Solid ECN | Professional Market Analysis | *Video*

[SOLIDECN]

The European currency shows a slight decrease against the US dollar during the Asian session, correcting after the "bullish" start of the week, which led to the renewal of local highs for the instrument from April 25. Quotes are still supported by the moderate weakness of the dollar, which reacts negatively to the publication of mixed macroeconomic statistics. In addition, investors positively assessed the rhetoric of the President of the European Central Bank (ECB) Christine Lagarde, who actually announced the imminent completion of the quantitative easing program and a possible increase in interest rates by 50 basis points in July.

Traders also assess the statement of the President of the European Commission, Ursula von der Leyen, who announced a number of steps to reduce the EU's dependence on Russian energy resources. The authorities intend to accelerate the transition to "green" energy, increasing the current target values from 9% to 13% by 2030. In particular, the construction of solar roofs in new buildings is proposed. About 300 billion euros will be needed for energy reforms, of which about 72 billion euros will be grants and 225 billion can be obtained in the form of loans. Up to 2 billion euros will be needed for oil infrastructure, taking into account the cessation of shipments of Russian oil.

Meanwhile, macroeconomic statistics from the euro area, released the day before, turned out to be negative. Markit Services PMI fell from 57.7 to 56.3 points, which turned out to be worse than market expectations for a reduction to 57.5 points. Composite PMI fell from 55.8 to 54.9 points, which also turned out to be weaker than market forecasts at the level of 55.3 points.

Bollinger Bands in D1 chart show moderate growth. The price range is expanding but it fails to conform to the surge of "bullish" activity at the moment. MACD grows, preserving a stable buy signal (located above the signal line). The indicator is trying to consolidate above the zero level. Stochastic, having reached its highs, reversed into a horizontal plane, indicating overbought EUR in the ultra-short term.

Resistance levels: 1.0747, 1.08, 1.085, 1.09 | Support levels: 1.07, 1.064, 1.06, 1.05​

 

[SOLIDECN]

The USDJPY continues to decline for the third week in a row and is now in the 127 area.

The American currency was under pressure from market participants' fears of a possible recession, however, US Fed officials and, in particular, the head of the Federal Reserve Bank of San Francisco, Mary Daly, tried to reassure investors, stating that there would not be a serious decline in indicators as a result of a sharp increase in interest rates. Nevertheless, most experts are pessimistic and confident that a slowdown in economic growth cannot be avoided, but how strong it will be is still unclear. Against this background, further steps of the regulator become especially important. Today, the minutes of the last meeting of the Federal Open Market Committee (FOMC) will be published, in which investors will look for information regarding further rate hikes.

The position of the Japanese yen also does not look stable, primarily due to rising inflation, which puts pressure on household demand and business activity. Thus, according to the May data published earlier, the index of business activity in the manufacturing sector of Japan, instead of growing from 53.5 to 53.8 points, fell to 53.2 points, but the index for the service sector rose from 50.7 to 51.7 points, which due to temporary support from the reduction of quarantine measures. The government said in a report released today that the economy is showing signs of recovery, but downside risks due to the negative effects of the coronavirus pandemic in China and the Ukrainian crisis are intensifying. In general, they are taken less seriously by investors than the risks of a recession in the US economy.

The price of the USDJPY pair is near 127 (Fibo retracement of 23.6%), consolidation below which will give the prospect of further decline to the levels of 125 (Murray [4/8], Fibo retracement of 38.2%) and 122.75 (Fibo retracement of 50). .0%). The key for the "bulls" seems to be 129.20 (the middle line of the Bollinger Bands), the breakout of which will allow quotes to continue moving towards 131.25 (Murray [6/8]).

Technical indicators signal the possibility of further decline: the Stochastic is directed downwards, and the MACD histogram is decreasing in the positive zone.

Resistance levels: 129.20, 131.25 | Support levels: 127, 125, 122.75​

 

[SOLIDECN]

After reaching the level of 1.004, USDCHF corrected to 0.958 and continues to trade near it amid the depreciation of the US dollar, which is losing value against all major competitors. The sale is caused by the desire of investors to get better prices for entering long positions of the asset before the US Federal Reserve raises the interest rate at a meeting on June 15. It is expected that the regulator will adjust the value by 50 basis points to 1.50%. If the forecast is justified, the US currency will continue its strengthening, which began a year ago.

