Beginning of a new week on the markets has been calm so far. Worse than expected German industrial production reading for March did not have much impact on EUR or European indices. German industrial output dropped 3.4% MoM, missing -1.3% MoM estimate quite significantly. One more piece of data from Europe will be released today - Sentix index for May at 9:30 pm BST. However, it is unlikely to trigger major moves on the EUR market as well. Speech from ECB Lane at 3:00 pm BST may trigger some short-term volatility. We also had release of Bank of Japan minutes during the Asian session but it turned out to be a non-event as it related to early-March meeting which was still chaired by Kuroda.
Taking a look at EURJPY at D1 interval, we can see that the pair has managed to halt recent correction at 147.50 support zone and is now trying to recover back to recent highs in the 151.00 area. A move above 149.00 mark was made today. Should the upward move continue and the pair breaks above the 151.00 area, a test of the upper limit of the upward channel, currently in the 153.20 area, cannot be ruled out in the near-term.
EURUSD is Recovering
The EURUSD pair’s decline stopped at 1.0966 level, to rebound bullishly and settle above the EMA50, to head towards recovering and resume the main bullish wave again, on its way to test 1.1075 level as a first station, noting that breaching this level will extend the bullish wave to reach 1.1150 areas as a next target.
Therefore, we expect to witness more bullish bias in the upcoming sessions, and the price needs to consolidate above 1.1010 to continue the suggested rise, as breaking it will put the price under new negative pressure to head towards visiting 1.0945 level initially.
The NZDUSD pair shows more bullish bias to move away from 0.6290, which supports the continuation of the bullish wave for the rest of the day, and the way is open to achieve our next target at 0.6380, supported by the EMA50 that carries the price from below, noting that holding above 0.6290 is important to achieve these targets.
The expected trading range for today is between 0.6260 support and 0.6370 resistance
EURJPY holds below the barrier
EURJPY pair approached 149.35 barrier yesterday, while the lack of the positive momentum forced it to provide new negative close to confirm its affection by the bearish bias for now, noticing its crawl towards 148.35.
We expect to renew the negative attempts to target the first station at 147.50, reminding you that breaking this level might force it to suffer additional losses that might extend towards 146.60 followed by reaching 145.65 support line.
GBPUSD presses on the channel’s support line
GBPUSD pair ended yesterday negatively, to test the intraday bullish channel’s support line, noticing that the price begins today with slight decline to move below this support, while stochastic reaches the oversold areas now, to form positive motive that we are waiting to assist to push the price to resume the main bullish wave and head to achieve gains that reach 1.2850.
Therefore, the overall bullish trend will remain valid for the upcoming period, supported by the EMA50, and the price needs to breach 1.2625 to confirm resuming the bullish track, noting that failing to achieve the required breach will push the price to achieve additional decline that its next target reaches 1.2550.
USDCAD approaches the extended target
USDCAD pair continued to decline yesterday to approach 1.3300 level, but it bounced bullishly to settle above 1.3350, noticing that stochastic lost its positive momentum to reach the overbought areas now, which forms negative motive that we expect to push the price to resume the negative trades and head to achieve additional negative targets that reach 1.3265.
Therefore, we will continue to suggest the bearish trend for the upcoming period, noting that breaching 1.3385 will stop the negative scenario and lead the price to start correctional bullish wave on the intraday basis.
Gold price continues its bullish trend trajectory on Tuesday. The price of gold is currently trading around $2,030 per ounce, which is a +0.41% daily change. The upward trend channel has provided continuous positive support to gold prices - marked with dark blue parallel lines.
The stochastic indicator is beginning to gather positive momentum, indicating a potential upward movement in the price of gold. The resistance level near the range of $2,060-2,070, marked with a green line, has been tested multiple times, suggesting a strong price action and weakening resistance.
Based on these factors, it is probable that the Gold price continues to rise in the upcoming days. The first positive target is expected to be around $2,049. A break of this level could push the price above $2,068 as the next target. However, a break below the support level of $2,000 would be considered as a negative factor and could initiate a bearish correction wave. In such a scenario, the next support line is in the range of $1,960-1,970. The overall structure is bullish for gold.
Traders and investors should monitor the price action around these key levels and wait for confirmation of a breakout or reversal before making trading decisions. Technical indicators and additional market analysis could provide further insights into the potential direction of gold prices.
GBPJPY repeats the positive closes
The GBPJPY pair repeated providing positive closes above the extra support at 169.25 level, confirming its readiness to resume the bullish attack, to notice its fluctuation near 170.70.
note that stochastic begins providing positive momentum by its rally above 50 level will ease the mission of reaching the initial extra target at 172.13, then wait for attacking the extra barrier at 172.50 level, which represents the key for detecting the expected trend in the upcoming period. The expected trading range for today is between 169.70 and 171.40.
GBPUSD pair kept its stability above the beached resistance of the bullish flag, to keep the bullish trend scenario valid for the upcoming period, supported by the EMA50, waiting to visit 1.2700 followed by 1.2850 levels mainly.
