official Market Update by Solidecn.com

[Solid ECN ✔️]

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

 

[Solid ECN ✔️]

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
 

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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

 

[Solid ECN ✔️]

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.

 

[Solid ECN ✔️]

The rise in oil prices contributes to the strengthening of the pair
As a result of rising energy prices, the Canadian dollar is strengthening, which negatively affects the dynamics of the USDCAD pair, pushing it to the lows of April 2022.

Thus, the quotes of WTI Crude Oil have updated the maximum on March 24 in the area of 118, and at the moment they are trading under the level of 120, developing a "bullish" momentum. The increasing oil price strengthens the position of the Canadian dollar, as revenues to the national budget are growing, and the country can direct additional revenues from oil and gas profits to the development of its economy, which will make it more attractive to investors.

Another factor supporting the strengthening of the Canadian currency is the tightening of monetary policy by the Bank of Canada. Last week, the regulator raised the interest rate by 0.50% to 1.50%. This trend is likely to continue in the future, therefore, in the current conditions, a decline in the USDCAD pair seems more likely.

The long-term trend, however, remains upward. Last week, the trading participants broke down the support level of 1.2660, which suggests a further decline in the asset to the key support area of the trend of 1.2460–1.2430, however, if it is held, the growth will continue with a target at the May maximum.

The mid-term trend is downward. This week, the target zone 1.2640–1.2619 was broken down. The next target of the decline is the 1.2432–1.2412 zone. The key resistance of the trend is shifting to the level of 1.2766–1.2745. From the area of key resistance, new sales for the USDCAD pair can be considered.

Resistance levels: 1.2675, 1.2885, 1.2950 | Support levels: 1.2460, 1.2430, 1.2295

 

[Solid ECN ✔️]

Consolidation pending the results of the ECB meeting
The European currency shows a slight decrease against the US dollar during the Asian session, consolidating near 1.0680. Activity on the market remains quite low, as the news background changes slightly.

Yesterday investors were focused on the statistics on Factory Orders in Germany: in April, the figure showed a decrease of 2.7% after falling by 4.2% a month earlier, although analysts had expected a growth of 0.5%. In annual terms, the negative dynamics increased from –2.9% to –8.9%, which also turned out to be worse than the average market forecasts. Slight support for the instrument was provided only by data on Sentix Investor Confidence in the euro area, which rose from –22.6 to –15.8 points in June, while analysts expected an increase to only –20.0 points. Today, investors are waiting for the publication of updated statistics on the dynamics of the Eurozone GDP for Q1 2022. Previous estimates suggested growth of the region's economy by 0.3% QoQ and 5.1% YoY. Also during the day, Employment Change statistics for Q1 2022 will be released.

The eurozone economy is under unprecedented pressure, forcing the European Central Bank (ECB) to tighten monetary policy at its June 9 meeting. Currently, most experts are in favor of two 50 basis points rate hikes in July and September. More "hawkish" rhetoric is unlikely, so a depreciation of the euro can be expected.

Meanwhile, the European authorities are trying to replace the volumes of Russian oil, which now cannot be delivered to the region due to economic sanctions. This week it became known that the US State Department lifted the ban on the supply of Venezuelan "black gold" to Europe by Eni S.p.A. and Repsol S.A. It is noted that deliveries will begin as early as next month and initially will be able to replace Russian energy only partially, having an insignificant impact on prices, but experts agree that this is only the first step to open the Venezuelan oil market.

On the D1 chart Bollinger Bands are trying to reverse horisontally. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the ultra-short term. MACD is going down, keeping a fairly stable sell signal (located below the signal line). Stochastic is showing similar dynamics being located in the middle of its area.

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

 

[Solid ECN ✔️]

The sharp tightening of the RBA monetary policy surprised investors
The AUDUSD pair is correcting against the background of the stabilization of the USD, trading at 0.7177.

Yesterday, the Reserve Bank of Australia (RBA) decided to raise the interest rate by 50 basis points at once — from 0.35% to 0.85%, which came as a surprise to analysts who assumed a correction to 0.60%. In an accompanying statement, the head of the regulator, Philip Lowe, said that the sharp tightening of the current monetary policy parameters was a response to rapidly rising inflation and problems with the housing market, which, according to yesterday's statistics, fell into negative territory. Thus, the number of construction permits issued decreased by 2.4% after an increase of 19.2% a month earlier, and the number of permits issued for the construction of private houses increased by 0.5% after a decrease of 3.0% in the previous month. Thus, in case of a correction in the USD, the growth of the AUD/USD pair will continue.

