Forex, Commodities, Crypto Market Analysis by Solid ECN

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USDCAD, in anticipation of additional growth drivers

The USDCAD pair tests the level of 1.2500 for a breakout, retreating from local lows of January 20, renewed last Friday, and waiting for additional growth drivers to appear.

The whole picture in the market changes slightly. Traders are still analyzing warning signs from Eastern Europe, trying to assess the prospects for global inflation and economic growth against a special military operation in Ukraine. Further escalation of the conflict significantly increases the demand for safe assets, but investors are increasingly giving their preference to the US currency, as the US Federal Reserve launched a cycle of raising interest rates. Also, as early as May, the rate growth rates may be increased, given the record inflation in the US and the relatively positive situation in the national labor market. The “bulls” are also supported by the escalation of tension between Russia and the West, the imposition of mirror economic sanctions by the states, and the lack of progress in ceasefire negotiations between representatives of the Russian and Ukrainian delegations. The next face-to-face round is scheduled for March 28–30. It will be held in Turkey.

The US macroeconomic statistics released on Friday were negative. Thus, the index of consumer confidence from the University of Michigan in March decreased from 59.7 to 59.4 points, while analysts did not expect changes. The pending home sales fell by 4.1% in February after falling by 5.8% in January. Analysts had expected positive dynamics at 1.0%. Meanwhile, the 10-year US Treasury yield rose by 5.4 basis points to its highest level since May 2019, around 2.54%, which pushed the US dollar index to a two-week high.

Resistance levels: 1.2558, 1.2600, 1.2650, 1.2700.
Support levels: 1.2450, 1.2400, 1.2335, 1.2300.

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NZDUSD, New Zealand employment recovers

Supported by soaring commodity prices and positive employment statistics from the Stats N.Z. agency, the NZD/USD pair is holding at stable levels around 0.6945.

Over the past month, the number of employed jobs in the country increased by 5,989K, which is 0.3% higher than in January. The sector of scientific and technological services showed the greatest growth of the indicator, having added 8.2% or 14.185K jobs, and in the construction sector, the value increased by 7.0%. Security added 6.8%, while healthcare and retail added 4.1% and 3.9%, respectively.

Meanwhile, the USD Index is trying to break through the 99.000 mark. US 10-year Treasury yields rose nearly 2.5% amid investor optimism following “hawkish” rhetoric from the U.S. Fed and officials willing to push up to seven rate hikes in 2022. A preliminary estimate the US Nonfarm Payrolls is 488K, which is much lower than the previous figure of 678K, and negative figures may also affect the decision of the country’s financial authorities to make a significant interest rate adjustment at the next meeting.

As NBC News reported yesterday, the approval rating for the work of the head of the White House, Joe Biden, continues to decline, currently amounting to only 40%, while at the beginning of the year, it consolidated around 54% steadily. According to the TV channel, first of all, citizens are dissatisfied with the economic situation in the country associated with rising fuel and food prices.

The instrument moves within the local ascending channel, rising along the resistance line. Technical indicators maintain a stable buy signal: fast EMAs on the alligator indicator are significantly above the signal line, and the A.O. oscillator histogram forms rising bars in the buying zone.

Resistance levels: 0.6980, 0.7158.
Support levels: 0.6889, 0.6710.

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NZDUSD, upward momentum begins to weaken

The New Zealand dollar shows mixed trading dynamics against the US currency in the Asian session, consolidating near the support at around 0.69.

Yesterday the instrument fell sharply, but this was due only to technical factors, as well as market hopes that the US Federal Reserve will accelerate the tightening of monetary policy in the near future. In particular, it is assumed that the regulator will raise the interest rate in May by 50 basis points at once, and will also launch quantitative tightening mechanisms. In addition, the benchmark 10-year US Treasury yield hit a multi-year high of 2.557% the day before, making the US currency even more attractive to invest in.