In turn, the Swiss National Bank will decide on the interest rate a day later, on June 16. Over the past few years, the regulator has kept the indicator at a record low level of –0.75%, and if the rhetoric of officials changes this time, the franc may react with an increase in the exchange rate against the dollar, but Swiss monetary tightening is unlikely to be as aggressive as in the USA. In this regard, one can assume a further increase in USD/CHF in the long term.

The long-term trend remains upward. At the moment, a correction is developing in the asset, within which market participants tested the support level of 0.958. If this level is kept, the growth will continue with the nearest target around 0.9757. If 0.958 is broken down, the correction will continue with the target at 0.945.

The mid-term trend is downward. This week the traders reached the target zone 4 (0.9615–0.9605), in case of a breakdown of which the decline will continue with the target in the area of the target zone 5 (0.9509–0.9499). Otherwise, a correction will start with the target at the trend line 0.9691–0.9681.

Resistance levels: 0.9757, 1.004 | Support levels: 0.958, 0.9450, 0.9363​

 

[SOLIDECN]

The pound is trading with multidirectional dynamics during the morning session, keeping close to the local highs of May 5. The growth of the instrument is still supported by some weakness of the US currency, as the demand for it is gradually decreasing as there are signals about further tightening of monetary policy in Europe and the UK. Earlier, the President of the European Central Bank (ECB), Christine Lagarde, announced the readiness of the regulator to curtail the quantitative easing program in June, and then launch a cycle of raising the interest rate, which would help curb a sharp rise in inflation.

Significant pressure on the dollar position was exerted by weak macroeconomic statistics from the US, published the day before. Durable Goods Orders slowed from 0.6% to 0.4% in April, worse than analysts' neutral forecasts, while Nondefense Capital Goods Orders excluding Aircraft, rose only 0.3% over the same period after an increase of 1.1% in March. Average market forecasts assumed a slowdown to 0.5%.

According to a study by Loughborough University, the rapid inflation in the UK, which reached 9% in April, had the most negative impact on the living standards of families with children. Prices for consumer goods and services have risen by an average of 400 pounds MoM, or 13% YoY, with food prices up 9.3% over the past year and childcare costs up 6.7%. Meanwhile, chief executive of Ofgem, the independent energy regulator for Great Britain, Jonathan Brearley, has predicted a further 42% increase in electricity tariffs by October, adding more than 800 pounds to the average annual bill. Thus, already next winter, about 9.6 million British families will face a fuel shortage, since about a tenth of the family budget will be directed to pay for electricity.

Bollinger Bands in D1 chart show moderate growth. The price range expands, freeing a path to new local highs for the "bulls". MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic, being at its highs, is again trying to reverse downwards, indicating risks of overbought GBP in the ultra-short term.

Resistance levels: 1.2600, 1.2674, 1.2800, 1.2900 | Support levels: 1.2500, 1.2400, 1.2250, 1.2163

 

[SOLIDECN]

During the Asian session, the USDCHF pair is slightly corrected, renewing local lows from April 26. The asset is preparing to end trading with a fairly confident decline and continue the development of a strong "bearish" momentum formed last week.

The pressure on quotes is again exerted by uncertain US macroeconomic statistics, which increases the risk that the US Federal Reserve will break the interest rate hike cycle after its planned increase in June and July. Traders fear that the actions of financial regulators, which are due to the fight against high inflation, will lead to a noticeable slowdown in global economic growth. According to the revised data, the contraction of the US economy for the first quarter of this year amounted to 1.5%, which was 0.1% worse than the previous estimate.

On Friday, traders expect the publication in the US of April data on the dynamics of income and expenses of American citizens. Current forecasts suggest that revenue growth will remain flat at 0.5%, while spending could slow from 1.1% to 0.7%.

On the daily chart, Bollinger Bands are steadily declining: the price range expands, letting the "bears" renew local lows. The MACD indicator falls, keeping a strong sell signal (the histogram is below the signal line). Stochastic is close to its lows, signaling that USD may become oversold in the ultra-short term.