The US currency, in turn, is held above the 102.500 mark in the USD Index against the backdrop of an ambiguous market reaction to the speech of US Treasury Secretary Janet Yellen, during which special attention was paid to the situation on the oil market. The official noted that the increase in gasoline prices in the country could have been much higher if the Joe Biden administration had not decided to release part of the reserves from the strategic reserve. It is worth noting that Yellen's rhetoric disappointed investors who were hoping to hear about concrete steps by the financial authorities to combat inflation, which has reached the highest values in the USA in 40 years.

On the global chart of the asset, the price is trading within the Expanding Formation pattern, rising in the 5th wave. Technical indicators keep a stable buy signal, strengthening it: fast EMAS on the alligator indicator are significantly above the signal line, and the histogram of the AO oscillator forms ascending bars while in the buy zone.

Support levels: 0.7158, 0.6987 | Resistance levels: 0.7264, 0.7571

[Solid ECN ✔️]

Economic indicators disappoint investors
Against the background of the stabilization of the US currency, the GBPUSD pair is correcting within the local trend, trading around the level of 1.2545.

The expected outcome of the vote in the House of Commons, as a result of which the current Prime Minister, Boris Johnson, retained his post for at least another year, supported the pound quotes. Investors took this event as a sign of stability, and confidence in the national currency increased, but now, this momentum has leveled off, and economic issues are coming to the fore. As yesterday's statistics showed, the business activity of the main sectors is declining: according to the May report, the composite PMI fell to 53.1 points from 58.2 points in April, for the third time in a row. Service PMI fell to 53.4 points from 58.9 points in April, and this is also the third period of negative dynamics of the index. Today, Construction PMI will be published, but there, too, analysts have already predicted a drop in value from 58.2 points to 56.6 points.

The USD Index is trading at the beginning of yesterday at 102.5, almost without reacting to the speech of US Treasury Secretary Janet Yellen. Contrary to expectations, the main part of the official's speech was devoted to the situation in the oil market and the unprecedented rise in energy prices caused by the development of the military conflict in Ukraine. Commenting on the situation in the United States, Yellen noted that the current president's administration had done everything possible to mitigate the consequences of the energy crisis for the country, and without these actions, fuel prices would have been much higher. She said the 1.9T dollars stimulus package passed by the head of the White House in 2021 eliminated economic risks, leading to one of the lowest unemployment rates in post-war history.

The asset tries to test the recently passed global downlink support line. Technical indicators almost canceled the sell signal, preparing for a reversal: indicator Alligator's EMA oscillation range has narrowed as much as possible, and the AO oscillator histogram is forming new upward bars.

Resistance levels: 1.2634, 1.3000 | Support levels: 1.2452, 1.2164
 

[Solid ECN ✔️]

Consolidation near record highs
The US dollar shows mixed trading dynamics, consolidating near new record highs and the level of 134 and continuing the development of the general uptrend since May 30.

The pressure on the positions of the yen is exerted by the prospect of maintaining the current soft monetary policy of the Bank of Japan. While virtually all major financial regulators have moved on to sharply raise interest rates (the European Central Bank (ECB) is expected to launch the program in July), the Japanese authorities are pushing for continued stimulus. Such statements were made by the Deputy Governor of the regulator Masazumi Wakatabe, who also admitted the possibility of introducing new incentives if the economic situation so requires.

Macroeconomic statistics released yesterday in Japan did not provide any noticeable support to the yen. Revised data on the dynamics of gross domestic product for Q1 2022 were revised upward from –0.2% to –0.1% in quarterly terms and from –1.0% to –0.5% in annual terms, and the Eco Watchers Survey on Current Situation in May rose from 50.4 to 54.0 points, while the forecast was for a decline to 49.2 points.

Meanwhile, the Japanese authorities announced the continuation of work in the Russian oil and gas projects Sakhalin-1 and Sakhalin-2. The decision is contained in the national Energy White Paper. It is emphasized that in the current high energy prices, the country needs stable supplies of liquefied gas, and long-term contracts can reduce the negative effect on energy security. Mitsui & Co., Ltd. and Mitsubishi Corp. own 12.5% and 10% shares of the Sakhalin-2 project, and most of the gas produced here is supplied to Japan.