The demand for the US dollar is also supported by the development of the military conflict in Ukraine. Traders are frustrated with the negotiation process, which has not led to any results so far. In turn, the sanctions pressure is only increasing, and Russia is already preparing to take retaliatory measures. In particular, Russian President Vladimir Putin ordered all payments for gas to be converted into rubles, which many European countries considered a violation of existing contracts. In addition, the authorities of Shanghai, home to about 25 million people, have introduced a record in two years lockdown due to the outbreak of the coronavirus. For the duration of the restrictions, transport communication will be stopped, most enterprises will switch to a remote mode of operation. Experts believe that a prolonged lockdown could affect demand for commodities such as crude oil, as well as threaten to collapse the global economy.

Support and resistance
Bollinger Bands on the daily chart show a steady increase. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is going down preserving a stable sell signal. Stochastic is showing similar dynamics; however, the indicator line is rapidly approaching its lows, indicating the risks of NZD being oversold in the ultra-short term.

Resistance levels: 0.6924, 0.696, 0.7, 0.705.
Support levels: 0.6866, 0.684, 0.6795, 0.6766.

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AUDUSD, Australia’s economy is recovering

The Australian currency continues to trade at stable levels around 0.7484 after the publication of positive macroeconomic statistics. This morning, the head of the Australian Bureau of Statistics, Ben James, said that the recovery of trade turnover is proceeding faster, which is also confirmed by data on retail sales, which added 1.8% in February. According to the official, the indicator reached such a high level for the second time in the history of observations after a sharp surge in November last year. In particular, significant growth was recorded in catering (+9.7%), clothing retail (+11.2%), and sales in department stores (+11.1%). At the same time, the retail food trade continues to experience difficulties, and the decline of 2.9% demonstrates this.

Meanwhile, Prime Minister Scott Morrison announced that the country’s 2023 federal budget had set record funding for infrastructure projects, which will receive around 18B Australian dollars. The most significant funds will be spent on the construction of intermodal and cargo terminals in Melbourne (3.6B dollars) and the modernization and increase in the capacity of the railway network on the east coast of the continent (4.5B dollars). As expected, the Federal Parliament of Australia will consider the budget prepared by the country’s government already today.

The price is moving within a wide side channel on the global chart, having reached the resistance line yesterday. Even though the technical indicators are in a buy signal, this level is quite solid, and the price may not break immediately. The most likely scenario would be a rollback of quotes and a full downward correction.

Resistance levels: 0.7540, 0.7750.
Support levels: 0.7442, 0.7165.

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S&P 500, growth at the back of correction in the bond market

The S&P 500 index is correcting up against the backdrop of growth in the bond market, trading at around 4587. In the corporate segment, it is worth noting the increased activity in the shares of electric car manufacturer Tesla Inc. The company said it plans to seek permission from its shareholders for an additional share split in the form of dividends ranging from 2:1 to 3:1. The last time such a split was held in August 2020, when each shareholder received additional four securities for one already in hand.

The bond market continues active growth, which was clearly confirmed by yesterday’s trading. The yield on 2-year US Treasury notes was fixed at 2.365%, well up from 1.553% at the last placement, the rate on 6-month notes was 1.050% versus 0.870% a month earlier, and the yield on 5-year treasury bills was fixed at 2.543% from 1.880% on the previous placement.

The index quotes are traded in a local uptrend, having overcome the resistance line of the descending channel the day before. Technical indicators have already reversed and issued a new buy signal: fast EMAs on the Alligator indicator crossed the signal line from below and the AO oscillator histogram moved into the buy zone, continuing to form ascending bars above the zero level.

Support levels: 4510, 4278.
Resistance levels: 4630, 4800.

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EURUSD: progress in negotiations between Russia and Ukraine pushes the price up

The European currency shows moderate growth against the US dollar during the Asian session, developing a strong “bullish” momentum formed the day before. EURUSD is testing 1.111 for a breakout and is located near the local highs of March 17.

