The major cryptocurrency has once again been pushed off the $30,000 level signaling a possible backdrop for a larger correction of the huge upward movement. Should the declines deepen, the 23.6 Fibonacci retracement of the upward wave, which began in November 2022, at $27,400, and the SMA100 (black line), which may overlap with the 38.2 Fibo at the psychological zone of $25,000, may prove to be important levels.
March 2023 German PPI inflation comes in at 7.5% YoY (forecast: 9.9%; previous: 15.8%)
In MoM terms, inflation dynamics fall by -2.6% against expectations of -0.6% and the previous level of -0.3%.
The EURUSD pair has been subject to increased volatility in recent minutes. First, the ECB’s Knot commented that the ECB still has a lot of work to do in terms of fighting inflation and an extension of the rate hike cycle into June and July is possible. On the other hand, the strong fall in PPI inflation somewhat sweetens the tone of the ECB banker’s comments.
The New Zealand dollar has been one of the worst performing major currencies today. The sell-off was primarily caused by the inflation report, which showed that price growth in the economy is slowing much faster than expected. The quarterly data showed that inflation on a QoQ basis came in at 1.2% against forecasts of 1.7% and an earlier reading of 1.4%. In YoY terms, inflation came in at 6.7% against expectations of 7.1% and an earlier reading of 7.2%.
The swap market is currently pricing in a near 78% chance of a 25 basis point interest rate hike at the next RBNZ meeting. As recently as this morning, those odds were close to 85%, so the surprise inflation reading has lowered the prediction for a further hike. The RBNZ had forecast Q1 inflation at an annualized rate of 7.3%, slowing to 6.6% in Q2. As such, today’s reading of 6.7% for Q1 goes a long way to putting the brakes on further aggression in the tightening cycle.
Looking at the NZDUSD price chart, we can see that the pair has broken out below the support zone set by the April 17 low and is currently trading near the levels outlined by the 38.2% Fibo retracement of the upward wave started in October 2022. For the moment, the key support and resistance levels are: (support) the zone between the previously mentioned 38.2 retracement and the 50% Fibo measure; (resistance) the downward trendline initiated in February 2023.
The German leading index is coming under increasing pressure.
The DAX future / DE30 is falling today, pulling back from the high for the year, which was reached yesterday at 16,056 points. The record high remains the key resistance - the gap is around 400 points. In case of further losses, the breakout level at 15,698 points and the intermediate high at 15,463 points could be targeted.
The German leading index is coming under increasing pressure.
The DAX future / DE30 slipped below the low at 15,901 points, falling to its lowest level in six days. The technical situation has deteriorated in pre-market trading today - see crossover and lower lows and lower highs. With no sign of life from the bulls, the index remains vulnerable to further losses.
Oil prices are pulling back and are one their way to close the bullish price gap that was triggered by unexpected OPEC+ decision to cut output. Taking a look at WTI (OIL.WTI) at D1 interval, we can see that the recent price advance was halted near the $82 resistance zone, marked with the upper limit of the Overbalance structure. While prices have traded briefly above this hurdle, bulls failed to uphold momentum and a pullback was launched. Moreover, the price dropped below the 100-season moving average today, which further brightens the outlook for bears. While lower limit of the bullish price gap from April 3 is still more than 2% below current market price, it looks like closing it may be just a matter of time, given current market volatility.
Taking a look at the chart at lower interval (H1), we can see that WTI is trading in a short-term downtrend. Key resistance to watch in the near-term can be found in the $78.35 area. Unless we see a break above this level, bulls may struggle to launch a longer-lasting upward impulse.
PALLADIUM is the worst performing precious metal today, dropping around 2.5% at press time and moving further away from a recent 2-month high. Palladium is a clear outlier among precious metals today as USD weakening allows gold to rise 0.6% and platinum to add 0.2%. Silver is trading flat. While gold and silver, and to a lesser extent platinum, are driven primarily by the investment demand, palladium is more reactive to industrial developments. Today’s drop may be to some extent driven by poor performance of EV stocks, especially Tesla as it slumps 10% following a lackluster Q1 2023 earnings report.