Bollinger Bands in D1 chart show quite active growth. The price range is expanding, but still does not keep pace with the development of "bullish" sentiment in the market. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic has been near its highs for a long time, indicating high risks of the US dollar being overbought in the ultra-short term.

Resistance levels: 134.54, 135.55, 136 | Support levels: 133.7, 133, 132, 131

 

[Solid ECN ✔️]

Correction ahead of the ECB meeting
The European currency continues the local upward movement, which began yesterday after the publication of positive data on the state of the EU economy. Now the EURUSD pair is holding around the 1.0700 mark.

Thus, the gross domestic product for the first quarter increased by 0.6%, ahead of analysts' forecasts of 0.3% and the previous value of 0.2%. Thus, the growth was 5.4% YoY compared to 4.7% in the previous period. Today, investors will follow the course of the meeting of the European Central Bank (ECB). Traders expect to hear specific dates for the start of tightening monetary policy, as recently, the head of the department, Christine Lagarde, has already stated the need to raise rates and curtail the asset purchase program. Analysts believe that if the increase occurs, then not today since the ECB is not yet ready for "hawkish" steps.

The instrument moves within a wide downwards channel, approaching the resistance line. Technical indicators maintain a stable buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram forms upward bars.

Resistance levels: 1.0778, 1.1131 | Support levels: 1.0630, 1.0351

[Solid ECN ✔️]

The market is waiting for the US inflation data
USDCAD is correcting upwards, trading around 1.269. The Canadian currency has been actively increasing in value against the US dollar for almost the entire week; however, in the end, it lost all the gained positions, which was caused by two main factors.

First of all, the Bank of Canada released a report on financial stability, which reflected the main points of vulnerability of the national economic system. The regulator noted the negative dynamics of housing prices, which have grown by more than 50% since the beginning of the coronavirus pandemic and until now. In addition, the country has recorded an increase in the number of heavily indebted households, which in the near future may face an even greater burden due to rising interest rates on loans.

The second reason for the growth of USDCAD is the strengthening of the US dollar, which reached 103 in the USD Index. In turn, market participants almost did not react to another increase in the number of Initial Jobless Claims, which amounted to 229K against 202K a week earlier. Key expectations of investors are related to today's data on consumer inflation in the US, which may increase by 0.7% over the month and remain at 8.3% in annual terms.

On the global chart of the asset, the price continues to trade within a wide ascending channel with dynamic boundaries of 1.2450–1.3100, having reached the support line the day before. The fluctuation range of the Alligator indicator EMAs began to actively narrow, and the histogram of the AO oscillator is forming new ascending bars, actively rising in the sell zone.

Support levels: 1.2630, 1.2463 | Resistance levels: 1.2730, 1.2890

[Solid ECN ✔️]

ECB expects high inflation to continue
The European currency reversed and continued to decline after the European Central Bank published its decision on monetary policy. Thus, the interest rate was kept at 0.00%, and the Board of Governors announced the end of the Asset Purchase Program (APP) from July 1, 2022, to make it possible to increase the key rate by 25 basis points already at the July meeting. The regulator will not change the existing values for margin credit and deposit lines, leaving them around 0.25% and -0.50%, respectively. However, European officials do not rule out another increase in September, which will depend entirely on the inflation rate, which, according to forecasts, will remain high for a long time. According to forecasts, the consumer price index will be at 6.8% during 2022, and only in the middle of 2023 is it possible to adjust to 3.5% and 2.1% in 2024. The dynamics of the gross domestic product will also slow down – from 3.7% to 2.8%.

The asset moves within a wide downward channel, approaching the resistance line. Technical indicators have sharply changed their readings and are turning in the direction of selling: fast EMAs on the Alligator indicator are actively approaching the signal line, and the AO oscillator histogram has formed the first downward bar.

Resistance levels: 1.0774, 1.1075 | Support levels: 1.0547, 1.0351
 

[Solid ECN ✔️]

The New Zealand currency is declining against the US dollar. However, there is an obvious trend towards its strengthening relative to other currencies due to the publication of positive national macroeconomic statistics: after the removal of the main coronavirus restrictions, the flow of people crossing the border increased significantly, reaching 266.7K people in April, which significantly exceeds the figures of previous months and 15.9K in May 2020. Also, data on spending on credit cards were published earlier, which reflected an increase in the purchasing activity of the population. Thus, the May figure was 123M New Zealand dollars, which is 1.4% higher than the April data.

