Forex, Commodities, Crypto Market Analysis by Solid ECN

Commercial Content Analysts
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The New Zealand dollar shows an active decrease against the US dollar during the Asian session, developing a strong “bearish” momentum that formed the day before. NZDUSD is testing 0.67 for a breakdown and updating local lows from February 28. The pressure on the instrument is again exerted by the growing US dollar, which is supported by the expectations of an early tightening of the monetary policy of the US Fed. The regulator expects to raise the interest rate immediately by 50 basis points already during its May meeting. In addition, the Fed is likely to launch a quantitative tightening program that will help reduce its balance sheet.

Additional pressure on the NZ dollar is exerted by the macroeconomic statistics from New Zealand released yesterday. The Consumer Price Index in Q1 2022 accelerated from 1.4% to 1.8%, which turned out to be only 0.2% worse than market expectations. In annual terms, inflation reached a new record high of 6.9%, although analysts had projected an increase to 7.1%.

Bollinger Bands on the daily chart show a steady decline. The price range is narrowing, reflecting the emergence of multidirectional trading dynamics in the short term. MACD reversed downwards having formed a new sell signal (located below the signal line). Stochastic, which made an attempt to grow a few days ago, is again reversing into a horizontal plane, reacting to a surge of “bearish” activity. It is necessary to wait for the trade signals from technical indicators to become clear.

Resistance levels: 0.677, 0.6812, 0.6874, 0.6924 | Support levels: 0.67, 0.665, 0.66, 0.6568

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The euro’s fall continues against the backdrop of approaching the next meeting of the US Federal Reserve on May 4, at which the regulator is likely to raise interest rates by 25–50 basis points. Only 0.2% of experts believe that monetary policy will not change. The US dollar is likely to strengthen against all major currencies in the long term. By raising the rate, the regulator hopes to bring inflation under control: according to the latest data, the consumer price index in the US reached a record high in 40 years – 8.5%.

Inflation in the EU is not far behind at 7.4%, but the European Central Bank is in no hurry to tighten monetary policy. So far, all that is known is that in the second half of 2022, the curtailment of the bond redemption program may begin, and only then the agency will consider raising the rate. Until the ECB takes decisive action and until the end of the military conflict in Ukraine, the euro is likely to decline against the US dollar.

The long-term trend is downwards. After the price consolidates below 1.085, the decline continues to the 2020 low at 1.0650. The nearest resistance, from which one can consider selling, is 1.085.

The medium-term trend is down. This week, market participants are trying to break through target zone 2 (1.08–1.0781). The next sell target will be zone 3 (1.0608–1.0589) if they succeed. The key resistance of the trend is shifting to the levels (1.0968–1.0949).

Resistance levels: 1.085, 1.117 | Support levels: 1.065, 1.05

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AUDUSD, is trading in a downtrend amid a significant decline in the Australian currency, being at around 0.7343.

The Australian currency continues to decline in tandem with the US dollar against the background of the lack of positive dynamics of macroeconomic indicators. According to preliminary data, the Manufacturing PMI in April may reach 57.9 points, which is slightly higher than 57.7 points in March. The Services PMI may rise to 56.6 points from 55.6 points a month earlier.

In turn, the US currency continues to hold in an uptrend, being above 100.000 in the USD Index. The day before, the Chair of the US Fed, Jerome Powell, made a speech during which he indirectly blamed Russia’s actions on the territory of Ukraine for the increase in inflation and noted that now the conflict in Eastern Europe is exerting slight pressure on the US economy, but soon it may intensify, and inflation may increase even more. In the local perspective, this will support the US currency, but globally, the growth of the dollar will soon end.

On the global chart of the asset, the price is trading within a broad upward channel, approaching the support line. Technical indicators have already reversed and issued an updated sell signal: the range of the Alligator indicator EMAs fluctuations is expanding in the direction of decline, and the histogram of the AO oscillator forms descending bars.

Support levels: 0.7285, 0.7 | Resistance levels: 0.745, 0.76

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The Australian dollar shows a steady decline during the morning session, updating local lows from February 28. The instrument has been developing a downtrend since last Thursday, when the Fed Chairman Jerome Powell once again announced the need to raise interest rates by 0.50% at once at the May meeting. In addition, the regulator may launch a quantitative tightening program, which its representatives have also often spoken about recently. Investors took the official’s speech as an additional signal to reduce risky positions, which provoked a noticeable strengthening of the US currency.