The appearance of optimistic moods of investors was facilitated by the preliminary results of the meeting of the Russian and Ukrainian delegations, which ended in Turkey the day before. The parties announced significant breakthrough in the negotiations, which, in theory, could contribute to the de-escalation of the military conflict on the territory of Ukraine. Russian Defense Minister Sergei Shoigu also said that due to the transition of the current agreements into practice, the command decided to temporarily suspend the advance of troops in a number of areas. At the same time, it is noted that noticeable contradictions still remain between the parties, primarily on the territorial issue. Russia is expected to present its counter proposals today.

Another factor contributing to the growth of EUR/USD is the rally in eurozone bond yields. German 2-year Treasuries posted a substantial daily gain of 10 basis points for the first time since 2015. Continued positive dynamics will allow overcoming the key level of 0.0%.

In the meantime, market participants are waiting for the publication of a block of statistics on business sentiment in the euro area for March, as well as data on consumer inflation in Germany for the same period, which will be released today. Forecasts suggest a further increase in price pressure against the backdrop of a widespread decline in business confidence and activity. For example, the Gfk Consumer Confidence Survey for April in Germany released the day before fell from -8.5 to -15.5 points, which turned out to be significantly worse than market forecasts at the level of -12 points.

Bollinger Bands in D1 chart show moderate growth. The price range is slightly expanding, barely keeping up with the surge in “bullish” sentiment in recent days. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic is showing similar dynamics; however, the indicator line is already approaching its highs, indicating the risks of overbought EUR in the ultra-short term.

Resistance levels: 1.115, 1.1185, 1.122, 1.1255
Support levels: 1.11, 1.1051, 1.1, 1.0957.

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NZDUSD, trend replaced by an upward one​

The NZDUSD pair is strengthening to the level of 0.6980, as under the influence of rapidly rising commodity prices, the export-oriented economy of New Zealand is showing growth. Optimism about the negotiations between the Russian and Ukrainian delegations, which took place yesterday in Turkey, allows investors to pay attention to risky assets, as well as euros and shares of European companies.

Meanwhile, the New Zealand economy is showing strong growth, as evidenced by the publication of updated data on construction permits for February: the indicator increased by 10.5% for the month, although in January the value was negative and amounted to -8.7%.

Thus, the NZD/USD pair changes the long-term trend to an upward one, breaking through the key resistance level of 0.6910. For the “bulls”, new targets are opening in the area of 0.7055 and 0.7200, and the 0.6910 mark passes into the category of support levels and shifts to the area of 0.6885.

The mid-term trend in the NZDUSD pair has long been replaced by an upward one. As part of the growth last week, the bidders reached the target zone 3 (0.6963-0.6949), which buyers are trying to break out at the moment. If successful, the next will be target zone 4 (0.71030-0.7089). Key trend support: 0.6848-0.6834.

Resistance levels: 0.7055, 0.72 | Support levels: 0.6885, 0.6739, 0.665.​

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EURUSD, the threat of cutting off gas supplies to the EU has decreased

Today is the deadline for transferring payments to rubles for Russian energy resources by “unfriendly” countries. The change in the settlement procedure was introduced since the foreign exchange reserves of the Central Bank of the Russian Federation were frozen by the EU countries after the start of a special military operation in Ukraine. After negative comments from EU leaders, investors feared that the Russian authorities might permanently cut off gas supplies. Still, tensions eased yesterday after German Chancellor Olaf Scholz and Italian Prime Minister Mario Draghi contacted Russian President Vladimir Putin to elaborate on the proposed calculation scheme. It was a signal that supplies would not stop, and the EU countries were ready to make contact.

The American currency has been declining for the second session in a row. This time, the reason for the negative dynamics was the report on the poor growth of the US economy. Analysts expected that Q4 GDP would increase by 7.1%, but the growth was only 6.9%. Additional pressure on the dollar was provided by poor Nonfarm Payrolls, which increased by only 455K, which is significantly lower than 486K a week earlier.

The asset moves within a wide downward channel and yesterday’s local growth did not affect the general trend. Technical indicators maintain a global sell signal: fast EMAs on the Alligator indicator are below the signal line, while the AO oscillator histogram remains in the sell zone.

