Solid ECN | Professional Market Analysis | *Video*

[SOLIDECN]

The British pound is trading up against the US currency, trying to recover from four sessions of decline, which led to new record lows since June 2020. The instrument remains under pressure from extremely low demand for risky assets, which, in turn, pushes the US currency to update record highs.

Despite an attempt by the Bank of England to stabilize the situation, experts fear that a sharp rise in interest rates could have an extremely negative impact on the recovery of the British economy, up to the onset of a recession. Meanwhile, the situation with energy resources remains tense, given that the EU and the UK continue to increase sanctions pressure against the Russian economy in response to a special military operation in Ukraine. Last Sunday, the leaders of the G7 countries held talks via videoconference, during which they supported the decision to phase out energy resources, as well as a ban on oil imports from Russia.

The data published the day before put additional pressure on the British currency. Thus, BRC Like-For-Like Retail Sales in April showed a decrease of 1.7% after falling by 0.4% a month earlier, while analysts expected an acceleration of negative dynamics, but expected a slightly more modest decrease of –1.6%. Tomorrow, investors will follow the publication of updated data on the dynamics of UK GDP for Q1 2022.

Bollinger Bands on the daily chart show a steady decline. The price range is narrowing, reflecting the emergence of multidirectional trading dynamics in the short term. MACD indicator reverses to growth while forming a new buy signal (the histogram is about to consolidate above the zero level). Stochastic shows similar dynamics, recovering from its lows, indicating the risks of oversold pound in the ultra-short term.

Resistance levels: 1.24, 1.25, 1.26, 1.2674 | Support levels: 1.225, 1.22, 1.215, 1.21

 

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The Australian currency continues unsuccessful attempts to change the global trend against the US dollar, but there are again obstacles to growth. At the moment, the AUDUSD pair is correcting at 0.6961.

Yesterday, the Australian dollar corrected upwards after publication of data on the index of business confidence from the National Bank of Australia, which amounted to 20 points in April, having risen from 15 points a month earlier. At the same time, Q1 retail sales amounted to 1.2%, significantly lower than 7.9% in the previous period but higher than analysts' pessimistic forecast, which assumed a decline to 1.0%. Today, positive statistics were leveled by data on the consumer sentiment index from Westpac with a forecast for May, which reflected a decrease in the index by 5.6% after falling by 0.9% in April. The statistics clearly show signs of a slowdown in the economy, which negatively affects the national currency's exchange rate.

The main pressure on the instrument is exerted by the US dollar, whose quotes are at high levels close to 104 in the USD Index. The key event of this week will be today's publication of a report on consumer prices, which will show the real state of inflation in the US. Most regional FRB officials have already spoken out in favor of the expected decline to 8.1% from the current 8.5%, which, in turn, is not in line with other economic indicators. If actual inflation continues to rise, this could completely undermine the market's confidence in the actions of the US Federal Reserve and its forecasts.

The price moves within the Expanding formation pattern on the global chart, having reached the support line. Technical indicators keep a sell signal, reflecting the beginning of a possible reversal: indicator Alligator's EMA fluctuations range slightly narrows, and the AO oscillator histogram forms multidirectional bars.

Resistance levels: 0.7, 0.7265 | Support levels: 0.69, 0.67​

 

[SOLIDECN]

The European currency traded with mixed dynamics against the US dollar during the Asian session, consolidating near 1.05. The day before the euro made an attempt to grow, having received support from the optimistic statements of the President of the European Central Bank (ECB), but the "bulls" failed to consolidate on new local highs. EURUSD eventually returned to the "red" zone, continuing the development of flat dynamics in the short term.

The European regulator is likely to complete the asset buyback at the beginning of Q3 2022, after which it will start raising the interest rate. This was stated by the ECB President Christine Lagarde the day before, speaking in Ljubljana. Last month, officials continued their "dovish" policy from 2011 and left the interest rate on the main refinancing operations, the rate on the deposit facility and the rate on the marginal lending facility at 0.00%, -0.50% and 0.25%, respectively. Experts believe that the ECB will increase the figures in July and September, and bring the deposit rate to 1.5% within two years. However, much will depend on the development of the military conflict in Ukraine, where the situation is still extremely tense.