The macroeconomic statistics released on Friday from Australia failed to slow down the development of the “bearish” dynamics for the instrument, despite the fact that the data turned out to be quite positive in general. The Commonwealth Bank Manufacturing PMI in April rose from 57.7 to 57.9 points, while analysts had expected growth to only 57.8 points. The Services PMI for the same period strengthened from 55.6 to 56.6 points, but the market expected a much more noticeable increase to 58.5 points. At the same time, the Composite PMI rose from 55.1 to 56.2 in April.

In addition, China recorded the highest daily death rate of the population from COVID-19 this year, and the record for the incidence in Shanghai was 21K people. The city authorities announced a new round of quarantine measures last week, including daily testing of citizens for coronavirus. China remains one of the few countries that have adopted a “zero tolerance” policy, imposing mandatory quarantine for those who come into contact with infected citizens in order to contain the spread of the disease.

Bollinger Bands in D1 chart demonstrate a stable 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 a steady downtrend but is located in close proximity to its lows, which indicates the risks of oversold AUD in the ultra-short term.

Resistance levels: 0.72, 0.725, 0.73, 0.7341 | Support levels: 0.715, 0.71, 0.705, 0.7

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During the Asian session, the USDCHF pair is actively growing, testing the level of 0.9580 for a breakout and holding near the record highs of June 2020, renewed at the end of last week after the speech of the head of the US Federal Reserve, Jerome Powell.

The regulator chairman confirmed his intention to start an aggressive adjustment of the monetary policy parameters and raise the interest rate by 50 basis points at the next meeting in May to combat the inflation rate, which has been a record for 40 years. Also, the agency is likely to launch a quantitative easing program, which will allow it to reduce its balance sheet, which currently stands at about 9T dollars, mainly consisting of Treasuries and mortgage-backed securities.

Against the backdrop of rising buying sentiment, the US currency ignored the national macroeconomic data on Friday. The PMI Markit index in the manufacturing sector in April rose from 58.8 to 59.7 points, while analysts expected a slight decline to 58.2 points. In turn, the business activity index in the service sector for the same period fell from 58 to 54.7 points with neutral market forecasts. The composite business activity index corrected from 57.7 to 55.1 points, which was noticeably worse than analysts’ expectations of 58.1 points.

On the daily chart, Bollinger Bands are steadily growing: the price range is expanding, letting the “bulls” renew the highs. The MACD indicator grows, keeping a strong buy signal (the histogram is above the signal line). Stochastic also maintains an upward direction but is near its highs, signaling that the dollar may become overbought in the ultra-short term.

Resistance levels: 0.96, 0.965, 0.97, 0.975 | Support levels: 0.9535, 0.95, 0.9459, 0.94

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The European currency shows a moderate decline against the US dollar during the Asian session, building on the “bearish” momentum formed at the end of last week, when the euro retreated from its local highs from April 7. The pressure on the instrument is exerted by the previous factors of a gradually strengthening dollar against the backdrop of deterioration in global economic prospects.

The military conflict in Ukraine is intensifying, despite the unprecedented sanctions imposed on the Russian economy by Western countries. Meanwhile, the EU is preparing another, sixth in a row, package of sanctions, which will likely be announced on April 25-29 and will significantly reduce the possibility of energy supplies from Russia. The issue of oil and gas imports for European countries is still extremely painful. Nevertheless, quite clear trends have been identified, and, not without pressure from the White House administration, the EU is gradually reducing its energy dependence on Russian resources, which, in turn, leads to an upward correction in energy prices, simultaneously pushing up the already high inflation in the region.

The macroeconomic statistics from Europe published last Friday did not have a noticeable impact on the dynamics of the instrument, despite the fact that the data, in general, was not disappointing. The eurozone Composite Manufacturing PMI rose from 54.9 to 55.8 in April, beating its forecast of a decline to 53.9. The Services PMI for the same period strengthened from 55.6 to 57.7 points, contrary to forecasts of a decline to 55 points.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is expanding reluctantly, making way to new local lows for the “bears”. MACD reversed downwards having formed a new sell signal (located below the signal line). Stochastic, having made an attempt to grow last week reversed downwards again and is testing the border of the oversold area.

