Forex, Commodities, Crypto Market Analysis by Solid ECN

Commercial Content Analysts
302

After reaching the level of 1.004, USDCHF corrected to 0.958 and continues to trade near it amid the depreciation of the US dollar, which is losing value against all major competitors. The sale is caused by the desire of investors to get better prices for entering long positions of the asset before the US Federal Reserve raises the interest rate at a meeting on June 15. It is expected that the regulator will adjust the value by 50 basis points to 1.50%. If the forecast is justified, the US currency will continue its strengthening, which began a year ago.

In turn, the Swiss National Bank will decide on the interest rate a day later, on June 16. Over the past few years, the regulator has kept the indicator at a record low level of –0.75%, and if the rhetoric of officials changes this time, the franc may react with an increase in the exchange rate against the dollar, but Swiss monetary tightening is unlikely to be as aggressive as in the USA. In this regard, one can assume a further increase in USD/CHF in the long term.

The long-term trend remains upward. At the moment, a correction is developing in the asset, within which market participants tested the support level of 0.958. If this level is kept, the growth will continue with the nearest target around 0.9757. If 0.958 is broken down, the correction will continue with the target at 0.945.

The mid-term trend is downward. This week the traders reached the target zone 4 (0.9615–0.9605), in case of a breakdown of which the decline will continue with the target in the area of the target zone 5 (0.9509–0.9499). Otherwise, a correction will start with the target at the trend line 0.9691–0.9681.

Resistance levels: 0.9757, 1.004 | Support levels: 0.958, 0.9450, 0.9363

303

The pound is trading with multidirectional dynamics during the morning session, keeping close to the local highs of May 5. The growth of the instrument is still supported by some weakness of the US currency, as the demand for it is gradually decreasing as there are signals about further tightening of monetary policy in Europe and the UK. Earlier, the President of the European Central Bank (ECB), Christine Lagarde, announced the readiness of the regulator to curtail the quantitative easing program in June, and then launch a cycle of raising the interest rate, which would help curb a sharp rise in inflation.

Significant pressure on the dollar position was exerted by weak macroeconomic statistics from the US, published the day before. Durable Goods Orders slowed from 0.6% to 0.4% in April, worse than analysts’ neutral forecasts, while Nondefense Capital Goods Orders excluding Aircraft, rose only 0.3% over the same period after an increase of 1.1% in March. Average market forecasts assumed a slowdown to 0.5%.

According to a study by Loughborough University, the rapid inflation in the UK, which reached 9% in April, had the most negative impact on the living standards of families with children. Prices for consumer goods and services have risen by an average of 400 pounds MoM, or 13% YoY, with food prices up 9.3% over the past year and childcare costs up 6.7%. Meanwhile, chief executive of Ofgem, the independent energy regulator for Great Britain, Jonathan Brearley, has predicted a further 42% increase in electricity tariffs by October, adding more than 800 pounds to the average annual bill. Thus, already next winter, about 9.6 million British families will face a fuel shortage, since about a tenth of the family budget will be directed to pay for electricity.

Bollinger Bands in D1 chart show moderate growth. The price range expands, freeing a path to new local highs for the “bulls”. MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic, being at its highs, is again trying to reverse downwards, indicating risks of overbought GBP in the ultra-short term.

Resistance levels: 1.2600, 1.2674, 1.2800, 1.2900 | Support levels: 1.2500, 1.2400, 1.2250, 1.2163

304

During the Asian session, the USDCHF pair is slightly corrected, renewing local lows from April 26. The asset is preparing to end trading with a fairly confident decline and continue the development of a strong “bearish” momentum formed last week.

The pressure on quotes is again exerted by uncertain US macroeconomic statistics, which increases the risk that the US Federal Reserve will break the interest rate hike cycle after its planned increase in June and July. Traders fear that the actions of financial regulators, which are due to the fight against high inflation, will lead to a noticeable slowdown in global economic growth. According to the revised data, the contraction of the US economy for the first quarter of this year amounted to 1.5%, which was 0.1% worse than the previous estimate.