Taking a look at PALLADIUM at D1 interval, we can see that the price is pulling back after a failed attempt at breaking above the $1650 resistance zone. Downward move accelerated today with price dropping below the $1600 mark. The near-term support can be found ranging above the $1,500 mark and served as the upper limit of a previous short-term trading range.
Flash PMI indices for April from France and Germany were released at 8:15 am BST and 8:30 am BST, respectively.
French reading was mixed - services index showed a big and unexpected improvement while the manufacturing sector showed large and also unexpected deterioration. Deterioration in manufacturing, which reached 35-month low, can be explained with massive employee strikes that are occuring in France in response to new pension reform. Improvement in services is puzzling but we will have to wait for the final release for details.
German reading was mixed on the same note - miss in manufacturing and beat in services. However, in case of German data, strikes cannot be used as an explanation so we will have to wait for final data with sector/industry breakdown.
France
Manufacturing: 45.5 vs 47.9 expected (47.3 previously)
Services: 56.3 vs 53.5 expected (53.9 previously)
Germany
Manufacturing: 44.0 vs 45.6 expected (44.7 previously)
Services: 55.7 vs 53.3 expected (53.7 previously)
EUR ticked higher following the release of French data but the move was minimal. Indices also moved higher in a knee-jerk move but have later turned lower. Those moves were magnified after German release with EURUSD adding to previous gains and DE30 deepening slide.
DE30 deepens drop below 15,900 pts price zone after mixed PMIs from France and Germany.
EURUSD is pulling back this morning. The move lower is driven mostly by strengthening of the US dollar. The main currency pair tried to recover some losses after the release of mixed PMIs for France and Germany that showed major improvement in the services sector and significant deterioration in manufacturing. While flash PMIs failed to trigger a strong recovery move, they seem to have been enough to halt declines.
Taking a look at EURUSD at the H1 interval, we can see that the pair dropped to the 1.0940 area, where the short-term upward trendline can be found. Bulls managed to defend this price zone and now we can see the pair trying to climb back above 1.0950. From a technical point of view, this is a bullish development but whether this translates into a large upward impulse will depend on whether bulls manage to break above the 1.0980 resistance zone that has been limiting upward moves this week. Should such a break occur, EUR bulls may target recent highs in the 1.1070 area next.
The pair may see some volatility around 2:45 pm BST when flash PMIs from the United States for April are released. Market expects a small deterioration in both manufacturing and services.
Indices from Asia-Pacific traded lower at the beginning of a new week. Nikkei, S&P/ASX 200 and Nifty 50 traded flat, Kospi dropped 0.9% and indices from China traded 0.3-1.3% lower
DAX futures and S&P 500 futures trade slightly lower
Russia warned that it will terminate Black Sea grain deal if G7 moves to impose a total ban on exports
BoJ Governor Ueda said that inflation forecasts strong and close to 2% for bank to consider changing its yield curve control mechanism
Financial Times reports that United States asked South Korea not to increase chip sales to China if chips of US company Micron get banned as part of Chinese investigation
Cryptocurrencies traded mostly sideways over the weekend. Small gains can be seen today - Bitcoin gains 0.8%, Ethereum adds 0.3% and Dogecoin jumps 1.2%
USD and CHF are the best performing major currencies while AUD and JPY lag the most
Precious metals pull back amid USD strengthening. Gold drops 0.2%, silver trades 0.7% lower and platinum plunges 2.3%
Energy commodities trade lower as well - oil drops 1.2% while US natural gas prices decline 0.5%
Brent (OIL) is inches away from closing a bearish price gap triggered by an unexpected OPEC+ output cut.
Japanese central bankers will meet this week to decide on monetary policy (Friday). This will be the first meeting under new Bank of Japan governor Ueda. There was some hope in the markets that change at BoJ helm will result in change in BoJ policy. However, Ueda so far has been hinting at continuation of the ultra-loose policy of his predecessor, at least for now. On the other hand, Sankei reports that the central bank may review and assess the past 10 years of monetary policy. One cannot rule out that even in spite of lack of change in policy or statement, assessment alone may offer some guidance. JPY is recovering some of its recent losses as the meeting draws closer.