Resistance levels: 1.08, 1.085, 1.09, 1.0957 | Support levels: 1.075, 1.07, 1.0634, 1.06

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The US dollar is developing flat trading dynamics in tandem with the yen during the Asian session, consolidating near 128. The development of the uptrend stopped last week, when USDJPY made new record highs, and the market plunged into a correction.

Meanwhile, demand for the US currency is increasing in anticipation of a more aggressive approach to tightening monetary policy parameters by the US Federal Reserve, pushing buyers to open new deals, while the Bank of Japan is only cautious about the risks of rising inflation in the country. The latter, however, does not frighten Japanese investors at all, who are accustomed to the deflationary characteristics of the national economy. The Bank of Japan is likely to keep its rate unchanged at -0.10% at its meeting on Thursday and refrain from major adjustments in its forecasts for further actions, as rising commodity prices force it to focus on maintaining the economic recovery after the coronavirus pandemic. Thus, in a broader sense, the Japanese yen is currently experiencing a “bullish” pullback after a consistent decline due to the regulator’s ultra-loose monetary policy.

Macroeconomic statistics from Japan, released the day before, turned out to be restrainedly optimistic: the Coincident Index in February rose from 96.3 to 96.8 points, which turned out to be better than the negative forecasts of analysts for a decline to 95.5 points. The Leading Economic Index for the same period fell from 101.2 to 100.0 points, while the market expected 100.9 points. The Unemployment Rate in the country in March also corrected down from 2.7% to 2.6%.

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 having formed a new sell signal (located below the signal line). Stochastic maintains a confident downtrend, being approximately in the center of its area.

Technical indicators do not contradict the development of the correctional decline in the short and/or ultra-short term.

Resistance levels: 128.62, 129.39, 130, 131 | Support levels: 127.5, 127, 126.3, 125.6

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EURUSD

Euro quotes are consolidating after a “bearish” start to the week, which led EURUSD to update record lows since March 2020. The reason for the emergence of upward dynamics on Tuesday are technical factors, while the news background continues to strengthen the dollar as a “safe” asset. Currently, traders are concerned about the prospects for the recovery of the global economy against the backdrop of further escalation of the conflict in Ukraine, which is the cause of the crisis in the commodity areas. In addition, there are reports from Beijing of a rapid increase in the incidence of coronavirus infection among the local population. Recently a large-scale lockdown ended in Shanghai, and now a similar prospect seems to threaten the capital of China. Over the past day, about 22K cases of COVID-19 were detected in the country, and more than 21K infected occurred in Beijing. Further tightening of coronavirus restrictions could lead to a decline in energy consumption in the Chinese economy. Meanwhile, macroeconomic statistics from Europe published on Monday turned out to be optimistic: the IFO Business Climate in Germany rose from 90.8 to 91.8 points in April, while analysts expected it to decline moderately to 89.1 points. The Current Assessment indicator for the same period rose from 97.1 to 97.2 points, which also turned out to be noticeably better than market expectations at the level of 95.8 points. The index of Economic Expectations in April strengthened from 84.9 to 86.7 points, ahead of forecasts at the level of 83.5 points.

GBPUSD

The pound is showing an uptrend against the US currency, correcting after a sharp decline over the past two sessions, which caused the instrument to renew all-time highs for the instrument since September 2020. GBPUSD received a signal for a technical correction, but analysts note that the outlook for the British currency is very controversial. Against the background of the rapidly developing energy crisis in Europe, many experts believe that in the future one should not exclude the possibility of a recession in the British economy, which is most actively involved in the anti-Russian sanctions policy after the start of a special military operation on the territory of Ukraine. In addition, the consequences of Brexit, which at one time managed to be avoided relatively easily, can now reappear with a larger negative effect. Also traders pay attention to a rather difficult position of the Bank of England. Earlier, the Governor of the British regulator, Andrew Bailey, admitted that the issue of adjusting interest rates is now becoming more acute. On the one hand, officials are forced to fight record inflation; on the other hand, it is necessary to prevent the national economy from falling into recession.