On Friday, traders expect the publication in the US of April data on the dynamics of income and expenses of American citizens. Current forecasts suggest that revenue growth will remain flat at 0.5%, while spending could slow from 1.1% to 0.7%.

On the daily chart, Bollinger Bands are steadily declining: the price range expands, letting the “bears” renew local lows. The MACD indicator falls, keeping a strong sell signal (the histogram is below the signal line). Stochastic is close to its lows, signaling that USD may become oversold in the ultra-short term.

Resistance levels: 0.96, 0.9637, 0.97, 0.9762 | Support levels: 0.9535, 0.9459, 0.94, 0.93

305

The New Zealand dollar shows moderate growth during the morning session, updating local highs from May 5. NZDUSD is testing 0.655 for a breakout.

The US dollar is still under pressure from macroeconomic statistics, which indicates a gradual slowdown in the national economy. At the same time, the US Federal Reserve signaled earlier that after raising the rate in June and July, a pause will be taken in the monetary policy tightening cycle to assess the balance of inflationary risks and pressure on the economy due to high rates. The Reserve Bank of New Zealand (RBNZ) raised its rate last week, which, in general, coincided with most forecasts of market experts. The next meeting of the regulator will take place on July 13. The macroeconomic statistics released on Friday in New Zealand put moderate pressure on the positions of the instrument. ANZ Consumer Confidence in May fell from 84.4 to 82.3 points, which turned out to be worse than the average analysts’ forecasts.

New Zealand authorities will open their borders to foreigners on July 31, lifting travel restrictions two months ahead of schedule. Prime Minister Jacinda Ardern said the country will only accept vaccinated tourists, who will still need to be tested. Prior to the start of the COVID-19 pandemic in 2020, tourism was one of the most highly developed industries in New Zealand, providing at least 10% of the country’s total income.

Bollinger Bands on the daily chart show a steady increase. The price range expands, freeing a path to new local highs for the “bulls”. MACD grows, preserving a stable buy signal (located above the signal line). The indicator is about to test the zero level for a breakout. Stochastic, having approached its highs, shows mixed dynamics, indicating the risks of a strongly overbought New Zealand dollar in the ultra-short term.

Resistance levels: 0.6567, 0.66, 0.665, 0.67 | Support levels: 0.65, 0.645, 0.64, 0.63

306

USDCAD, H4
On the four-hour chart, below the resistance level of 1.2875, there is the formation of successive Shooting Star candlestick analysis patterns, after which the asset showed a significant decrease. In the process of downward dynamics, the Three Black Crows pattern was formed, which is a model for the continuation of the “bearish” trend. Further decline of USDCAD to the nearest support level of 1.2654 is expected, fixing below which will allow the quotes to continue moving towards the area of 1.2558–1.247. An alternative scenario may be relevant in case the price breaks through the resistance level of 1.2771.

USDCAD, D1
The daily chart shows the formation of a Head and Shoulders price pattern, the Neck line of which has been overcome. The quotes tested the broken level, forming an Evening Star candlestick analysis model at 1.2875. A confirming signal of price fixing is the formed Three Black Crows pattern of continuation of the downtrend. At the moment, under the level of 1.2733, it is possible to build a Bearish Belt Hold figure. In case of successful overcoming of the support level of 1.2654, the quotes will most likely continue their decline to the zone of 1.2558–1.247.

Support levels: 1.2654, 1.2558, 1.2470 | Resistance levels: 1.2771, 1.2875, 1.2973

307

The USDCAD pair is actively declining, reaching 1.2660 due to the upward dynamics of oil quotes.