Resistance levels: 0.96, 0.9637, 0.97, 0.9762 | Support levels: 0.9535, 0.9459, 0.94, 0.93

 

[SOLIDECN]

The New Zealand dollar shows moderate growth during the morning session, updating local highs from May 5. NZDUSD is testing 0.655 for a breakout.

The US dollar is still under pressure from macroeconomic statistics, which indicates a gradual slowdown in the national economy. At the same time, the US Federal Reserve signaled earlier that after raising the rate in June and July, a pause will be taken in the monetary policy tightening cycle to assess the balance of inflationary risks and pressure on the economy due to high rates. The Reserve Bank of New Zealand (RBNZ) raised its rate last week, which, in general, coincided with most forecasts of market experts. The next meeting of the regulator will take place on July 13. The macroeconomic statistics released on Friday in New Zealand put moderate pressure on the positions of the instrument. ANZ Consumer Confidence in May fell from 84.4 to 82.3 points, which turned out to be worse than the average analysts' forecasts.

New Zealand authorities will open their borders to foreigners on July 31, lifting travel restrictions two months ahead of schedule. Prime Minister Jacinda Ardern said the country will only accept vaccinated tourists, who will still need to be tested. Prior to the start of the COVID-19 pandemic in 2020, tourism was one of the most highly developed industries in New Zealand, providing at least 10% of the country's total income.

Bollinger Bands on the daily chart show a steady increase. The price range expands, freeing a path to new local highs for the "bulls". MACD grows, preserving a stable buy signal (located above the signal line). The indicator is about to test the zero level for a breakout. Stochastic, having approached its highs, shows mixed dynamics, indicating the risks of a strongly overbought New Zealand dollar in the ultra-short term.

Resistance levels: 0.6567, 0.66, 0.665, 0.67 | Support levels: 0.65, 0.645, 0.64, 0.63

 

[SOLIDECN]

USDCAD, H4
On the four-hour chart, below the resistance level of 1.2875, there is the formation of successive Shooting Star candlestick analysis patterns, after which the asset showed a significant decrease. In the process of downward dynamics, the Three Black Crows pattern was formed, which is a model for the continuation of the "bearish" trend. Further decline of USDCAD to the nearest support level of 1.2654 is expected, fixing below which will allow the quotes to continue moving towards the area of 1.2558–1.247. An alternative scenario may be relevant in case the price breaks through the resistance level of 1.2771.

USDCAD, D1
The daily chart shows the formation of a Head and Shoulders price pattern, the Neck line of which has been overcome. The quotes tested the broken level, forming an Evening Star candlestick analysis model at 1.2875. A confirming signal of price fixing is the formed Three Black Crows pattern of continuation of the downtrend. At the moment, under the level of 1.2733, it is possible to build a Bearish Belt Hold figure. In case of successful overcoming of the support level of 1.2654, the quotes will most likely continue their decline to the zone of 1.2558–1.247.

Support levels: 1.2654, 1.2558, 1.2470 | Resistance levels: 1.2771, 1.2875, 1.2973​

 

[SOLIDECN]

During the Asian session, the USDJPY pair shows ambiguous dynamics, consolidating near 127. Last week, the US dollar showed predominantly downwards trading dynamics, resulting in which the asset has renewed its local lows of April 18.

The demand for the yen is gradually increasing since the Japan Bank previously announced the first possible steps on the path to tightening monetary policy. The regulator is not going to increase the rate yet. Officials have only stated the possibility of reducing the quantitative softening program, but inflation in the country is approaching target levels, which will probably require decisive measures from financial authorities. Nevertheless, the tendency of investors to risk and news from China, signaling the further decrease in activity due to quarantine restrictions, help the yen to keep traders’ interest as a shelter asset.

The data from Japan published on Friday indicated the acceleration of the Tokyo consumer price index without taking into account food prices and energy for May from 0.8%to 0.9%, while analysts counted on a sharp deceleration of up to 0.4%. The indicator increased by 1.9% YoY, repeating the dynamics of the previous month. Tomorrow, investors expect an extensive block of macroeconomic statistics from Japan. In particular, information about unemployment will appear (it is predicted that the indicator will remain around 2.6%), the dynamics of retail sales and industrial production for April. According to preliminary estimates, sales will decrease again, from 0.7% to 2.6, which can support the national currency.