Meanwhile, Hungary announced its readiness to impose an embargo on Russian resources, but the Minister of Foreign Affairs and Trade, Péter Szijjártó, voiced a number of demands. In particular, he noted that the country expects concrete measures from the EU to reduce the negative consequences for the national economy if a decision is made. According to Szijjártó, official Budapest will support the pan-European embargo if it does not concern oil pipelines. Now about 65% of oil from Russia comes through the Druzhba pipeline, and the Hungarian economy does not yet have alternative options for replacing these resources.

Macroeconomic statistics from Europe published on Wednesday did not have a noticeable impact on the instrument's dynamics. Consumer Price Index in Germany in April showed an increase of 0.8%, which also fully coincided with market expectations. In annual terms, inflation fixed at around 7.4%.

Bollinger Bands on the D1 chart still maintain a moderate downward direction. The price range is actively narrowing, reflecting the emergence of multidirectional trading dynamics in the short term. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, on the contrary, keeps its downward direction, indicating the predominance of "bearish" sentiment in the ultra-short term.

To open new trading positions, it is necessary to wait for the signals from technical indicators to be clarified.

Resistance levels: 1.0576, 1.064, 1.069, 1.0726 | Support levels: 1.05, 1.047, 1.04, 1.035

 

[SOLIDECN]

During the Asian session, the USDCAD pair is growing moderately, retesting the level of 1.3 for a breakout after an active decline yesterday, when the “bears” lost their positions by the close of the day session. As a result, the instrument failed to retreat from its all-time highs since November 2020, renewed on Tuesday.

Investors reacted to the publication in the US of April statistics on consumer inflation, which is one of the main guidelines for the US financial regulator when choosing a monetary policy vector. Thus, the consumer price index excluding food and energy in April accelerated from 0.3% to 0.6%, which was higher than analysts' expectations of 0.4%, and the figure slowed down from 6.5% to 6.2% YoY, which also was better than preliminary market estimates of 6.0%.

On Thursday, traders are focused on the US Initial Jobless Claims. Also during the day will be published April data on manufacturing inflation. Corresponding to consumer prices, some correction is expected from manufacturing inflation. Among Canadian publications, it is worth paying attention only to the speech of the representative of the Bank of Canada, Toni Gravelle.

On the daily chart, Bollinger Bands steadily grow: the price range slightly expands from above, letting the “bulls” renew local highs. MACD grows, keeping a strong buy signal (the histogram is above the signal line). Stochastic reached its highs and reversed into a downwards plane, indicating that the US dollar may become overbought in the ultra-short term.

Resistance levels: 1.305, 1.31, 1.315, 1.32 | Support levels: 1.3, 1.295, 1.29, 1.285

 

[SOLIDECN]

The British pound shows an uptrend in trading, correcting after another decline the day before, as a result of which GBPUSD updated its lows since May 2020. The growth of the pound on Friday is due to the strengthening of technical factors, while the fundamental picture changes slightly and still contributes to the further weakening of the British currency.

Due to the difficult situation in the labor market, the disruption of product supply chains, as well as rising energy prices, the cost of living crisis will affect about 1 million Britons, the National Institute for Economic and Social Research (NIESR) has calculated. According to the data presented, inflation in the country may accelerate to 14.4% by the end of this year, reaching 40-year peak levels. Against this background, about 250K people may find themselves in extreme poverty, and the economy itself may go into recession. To solve the problem, concrete measures of assistance from the government, totaling 4.2 billion pounds, will be required.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is changing slightly, but remains rather spacious for the current level of activity in the market. MACD is trying to reverse upwards but preserves its previous sell signal (located below the signal line). Stochastic has been located in close proximity to its lows for quite a long time, which points to the risk of oversold GBP in the ultra-short term.

Resistance levels: 1.225, 1.24, 1.25, 1.26 | Support levels: 1.2163, 1.2074, 1.2, 1.19​

 

[SOLIDECN]

The US dollar is slightly declining against the Japanese yen in Asian trading, once again trying to consolidate below 129.00. The positions of the American currency are under some pressure after the publication of disappointing macroeconomic statistics last Friday. In addition, traders are in a hurry to close long positions in the asset, fearing a corrective decline in the US government bonds, which retreated from their record highs at the end of last week.

The Japanese currency is supported today by the statistics from Japan on producer inflation. Producer Price Index accelerated in April from 0.8% to 1.2%, which turned out to be stronger than analysts' neutral forecasts. The Producer Price Index for corporate goods over the same period YoY strengthened from 9.5% to 10%, while the market expected a slight decline to 9.4%.

