official Market Update by Solidecn.com

[Solid ECN ✔️]

The yen continues to trade in a global downtrend against most of the world's competitors, and the meeting of the Bank of Japan on monetary policy that ended yesterday could not reverse this trend. Currently, the quotes of the USDJPY pair are correcting around the level of 130.44.

Thus, the regulator kept the interest rate at –0.10% and the redemption of bonds – at the same level without an upper limit. As for macroeconomic indicators, they are still holding in zero dynamics: April Services PMI amounted to 50.7 points, being higher than the March value of 50.5 points, while average wages remained at the previous 1.2%, despite the analysts' expectation of a decline of 0.9%.

Last month, the Japanese currency lost more than 5% against the US dollar, renewing the 20 years' low, against the background of the super-loose monetary policy of the Bank of Japan, as well as after a sharp increase in bond yields in the US and Europe and a rapid increase in tariffs on commodities goods that catalyzed the rise in import costs. The consumer price index in Tokyo rose from 1.3% to 2.5%, and the core value from 0.8% to 1.9%, reflecting the highest rates in the past seven years. Japan's official April inflation report will be released on May 20, but experts believe the rate will exceed its 2% target this year, hurting sales as companies pass on their costs to consumers.

Tokyo intends to maintain its stake in the Russian oil and gas projects Sakhalin-1 and Sakhalin-2. However, according to Prime Minister Fumio Kishida, imports of "black gold" will gradually decrease. The decision aims to minimize the negative impact of rising energy tariffs on the standard of living of the population and business activity.

The US currency continues to consolidate around 103.600 points in the USD Index without making sharp fluctuations ahead of the publication of data on the consumer price index in the US. For the first time in the past few quarters, analysts expect the inflation rate to fall to 8.1% from 8.5% a month earlier, which was also announced by the head of the Fed of Atlanta, Rafael Bostic, during his speech yesterday. The official said he sees no reason for an acceleration in the rate hike in June and believes that a 25 or 50 basis point adjustment is the most likely scenario for tightening monetary policy if inflation starts to slow down.

The USDJPY pair continues to trade within the global uptrend, slowing down its growth to break the year's high of 131.30. Technical indicators keep a stable buy signal: indicator Alligator's EMA fluctuations range remains wide, and the AO oscillator histogram remains high in the buy zone, forming ambiguous bars.

Support levels: 128.93, 125.14 | Resistance levels: 131.3, 135

[Solid ECN ✔️]

After the price consolidates above 1.2950 due to the strengthening of the US dollar after the May meeting of the US Federal Reserve, the USDCAD pair continues its upward trend with the target at 1.3157.

Last week, the US regulator raised the interest rate by 50 basis points to 1.00% and announced that from June 1, it would begin a phased reduction in its balance sheet, which will reach 95B dollars per month. In a follow-up commentary, Regulator Chief Jerome Powell dismissed reports that officials may accelerate the pace of monetary tightening going forward but noted the intention to continue hawkish policies to combat record consumer price increases that hurt both private consumers and the industry. According to the latest data, inflation in the US is 8.5%, but renewed statistics will be published tomorrow. Analysts predict that due to the timely actions of the US Federal Reserve, inflation will fall to 8.1% in annual terms. If the forecast is justified, it will allow the US dollar to continue its upward trend.

As for the position of the Canadian dollar, its strengthening is hampered by negative statistics on the labor market published last Friday. According to official data, 15.3K new jobs were created in April, significantly lower than preliminary market estimates of 55.0K and the previous value of 72.5K. The unemployment rate remained at the same level of 5.2%. The Bank of Canada, at its next meeting, scheduled for June 1, will undoubtedly take into account indicators related to the state of the national labor market. If the negative dynamics continue, then the rate increase may not occur, or the value will be adjusted by a minimum amount, which may cause disappointment for investors and further depreciation of the national currency.

The long-term trend is upwards. Today the USD/CAD pair is trying to consolidate above the resistance area of 1.2950–1.2885, after which the next upside target will be 1.3157. Long positions may be opened from 1.2885.

The medium-term trend is upwards. Last week, the price broke through the target zone 2 (1.2862–1.2842), and now the trading instrument is moving to the area of 1.3064–1.3043. The key trend support is shifting to 1.2836–1.2816, from where it is worth considering new long positions.

Resistance levels: 1.3157, 1.336 | Support levels: 1.2885, 1.266
 

[Solid ECN ✔️]

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

[Solid ECN ✔️]

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

[Solid ECN ✔️]

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

 

[Solid ECN ✔️]

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
 

[Solid ECN ✔️]

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

 

[Solid ECN ✔️]

The US dollar is confidently leading the pair with the Swiss franc, and the current growth already claims to be the most significant since the fall of 2010, when USDCHF exchange rate strengthened by more than 20K points in two months. Now the quotes of the trading instrument are in the area of 1.0027.