On the daily chart, the Bollinger bands are moderately reduced: the price range narrows, reflecting the emergence of ambiguous trading dynamics in the super-short term. The MACD indicator decreases, maintaining a relatively strong sell signal (the histogram is below the signal line), and tries to consolidate below the zero line. Stochastic, having attempted corrective growth last week, reverses horizontally. It is better to wait until the signals from the technical indicators are clear.

Resistance levels: 127.5, 128, 128.62, 129.39 | Support levels: 127, 126.34, 125.60, 125.09

 

[SOLIDECN]

The Australian dollar shows an uncertain decline, correcting after two sessions of fairly active growth, as a result of which AUDUSD updated local highs from May 5. The US dollar is trying to recover its positions, but so far the further decline of the instrument is limited by restrained optimism from China.

Tomorrow restrictions on the work of enterprises will be lifted in Shanghai, which will mean the end of the quarantine caused by another wave of coronavirus, which had an extremely negative impact on the supply of a number of high-tech products to world markets. The Beijing authorities are also partially easing the restrictions and gradually allowing the operation of some public transport and retail facilities. Optimism about the Chinese economy was also confirmed by macroeconomic publications from China. Non-Manufacturing PMI in May rose from 41.9 to 47.8 points, which, however, turned out to be worse than optimistic forecasts of an increase to 50.7 points. NBS Manufacturing PMI strengthened in May from 47.4 to 49.6 points, which coincided with the average market forecasts. In addition, investors reacted positively to the growth in Private Sector Credit in Australia in April from 0.4% to 0.8%, as well as the increase in Company Gross Operating Profits from 2% to 10.2% in Q1 2022.

Bollinger Bands on the daily chart show a steady increase. The price range is narrowed, being spacious enough for the current activity level in the market. MACD is growing, maintaining a strong buy signal (the histogram is above the signal line and is consolidating above the zero level). Stochastic reached its highs, which points to the risks of overbought Australian dollar in the ultra-short term.

Resistance levels: 0.7202, 0.725, 0.73, 0.7341 | Support levels: 0.715, 0.71, 0.705, 0.7

 

[SOLIDECN]

The USDCAD pair is actively declining, reaching 1.2660 due to the upward dynamics of oil quotes.

The EU authorities have agreed to impose an embargo on importing two-thirds of crude oil and petroleum products supplied from Russia to the EU with a temporary exception of transportation through the Druzhba pipeline in response to the escalation of the military conflict in Ukraine. Thus, the EU will reduce the import of "black gold" to 90% by the end of the year. Also, officials will step up work to reduce dependence on gas and coal from the Russian Federation. The sanctions policy will not affect Hungary, which remains highly dependent on Russian energy resources. Against this backdrop, Brent Crude Oil prices rose to 122 dollars per barrel, while the USD/CAD pair fell to 1.2660.

Traders are waiting for the results of the June meeting of the US Federal Reserve, which can act as a catalyst for the upward movement of the US currency. Analysts predict a continuation of the "hawkish" policy and increased interest rate by another 50 basis points, to 1.50%. If the forecast is correct, the adjustment cycle will be the fastest in the last 20 years.

Today, US President Joe Biden will hold a meeting in the Oval Office with US Federal Reserve Chairman Jerome Powell, during which they will consider measures by the financial authorities to contain inflationary pressure, which has already become the cause of mass dissatisfaction among Americans with the policies of the head of the White House. The meeting results may be positively perceived by investors, which will support the US dollar, and against this background, the USD/CAD pair may continue the uptrend with the first target at 1.2885.

The long-term trend is upwards. At the moment, a correction is developing, within which the price has tested the support level of 1.2660. If it is kept, the upward dynamics will continue to 1.2885, 1.2950. An alternative scenario suggests a fall to 1.2460.

The medium-term trend changed to a downtrend last week, and the asset broke through the zone of 1.2854–1.2833. Now the target for quotes is zone 2 (1.2640–1.2619). New short positions should be considered from the correction around the key trend resistance 1.2886–1.2865.