The EU authorities have agreed to impose an embargo on importing two-thirds of crude oil and petroleum products supplied from Russia to the EU with a temporary exception of transportation through the Druzhba pipeline in response to the escalation of the military conflict in Ukraine. Thus, the EU will reduce the import of “black gold” to 90% by the end of the year. Also, officials will step up work to reduce dependence on gas and coal from the Russian Federation. The sanctions policy will not affect Hungary, which remains highly dependent on Russian energy resources. Against this backdrop, Brent Crude Oil prices rose to 122 dollars per barrel, while the USD/CAD pair fell to 1.2660.

Traders are waiting for the results of the June meeting of the US Federal Reserve, which can act as a catalyst for the upward movement of the US currency. Analysts predict a continuation of the “hawkish” policy and increased interest rate by another 50 basis points, to 1.50%. If the forecast is correct, the adjustment cycle will be the fastest in the last 20 years.

Today, US President Joe Biden will hold a meeting in the Oval Office with US Federal Reserve Chairman Jerome Powell, during which they will consider measures by the financial authorities to contain inflationary pressure, which has already become the cause of mass dissatisfaction among Americans with the policies of the head of the White House. The meeting results may be positively perceived by investors, which will support the US dollar, and against this background, the USD/CAD pair may continue the uptrend with the first target at 1.2885.

The long-term trend is upwards. At the moment, a correction is developing, within which the price has tested the support level of 1.2660. If it is kept, the upward dynamics will continue to 1.2885, 1.2950. An alternative scenario suggests a fall to 1.2460.

The medium-term trend changed to a downtrend last week, and the asset broke through the zone of 1.2854–1.2833. Now the target for quotes is zone 2 (1.2640–1.2619). New short positions should be considered from the correction around ​​the key trend resistance 1.2886–1.2865.

Resistance levels: 1.2885, 1.2950, ​​1.3065 | Support levels: 1.2660, 1.2460, 1.2430

308

The pound is trading with mixed dynamics during the morning session, consolidating near 1.2600. The day before, the British currency showed a moderate decline, retreating from its local highs of April 26, which was the market’s reaction to the resumption of growth in the US dollar against the backdrop of fairly strong American macroeconomic statistics. In particular, investors drew attention to the increase in the S&P/Case-Shiller Home Price Indices in March from 20.3% to 21.2%, while the Chicago PMI rose from 56.4 to 60.3 points in May, with the analysts’ forecast at the level of 55.0 points.

In turn, the macroeconomic background from the UK turned out to be mixed: the volume of Consumer Credit in April increased from 1.303 billion pounds to 1.399 billion pounds, with preliminary market estimates of a decline to 1.2 billion pounds. At the same time, the Mortgage Approvals over the same period decreased from 69.531 thousand to 65.974 thousand, which turned out to be noticeably worse than expected correction to 69.000 thousand.

Bollinger Bands in D1 chart show moderate growth. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the ultra-short term. MACD is gradually reversing into a downward plane, being located near the zero level and keeping the previous buy signal (the histogram is above the signal line). Stochastic shows similar dynamics, rapidly retreating from its highs, which signal that the pound is overbought in the ultra-short term.

Resistance levels: 1.2600, 1.2674, 1.2800, 1.2900 | Support levels: 1.2500, 1.2400, 1.2250, 1.2163

309

During the Asian session, the USDCAD pair is growing moderately, retreating from the local lows of April 22, renewed yesterday, and is testing 1.2670 for a breakout, supported by positive US macroeconomic statistics and renewed growth in US Treasury yields.

Markets are still worried about the prospects for tighter monetary policy by the US Federal Reserve. Earlier, the regulator spoke in favor of raising the rate by 50 basis points in June and July, after which some pause will be taken to assess the effectiveness of the measures taken and develop a new vector of movement. Currently, inflation has slightly decreased relative to the April peak, but prices remain close to record levels, and the near-term forecasts are rather vague.