USDJPY is trading higher today, due to USD strength, but has lost some ground after the Sankei news report. USDJPY continues to trade in an uptrend started at the end of March but has run into resistance in the 135.00 area.
Taking a look at US100 chart at H1 interval, we can see that the index has been trading in a triangle pattern for some time with a 13,000 pts area serving as the lower limit of the pattern. This is a continuation pattern so traders should be aware of a potential for a downside breakout, especially as price has reached a lower limit recently. In case of a break below 13,000 pts, textbook range of breakout from the pattern suggests possibility of an around 350-points drop, to 12,650 pts area.
Like other companies in the industry, the Coca-Cola Company has increased the prices of its products, but this has not affected consumer demand. In recent years, as pandemic-related restrictions have disappeared, the company has seen an increase in productivity. This is mainly due to consumers being willing to pay more for drinks in public places such as restaurants, stadiums and concerts.
Current premarket trading on Wall Street indicates that Coca-Cola (KO.US) shares have broken above the important resistance set by the local peaks of December 2022.
EURUSD has once again moved above the resistance zone at 1.10 USD. If this break is sustained, a continuation of the upward movement towards the next resistance level at 1.1273 is not excluded.
Recently, many events have overlapped and influenced the prevailing sentiment on the cryptocurrency market.
On the one hand, we observe weakening bulls on the broader financial market after high index results in the first quarter of this year. Investors are trying to price in new quarterly reports published by the largest technology companies in the US and deteriorating macroeconomic data, which are starting to forecast the upcoming recession on the financial markets.
On the other hand, a lot has happened in the crypto market space. The recent hearing of SEC chairman Gary Gancler did not bring any new news. The SEC chairman continued his narrative without any explanation that all cryptocurrencies except BTC should be considered security - despite many questions from Congress Representatives.
Another wave of declines came today after the news about Coinbase suing the SEC. According to the information provided, Coinbase has taken legal action in a US federal court to force the country’s securities regulator to give a definitive response to a petition it submitted in July. The petition sought clearer regulatory guidelines for the cryptocurrency industry in the US.
On the 4-hour timeframe, the BTC price continued to consolidate below $28,000, with the largest cryptocurrency by market capitalization trading at around $27,240, down 0.55% in the past 24 hours. BTC has already dropped by 13% from its recent highs of $31000. The price broke through the key support level around $28,600, indicating a bearish trend in the short term. Currently, the price is at the equilibrium level of the last consolidation range, indicating that the market is in a state of indecision. However, further price action downwards is expected, with the next resistance level likely to be at $26,650. This level acted as a support in the past. Overall, the short-term trend for Bitcoin appears bearish and traders should exercise caution when taking long positions. It is essential to keep an eye on any major news events or developments in the cryptocurrency space that may impact the price of Bitcoin.
Microsoft (MSFT.US), interval D1. The major supply has activated in $280 zone, it’s level of resistance from summer 2022 highs. If the earnings will be weaker than expected, the major support may be at 270 or 260 USD levels, where we can see 23,6 and 38,2 Fibonacci retracement of upward wave started in the October 2022. On the other hand if the financial report will be strong, with possible optimistic guidance the major resistance at $300 level may be exceed. Also ‘golden cross’ formation of moving averages (SMA200, SMA100) may indicate that bulls will be still strong.
A pack of US data was released at 3:00 pm BST today. While both soft and hard data was released, the market was more focused on the former, especially Conference Board consumer confidence reading for April. CB reading turned out to be a disappointment with headline index dropping from 104.2 to 101.3 (exp. 104.0). Lower reading was driven by a drop in expectations subindex. Other data released simultaneously to CB reading turned out to be mixed - new home sales increased 9.6% MoM in March and beat expectations while Richmond Fed index came in lower than expected.