AUDUSD

The Australian dollar is correcting during morning trading, recovering from a three-day “bearish” rally, which led to the renewal of local lows from February 24. The growth of the instrument on Tuesday is supported by technical factors, while the informational background changes slightly. In turn, the pressure on the position of the Australian currency is still exerted by the disappointing prospects for the recovery of the global economy. The escalation of the crisis in Ukraine at the moment does not mean that the conflict, or at least its acute phase, will end in the near future. Meanwhile, sanctions pressure on Russia continues to intensify, approaching the most sensitive aspects of the bans, the energy imports. Any restrictions beyond those already in place will inevitably lead to additional price increases, which will aggravate the already difficult situation with inflation and the energy crisis in Europe and in the world as a whole. Today, the focus of investors will be on a block of statistics from the US on the dynamics of Durable Goods Orders, as well as data on New Home Sales in March. Interesting data from Australia will appear only on Wednesday, with the release of statistics on consumer inflation for Q1 2022, and analysts suggest acceleration in prices from 3.5% to 4.6% year on year.

USDJPY

The US dollar is developing flat trading dynamics in tandem with the yen during the Asian session, consolidating near 128.00. The development of the uptrend stopped last week, when USDJPY made new record highs, and the market plunged into a correction. Meanwhile, demand for the US currency is increasing in anticipation of a more aggressive approach to tightening monetary policy parameters by the US Federal Reserve, pushing buyers to open new deals, while the Bank of Japan is only cautious about the risks of rising inflation in the country. The latter, however, does not frighten Japanese investors at all, who are accustomed to the deflationary characteristics of the national economy. The Bank of Japan is likely to keep its rate unchanged at -0.10% at its meeting on Thursday and refrain from major adjustments in its forecasts for further actions, as rising commodity prices force it to focus on maintaining the economic recovery after the coronavirus pandemic. Macroeconomic statistics from Japan, released the day before, turned out to be restrainedly optimistic: the Coincident Index in February rose from 96.3 to 96.8 points, which turned out to be better than the negative forecasts of analysts for a decline to 95.5 points. The Leading Economic Index for the same period fell from 101.2 to 100.0 points, while the market expected 100.9 points. The Unemployment Rate in the country in March also corrected down from 2.7% to 2.6%.

XAUUSD

Gold prices are slightly increasing during the morning session, correcting after an active decline at the beginning of this week, which led XAUUSD to updating local lows from March 29. At the moment, the quotes are in the area of 1900.00 and are waiting for new drivers to move in the market. The pressure on the instrument is still exerted by expectations of further tightening of monetary policy by the US Federal Reserve. Already during the May meeting, members of the Fed can raise the key interest rate by 50 basis points, as well as launch a quantitative tightening program. In turn, the demand for “safe” gold is supported by the escalation of the conflict on the territory of Ukraine and the rapid growth of inflationary risks against the backdrop of further growth in energy prices.

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The American currency is moderately declining, retreating from the local highs of March 16, updated the day before. Investors attribute the development of “bearish” trend to the emergence of technical factors, while the fundamental background changes slightly and still contributes to the strengthening of the US dollar.

In particular, traders are concerned about the prospects for the recovery of the global economy against the backdrop of further escalation of the conflict in Ukraine, which is the cause of the crisis in the commodity areas. In addition, there are reports from Beijing of a rapid increase in the incidence of coronavirus infection among the local population. Recently a large-scale lockdown ended in Shanghai, and now a similar prospect seems to threaten the capital of China. Over the past day, about 22K cases of COVID-19 were detected in the country, and more than 21K infected occurred in Shanghai. Further tightening of coronavirus restrictions could lead to a decline in energy consumption in the Chinese economy.

Canadian macroeconomic statistics released late last week put moderate pressure on the positions of the Canadian currency, reflecting the expected slowdown in economic activity in the country. First of all, investors drew attention to a sharp slowdown in Retail Sales in February from 3.3% to 0.1%, while analysts had expected a decline of 0.1%. At the same time, Retail Sales excluding Automobiles over the same period slowed down only from 2.9% to 2.1%, while forecasts assumed zero dynamics.

Bollinger Bands in D1 chart show moderate growth. The price range expands, freeing a path to new local highs for the “bulls”. MACD is growing, maintaining a relatively strong buy signal, being located above the signal line. Stochastic, having approached the level of “100”, reversed into the horizontal plane, indicating risks of strongly overbought USD in the ultra-short term.

Resistance levels: 1.2750, 1.28, 1.2850, 1.29 | Support levels: 1.27, 1.265, 1.2600, 1.2538

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Quotes of USDJPY fell to a weekly low the day before, but today the yen is trying to regain its positions, despite the fact that the observed correction is largely associated with a slowdown in the growth of the US currency. Now the instrument is trading around 127.7.