Resistance levels: 1.1226, 1.148 | Support levels: 1.1075, 1.0843

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USDCAD, correction after a two-day decline

The US dollar shows strong growth against the Canadian currency during the morning session on March 31, correcting after a two-day decline, which resulted in the renewal of local lows of November 10.

Hopes for a de-escalation of the conflict in Eastern Europe are gradually waning as the rhetoric of Russian and Ukrainian officials does not share the initial optimism expressed by the participants in the negotiation process in Istanbul earlier this week. Meanwhile, the risks of possible interruptions in the supply of Russian energy resources to Europe and several other countries are increasing significantly since earlier, Russian President Vladimir Putin instructed to transfer the gas payment system into rubles as soon as possible, which caused an extremely negative reaction from European partners, who considered this decision a violation of the contract obligations.

Today, investors wait for February’s macroeconomic US dynamics of personal income and spending. Also, Initial Jobless Claims data for the week of March 25 will be published during the day. Canada is to release January GDP data for January (on a monthly basis), and later, it will present a draft of the country’s annual budget. On Friday, the focus of private traders will be the March report on the US labor market, which will clarify the prospects for a faster tightening of the US Federal Reserve’s monetary policy.

On the daily chart, Bollinger bands show a steady decline as the price range narrows, reflecting the emergence of ambiguous trading dynamics in the short term. MACD reverses upwards, forming a new buy signal and trying to consolidate above the zero line. Stochastic shows similar dynamics, retreating from its lows and reflecting that corrective growth is possible in the ultra-short term.

Resistance levels: 1.2558, 1.2600, 1.2650, 1.2700 | Support levels: 1.2450, 1.2400, 1.2335, 1.2300

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USDCHF, the US dollar is recovering its positions

The US dollar shows moderate growth against the Swiss franc during the Asian session, recovering from a sharp decline the day before, which led to updating local lows from March 7. Investors are turning their attention back to the defensive asset as expectations decline for a peace deal between Russia and Ukraine that would bring about a final ceasefire. However, buyers are cautious ahead of the publication of a large block of US macroeconomic statistics at the end of the week. The focus is on the Friday’s report on the labor market for March, which will re-evaluate the prospects for an earlier tightening of monetary policy by the US Federal Reserve during the May meeting. Earlier, the Chair of the regulator, Jerome Powell, did not rule out the possibility of raising the rate by 50 basis points at once in response to the continuing growth of inflationary pressure.

The macroeconomic statistics from the US and Switzerland published yesterday did not have a significant impact on the dynamics of the instrument. The index of economic expectations in Switzerland from the ZEW Institute in March showed a sharp decline from 9 to -27.8 points, which turned out to be significantly worse than market expectations of growth to 9.1 points. In turn, US data reflected a slight decline in GDP dynamics for Q4 2021 from 7% to 6.9%. In addition, the ADP Employment Change Report showed an increase of only 455K new jobs after an increase of 486K.

On the D1 chart Bollinger Bands are reversing into the descending plane. The price range is expanding from below; however, it fails to catch the surge of the “bearish” sentiment at the moment. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic keeps a downward direction but is located near its lows, which indicates the risks of oversold USD in the ultra-short term.

Resistance levels: 0.9250, 0.9300, 0.9341, 0.9381 | Support levels: 0.9219, 0.9200, 0.9175, 0.9148

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EURUSD, euro is correcting at the end of the week​

The European currency shows flat dynamics of trading against the US dollar during the Asian session, consolidating near 1.1060 and waiting for new drivers. The day before, the euro showed a sharp weakening against the US currency, which did not allow the instrument to consolidate on new local highs from March 1.

The return of “bearish” trend was due to the growth of negative sentiments regarding the impact of sanctions against Russia on the global and European economy in particular. Among other things, analysts are trying to assess the prospects for interruptions in gas supplies to the EU due to the introduction of a new mechanism for paying current and subsequent contracts in rubles. Many European countries have said they will not make concessions to Russia, which could lead to a potential cessation of exports by the Russian Federation.