Last week it became known that Japan and the United States will develop cooperation in the field of research and production of semiconductors. It is predicted that the partnership agreement will be signed during the meeting scheduled for May 23. This will allow Japan to reduce its dependence on supplies from South Korea and Taiwan. In addition, the parties will work on projects in the defense, space, and cyberspace sectors. At the moment, the Japanese government intends to adjust the defense budget, increasing it to 106 billion dollars and bringing it to 2% of Gross Domestic Product against the backdrop of growing geopolitical tensions from China, North Korea and Russia, as well as the escalation of the military conflict in Ukraine.

On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is narrowing actively, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is going down preserving a stable sell signal (located below the signal line). At the same time, the current indicator readings weakly correlate with real market dynamics. Stochastic stopped the development of the "bearish" dynamics near the level of "20", indicating the emergence of multidirectional trading in the ultra-short term.

To open new positions, it is necessary to wait for the trade signals to become clear.

Resistance levels: 129.39, 130.00, 130.79, 131.33 | Support levels: 128.62, 127.5, 127, 126.3

 

[SOLIDECN]

The European currency shows a mixed dynamics of trading against the US dollar during the Asian session, consolidating near 1.044 and expecting new drivers to appear on the market. The day before, the euro showed weak growth, continuing the development of Friday's momentum, which allowed the instrument to retreat from record lows since January 2017.

In the meantime, the news and macroeconomic background remained quite negative, and the reasons for the growth of the instrument were mainly technical factors. Yesterday's data from Europe somewhat disappointed buyers; however, in general, they didn't influence the situation on the market much. The eurozone Trade Deficit in March amounted to 17.6 billion euros, which turned out to be significantly worse than last month's data (-11.3 billion euros) and forecasts that suggested an improvement in dynamics to -6.6 billion euros.

Today, investors are focused on the updated statistics on the dynamics of GDP in the euro area for Q1 2022. Earlier data indicated that the European economy grew by 0.2% QoQ and 5% YoY. Also during the day, quarterly Employment statistics will be published and a speech by the President of the European Central Bank (ECB) Christine Lagarde will take place, where the official is likely to correct the regulator's forecasts regarding the vector of monetary policy in the near future.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is slightly widening from below but does not conform to the surge of the "bearish" sentiment of the end of the previous week yet. MACD indicator is growing, having formed a new buy signal (located above the signal line). Stochastic is showing similar dynamics, having rebounded from the level of "20" and signaling in favor of the development of corrective growth in the ultra-short term.

Resistance levels: 1.047, 1.05, 1.0576, 1.064 | Support levels: 1.04, 1.035, 1.03, 1.025

 

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The Australian dollar shows active growth against the US currency during trading in Asia, testing a strong psychological barrier at the level of 0.7000. AUD/USD renews local highs from May 11, although yesterday the Australian dollar showed a sharp drawdown, which was caused by the publication of disappointing macroeconomic statistics from China.

Retail Sales in China fell sharply by 11.1% in April after falling by 3.5% a month earlier, although analysts had expected a decline of 6%. The pace of Industrial Production in the country in April showed a decline of 2.9% after rising by 5% in March. The forecasts assumed that positive dynamics would remain at the level of 0.7%.

The Australian dollar is being supported today by the minutes of the meeting of the Reserve Bank of Australia (RBA). The regulator was rather optimistic about the prospects for inflation, noting that it is likely to return to target levels as external risks stabilize. Representatives of the department expect that by mid-2024, consumer prices may fall to the upper limit of the indicated range of 3%. As for interest rates, the RBA expects them to increase further to 1.5% by the end of 2022 and to 2.5% by the end of 2023.

On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is narrowing from above, remaining spacious enough for the current activity level in the market. MACD indicator is growing having formed a stable buy signal (located above the signal line). Stochastic shows similar dynamics, quickly approaching its highs and reflecting the risks of overbought Australian dollar in the ultra-short term.

Resistance levels: 0.7, 0.705, 0.71, 0.7164 | Support levels: 0.6950, 0.69, 0.6827, 0.675

 

[SOLIDECN]

The pair may continue to decline
Against the backdrop of a depreciation of the American currency, the GBPUSD pair is correcting within the local trend around 1.2343.

Today the pressure on the pound may be exerted by data on the labor market in the UK for April. According to statistics, the unemployment rate was 3.7%, down from 3.8% in March. The level of labor productivity remained around 0.7%. It is worth noting another reduction in the number of applications for unemployment benefits, which decreased by 56.9K, after a decrease of 46.9K a month earlier. Thus, it becomes obvious that the growth rate of the UK economy is not as high as previously expected, which negatively affects the national currency.