One of the main reasons for the rapid uptrend is the negative situation with the increase in prices for products within the country. According to a recent report, the Swiss Producer Price Index added 1.3% in April to 108.4 points, well above 100.0 of early last year. The main increase in prices was observed for oil products and metallurgy products. Compared to March 2021, inflation across the entire product line was 6.7%, a significant jump for the conservative Swiss economy.

The American currency is trading steadily above the level of 104.000 in the USD Index, continuing to ignore the negative macroeconomic statistics and strengthening against the background of statements by the US Federal Reserve, as well as the head of the White House. The day before, Joe Biden said that the US government intends to reduce the budget deficit by 1.5 trillion dollars. The decision should help reduce inflationary pressures, while the US president did not specify what steps the authorities would take. In February of this year, the federal debt exceeded 30 trillion dollars and amounted to 30.012 trillion dollars.

On the global chart of USD/CHF, the price is trading in an active uptrend. Technical indicators are in the state of a stable buy signal, indicating a likely continuation of growth: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram is increasing in the buy zone.

Support levels: 0.9935, 0.9718 | Resistance levels: 1.0050, 1.0200

[Solid ECN ✔️]

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

 

[Solid ECN ✔️]

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

[Solid ECN ✔️]

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

[Solid ECN ✔️]

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

 

 

[Solid ECN ✔️]

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

[Solid ECN ✔️]

USDCHF, the asset is back below 1.

During the Asian session, the USD/CHF 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

 

[Solid ECN ✔️]

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

 

[Solid ECN ✔️]

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

 

[Solid ECN ✔️]

The European currency is relatively stable against the US dollar during trading in the Asian session and is consolidating near local highs from May 5. The day before, the instrument showed active growth, which allowed leveling the results of Wednesday's "bearish" trend and brought the euro to a high at around 1.0600. EUR/USD was supported yesterday by expectations of the imminent end of quarantine due to the coronavirus in Shanghai, which will allow many enterprises to resume normal operation and have a positive effect on the dynamics of foreign trade.

In turn, yesterday's macroeconomic data from the US put moderate pressure on the positions of the US currency. Initial Jobless Claims for the week ended May 13 increased from 197 thousand to 218 thousand, which was higher than market expectations by 18 thousand. Philadelphia Fed Manufacturing Index declined sharply in May from 17.6 to 2.6 points, while analysts expected the decline to only 16 points.

The Minutes of the European Central Bank (ECB)'s meeting released the day before also contributed to the moderate growth of the single currency. In the report, the regulator pointed to the increasing risks associated with a sharp growth in inflation in the region, but at the same time maintained optimistic forecasts for both Q3 and Q4 of 2022. Also, many members of the ECB board are gradually speaking out in favor of tightening monetary policy. Analysts consider the rate hike at the end of summer or early autumn as most likely.

Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is slightly expanded from above, remaining spacious enough for the current activity level in the market. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic approached the level of "80" and reversed into a horizontal plane, reflecting the mixed nature of trading at the end of the current trading week.

Resistance levels: 1.06, 1.064, 1.069, 1.0726 | Support levels: 1.05, 1.0459, 1.04, 1.035

 

[Solid ECN ✔️]

USDCHF, D1
On the daily chart, the price is actively correcting downwards from the 1.0025 area. Currently, it is close to 0.9675 (retracement of 38.2%). Its breakdown will give the prospect of further decline to the levels of 0.9565 (retracement of 50.0%) and 0.9460 (retracement of 61.8%). However, the price will have to break through the descending fan. The repeated consolidation of quotations above the level of 0.9810 (retracement of 23.6%) may lead to a return to the area of 1.0025. Technical indicators do not give a single signal: the Bollinger Bands are directed upwards, the MACD histogram is shrinking in the positive zone, and the Stochastic has entered the oversold zone, which does not exclude a reversal. 

USDCHF, W1
On the weekly chart, the price has reversed near the upper boundary of the ascending channel and is also declining. Quotes are close to the level of 0.9670 (retracement of 61.8%), consolidation below which will give the prospect of a decline to the levels of 0.9510 (retracement of 50.0%), 0.9350 (retracement of 38.2%). Otherwise, the quotes will be able to return to the area of 1.0000. Technical indicators do not give a single signal: the Bollinger Bands are directed upwards, the MACD histogram is increasing in the positive zone, but the Stochastic is preparing to leave the overbought zone and form a sell signal.

In general, in the near future, with a breakdown of the level of 0.9670 (retracement of 38.2%, D1, 61.8%, W1), it is possible that the price will continue to decline to the levels of 0.9565 (retracement of 50.0%, D1), 0.9510 (retracement of 50.0%, W1), 0.9460 (retracement of 61.8%, D1). If the level of 0.9810 breaks out (retracement of 23.6%, D1), growth will be able to resume to 1.0025 (retracement of 0.0%, D1).    

Resistance levels: 0.9810, 1, 1.0025 | Support levels: 0.9670, 0.9565, 0.9510, 0.946

[Solid ECN ✔️]

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

 

[Solid ECN ✔️]

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