Stochastic current negativity might cause some temporary sideways fluctuation before resuming the expected rise, which will remain valid conditioned by the price stability above 1.2565.
Gold prices shows some bearish bias since morning, noticing that stochastic gathers the positive momentum clearly, waiting to motivate the price to resume the expected bullish trend for today, which its targets begin at 2048.70 and extend to 2075.25 after surpassing the previous level.
The bullish channels organize the expected bullish wave, which will remain valid unless breaking 2007.65 and holding below it.
Crude oil price faces clear negative pressure to move below 72.80 level now, which urges caution from the upcoming trading, as consolidating below this level will stop the expected bullish trend and put the price under additional negative pressure that targets visiting 71.55 as a next negative station, while the price needs to step above 72.80 to manage to resume the bullish wave that its targets begin by breaching 73.80 to confirm heading towards 76.10.
The expected trading range for today is between 71.50 support and 75.00 resistance.
Silver price didn’t show any strong move since morning, thus, no change to the expected bullish trend scenario on the intraday basis, which targets 26.07 followed by 26.90 levels as next main stations, supported by the EMA50 that continues to carry the price from below, reminding you that the continuation of the bullish wave depends on the price stability above 25.50 and 25.30 levels.
The expected trading range for today is between 25.30 support and 26.10 resistance.
Should the Bank of England deliver onto those expectations and hike rates by 25 basis points, the main rate would climb to 4.50% - the highest level since October 2008. However, as such an outcome is well expected and priced in, investors will look for hints on what comes next.
Should we see an increase in the number of MPC members who favor keeping rates unchanged, GBP may find itself under pressure. Last time, 7 MPC members opted for increasing rates while 2 preferred keeping them unchanged. Also, a new set of economic projections will be released and it will be closely watched, especially inflation forecasts. UK CPI inflation slowed in March but stayed above 10% YoY mark and should new forecasts show higher inflation expectations, it could be a bullish signal for GBP as it would hint at a need for more rate hikes. Markets currently see a rate peak at around 5.00% in September-November 2023.
Taking a look at GBPUSD chart at H1 interval, one can see that the pair has been pulling back this morning. Pair dropped below the support zone marked with 38.2% retracement of the upward impulse launched on May 2, 2023 (1.2585 area). Downward move did not stop there with pair continuing to move lower and dropping below 200-hour moving average (purple line). An attempt to climb back above this moving average can be spotted at press time but should bulls fail to do so, the pair may look towards a test of the support zone marked with 50% retracement in the 1.2557 area.
Bitcoin Weaker Ahead of Options Expiring Friday
Bearish pressure on Bitcoin is increasing as Friday’s option expiration approaches. The bears could cause the price to settle below $27,000 allowing options market speculators betting on declines to cash in on record profits. Bitcoin has been pushed below $30,000 several times in April and today the cryptocurrencies are recording another weak day:
In addition to the uncertainty surrounding the BTC network’s technical problems (soaring fees and tens of thousands of outstanding transactions), sentiment also weakened after still unconfirmed reports of a BTC sale by the US, which holds significant reserves of seized BTC from SilkRoad;
Investors are assessing the impact of a potential economic slowdown and Fed policy on cryptocurrencies. Today’s claims came in stronger than expected, showing a strong U.S. labor market. This one may cause the Federal Reserve to stay on a hawkish track longer which does not seem positive for risky assets;
The call to put ratio (the ratio between call and put options) at 1.65 shows a lack of balance between bulls and bears. There is $560 million in call options and $340 million in put options. Bullish options have been by far the more popular in recent weeks, but in the end it is the supply side that gets the upper hand
It is now in the sellers’ interest to get the lowest possible price before the options expire tomorrow. A drop below $27,000 could bring the bears as much as $230 million in profits, if the bulls manage to maintain the current level sellers will earn about $120 million according to Coinglass estimates.
Bitcoin chart, H1 interval. The price has fallen below the SMA100, SMA200 and the 23.6 Fibonacci retracement of the March 10 upward wave, making it likely that demand will only be more active at the 38.2 Fibo level, near $26,650.
EURNZD is one of the G10 FX crosses that experienced large moves so far today. The pair is trading higher as EUR got supported by hawkish comments from Joachim Nagel, Bundesbank President and ECB member. Meanwhile, NZD is the worst performing G10 currency after RBNZ lowered 1- and 2-year inflation expectations.
Starting with EUR news, Joachim Nagel said that inflation still remains too high and too strong. He continued saying that central bankers need to be sure that the inflation wave ends before they decide to pause policy tightening. He stressed it loud and clear that the latest rate hike delivered by the ECB won’t be the last. While Nagel sounding hawkish is nothing new as he is one of the biggest ECB hawks, comments suggesting that more rate hikes are coming have been delivered throughout the week by various ECB members throughout this week.