The macroeconomic statistics from the EU published yesterday had only a minor impact on the dynamics of the instrument. Retail Sales in Germany rose by 0.3% in February, which was slightly worse than market expectations at the level of 0.5%. In annual terms, sales volumes slowed down from 10.4% to 7.0%, while experts expected a fall to 6.1%. At the same time, the German labor market in March showed very encouraging resilience on the eve of a new possible crisis. The Unemployment Change in the country fell by 18K, slowing down, however, after a decline of 33K.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is almost unchanged, reflecting the development of flat dynamics of trading in the short term. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, having reached the level of “80”, reversed into a descending plane, reacting to the appearance of corrective dynamics on the results of Thursday.

Resistance levels: 1.11, 1.115, 1.1185, 1.122 | Support levels: 1.1051, 1.1, 1.0957, 1.09

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Dow Jones, the US stock market is preparing for a new decline

The US stock market is declining again, the reason for which was the technology sector, whose shares are seriously getting cheaper. Thus, Advanced Micro Devices Inc. stocks lost more than 5.6% due to the negative forecast of Barclays experts and the change of the recommendation to negative. In turn, the quotes of HP Inc. and Dell Technologies Inc. are losing 7.6% and 7.4%, respectively, after Morgan Stanley analysts lowered their forecast for the purchase of shares of these companies.

The US bond market is showing local growth. Thus, the yield rate on 10-year US Treasuries increased by 2.62% and by 1.90% on conservative 20-year securities. Short-term bonds are also rising. The rate on annual treasury securities increased by 1.77%, and on 6-month — by 3.50%.

At the moment, there is not a single company showing growth in the index, and among the least losing in price are Caterpillar Inc. (-0.12%), Amgen Inc. (-0.31%), Coca-Cola Co. (-0.34%), Merck&Co. (-0.42%).

The leaders of the decline are Walgreens Boots Inc. (-5.67%), Intel Corp. (-3.71%), JPMorgan Chase & Co. (-3.00%).

The index quotes continue to trade inside the descending channel, having reached the resistance line the day before. Technical indicators are ready to reverse and issue a sell signal: the fast EMA of the alligator indicator began to actively approach the signal line, and the histogram of the AO oscillator formed the first descending bar.

Support levels: 34327, 32540 | Resistance levels: 35260, 36410

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USDCHF, rising inflation in Switzerland strengthens the franc

The strengthening of the Swiss franc was caused by outstripping inflation, which remained in the zero area for a long time. Today, renewed data on the consumer price index for March was released: the indicator rose by 0.6% MoM, higher than the forecast of 0.5%, and amounted to 2.4% YoY. It means that rising prices around the world are beginning to impact the Swiss economy, which in the future may lead to an increase in the interest rate. The procure.ch Manufacturing PMI was released today, showing the activity of purchasing managers in the manufacturing sector. The indicator reached 64.0 points, higher than the forecast of 60.5 points and the previous value of 62.6 points, which further supported the franc.

It is worth noting that Switzerland and the United States are at different stages of the economic cycle, and their central banks pursue different monetary policies. Switzerland maintains a negative interest rate of –0.75%, which has not changed for seven years, and the US Federal Reserve has begun to tighten monetary policy, which implies a cycle of interest rate hikes in 2022. The US dollar is expected to strengthen in the long term, while the Swiss franc can maintain its position and remain neutral.

The long-term trend is upwards, but now, a correction is developing, within which the asset tested the support area of ​​0.9205–0.9155. If buyers hold it, then the growth of the asset will continue to 0.9450.

As part of the medium-term downtrend, the instrument reached the target zone 2 (0.9216–0.9204), the breakdown of which will allow sellers to lower the price to the target zone 3 (0.9098–0.9087). Holding the target zone 2 may lead to a medium-term correction to the trend line 0.9326–0.9314.