On the daily chart, Bollinger Bands are steadily declining: the price range is narrowing, reflecting the emergence of ambiguous trading dynamics in the ultra-short-term. The MACD indicator is going down, keeping a fairly strong sell signal (the histogram is below the signal line). Stochastic, still near its lows, is trying to reverse upwards, indicating that the USD is oversold in the ultra-short term.

Resistance levels: 1.2700, 1.2750, 1.2800, 1.2850 | Support levels: 1.2650, 1.2600, 1.2538, 1.2500

310

Yesterday, the Japanese currency received significant support from investors after the publication of an extensive block of macroeconomic statistics. If not for the rapid strengthening of the US dollar, macroeconomic data could have put significant pressure on the instrument. Thus, the unemployment rate in Japan fell in April to 2.5% from 2.6% in March, which exceeded the forecast of analysts who had expected the indicator to remain at 2.6%. Industrial production fell 1.3% as expected due to disruption in supply chains and rising fuel prices, but the forecast for a month ahead is for recovery to 4.8% and two months ahead to 8.9%, which will return production levels to pre-crisis levels. Experts also pay attention to the unexpected 2.9% increase in April retail sales, after a 0.7% increase in the previous month.

In the meantime, the USD Index made a spurt up and again broke the 102 level, below which it had been trading last week. In the current situation, when the dollar was under serious fundamental pressure, investors expected the slightest hint of positive, which was received after the publication of the consumer confidence index from the Conference Board. Although the May indicator was worse than in April and amounted to 106.4 points against 108.6 points, the value still exceeded analysts’ preliminary estimates of 103.9 points.

The asset is moving within the global uptrend, working out the signal from the Head and shoulders pattern. Technical indicators maintain a sell signal, working out a local correction: indicator Alligator’s EMA oscillation range remains narrow, and the AO oscillator histogram forms new bars in the sell zone.

Resistance levels: 130.8, 134 | Support levels: 128.25, 125.1

311

The European currency shows mixed trading dynamics against the US dollar, consolidating near 1.0650 after two sessions of decline, which led to the renewal of local lows from May 23.

Pressure on the euro has intensified since Tuesday after the release of inflation data for May in the eurozone. The Harmonised Index of Consumer Prices accelerated from 3.5% to 3.8%, which turned out to be higher than the market’s neutral forecasts, and the Core Consumer Price Index in May updated a record at 8.1%, while analysts had expected only 7.7%. In addition, disappointing Retail Sales data in Germany were published yesterday: in April, in annual terms, the indicator fell by 0.4% after falling by 1.7% a month earlier, although preliminary market estimates assumed a positive dynamics at the level of 4.0%, and on a monthly basis, sales fell by 5.4% after rising by 0.9% in March.

In turn, some support for the single currency is provided by the expectations that the European Central Bank (ECB) will launch a cycle of raising interest rates. So far, the members of the regulator’s board have not agreed on any specific timing for the start of tightening monetary policy, but it is clear that with the current price pressure, this will happen soon.

Bollinger Bands in D1 chart show moderate growth. The price range is narrowing, reflecting appearance of multi-directional dynamics in the short term. MACD is reversing downwards forming a new sell signal (the histogram consolidated below the signal line). Stochastic is showing similar dynamics; however, the indicator line is rapidly approaching its lows, indicating the risks of EUR being oversold in the ultra-short term.

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

312

Against the backdrop of the upward dynamics of the US dollar, the AUDUSD pair is correcting around 0.7190, despite the multidirectional reaction of investors to the incoming macroeconomic statistics.

Yesterday, Australia’s Q1 GDP was published, and the indicator’s growth slowed down to 0.8% from 3.6% QoQ but still was higher than the experts’ forecast of 0.5%, which was taken into account by the participants trading in quotes. The value consolidates around 3.3% YoY, which is better than the preliminary market estimates of 2.9% but inferior to 4.4% in the previous quarter. Given the significant rise in fuel and food prices, we can say that the Australian economy is in a stable state. It is reflected in retail sales, which rose by 0.9%, in line with forecasts.