The main driver of yesterday's asset growth was the US dollar, which in the index fell by half a point, reaching 104.200 amid the publication of a renewed forecast for the growth of the US economy for 2022 and 2023. According to the new forecast of The Goldman Sachs Group Inc., due to the serious tightening of monetary policy, GDP for 2022 was lowered to 2.4% from 2.6% in the previous forecast, and GDP for 2023 was lowered to 1.6% from 2.2% before. Also, investors could react negatively to the NY Empire State report, according to which the index of manufacturing activity in the US fell to 11.60 points in May from 24.60 points in April.

The asset has left the global downstream channel and is currently completing a reverse test of the passed support. Technical indicators keep a sell signal: indicator Alligator's EMA fluctuations range is still quite wide, and the histogram of the AO oscillator is trading deep in the sell zone.

Resistance levels: 1.245, 1.3 | Support levels: 1.216, 1.19​

 

[SOLIDECN]

GBPUSD, the pound is consolidating at local highs

The British pound is trading with mixed dynamics against the US currency during the morning session, holding in the area of local highs from May 5 and resistance at around 1.2500.

The pound was supported the day before by strong data on the UK labor market for March-April. Claimant Count Change in April decreased by 56.9 thousand after falling by 81.6 thousand a month earlier. Analysts expected a decline of only 38.8 thousand. The Average Earnings Excluding Bonus accelerated in March from 4.1% to 4.2%, which coincided with experts' estimates. The Average Earnings Including Bonus accelerated its growth from 5.6% to 7.0%, which turned out to be significantly better than the market's expectations of a slowdown to 5.4%. ILO Unemployment Rate in the UK in March fell from 3.8% to 3.7% with neutral forecasts.

Today, investors are awaiting the publication of statistics on consumer inflation for April. Current forecasts suggest a further acceleration of the indicator from 7% to a new record high of 9.1%. If market expectations are justified, pressure on the Bank of England may increase sharply, forcing the regulator to act more decisively on the issue of tightening monetary policy.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range narrows slightly from above, but still remains spacious enough for the current level of market activity. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic retains upward direction but is located near its highs, which indicates the risks of overbought instrument in the ultra-short term.

Resistance levels: 1.25, 1.26, 1.2674, 1.28 | Support levels: 1.24, 1.225, 1.2163, 1.21

 

[SOLIDECN]

USDCAD is correcting down amid the decline in US currency quotes, trading at 1.2819.

The Canadian currency is making attempts to grow after the publication of optimistic macroeconomic data in Canada. Canada's Manufacturing Sales rose 2.5% in March against a forecast of 1.7%. Wholesale Sales increased by 0.3%, while analysts had projected a decline of 0.3%. Housing Starts should also be noted, rising to 267.3 thousand in April from 248.4 thousand in March. As for the Canadian stock market, the volume of Foreign Portfolio Investment in Canadian Securities increased by 46.94 billion dollars in March from 7.49 billion dollars a month earlier.

In turn, the US dollar is correcting in a downtrend, holding at around 103.4 in the USD Index on the back of yesterday's statements by US Federal Reserve Chairman Jerome Powell that the regulator will make every effort to stabilize inflation, even if this causes a temporary recession. At the same time, the official declined to give a precise answer to the question about the pace of the rate increase, saying that a correction of 0.75% in the current situation is not a critical need.

On the global chart of the asset, the price is trading within the wide upward channel with dynamic borders of 1.245 - 1.31. Technical indicators have significantly weakened the potential of the buy signal, hinting at a possible continuation of the correction: fast EMAs on the Alligator indicator are approaching the signal line, and the AO oscillator histogram is forming new descending bars trading in the buy zone.

Support levels: 1.2731, 1.247 | Resistance levels: 1.2895, 1.3077​

 

[SOLIDECN]

USDCHF, the asset is back below 1

During the Asian session, the USDCHF pair shows a slight corrective growth, testing the level of 0.9940 for a breakout.

The instrument was actively declining yesterday, although the US macroeconomic background was quite optimistic. In particular, retail sales for April came out noticeably better than expected, reducing the risks that the US Federal Reserve will slow down the pace of monetary tightening.