Resistance levels: 0.9363, 0.9450, 0.9539 | Support levels: 0.9205, 0.9155, 0.9089, 0.9033

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AUDUSD, the instrument is testing 0.7500 for the breakout

During the Asian session, the AUDUSD pair is actively growing, re-testing the level of 0.7500 for the breakout. The instrument is developing a “bullish” momentum formed at the end of the last week. However, the general dynamics of the short-term outlook remain flat for now.

A strong report on the US labor market, published on Friday, did not allow quotations to consolidate on new local highs. However, the data from Australia were also positive. Thus, the AiG manufacturing activity index rose from 53.2 to 55.7 points for March, which outpaced the average market forecasts, while the Australian Commonwealth Bank manufacturing PMI index rose from 57.3 to 57.7 points over the same period against neutral expectations of investors. The National Reserve Bank Commodity Price Index accelerated from 34% to 40.9% in March, well above the expected 10% rise. At the same time, statistics on the credit market disappointed traders: for February, the volume of mortgage loans issued decreased by 4.7% after increasing by 1% last month, although preliminary market estimates suggested an increase of 1%. An additional “bearish” factor for the asset is the index of the number of vacancies published today by the Australian financial group ANZ. For March, the indicator slowed down sharply from 8.4% to 0.4%, significantly worse than market forecasts of 1.6%.

Support and resistance
On the daily chart, Bollinger bands are steadily rising: the price range is actively narrowing, indicating ambiguous trading dynamics in the short term. The MACD indicator falls, keeping a poor sell signal (the histogram is below the signal line). Stochastic interrupted its confident fall and reversed into a horizontal plane approximately in the center of its working area.

Resistance levels: 0.755, 0.76, 0.765, 0.77 | Support levels: 0.75, 0.744, 0.7366, 0.73

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NZDUSD, import costs for New Zealand rise

Yesterday, the New Zealand news agency Stats NZ published a report on price dynamics in the commodity market: imports of petroleum products increased by 81% in January and February, imports of fertilizers rose by 161%, and equipment – increased by 14%. According to experts, the negative dynamics of indicators are caused by high global inflation rates, which have already caused price adjustments for food products in the country’s supermarkets. The current growth will undoubtedly affect sales dynamics, which may put pressure on the New Zealand dollar.

The USD Index is at stable levels above 98.000. Despite the US unemployment rate decline to 3.6% last month from 3.8% in February, local data recorded another decrease in Nonfarm Payrolls to 431K from 750K, while the average wage rose immediately by 5.6%. Strong data confirmed that the US Federal Reserve would decide to raise interest rates by 50 basis points at once during its May meeting.

The NZDUSD pair moves within the local rising channel, rising along the resistance line. Technical indicators keep a stable buy signal: fast EMAs on the alligator indicator are above the signal line, and the AO oscillator histogram forms downward bars in the buying zone.

Resistance levels: 0.6989, 0.7201 | Support levels: 0.6864, 0.6536

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GBPUSD, flat dynamics in the short term

The pound shows a weak upward dynamics of trading during the morning session, developing the “bullish” momentum formed the day before, when GBP/USD retreated from the local lows of March 30. Demand for the British currency remains quite low, and in general, the instrument shows rather flat dynamics in the short term, due to growing risks of increased pressure against the Russian economy due to the situation in Ukraine.

Western countries are discussing the introduction of another package of sanctions against the Russian economy, referring to the crimes of the Russian military in the Ukrainian city of Bucha. New restrictions could include a ban on Russian ships using EU ports, an embargo on coal, oil or gas supplies, and personal sanctions.

The UK announced a complete embargo on Russian oil imports back in March, as the dependence of the British economy on energy from the Russian Federation is significantly lower than that of European countries. However, prices for “black gold”, gasoline and gas are growing here too, threatening the pace of national economic recovery. Earlier, the Governor of the Bank of England, Andrew Bailey, warned that the country could face the most powerful crisis since 1970, and inflation by the end of 2022 could reach 9%.

