levels: 0.67, 0.665, 0.66, 0.655