Resistance levels: 1.2885, 1.2950, 1.3065 | Support levels: 1.2660, 1.2460, 1.2430

 

[SOLIDECN]

The pound is trading with mixed dynamics during the morning session, consolidating near 1.2600. The day before, the British currency showed a moderate decline, retreating from its local highs of April 26, which was the market's reaction to the resumption of growth in the US dollar against the backdrop of fairly strong American macroeconomic statistics. In particular, investors drew attention to the increase in the S&P/Case-Shiller Home Price Indices in March from 20.3% to 21.2%, while the Chicago PMI rose from 56.4 to 60.3 points in May, with the analysts' forecast at the level of 55.0 points.

In turn, the macroeconomic background from the UK turned out to be mixed: the volume of Consumer Credit in April increased from 1.303 billion pounds to 1.399 billion pounds, with preliminary market estimates of a decline to 1.2 billion pounds. At the same time, the Mortgage Approvals over the same period decreased from 69.531 thousand to 65.974 thousand, which turned out to be noticeably worse than expected correction to 69.000 thousand.

Bollinger Bands in D1 chart show moderate growth. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the ultra-short term. MACD is gradually reversing into a downward plane, being located near the zero level and keeping the previous buy signal (the histogram is above the signal line). Stochastic shows similar dynamics, rapidly retreating from its highs, which signal that the pound is overbought in the ultra-short term.

Resistance levels: 1.2600, 1.2674, 1.2800, 1.2900 | Support levels: 1.2500, 1.2400, 1.2250, 1.2163

 

[SOLIDECN]

During the Asian session, the USDCAD pair is growing moderately, retreating from the local lows of April 22, renewed yesterday, and is testing 1.2670 for a breakout, supported by positive US macroeconomic statistics and renewed growth in US Treasury yields.

Markets are still worried about the prospects for tighter monetary policy by the US Federal Reserve. Earlier, the regulator spoke in favor of raising the rate by 50 basis points in June and July, after which some pause will be taken to assess the effectiveness of the measures taken and develop a new vector of movement. Currently, inflation has slightly decreased relative to the April peak, but prices remain close to record levels, and the near-term forecasts are rather vague.

On the daily chart, Bollinger Bands are steadily declining: the price range is narrowing, reflecting the emergence of ambiguous trading dynamics in the ultra-short-term. The MACD indicator is going down, keeping a fairly strong sell signal (the histogram is below the signal line). Stochastic, still near its lows, is trying to reverse upwards, indicating that the USD is oversold in the ultra-short term.

Resistance levels: 1.2700, 1.2750, 1.2800, 1.2850 | Support levels: 1.2650, 1.2600, 1.2538, 1.2500

 

[SOLIDECN]

The European currency shows mixed trading dynamics against the US dollar, consolidating near 1.0650 after two sessions of decline, which led to the renewal of local lows from May 23.

Pressure on the euro has intensified since Tuesday after the release of inflation data for May in the eurozone. The Harmonised Index of Consumer Prices accelerated from 3.5% to 3.8%, which turned out to be higher than the market's neutral forecasts, and the Core Consumer Price Index in May updated a record at 8.1%, while analysts had expected only 7.7%. In addition, disappointing Retail Sales data in Germany were published yesterday: in April, in annual terms, the indicator fell by 0.4% after falling by 1.7% a month earlier, although preliminary market estimates assumed a positive dynamics at the level of 4.0%, and on a monthly basis, sales fell by 5.4% after rising by 0.9% in March.​

In turn, some support for the single currency is provided by the expectations that the European Central Bank (ECB) will launch a cycle of raising interest rates. So far, the members of the regulator's board have not agreed on any specific timing for the start of tightening monetary policy, but it is clear that with the current price pressure, this will happen soon.
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Bollinger Bands in D1 chart show moderate growth. The price range is narrowing, reflecting appearance of multi-directional dynamics in the short term. MACD is reversing downwards forming a new sell signal (the histogram consolidated below the signal line). Stochastic is showing similar dynamics; however, the indicator line is rapidly approaching its lows, indicating the risks of EUR being oversold in the ultra-short term.