It should also be noted that the British Chancellor of the Exchequer Rishi Sunak said that he had instructed the Royal Mint to develop and issue its own non-fungible token (NFT) by this summer. Thus, the British authorities are trying to take a leading position in the crypto space and take the regulation of digital assets in the country to a new level. In particular, some tokens will be included in the national payment system to legalize work with them, traders will be able to receive advice when trading, and groups will be created to interact with crypto assets, chaired by ministers and members of regulatory bodies in the UK and industry.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is almost constant, remaining rather spacious for the current level of activity in the market. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic turned into a horizontal plane in the center of its area, indicating an approximate balance of power in the short and ultra-short term.

Resistance levels: 1.315, 1.32, 1.325, 1.33 | Support levels: 1.31, 1.305, 1.3, 1.296

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USDCAD, the pair retreats from local highs

The US dollar is falling against the Canadian currency at the beginning of a new trading week, retreating from local highs, updated last Friday, and testing the level of 1.2470 for a breakdown. Investors are in no hurry to open new positions in anticipation of the publication of the minutes of the meeting of the US Federal Reserve. In turn, the USD Index is moving towards resistance at 99.000 and if it manages to consolidate above this level, it will head towards the next resistance at 99.200, which could push USDCAD to new growth.

The extremely tense situation around Ukraine remains in the spotlight. At the beginning of the week, market participants are again actively discussing the possibility of introducing new sanctions against the Russian economy, which may significantly limit the import of Russian energy resources to Europe, and the changes may also affect the financial sector.

Canadian macroeconomic statistics released on Monday provided moderate support for the national currency. Building Permits issued in February showed a record increase of 21% after declining by 8.2% a month earlier. Traders also focused on the US government bond market: the yield on 2-year bonds fell to 2.44%, but this movement did not put significant pressure on the US currency. Today, the publication of February data on the dynamics of imports and exports in Canada is expected, and the release of the March report on the Canadian labor market will take center stage on Friday.

Support and resistance

Bollinger Bands in D1 chart demonstrate quite active decrease. The price range is narrowed, being spacious enough for the current activity level in the market. MACD indicator is growing keeping a weak buy signal (located above the signal line). Stochastic shows similar dynamics, being located approximately in the center of its area and signaling the possibility of further development of “bullish” trend in the ultra-short term.

Resistance levels: 1.2538, 1.26, 1.265, 1.27 | Support levels: 1.245, 1.24, 1.2335, 1.23

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EURUSD, the euro develops a downtrend

The European currency is trading with a slight decrease against the US dollar during the Asian session, testing 1.0900 for a breakdown and updating local lows from March 9. Market sentiment correlates with the predominantly “bearish” trend in EURUSD since the end of last week.

Investors are assessing the prospects for further acceleration of inflation in the region as the EU considers the introduction of another package of sanctions against the Russian economy after evidence of war crimes in the Ukrainian city of Bucha. It is expected that the new restrictions will affect the import of coal for 4 billion euros per year, as well as equipment for the gas industry, transport and other industries for 10 billion euros per year. The sanctions will also affect the ban on investment, in particular; it is planned to introduce new measures against financial institutions and state-owned enterprises, as well as a number of representatives of the Russian authorities and their families. The European Union will stop buying fertilizers, timber and a number of food products from Russia, which in the current realities is estimated at about 5.5 billion dollars a year. Imports of Russian oil, as well as natural gas, remain practically unchanged, since for many EU countries this is a fundamental issue of energy security. In particular, Germany and Hungary oppose a complete embargo. At the moment, the EU buys almost 40% of all gas and about 60% of oil and oil products from Russia.

Macroeconomic statistics from Europe published on Tuesday turned out to be restrainedly optimistic, but did not have a noticeable impact on the market. The Composite Manufacturing PMI in the eurozone in March rose from 54.5 to 54.9 points with a neutral forecast. The Services PMI for the same period increased from 54.8 to 55.6 points, while analysts did not expect any changes here either.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is expanding, but at the moment it is not keeping up with the surge of “bearish” sentiment. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic retains stable downward direction but is located in close proximity to the zero level, which indicates the risks of oversold euro in the ultra-short term.