Data from the EU attracted a little more attention from investors. Thus, the EU GDP for the first quarter of 2022 rose by 0.3% QoQ, which was better than the previous estimate of 0.2%. The growth rate of the European economy was also revised upward from 5% to 5.1% YoY. The employment rate increased from 2.2% to 2.6%.

The growth in demand for risky assets was also facilitated by news from China, where the authorities plan to finally lift quarantine restrictions on Shanghai from June 1 this year. The PRC continues to maintain a "zero tolerance" policy for COVID-19.

On the daily chart, Bollinger bands are growing moderately. The price range is narrowing from above, reflecting the appearance of corrective dynamics in the ultra-short term. The MACD indicator is falling, forming a fairly strong sell signal (the histogram is below the signal line). Stochastic shows similar dynamics, being approximately in the center of its working area and signaling in favor of developing the "bearish" trend in the ultra-short term.

Resistance levels: 1, 1.005, 1.01, 1.015 | Support levels: 0.99, 0.9847, 0.977, 0.97

 

[SOLIDECN]

The US dollar shows moderate growth against the Japanese yen in Asian trading, recovering from the active decline the day before, which led to the renewal of local lows from May 12.

The instrument is testing 129.00 for a breakout, receiving support from good macroeconomic statistics from Japan. In particular, investors welcomed yesterday's data release, which reflected a weaker slowdown in the Japanese economy in Q1 2022. The GDP showed a decline of 0.2% QoQ and 1% YoY, while forecasts suggested a contraction of 0.4% QoQ and 1.8% YoY.

Today, the yen is supported by strong data on the Machinery Orders. In March, volumes rose by 7.1% MoM and 7.6% YoY, although analysts had projected a 3.7% increase in both figures. Only the data on the dynamics of exports were somewhat disappointing. In April, Exports from Japan slowed down from 14.7% to 12.5%, which turned out to be worse than the average analysts' forecasts of a decline to only 13.8%. With persistently high Imports (although they also sank from 31.2% to 28.2%), this led to an increase in the Trade Deficit from 1019 billion to 1618 billion Japanese yen.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range expands from below, making way for new local lows for the "bears". MACD is going down preserving a stable sell signal (located below the signal line). Stochastic shows a more modest decline, reacting to the emergence of upward dynamics during the morning session on May 19.

Resistance levels: 129.39, 130, 130.79, 131.33 | Support levels: 128.62, 127.88, 127.5, 127

 

[SOLIDECN]

The New Zealand dollar shows active growth against the US dollar during the Asian session, quickly recovering from the decline the day before, which proceeded against the backdrop of a sharp strengthening of the US currency. The US dollar was supported yesterday by the "hawkish" rhetoric of the Chairman of the US Federal Reserve, Jerome Powell, who reiterated the regulator's readiness to do everything necessary to curb inflation, which, in his opinion, threatens the foundations of the US economy.

Meanwhile, macroeconomic statistics from the US again turned out to be negative. Building Permits Change in April fell by 3.2% after rising by 1.2% a month earlier. Analysts had expected positive dynamics to remain at 1.0%. Housing Starts in April decreased from 1.728 million to 1.724 million. The MBA Mortgage Applications fell 11% as of May 13 after rising 2% in the previous period.

Today's data from New Zealand do not have a significant impact on the dynamics of the instrument. Anyway, the Producer Price Index Input in Q1 2022 increased by 3.6% after rising by 1.1% in the previous quarter. The Producer Price Index Output for the same period accelerated from 1.4% to 2.6%.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic keeps its upward direction but is rapidly approaching its highs, which reflects the risks of overbought NZD in the ultra-short term.

Resistance levels: 0.6400, 0.6450, 0.6500, 0.6567 | Support levels: 0.6300, 0.6250, 0.6200, 0.6150

 

[SOLIDECN]

After reaching a critical point around 0.6220, the NZD/USD pair went into correction under the influence of a temporary weakening of the US dollar and against the backdrop of rising commodity prices.

All commodity currencies show a strong recovery from yesterday's low, while commodities are becoming more expensive. Oil quotations increased by 3–4%, while benchmark prices for WTI Crude Oil are at 110 dollars per barrel. US gasoline futures rose above 4 dollars per gallon for the first time, putting additional pressure on consumers ahead of the summer driving season.

Traders are focusing on next week's Reserve Bank of New Zealand meeting, where many expect the regulator to raise rates by 50 basis points, which could push the New Zealand dollar to 0.6555.