Macroeconomic statistics from Japan turned out to be positive and supported the quotes of the national currency. The Unemployment Rate in the country in March fell to 2.6% from 2.7% a month earlier, despite the fact that analysts did not expect changes in the indicator. In turn, the Jobs / Applicants Ratio rose to 1.22 from the February value of 1.21, which coincided with analysts’ forecasts. Also noteworthy is the Core CPI from the Bank of Japan, which stood at 1.1% in March, slightly up from 1.0% in the previous month. Investors are waiting for the results of the meeting of the Japanese monetary policy regulator, which will be held tomorrow. Prime Minister Fumio Kishida has already called for keeping the current monetary policy parameters and not raising interest rates to prevent a rapid fall in the yen.

In turn, the US dollar is holding at its highs, having exceeded the level of 102.000 in the USD Index the day before against the backdrop of disappointing data on the Conference Board Consumer Confidence Index for April, which fell to 107.3 points, despite preliminary estimates of 108.0 points. In addition, New Home Sales also corrected downward in March from 835K to 763K.

The instrument is trading in a global uptrend, correcting within the local Flag pattern. Technical indicators hold a steady buy signal, which is working out a slight correction: the range of EMA fluctuations on the Alligator indicator is expanding, and the histogram of the AO oscillator is high in the purchase zone.

Support levels: 126.94, 123.77 | Resistance levels: 128.96, 133

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Today, the EURUSD pair renewed the 2020 low at 1.065, falling under the pressure of escalating the military conflict in Ukraine.

The decision of Russian President Vladimir Putin to sell natural gas to “unfriendly” countries for rubles is forcing European officials to refuse supplies and look for an alternative, more expensive options, which leads to inflation rising to a record high of 7.4% YoY. Analysts suggest that the negative trend will continue, and in April, the figure will reach 7.5%. Also, German Economic Minister Robert Habeck said on Tuesday that the country can now stop importing Russian oil, and Poland is ready to help it search for new suppliers, which has already indicated its position on refusing to renew existing contracts. Authorities hope to find alternatives in the coming days, the official said.

Against the backdrop of high inflation, the European Central Bank (ECB) is forced to adjust the current parameters of monetary policy. There are no official statements about the upcoming interest rate hike, however, according to analysts at Goldman Sachs Group, the regulator may adjust the rate by 25 basis points in July, and by 2023 the value will reach 1.25%. If ECB officials confirm this information, we can expect the EUR/USD pair to strengthen, and until then, the instrument is waiting for trading in a downtrend.

The US dollar is rising ahead of the US Federal Reserve’s interest rate decision on May 4th. It is expected that it will rise by 0.5% to 1%, which will help fight against high inflation.

The long-term trend is downward. Today, the asset has reached the support level of 1.0650, and after its breakdown, it may drop to 1.05, 1.035.

As part of the medium-term downtrend, the price reached the target zone 3 (1.0608 - 1.0589), after the breakdown of which the fall will continue with the target around ​​zone 4 (1.0416 - 1.0397). Otherwise, we can expect a correction to the area of ​​the key trend resistance 1.0799 - 1.078.

Resistance levels: 1.0850, 1.117 | Support levels: 1.065, 1.05

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The British pound continues its rapid decline, which began last Friday, and is currently trading in the area of 1.2523.

In addition to the economic reasons for the rapid downward movement in the asset, among which the main ones are a record increase in the cost of utilities and a drop in consumer demand (data from the Confederation of British Industry (CBI) recorded a decrease in retail sales in April to -35 points from 9 points a month earlier), there are also political aspects. Experts argue that there is a fairly high probability of Boris Johnson’s early departure from the post of Prime Minister of Great Britain, whose resignation is advocated by the Conservative Party. In 2020, Johnson’s cabinet repeatedly violated a strict ban on public gatherings during the lockdown, according to an internal investigation. If the official’s guilt is proven, he will have no choice but to resign, which, in turn, will put even more pressure on the pound.

Meanwhile, it is estimated that the British economy will suffer losses of 6.2B pounds due to anti-Russian sanctions imposed after the outbreak of the military conflict in Ukraine. Companies supplying luxury goods to Russia (Bentley and Aston Martin, Burberry) will record the greatest losses: in the next ten years they may lose 881.7M pounds of income, while the IT sector may lose about 4.1M pounds, and technology companies can lose 6.7M pounds.