Resistance levels: 1.0957, 1.1, 1.1051, 1.11 | Support levels: 1.09, 1.086, 1.08, 1.0767

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USDJPY, the US dollar is testing $124 for a breakout

The US dollar shows weak gains against the Japanese yen in Asian trading, testing $124 for a breakout. The USDJPY pair is developing an uptrend, formed at the end of last week, and is updating local highs from March 29. Moderate support for the US currency is provided by moderately optimistic macroeconomic statistics from the US on business activity from ISM.

At the same time, the general situation on the market is changing little and the demand for the dollar is still held against the backdrop of deteriorating growth prospects for the global economy. In addition, traders expect further steps from the US Federal Reserve towards tightening monetary policy. In May, the American regulator will meet for a regular meeting, following which the interest rate can be increased immediately by 50 basis points. The Bank of Japan, in turn, is forced to maintain a soft monetary policy in an effort to overcome deflationary risks. The day before, the Governor of the Japanese regulator Haruhiko Kuroda, speaking in Parliament, said that the recent fluctuations in the yen were too rapid, and the stability of the national currency is extremely important. The official reiterated that a weak yen is good for the economy as a whole as it helps boost overseas profits for companies and stressed that the central bank will continue to buy unlimited 10-year bonds if long-term interest rates rise quickly.

Tuesday’s macroeconomic statistics from Japan turned out to be ambiguous. Thus, the Jibun Bank Manufacturing PMI in March strengthened from 48.7 to 49.4 points. At the same time, Overall Household Spending in February slowed down sharply from 6.9% to 1.1%, which turned out to be noticeably worse than analysts’ forecasts at the level of 2.7%.

Bollinger Bands on the daily chart show a steady increase. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD has reversed to growth having formed a new buy signal (located above the signal line). Stochastic grows more actively and is approaching its highs, which reflects risks of the overbought USD in the ultra-short term.

Resistance levels: 124, 124.5, 125.09 | Support levels: 123.02, 122, 121.26, 120.5

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The Australian dollar shows a rather active decline during the Asian session, developing the “bearish” momentum formed the day before. The US dollar is gaining in value after yesterday’s publication of the minutes of the meeting of the Federal Open Market Committee of the US Fed (FOMC), which pushed AUDUSD to new lows below 0.75.

Traders noted an even more resolute attitude of the regulator regarding the prospects for further tightening of monetary policy in the country. In particular, the Committee spoke in favor of reducing the Fed’s balance sheet by 95 billion dollars a month, although earlier experts assumed that the volume could be only about 60 billion dollars. The dollar was also supported by comments from US Federal Reserve Board member Lael Brainard, who warned that the agency may need more than one rate hike by 0.50% at once during 2022.

In turn, the Reserve Bank of Australia, at a meeting held on April 5, decided to keep the official monetary rate at a record low level of 0.10%. The monetary policy statement said that the Australian economy remains resilient and spending is on the rise after the tide of the pandemic caused by the Omicron strain of coronavirus has subsided.

Some pressure on the positions of the Australian currency today is exerted by weak macroeconomic statistics from Australia. Export volumes in February showed zero dynamics after an increase of 8% in January. Imports at the same time rose sharply by 12% after falling by 2% a month earlier. As a result, the trade surplus in February fell sharply from 12.891 billion to 7.457 billion Australian dollars, which was significantly below the market’s expectations of 12.000 billion Australian dollars. AiG Services PMI in March fell from 60 to 56.2 points.

Bollinger Bands in D1 chart show active growth. The price range is sharply narrowing, reflecting ambiguous dynamics of trading in the short term. MACD reversed downwards having formed a new sell signal (located below the signal line). Stochastic is showing similar dynamics; however, the indicator line is already approaching its lows, indicating the risks of oversold AUD in the ultra-short term.

Resistance levels: 0.75, 0.755, 0.76, 0.765 | Support levels: 0.744, 0.7366, 0.73, 0.725

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