US data released at 3:00 pm BST today
Conference Board Consumer Confidence for April:101.3 vs 104.0 expected (104.2 previously)
Present situation: 151.1 vs 151.1 previously
Expectations: 68.1 vs 73.0 previously
Richmond Fed manufacturing index for April: -10.0 vs -8.0 expected (-5.0 previously)
New home sales for March: 683k vs 630k expected (640k previously)
Markets barely saw any reaction to the release of US data. USD ticked lower with EURUSD attempting to halt a decline in the 1.10 area while US index futures moved slightly higher following the release.
EURUSD attempts to bounce off the 1.1000 area after release of US survey and housing market data.
Oil continues to trade near but has not yet managed to close a bullish price gap, triggered by an unexpected OPEC+ output cut announcement. A bearish sentiment can be spotted on the crude market since mid-April and is trading less than $1 per barrel away from closing a bullish gap. Taking a look at OIL.WTI at the D1 interval from a technical point of view, we can see that downward move accelerated after the price failed to break above $82 resistance. According to the Overbalance methodology, this hints that the long-term trend remains bearish. Moreover, price dropped back below 100-period EMA, what further supports the bearish outlook.
Taking a look at WTI at a lower interval (H1), we can see that price tested a recently-broken support as a resistance and, after a failure to break above it, downward move was resumed. Currently, we are observing OIL.WTI testing recent local lows in the $76.85 per barrel area and should we see a break below this zone, the way towards $75.50 - lower limit of bullish price gap - will be left open.
Investors’ morning attention in the FX market turned towards Australia, where we learned the latest inflation data. Australia’s headline CPI came in at 1.4% k/k in Q1 2023 (versus the expected 1.3%). However, the AUDUSD pair saw declines, dictated by a lower core inflation reading (1.2% quarter-on-quarter versus expectations of 1.4%). By weight, it is core inflation that is the more important factor creating predictions for future RBA policy.
The Reserve Bank of Australia has forecast and continues to forecast a slowdown in inflation in the near future. The bank’s rhetoric comments relatively bluntly that changes in monetary policy have a lagged effect on economic activity and its indicators. The combination of these two factors persuaded the RBA to hold the cash rate steady at its April meeting, and today’s decline in core inflation will add to the case for another pause at the RBA’s next meeting on 2 May. At the moment, the swap market is pricing in a near 80% probability of holding rates at 3.6%.
Looking at the technical situation of the AUDUSD currency pair, we can see that the AUD is weakening against the US dollar and is currently descending into the support area defined by the March 2023 lows and the 61.8% Fibo retracement of the upward wave initiated in October 2022. The nearest region of resistance is the confluence of the 50-, 100- and 200-day exponential moving averages marked on the chart.
Bitcoin chart, D1 interval and US500 (yellow chart). Bitcoin again showed a negative correlation with the S&P500 and started an upward movement when US500 contracts weakened, influenced by weakness in the banking sector. The RSI indicator is still at relatively neutral levels indicating that the bulls still have plenty of room to possibly continue their attack. The first significant resistance level appears to be around $30,000 - $31,000, last seen in early summer 2022. The bulls has defended the bullish momentum at 23,6 Fibonacci retracement.
Risky assets, like equities or commodity currencies, dipped shortly before the Wall Street cash session opened following a report from CNBC on First Republic Bank. According to the media piece, the US government is currently unwilling to intervene to save First Republic Bank. First Republic Bank is on watch after Q1 earnings release highlighted the bank was close to collapse during recent US banking turmoil and that this risk has not waned yet.
S&P 500 futures (US500) dropped around 0.2% on the news. Interestingly, we also saw a move lower in USD with GBPUSD jumping above 1.25 mark and EURUSD moving closer to 1.11 handle. Safe haven flows as well as weaker USD provided fuel for around-0.5% jump on gold market, with precious metal climbing above the $2,000 mark.
GOLD jumped above the 200-hour moving average and $2,000 mark following CNBC report on First Republic Bank.