Resistance levels: 1.0700, 1.0747, 1.0800, 1.0850 | Support levels: 1.0640, 1.0600, 1.0500, 1.0459

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[SOLIDECN]

During the Asian session, the NZDUSD pair is consolidating near 0.6470 and local lows of May 27. Yesterday, the instrument attempted corrective growth but failed to consolidate on new highs and returned to the red zone closer to the close of the daily session.

On Wednesday, the asset was supported by positive data from China and Australia, where the slowdown in economic growth was slightly milder than analysts predicted: an increase in the Caixin Manufacturing PMI for May was recorded from 46 to 48.1 points, while the forecast for growth was only up to 47 points. Manufacturing activity will likely grow at a more robust pace going forward as factories in Shanghai resume operations from June 1 after a long lockdown.

In turn, pressure on the instrument yesterday was exerted by cautiously optimistic data from the US Manufacturing PMI, and the monthly economic review from the US Federal Reserve published closer to the close of the session. The regulator noted a moderate economic recovery in almost all twelve districts. However, some of them have slowed growth as economic conditions continue to deteriorate. Retail is facing rising food and energy prices, and housing markets react to rising interest rates.

New Zealand Prime Minister Jacinda Ardern intends to discuss with US President Joe Biden the issue of response to the conclusion of agreements in the field of trade, politics, and security by the Chinese authorities with representatives of the island states of the Indo-Pacific region. Some experts attribute the intensification of China's activities in the region to the possible consequences of the military conflict in Ukraine. Still, many believe that in this way, the PRC authorities are trying to dominate the region and then use these territories to deploy military bases, which creates significant concern for the New Zealand authorities and Australia.

On the daily chart, Bollinger bands are growing moderately: the price range is narrowing rather quickly, reacting to the appearance of a predominantly "bearish" dynamics in the market. The MACD indicator is falling, forming a new sell signal (the histogram is trying to consolidate below the signal line). Stochastic shows a much more confident decline, but at the moment, it is rapidly approaching its lows, indicating the risks of the New Zealand dollar being oversold in the nearest time intervals.

Resistance levels: 0.65, 0.6567, 0.66, 0.665 | Support levels: 0.645, 0.64, 0.63, 0.625

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[SOLIDECN]

During the Asian session, the Australian dollar is slightly declining, correcting after a sharp rise the day before, which led to a renewal of local highs from April 22. The quotes of AUDUSD were supported by not the most confident macroeconomic statistics from the US, which were released the day before. In particular, a report from Automatic Data Processing (ADP) reflected weaker growth in private non-farm payrolls in May, rising by just 128K from a 202K increase a month earlier, with experts forecasting 300K, slightly lowering investor expectations for the May US labor market report, which will be published today.

This week, The Australian published information about the readiness of the Chinese authorities to postpone the conclusion of security pacts with a number of island states in the Indo-Pacific region. The document concerns the laying of submarine cables, the construction of berths, the development of shipbuilding, as well as other areas of cooperation, including China's investment in the development of these regions. Experts believe that the country, to which the island states will join, will eventually gain control over the entire Pacific Ocean, and the Chinese authorities probably will not give up trying to conclude these agreements.

Bollinger Bands on the daily chart show a steady increase. The price range is expanding from above but it fails to conform to the surge of "bullish" activity at the moment. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, having approached its highs is reversing into a horizontal plane, indicating the overbought instrument in the ultra-short term.

Resistance levels: 0.7300, 0.7341, 0.7400, 0.7450 | Support levels: 0.7250, 0.7202, 0.7150, 0.7100

 

[SOLIDECN]

Japan legalizes stablecoins
The US dollar shows a slight decrease in Asian trading, holding near 131 and local highs from May 9, having received a moderate upward impetus after the publication of a rather strong report on the US labor market for May last Friday. At the same time, statistics on business activity were slightly worse than market forecasts, as well as indicators of Average Wages and overall Unemployment. The data allow investors to hope for a continuation of the US Fed's "hawkish" policy of raising interest rates by 50 basis points at least during the June and July meetings.

The Bank of Japan, in turn, maintains a wait-and-see attitude, although issues of growing inflationary pressure are already affecting the national economy. An extensive block of macroeconomic statistics will be released this week, and the updated quarterly GDP statistics, which will be published on Wednesday, will take center stage in publications. The previous estimate indicates a contraction of the country's economy in Q1 2022 by 0.2% QoQ and 1.0% YoY.