This week, the US currency is actively adding in value, consolidating above 103.000 in the USD Index. Meanwhile, the situation in the national economy continues to deteriorate. The rate on 30-year mortgages increased again, amounting to 5.37%, surpassing the value of 5.20% in the previous period. Naturally, the negative dynamics provoked a drop in demand for mortgage loans, and the lending index fell by 8.3% compared to a 5.0% decline a week earlier.

The instrument continues to trade below the support line of the global downward channel, moving into the acceleration stage. Technical indicators are holding a sell signal, which is strengthening: the range of EMA fluctuations on the Alligator indicator expands in the direction of decline, and the histogram of the AO oscillator is held deep in the sales zone.

Support levels: 1.2477, 1.21 | Resistance levels: 1.2742, 1.326

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Quotes of EUR/USD are trading at the lowest levels since 2017 around 1.0520. The downtrend in the asset is intensifying against the backdrop of the negative impact of the possible consequences of the previously adopted anti-Russian sanctions, and, in particular, the ban on the import of raw materials and fertilizers. After the refusal of countries “unfriendly” to Russia to adhere to the new scheme of paying for energy resources in rubles, the PJSC Gazprom announced the termination of gas supplies to Poland and Bulgaria. Meanwhile, the German authorities showed solidarity on the issue of a complete ban on the purchase of Russian fuel, noting the need for a gradual transition to the use of alternative sources. Thus, the country withdrew its objections to a complete embargo on the supply of “black gold” from the Russian Federation and joined the rest of the EU members in this matter.

In the meantime, inflationary pressures in Germany and in the euro area as a whole continue to grow, which is reflected in macroeconomic indicators. German Consumer Price Index in April year on year reached 7.4% for the first time since 1974, rising from 7.3% a month earlier and yielding to analysts’ forecast at 7.2%, while Italian Consumer Confidence Index corrected to 100.0 points from 100.8 points. The Consumer Price Index in Spain showed a downtrend and reached 8.4% after 9.8% shown in the previous period; however, despite the decline in inflation, Unemployment Rate in the country is fixed at a high level: 13.65% against 13.33%, shown in March.

In turn, the US currency could not ignore the negative fundamental background and came under pressure from weak data on the labor market, after which it began a downward correction, dropping from 103.700 to 103.400 in the USD Index. Thus, according to statistics, the Continuing Jobless Claims amounted to 1.408 million, exceeding the projected 1.403 million. Another increase in the Core Personal Consumption Expenditures index should also be noted: the value in Q1 increased to 5.20% from 5.00%.

The instrument is trading below the support line of the wide descending channel, which the price crossed the day before. Technical indicators maintain the global sell signal: the fast EMAs of the Alligator indicator are below the signal line, and the histogram of the AO oscillator continues to decline in the sell zone, forming descending bars.

Support levels: 1.0470, 1.0170 | Resistance levels: 1.0760, 1.1170

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AUDUSD
Australia’s economy continues to slow down

The Australian currency is declining against the US dollar amid historically strong Consumer Price Data in Q1 2022. Now AUDUSD is trading in a downtrend, at around 0.7155.

The country’s inflation rate reached 5.1% for the first time in more than 20 years, adding 2.1% for the current quarter and demonstrating the highest growth rate on record, while the Export Price Index rose from 3.5% to 18.0%. Investors are looking forward to the Reserve Bank of Australia meeting scheduled for May 3, during which, as predicted, the interest rate could be increased by 15 basis points to 0.25%, in which case the pre-election position of Prime Minister Scott Morrison could seriously deteriorate. Even now, in addition to ordinary citizens, Australian officials are also expressing their dissatisfaction with his policies. The day before, the candidate for Finance Minister from the Labor Party, Jim Chalmers, accused the Prime Minister of rising prices and falling living standards. He noted that the current price increase is only the beginning, and major financial shocks await citizens ahead.

On the daily chart, the price is within the Expanding Formation pattern, approaching the support line. Technical indicators continue holding a steady sell signal: the range of the Alligator indicator EMAs fluctuations is expanding in the direction of decline, and the histogram of the AO oscillator forms descending bars.