However, the long-term trend for the instrument remains downwards. At the moment, a correction is developing, within which the asset is trying to break through the resistance level of 0.6420, after which the growth will continue with the target at 0.6555. If the "bears" hold this level, then the decline is likely to continue to the month's minimum at around 0.6220.

The medium-term trend is trying to reverse upwards. If this week the trading closes above 0.6360, then the trend change will be consolidated, and the instrument will rise to the target zone 2 (0.6500–0.6486).

Resistance levels: 0.642, 0.6555, 0.672 | Support levels: 0.622, 0.595

 

[SOLIDECN]

The pound shows the uptrend in trading with the US currency during the morning session, testing the level of 1.2550 for a breakout and updating local highs from May 5. The strengthening of the British currency at the beginning of the week is facilitated by the growth of corrective sentiment for the US dollar against the backdrop of a noticeable decrease in the yield of US Treasury bonds.

Also, traders are still taking a lead from relatively optimistic macroeconomic statistics from the UK on Friday, which turned out to be significantly better than negative forecasts. In April, Retail Sales added 1.4% after falling by 1.2% a month earlier, although analysts had expected a decline of 0.2%. In annual terms, the indicator showed a sharp drop of 4.9% after increasing by 1.3% in March, while preliminary market estimates suggested a more active decline of 7.2%. Retail Sales excluding Fuel increased by 1.4% MoM, but decreased by 6.1% YoY, while the forecast was for a contraction of 0.2% MoM and 8.4% YoY.

Today, statistics on housing prices in the UK were released. Rightmove House Price Index increased by 2.1% in monthly terms and by 10.2% in annual terms, which turned out to be slightly higher than the previous values at the levels of 1.6% MoM and 9.9% YoY.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD indicator is growing keeping a buy signal (located above the signal line). Stochastic shows an unsteady uptrend, but is located in close proximity to its highs, which points to the risk of overbought GBP in the ultra-short term.

Resistance levels: 1.26, 1.2674, 1.28, 1.29 | Support levels: 1.2500, 1.24, 1.2250, 1.2163

 

[SOLIDECN]

During the Asian session, the USDCHF pair is weakening moderately, approaching the local lows of May 2, renewed on Friday. At the end of the weekly session, the US currency showed the strongest decline against the franc over the past few months, rapidly retreating from record highs and strong psychological resistance around 1.

Among other things, the US dollar was significantly pressured by a sharp decline in the yield of US 10-year Treasuries, which reached the three-week low at 2.77% last Thursday, while earlier during the month, it was at 3.2%. The macroeconomic statistics from the USA also was disappointing. There is no significant growth in retail sales, and the pace of industrial production rose by only 0.7% instead of the expected 1%.

The franc is supported by the positive dynamics of industrial production in Switzerland. In the first quarter, this indicator increased by 7.9% after a 7.3% increase in the previous period. Last week, the head of the Swiss National Bank, Thomas Jordan, said that the regulator's "dovish" policy, based on maintaining a negative interest rate, will continue. Still, officials are ready to act if inflation rises above 2.0%, focusing on global trends in determining monetary policy.

On the daily chart, Bollinger bands reverse into a horizontal plane: the price range is expanding from below, remaining spacious enough for the current level of activity in the market. The MACD indicator is falling, keeping a strong sell signal (the histogram is below the signal line). Having reached its lows, Stochastic reversed into a horizontal plane, indicating that the US dollar may become oversold in the ultra-short term.

Resistance levels: 0.9762, 0.9847, 0.9900, 1 | Support levels: 0.9700, 0.9637, 0.9600, 0.9535

 

[SOLIDECN]

After setting a 19-year high, USDJPY is correcting and testing a strong support level at 127.1 against the backdrop of a depreciation of the dollar. Due to the radically different approach in the conduct of monetary policy by the regulators of Japan and the United States, the instrument is likely to continue to strengthen in the long term; however, at the moment, waiting for the decision of the US Federal Reserve on the interest rate, scheduled for June 15, quotes are declining with the target at 124.5. It is expected that the indicator will be increased by 50 basis points to 1.50%.

The decision of the US Fed will largely be influenced by the minutes of the Federal Open Market Committee (FOMC), the publication of which is expected on Wednesday at 20:00 (GMT+2). If the document indicates that the US labor market will continue to recover as a result of an increase in rates, then the dollar is likely to resume growth after the correction; otherwise, the US currency will continue to decline until mid-June. The rate of USD/JPY will largely be determined by the monetary policy of the US Federal Reserve, since the wait-and-see position of the Bank of Japan, which is not ready to move to a rate increase, is already known to investors.