Meanwhile, the Japanese government is stepping up regulation of the national crypto asset market. Last week, Parliament approved a bill according to which stablecoins can officially be considered digital money as early as 2023. Only licensed financial institutions and payment system operators, as well as trust companies, will be able to issue them. The tokens will be backed by the yen or other national currencies, at a ratio of 1:1, since their holders must have the right to redeem at face value. In addition, lawmakers plan to publish rules for stablecoin issuers in the near future. Thus, Japan became the first country to develop a phased legal framework for the circulation of digital assets, designed to protect crypto investors and maintain market stability.

Bollinger Bands in D1 chart show moderate growth. The price range is expanding but it fails to conform to the surge of "bullish" activity at the moment. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, having approached its highs, is also trying to reverse into a descending plane, indicating the risks of overbought USD in the ultra-short term.

Resistance levels: 131, 132, 133, 134 | Support levels: 130, 129.39, 128.62, 128

 

[SOLIDECN]

The pound is traded mixed against the US dollar during the morning session, holding near 1.2500. Market activity remains subdued as many European markets are closed at the start of the new week for national holidays. At the same time, investors continue to evaluate the already released macroeconomic statistics for further analysis of price movements.

The report on the US labor market, published last Friday, turned out to be quite optimistic and pointed to the persistence of certain tension in the market, which is necessary to continue the "hawkish" policy of the US Federal Reserve. In May, the US economy created 390K new jobs outside the agricultural sector. In April, Non-Farm Payrolls were 436K, while analysts expected 325K in May. At the same time, the Unemployment Rate remained at the same level of 3.6% (it was expected to decrease to 3.5%). The Average Hourly Earnings increased by 0.3% MoM and by 5.2% YoY, which turned out to be slightly worse than the average market forecasts.

At the end of last week, representatives of the UK and the EU agreed to a ban on insurance of ships transporting oil from the Russian Federation as part of the sixth package of sanctions imposed against the backdrop of the military conflict in Ukraine. The government's decision will block the ability of Russian carriers to use the services and market opportunities of Lloyd's of London, which is considered the largest association of individual insurers and brokers in the field of shipping, and will significantly limit the ability to export resources. It is noted that following the British authorities, representatives of the G7 states may also introduce a similar ban.

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On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is actively narrowing, reflecting ambiguous nature of trading in the short term. MACD indicator tries to reverse downwards and to form a new sell signal (the histogram is about to consolidate below the signal line). Stochastic approaching the level of "20" is trying to reverse into a horizontal plane, reacting to the attempts of the "bulls" to show a weak corrective growth at the beginning of the week.

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

Resistance levels: 1.2600, 1.2665, 1.2750, 1.28 | Support levels: 1.2500, 1.2400, 1.2328, 1.225

 

[SOLIDECN]

The American currency is losing ground again

The NZDUSD pair is correcting upwards of around 0.6523 due to the stable Q1 New Zealand macroeconomic indicators.

According to data provided by the National Statistical Office (Stats NZ), total imports of services increased by 35.0% to 1.4B New Zealand dollars compared to March 2021, while exports of services added 12.0% to 376M New Zealand dollars. Imports of transport services showed the largest increase, up 82.0% to 1.5B New Zealand dollars, a quarterly record on record. The main reason for the positive dynamics was removing border restrictions introduced due to the coronavirus pandemic. The country's external economic activity will continue to recover, strengthening the position of the national currency.

The US currency is near 102 in the USD Index against the backdrop of the active publication of macroeconomic data, which investors perceive inconsistently. Thus, the unemployment rate in the US in May amounted to 3.6%, which coincided with the April value but was worse than the 3.5% expected by analysts. One of the reasons that prevented a more significant correction was another outflow of workers from the US non-farm sector: the value increased by 390K, below 436K a month earlier, while private non-farm employment decreased to 333K from 405K a month previously. Multidirectional statistics act as a catalyst for pressure on the US dollar.

The instrument moves within the global downward channel, approaching the resistance line. Technical indicators reversed and gave a buy signal: fast EMAs on the Alligator indicator crossed the signal line upwards, and the AO oscillator histogram forms bars above the zero level.