Support levels: 0.7087, 0.6965 | Resistance levels: 0.7280, 0.757

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USDCHF, D1
On the daily chart, the price continues its active growth, which began in April. Last week, the trading instrument reached its highest values since May 2020 at the level of 0.9758, if it is broken out, the uptrend may continue; however, at present, the development of a downward correction of quotations to the area of 0.9572 (retracement of 23.6%), 0.9533 (extension of 100.0%, Ascending Fan line of 38.2%) is not excluded. In general, the potential for strengthening USD/CHF is quite high, which is signaled by the upward reversal of Bollinger Bands and the increase in the MACD histogram in the positive zone, but Stochastic is reversing downwards in the overbought zone and may leave it, having formed a sell signal.

USDCHF, W1
On the weekly chart, the price is actively breaking through the Opposite Descending Fan and is currently testing the level of 0.9670 (retracement of 61.8%), but has not consolidated above it yet. If successful, the growth of the trading instrument may continue to the levels of 0.9900 (the area of March 2020 highs) and 1.0192 (retracement of 100.0%). Otherwise, a corrective decline to the levels of 0.9510 (retracement of 50.0%) and 0.9350 (retracement of 38.2%) is possible. The uptrend in the asset continues, which is signaled by an upward reversal of Bollinger Bands and Stochastic, as well as an increase in the MACD histogram in the positive zone; however, the price chart leaving the upper Bollinger Band does not exclude a downward correction.

In the near future, a downward correction to the levels of 0.9572 (retracement of 23.6%, D1) and 0.9510 (retracement of 50.0%, W1) is possible. If the price consolidates above 0.9758 (the Opposite Descending Fan line of 61.8%, W1), USDCHF will probably continue to strengthen towards 0.99 (the March 2020 highs area) and 1.0192 (retracement of 100.0%, W1).

Resistance levels: 0.9758, 0.99, 1.0192 | Support levels: 0.967, 0.9572, 0.951

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The Canadian currency continues to resist the active growth of the US dollar, receiving support after the publication of data on Gross Domestic Product (GDP). At the moment, the quotes of USDCAD are trading in a local uptrend at around 1.2869.

Thus, according to the statistics presented, Canada’s economy grew by 1.1% in February, which is the best indicator since March 2021. Experts also note a significant strengthening of the services sectors (by 0.9%) and the production of goods (by 1.5%). Sixteen out of twenty industries grew in this period, and preliminary data show that in March, the country’s GDP may continue its positive dynamics and add another 0.5% due to the recovery of the national tourism market, as coronavirus restrictions were significantly eased. More than one million tourists visited Canada in the middle of last month for the first time since the pandemic, according to the Canada Border Services Agency (CBSA). As for the quarterly GDP indicator, the preliminary forecast indicates a possible growth of 1.4%, which may also have a positive impact on the national currency.

Meanwhile, the US dollar is still holding above 103.000 in the USD Index after Friday’s release of macroeconomic statistics. The Labor Cost Index in Q1 increased by 1.4% from 1.0%, which exceeded the 1.1% expected by analysts, and the Earnings index rose by 1.20%, having risen by 1.00% a quarter earlier, while the annual Personal Consumption Expenditure Index stood at 6.6 points in March, outperforming February’s 6.3 points.

On the daily chart, the price continues to trade within a wide channel, actively approaching the resistance line. Technical indicators are holding a steady signal to open long positions: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram is forming new ascending bars trading in the buy zone.

Support levels: 1.2798, 1.2448 | Resistance levels: 1.2937, 1.31

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Now, the third wave of the lower level 3 of (1) is developing, within which the wave i of 3 has formed, and a local correction has ended as the wave ii of 3. If the assumption is correct, the pair will grow to the levels of 1.3200–1.3410. In this scenario, critical stop loss level is 1.2446.

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NZDUSD is correcting downwards to the July 2020 lows, under pressure from the rapidly strengthening US dollar ahead of the US Federal Reserve meeting this week, and is trading near 0.6427.

On the daily chart, the price continues to actively decline as part of another wave inside the global downward channel, and after overcoming the level of the initial trend of 61.8% of Fibonacci extension at 0.662, it is ready to break through the next support.

On a four-hour timeframe, the quotes of the trading instrument approached the level of the basic trend of 100.0% of the Fibonacci extension at 0.6357, which also coincides with the support line of the global downward channel. Technical indicators confirm the high probability of breaking this level as well, strengthening their sell signal: the range of EMA fluctuations on the Alligator indicator expands in the direction of decline, and the histogram of the AO oscillator is forming new descending bars, being deep in the sales zone.