The long-term trend is upward. At the moment, a correction is developing, within which market participants are trying to break through the level of 127.1, in case of consolidating below which the correction will continue with the target at 124.50, after which a new growth cycle can be expected.

The medium-term trend remains upward, but the first signs of its change are appearing. Last week, market participants tested the key trend support at 127.98–127.65, which was held, leading to the growth of USD/JPY. By the end of the week, the entire growth was offset by sales. Now the price is trying to consolidate below the key support, and if the sellers succeed, the trend will change to a downtrend, and the target zone 2 (124.78–124.47) will become the target for the decline.

Resistance levels: 131.1, 133.36, 135.07 | Support levels: 127.1, 124.5, 121.5

 

[SOLIDECN]

The US dollar shows a slight decline against the Japanese yen in Asian trading, holding close to the local lows of April 27 and testing the level of 127.5 for a breakdown. The US currency is under pressure again, reacting to optimistic macroeconomic publications from Europe and Japan.

Friday's statistics, reflecting the growth of Japan's National Consumer Price Index from 1.2% to 2.5% and the National CPI excluding Fresh Food from 0.8% to 2.1%, increases the skepticism of market participants regarding the actions of the Bank of Japan to maintain ultra-soft monetary policy, especially given the pressure on households amid rising spending without a significant increase in wages. However, regulator representatives believe that the indicator is unlikely to consolidate above the target level of 2% and, according to forecasts, core inflation will correct to 1% by 2024. In turn, Minister of State for Financial Services Shunichi Suzuki called the rapid weakening of the national currency an extremely undesirable phenomenon. According to him, consultations are being held with the financial authorities of the G7 member countries to take measures to curb excessive volatility and erratic actions of the regulator, which could have a negative impact on the economy.

The pressure on the dollar quotes intensified at the beginning of the week after the "hawkish" speech of the head of the European Central Bank (ECB) Christine Lagarde, who actually announced the start of measures to tighten monetary policy in July. As previously expected, the regulator will first complete the quantitative easing program, after which it will start raising interest rates, the pace of which is likely to coincide with the US Federal Reserve, that is, the correction will go in increments of 50 basis points.

Support for the yen today is provided by a relatively optimistic macroeconomic statistics on business activity. Jibun Bank Manufacturing PMI in May fell from 53.5 to 53.2 points, which, however, turned out to be better than negative forecasts of a decline to 52 points. Jibun Bank Services PMI over the same period strengthened from 50.7 to 51.7 points, while experts expected the figure to correct down to 50.6 points.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range expands from below, making way for new local lows for the "bears". MACD is going down, keeping a fairly stable sell signal (located below the signal line). Stochastic, having approached the level of "20", reversed into a horizontal plane. At the same time, the current readings of the indicator still indicate the growing risks of the US dollar being oversold in the ultra-short term.

Resistance levels: 128, 128.62, 129.39, 130 | Support levels: 127.5, 127, 126.3, 125.6

 

[SOLIDECN]

The NZDUSD pair has stopped its upward trend and is correcting downwards around 0.6432 due to today's poor macroeconomic data.

Statistics New Zealand (Stats NZ) reported that total Q1 retail sales corrected by 0.5% after rising by 8.8% in the last quarter of 2021 amid a 4.0% decline in car sales and a decline in the construction sector by 5.5%, while the segment of electrical goods added 2.7%. It brings the total value of goods purchased to 28.4B New Zealand dollars, up 8.0% from March 2021, but the sharp decline quarter-on-quarter sent a negative signal to investors.

The USD Index declines to 102.2 amid US President Joe Biden's recent announcement that a possible waiver of customs duties on goods of 25% from China is under consideration, and the final decision will be made after consultations with Treasury Secretary Janet Yellen. According to some experts, the current Asian tour of the head of the White House may be a sign of an imminent change in policy towards the two countries, which will be a serious step towards establishing trade ties between the US and China.

The instrument moves within the global downward channel, forming a new wave of corrective growth. Technical indicators keep a weakening sell signal: fast EMAs on the Alligator indicator approach the signal line, and the AO oscillator histogram forms upward bars.

Resistance levels: 0.6535, 0.6858 | Support levels: 0.6348, 0.6208​