The American currency showed an active decline all last week, but now, the quotes have won back the losses and reached 102.500 in the USD Index against the backdrop of a positive report from the Institute of Supply Management (ISM), which said that Manufacturing PMI rose to 56.1 points from the April value of 55.4 points, surpassing analysts’ expectations of 54.5 points. Meanwhile, according to JOLTS, the number of open vacancies in the labor market expectedly decreased and amounted to 11.400M for April, which is slightly inferior to 11.855M.

On the global chart, the asset moves within the Expanding formation pattern, rising within the fifth wave. Technical indicators reversed and gave a new buy signal: fast EMAs on the Alligator indicator crossed the signal line upwards, and the AO oscillator histogram formes upward bars in the buy zone.

Resistance levels: 0.7258, 0.7573 | Support levels: 0.7045, 0.6851

313

During the Asian session, the Australian dollar is slightly declining, correcting after a sharp rise the day before, which led to a renewal of local highs from April 22. The quotes of AUDUSD were supported by not the most confident macroeconomic statistics from the US, which were released the day before. In particular, a report from Automatic Data Processing (ADP) reflected weaker growth in private non-farm payrolls in May, rising by just 128K from a 202K increase a month earlier, with experts forecasting 300K, slightly lowering investor expectations for the May US labor market report, which will be published today.

This week, The Australian published information about the readiness of the Chinese authorities to postpone the conclusion of security pacts with a number of island states in the Indo-Pacific region. The document concerns the laying of submarine cables, the construction of berths, the development of shipbuilding, as well as other areas of cooperation, including China’s investment in the development of these regions. Experts believe that the country, to which the island states will join, will eventually gain control over the entire Pacific Ocean, and the Chinese authorities probably will not give up trying to conclude these agreements.

Bollinger Bands on the daily chart show a steady increase. The price range is expanding from above but it fails to conform to the surge of “bullish” activity at the moment. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, having approached its highs is reversing into a horizontal plane, indicating the overbought instrument in the ultra-short term.

Resistance levels: 0.7300, 0.7341, 0.7400, 0.7450 | Support levels: 0.7250, 0.7202, 0.7150, 0.7100

314

Japan legalizes stablecoins

The US dollar shows a slight decrease in Asian trading, holding near 131 and local highs from May 9, having received a moderate upward impetus after the publication of a rather strong report on the US labor market for May last Friday. At the same time, statistics on business activity were slightly worse than market forecasts, as well as indicators of Average Wages and overall Unemployment. The data allow investors to hope for a continuation of the US Fed’s “hawkish” policy of raising interest rates by 50 basis points at least during the June and July meetings.

The Bank of Japan, in turn, maintains a wait-and-see attitude, although issues of growing inflationary pressure are already affecting the national economy. An extensive block of macroeconomic statistics will be released this week, and the updated quarterly GDP statistics, which will be published on Wednesday, will take center stage in publications. The previous estimate indicates a contraction of the country’s economy in Q1 2022 by 0.2% QoQ and 1.0% YoY.

Meanwhile, the Japanese government is stepping up regulation of the national crypto asset market. Last week, Parliament approved a bill according to which stablecoins can officially be considered digital money as early as 2023. Only licensed financial institutions and payment system operators, as well as trust companies, will be able to issue them. The tokens will be backed by the yen or other national currencies, at a ratio of 1:1, since their holders must have the right to redeem at face value. In addition, lawmakers plan to publish rules for stablecoin issuers in the near future. Thus, Japan became the first country to develop a phased legal framework for the circulation of digital assets, designed to protect crypto investors and maintain market stability.

Bollinger Bands in D1 chart show moderate growth. The price range is expanding but it fails to conform to the surge of “bullish” activity at the moment. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, having approached its highs, is also trying to reverse into a descending plane, indicating the risks of overbought USD in the ultra-short term.