Support levels: 0.6357, 0.595 | Resistance levels: 0.662, 0.6976

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Market in anticipation of an increase in interest rates in the US

NZDUSD has been showing a downtrend since the end of last month, this week reaching its lowest levels since June 2020 around 0.6410. The pressure on the instrument is due to two main factors: the expectation of tightening of monetary policy by the US Federal Reserve and a decrease in prices for dairy products, which are New Zealand’s main export goods.

On Wednesday, May 4, a meeting of the US Fed will be held, at which, as expected, the interest rate may be increased by 50 basis points, and it may also be announced that the regulator’s balance sheet will be reduced, which will correct the record inflation growth in the country, that has reached forty-year high, and support the national currency. Many experts believe that a sharp increase in rates could lead to a recession in the US economy; moreover, according to preliminary data in Q1 2022, it has already decreased by 1.4%. However, US Fed officials hope that a significant decline will not happen and are ready to take risks, considering a significant increase in prices a more serious problem than a possible slowdown in economic development.

Meanwhile, milk prices have continued their downward correction since mid-March, shedding 3.6% despite a general increase in the cost of raw materials and food products. Today, the Global Dairy Trade will publish new statistics, and if the current trend continues, the New Zealand currency may be under significant pressure.

The price fell below 0.6470 (Murray [5/8], Fibonacci retracement 50.0%), which opens the way to 0.6347 (Murray [4/8]) and 0.6295 (Fibonacci retracement 61.8%). The key for the “bulls” seems to be the level of 0.6591 (Murray [6/8]), consolidation above which will allow the trading instrument to continue its upward movement to the area of 0.6714 (Murray [7/8], the center line of Bollinger Bands) and 0.6835 (Murray [8/8]). However, this option is less likely at the moment, as technical indicators show that the downtrend continues: Bollinger Bands are reversing downwards, MACD is increasing in the negative zone, and Stochastic is horizontal in the oversold zone.

Resistance levels: 0.6591, 0.6714, 0.6835 | Support levels: 0.6347, 0.6295

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European currency under pressure

The euro continues to trade at extremely low levels against its major counterparts, with the exception of the US dollar. Quotes of EURGBP are currently being corrected around 0.8391.

Macroeconomic data published the day before were weak: the Manufacturing PMI of Italy fell in April to 54.5 points from 55.8 points last month, and the same indicator in Germany declined to 54.6 points from 56.9 points, and only in France the value remained unchanged at the level of 55.7 points. Thus, the Composite Manufacturing PMI for the EU countries amounted to 55.5 points, which coincided with the March statistics and signals a slowdown in the eurozone economy.

In turn, the British currency currently looks much more confident than the European one. Today, data on the UK Manufacturing PMI for April will be published, and if the actual data coincide with the analysts’ forecast, which suggests that the figure will remain unchanged at 55.3 points, this may serve as additional support for the pound.

Meanwhile, the issue of energy security in the EU and the UK is becoming increasingly acute. At the end of last week, German Chancellor Olaf Scholz announced that the country would not use its veto power over the EU decision to declare an embargo on Russian oil. He also announced the readiness to stop the supply of Russian coal this summer and refuse to import oil until the end of the year against the backdrop of a serious reduction in the purchase of “blue fuel”. Meanwhile, the UK Treasury Chancellor said at a meeting with representatives of energy companies that the government is considering the option of imposing an additional tax on enterprises that are not ready to invest in protecting energy security. With gas prices skyrocketing, market participants, in his opinion, should include funding for a package of measures for the design of alternative energy sources and reducing imports in their development plans, since bills for ordinary citizens have doubled in the last year alone and will continue to grow in the autumn, which led to to social tension. Thus, the UK Labor Party is calling for a lump-sum tax on excess profits earned by companies such as BP Plc. and Shell Plc.

The asset is trading within the global Diamond pattern, and after reaching the resistance line, it forms a reversal. Technical indicators are holding a global buy signal, which is starting to weaken: fast EMAs on the Alligator indicator started to converge, and the AO oscillator histogram is forming descending bars, being in the buy zone.

Support levels: 0.8359, 0.8251 | Resistance levels: 0.8463, 0.8587