The US currency strengthened significantly, surpassing 104.000 in the USD Index. The upward trend was catalyzed by the publication of data on consumer prices: inflation in the United States increased to 8.6% compared to May 2021, which exceeded the analysts' forecast, which assumed that the indicator would remain at 8.3%. The US Federal Reserve did not expect the index to rise in May, but it amounted to 1.0%, significantly exceeding the consensus forecast of 0.7%, leading to an annual value increase. Such statistics mean that the US regulator will have to continue actively tightening monetary policy.

The trading instrument is moving within the global downtrend, approaching the year's low around 0.6220. Technical indicators reversed and gave a sell signal: fast EMAs on the Alligator indicator crossed the signal line downwards, and the AO oscillator histogram formed new downward bars below the zero line.

Resistance levels: 0.6410, 0.6566 | Support levels: 0.6220, 0.6070

[Solid ECN ✔️]

The pound is correcting after yesterday's negative dynamics caused by the publication of disappointing macroeconomic data, and now the GBP USD pair is trading around the level of 1.2172.

According to data for April, the UK economy slowed down by 0.3%, which led to a decrease in the growth rate to 0.2% QoQ. The negative dynamics harmed the annual GDP, which fell to 3.4% YoY from 6.4% earlier. Despite the upward correction, today's macroeconomic data did not reassure investors: the unemployment rate rose to 3.8% from 3.7% in March, and the Claimant Count Change decreased by only 19.7K instead of the expected 49 .4K against the background of correction of the average level of wages to 6.8% from 7.0% a month earlier.

Yesterday, the instrument renewed the year's low at 1.2170 and is now trying to consolidate below it. The technical indicators reversed rather quickly and gave a new sell signal: indicator Alligator's EMA oscillation range expands downwards, and the histogram of the AO oscillator forms downward bars.

Resistance levels: 1.2317, 1.2629 | Support levels: 1.2107, 1.1952

[Solid ECN ✔️]

Yesterday, Statistics Canada (StatCan) published data on the state of the Construction Sector, investment in which has been increasing for the seventh month in a row, adding 2.7% to 20.0 billion Canadian dollars in April. Financing for the construction of houses increased by 3.2%, and for the construction of non-residential buildings it increased by 1.4%. These data point to the stability of the real estate market in Canada, even in conditions of high inflation. Today, traders will be watching the data on Manufacturing Sales, which is expected to slow down to 1.6% from 2.5% a month earlier.

The US dollar, in turn, reached an all-time high of the year on May 12 at 104.900 in the USD Index on the back of a wave of sell-offs in risky assets, remaining stable in anticipation of today's publication of Producer Price Index data. According to forecasts, the May Producer Price Index may rise by 0.8%, which will provide an uptrend in the annual rate by 10.9%, and this, in turn, will signal a strengthening of the national currency.

On the global chart of the asset, the price is trading within the wide upward channel with dynamic borders of 1.2450–1.3100, actively approaching the resistance line. The fluctuation range of the Alligator indicator EMAs is about to issue a buy signal, and the histogram of the AO oscillator is forming new ascending bars, actively rising in the sell zone.

Support levels: 1.2763, 1.2525 | Resistance levels: 1.2937, 1.3077

[Solid ECN ✔️]

EUR USD, the market is waiting for the decision of the US Federal Reserve on the interest rate

Today data on inflation in France will be published. According to analysts' forecasts, the consumer price index for May will rise by 0.6%, which will increase the rate by 5.2% YoY after 4.8% a month earlier. Yesterday, it became known that the same indicator in Germany reached a record 7.9%, adding 1.1% over the month. Sharp inflation is putting pressure on key sectors, and today's EU industrial output data will likely reflect continued negative momentum. According to experts' expectations, the value will decrease by 2.0% for April and by 1.1% YoY, which will increase pressure on the European currency.

Quotes of the American currency have consolidated after reaching the year's high, around 105.000 in the USD Index, and the market is waiting for the evening decision of the US Federal Reserve on interest rates. The consensus forecast of analysts suggests an increase in the indicator by the already familiar 50 basis points but after inflation in the United States rose to 8.6%, some experts spoke out for a sharper increase in the value by 75 basis points, which may be a completely justified action by the regulator to convince investors of the seriousness of their intentions. Also, to determine the rate for the current period, the agency will publish a monetary policy forecast for the near future.

The trading instrument moves within a narrow downward channel, approaching the support line. Technical indicators strengthen the sell signal: indicator Alligator's fast EMA oscillation range expands downwards, and the AO oscillator histogram formed a down bar after entering the sell zone.