Resistance levels: 0.6557, 0.6746 | Support levels: 0.6432, 0.6212​

 

[SOLIDECN]

During the Asian session, the USDCAD pair resumed its decline and is approaching its local lows of April 21. On Monday, no important macroeconomic publications are expected, so the attention of investors is drawn to the report on the US labor market, which was ambiguous. At the end of May, in the non-agricultural sector, the US economy added 390K new jobs, while the unemployment rate remained around 3.6%, while analysts expected an increase of only 325K new jobs but at the same time expected a moderate decrease in the unemployment rate up to 3.5%. Thus, the released report on the US labor market allows us to expect that the current monetary policy of the US Federal Reserve will be continued. According to current expectations, the department will raise the rate by 50 basis points at the next two meetings in June and July, after which a pause will be taken to assess the effectiveness of the measures taken.

On Friday, Canada limited itself to the publication of labor productivity, which fell by 0.5% in the first quarter, significantly better than analysts' expectations of a decline of 1.2%. Recall that inflation in April consolidated at the maximum value for 31 years, 6.8%, significantly exceeding the regulator's goal of 2.0%, gas prices added more than 35%, and food products – increased by about 10%. The reason for the negative dynamics of the authorities is the escalation of the military conflict in Ukraine, which caused a rise in the price of wheat, most of which is grown in this territory, as well as increasing disruptions in supply chains, leading to an increase in tariffs for the transportation of goods. Bank of Canada Deputy Governor Paul Beaudry notes the risks of a rapid increase in inflation and predicts the continuation of the policy of tightening monetary policy parameters by the country's financial authorities with interest rate adjustment to the upper limit of the neutral range or above it.

On the daily chart, Bollinger Bands are steadily declining: the price range changes slightly but remains quite spacious 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). Stochastic has been near its lows for a long time, indicating that USD may become oversold in the ultra-short term.

Resistance levels: 1.2600, 1.2650, 1.2700, 1.2750 | Support levels: 1.2549, 1.2500, 1.2450, 1.2400

 

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Australian dollar remains under pressure
During the Asian session, the AUDUSD pair shows ambiguous trading dynamics, consolidating near the level of 0.7200.

On Tuesday, investors are focused on the decision of the Reserve Bank of Australia (RBA) on interest rates, which added activity to a fairly calm market. The regulator decided to increase the value by 50 basis points, contrary to the expected growth of only 25, from 0.35% to 0.85%. The accompanying statement noted that inflation in the country increased significantly, although it remained on average lower than in other advanced economies. Officials predictably identified the consequences of the COVID-19 pandemic and the development of the military conflict in Ukraine as external factors. Negative dynamics within the country were also noted, particularly a reduction in production capacity and a poor labor market. RBA forecasts suggest that inflationary risks will continue to grow but will be adjusted to 2–3% target levels next year.

Macroeconomic statistics from Australia exert little pressure on the positions of the instrument. Thus, the service sector's activity index from AiG in May fell sharply from 57.8 to 49.2 points, which was worse than the average analysts' forecasts.

Meanwhile, investors are watching the rhetoric of the Chinese authorities regarding the development of relations with Australia. Thus, Chinese Foreign Minister Wang Yi, as part of a tour of eight countries in the Asia-Pacific region, announced the need to restart them. It is worth noting that the activity of Chinese representatives in the region is of concern to official Canberra since the Chinese authorities have already managed to sign more than fifty agreements with island states on trade and security, while another ten countries are still considering such a possibility. Experts believe that the state to which the island regions will join will eventually gain control over the entire Pacific Ocean, and the Chinese authorities will probably not give up trying to conclude these agreements.

On the daily chart, Bollinger Bands are actively growing: the price range is narrowing, indicating the emergence of multidirectional trading dynamics in the short term. The MACD indicator is trying to reverse into a downward plane, forming a new sell signal (the histogram is trying to settle below the signal line). Stochastic remains confidently down but is rapidly approaching its lows, indicating that the Australian dollar may become oversold in the ultra-short term.

Resistance levels: 0.7202, 0.7250, 0.7300, 0.7350 | Support levels: 0.7150, 0.7100, 0.7050, 0.7000.