Moving onto NZD news, the Reserve Bank of New Zealand lowered its 1- and 2-year ahead inflation expectations. 1-year expectations dropped from 5.11 to 4.28% while 2-year expectations were lowered from 3.30 to 2.79%. This can be seen as a dovish move as lower inflation expectations suggest that RBNZ is progressing in its fight against inflation and may not need to raise rates too much. Money markets currently see just 25 basis points of additional tightening through July.
Taking a look at EURNZD chart at D1 interval, we can see that the pair has halted recent sell-off at 50% retracement of the upward impulse launched in mid-December 2022. Recovery move was launched yesterday and gains accelerated today. The pair climb above resistance zone in the 1.7420 area, marked with 38.2% retracement and is looking towards a test of the 50-session moving average (green line).
The EURUSD pair ended yesterday below 1.0945 level, to fall under expected negative pressure in the upcoming sessions, targeting 1.0865 level as a next correctional target.
Therefore, we are waiting for more expected decline on the intraday basis, supported by the negative pressure formed by the EMA50, noting that breaking the targeted level will push the price to achieve additional bearish correction that its next target reaches 1.0795, while the expected decline will remain valid unless breaching 1.0945 and getting daily close above it.
Indices from Asia-Pacific are trading mostly higher today. Nikkei gains 0.7%, S&P/ASX 200 adds 0.1%, Nifty 50 jumps 0.4% and Kospi trades flat. Indices from China trade up to 1.2% higher
European and US index futures trade slightly above Friday’s cash closing prices
NBC reports that meeting to discuss debt ceiling between US President Biden and congressional leaders was scheduled for Tuesday
With almost all votes counted, no single candidate managed to score an over-50% result in Turkish presidential elections, meaning that a run-off between incumbent president Erdogan and opposition candidate Kilicdaroglu is likely to take place in 2 weeks (May 28, 2023)
According to preliminary results, Erdogan’s party AKP managed to win parliamentary elections with 35.6% votes and secure 268 seats in 600-seat parliament
Turkish lira has been rather calm so far today as investors wait for an official confirmation that run-off in presidential elections will be needed
According to Financial Times, G7 countries and European Union consider banning restarting of the Russian gas pipelines if Moscow has previously halted supplies via them
According to Reuters, G7 also aims to more strictly target sanctions evasion involving third countries
Iraqi oil minister said he does not expect OPEC+ to announce more oil output cuts at June meeting
ECB’s De Guindos said that rate hike cycle in EMU is on the final stretch and that’s why ECB decide to return to 25 basis point moves
According to Reuters report, it was advised during BoJ-government meeting that Bank of Japan considers changing its policy approach should CPI and wages keep rising
Energy commodities trade mixed - oil drops 0.3% while natural gas jumps 0.7%
Precious metals advance - gold gains 0.2% while silver and platinum trade 0.3% higher
AUD and NZD are the best performing major currencies while JPY and USD lag the most
Turkish lira is trading a touch higher against USD and EUR today, as a run-off will be needed to decide the next Turkish president. It looks like there are expectations for a tight race with TRY seeing rather muted moves.
Stock traders launched a new week in upbeat moods with indices from Asia-Pacific finishing today’s trading higher and European benchmarks advancing as well. US index futures also trade higher with Russell 2000 (US2000) leading with 0.7% gain and Nasdaq-100 (US100) lagging behind others with 0.3% gain. The week ahead is slightly lighter in terms of data and macro events than previous ones but traders will be nevertheless offered some interesting reports. US retail sales data for April tomorrow at 1:30 pm BST as well as Powell’s speech on monetary policy on Friday, 4:00 pm BST are top events to watch in US macro calendar for the week. US tech shares may see some moves later into the week when Alibaba Group reports earnings on Thursday.
Taking a look at US100 chart at H1 interval, we can see that the index managed to halt recent declines at 13,330 pts support zone, marked with 23.6% retracement of the upward move launched in late-April, lower limit of the market geometry as well as the upward trendline. Bouncing off this area confirmed the bullish sentiment and index started to recover recent losses. A break above 50-hour moving average (green line) was delivered today and now the way for a test of recent highs just shy of 13,500 pts mark is open.
Raphael Bostic, head of Atlanta Fed, delivered a speech today. He pointed out that there is still a lot to do on inflation and the economy will have negative impact on price growth (as he expects a slowdown). Bostic sees risk of a recession although it will rather be a short and shallow one.
Bostic stresses that rate cuts this year are not a base case scenario for him and that Fed will not cut rates until well into 2024. However, one should remember that the FOMC dot-plot assumes rate cuts next year. Simultaneously, Fed should maintain an outlook on possible continuation of rate hikes. Overall, Bostic wants to see what impact previous rate hikes will have on the economy.
EURUSD is trading slightly higher on the day after two final days of the previous week were marked with significant strengthening of USD. EURUSD is currently trading below 2 important resistance levels - 1.09 area and 50% retracement of the last major upward impulse.
NZDUSD pair provides clear additional negative trades to approach our first waited target at 0.6200, waiting for more decline to head towards 0.6140 as a next negative station.
Therefore, we will continue to suggest the bearish trend for today unless the price rallied to breach 0.6290 and hold above it.