Resistance levels: 1.0498, 1.0776 | Support levels: 1.0353, 1.01

[Solid ECN ✔️]

USD TRY, Turkish statistics alarm investors
According to the Turkish Statistical Institute (TurkStat), Retail Sales added 14.7% in April 2022, supported by a 31.3% increase in sales of non-food products, while the same indicator for fuel and food corrected down by 2.8% and 1.1% respectively. Despite the positive results, the Inflation Research Group (ENAG), created by Turkish scientists and economists, seriously doubted their reliability. According to experts, the agency deliberately understates data on consumer price dynamics, and the May figure was not 73.50%, as stated in official statistics, but 161.0%. Against this background, the Turkish government is considering the possibility of banning independent economic analysts from publishing statistics without prior approval from TurkStat.

In turn, the US currency reached 105 in the USD Index and consolidated there, in anticipation of the evening publication of the US Federal Reserve's decision on the interest rate, which can be increased once again by at least 50 basis points. There is practically no doubt about the correction of the value, and the implementation of the forecast will only increase the upward momentum in the trading instrument.

The USD TRY quotes are rising as part of another wave of global growth, approaching the all-time high of 2021 at around 18.25. Technical indicators maintain a steady buy signal: the range of EMA fluctuations on the Alligator indicator is still directed upwards and the AO oscillator histogram is trading in the purchases area, forming new ascending bars.

Support levels: 16.9, 16.15 | Resistance levels: 17.5, 18.25
 

[Solid ECN ✔️]

USD JPY, the market is waiting for decisive steps from the Bank of Japan
The USD JPY pair shows extremely unstable trading dynamics as investors are waiting for a two-day meeting of the Bank of Japan on monetary policy, being corrected around 134.36.

The yen is rapidly declining amid ultra-soft policy from the country's main financial regulator, and inflation in May rose sharply to 2.5% from 1.2%, which requires the authorities to take steps to contain it. As for the local macroeconomic background, foreign trade data were published today, among which the increase in imports by 48.9% in May is particularly notable, which led to a serious correction in the trade balance to –2.384T yen from –842.8B for the month previously.

The American currency unexpectedly for investors remained at the beginning of the week at 105 in the USD Index after the decision of the US Federal Reserve to raise the rate by 75 basis points to 1.75%. Also, the regulator plans to increase the pace of treasury and mortgage securities sales from September to 60B and 35B dollars, respectively, from the current 30B and 17.5B dollars. By the end of the year, the agency expects that the rate will reach 3.4%, and in 2023, the rate of increase will be reduced, and the indicator will stop around 3.8%, after which it is planned to start a cycle of reduction in 2024 and bring the value to 3.4%.

The instrument is moving within the global uptrend, having renewed another high of the year at 135.5 yesterday. Technical indicators maintain a stable buy signal: indicator Alligator's EMA oscillation range expands upwards, and the histogram of the AO oscillator forms new rising bars.

Resistance levels: 136, 142.2 | Support levels: 130.9, 126.75

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[Solid ECN ✔️]

EUR USD, investors expect inflation data in the EU
The European currency is trading with a slight slowdown after yesterday's strong growth, caused by investors' reaction to the wage increase in the EU in the first quarter by 2.70% from 1.50%, but today's data will have a key impact on the dynamics of the instrument. In the middle of the day, Eurostat will publish May's CPI, which estimates inflation, and the monthly increase could be 0.8% against the 0.6% shown in April, and the growth will remain around 8.1% YoY. As for the core consumer price index, which does not consider food and fuel prices, analysts do not expect positive dynamics and expect the value to remain at the April level of 3.8%.

After three days of being near the year's highs, around 105 in the USD Index, Quotes of the American currency reversed downwards and rolled back to 104 against the backdrop of disappointing data on the US labor market. Initial Jobless Claims amounted to 229K, which exceeds the quoted market expectations of 215K, and the total number of citizens receiving payments from the state consolidated at 1.312M compared to 1.309M last week. Investors drew attention to a significant decrease in the index of manufacturing activity from the Philadelphia Fed in June to –3.3 points from 2.6 points in May.

The trading instrument moves within a narrow downward channel, approaching the support line. Technical indicators maintain a global sell signal: indicator Alligator's EMA oscillation range downwards, and the AO oscillator histogram has formed another down bar in the sell zone.

Resistance levels: 1.0630, 1.0778 | Support levels: 1.0377, 1.0151

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