Resistance levels: 131, 132, 133, 134 | Support levels: 130, 129.39, 128.62, 128

315

The pound is traded mixed against the US dollar during the morning session, holding near 1.2500. Market activity remains subdued as many European markets are closed at the start of the new week for national holidays. At the same time, investors continue to evaluate the already released macroeconomic statistics for further analysis of price movements.

The report on the US labor market, published last Friday, turned out to be quite optimistic and pointed to the persistence of certain tension in the market, which is necessary to continue the “hawkish” policy of the US Federal Reserve. In May, the US economy created 390K new jobs outside the agricultural sector. In April, Non-Farm Payrolls were 436K, while analysts expected 325K in May. At the same time, the Unemployment Rate remained at the same level of 3.6% (it was expected to decrease to 3.5%). The Average Hourly Earnings increased by 0.3% MoM and by 5.2% YoY, which turned out to be slightly worse than the average market forecasts.

At the end of last week, representatives of the UK and the EU agreed to a ban on insurance of ships transporting oil from the Russian Federation as part of the sixth package of sanctions imposed against the backdrop of the military conflict in Ukraine. The government’s decision will block the ability of Russian carriers to use the services and market opportunities of Lloyd’s of London, which is considered the largest association of individual insurers and brokers in the field of shipping, and will significantly limit the ability to export resources. It is noted that following the British authorities, representatives of the G7 states may also introduce a similar ban.

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On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is actively narrowing, reflecting ambiguous nature of trading in the short term. MACD indicator tries to reverse downwards and to form a new sell signal (the histogram is about to consolidate below the signal line). Stochastic approaching the level of “20” is trying to reverse into a horizontal plane, reacting to the attempts of the “bulls” to show a weak corrective growth at the beginning of the week.

To open new trading positions, it is necessary to wait for the signals from technical indicators to be clarified.

Resistance levels: 1.2600, 1.2665, 1.2750, 1.28 | Support levels: 1.2500, 1.2400, 1.2328, 1.225

316

The American currency is losing ground again

The NZDUSD pair is correcting upwards of around 0.6523 due to the stable Q1 New Zealand macroeconomic indicators.

According to data provided by the National Statistical Office (Stats NZ), total imports of services increased by 35.0% to 1.4B New Zealand dollars compared to March 2021, while exports of services added 12.0% to 376M New Zealand dollars. Imports of transport services showed the largest increase, up 82.0% to 1.5B New Zealand dollars, a quarterly record on record. The main reason for the positive dynamics was removing border restrictions introduced due to the coronavirus pandemic. The country’s external economic activity will continue to recover, strengthening the position of the national currency.

The US currency is near 102 in the USD Index against the backdrop of the active publication of macroeconomic data, which investors perceive inconsistently. Thus, the unemployment rate in the US in May amounted to 3.6%, which coincided with the April value but was worse than the 3.5% expected by analysts. One of the reasons that prevented a more significant correction was another outflow of workers from the US non-farm sector: the value increased by 390K, below 436K a month earlier, while private non-farm employment decreased to 333K from 405K a month previously. Multidirectional statistics act as a catalyst for pressure on the US dollar.

The instrument moves within the global downward channel, approaching the resistance line. Technical indicators reversed and gave a buy signal: fast EMAs on the Alligator indicator crossed the signal line upwards, and the AO oscillator histogram forms bars above the zero level.

Resistance levels: 0.6557, 0.6746 | Support levels: 0.6432, 0.6212

317

During the Asian session, the USDCAD pair resumed its decline and is approaching its local lows of April 21. On Monday, no important macroeconomic publications are expected, so the attention of investors is drawn to the report on the US labor market, which was ambiguous. At the end of May, in the non-agricultural sector, the US economy added 390K new jobs, while the unemployment rate remained around 3.6%, while analysts expected an increase of only 325K new jobs but at the same time expected a moderate decrease in the unemployment rate up to 3.5%. Thus, the released report on the US labor market allows us to expect that the current monetary policy of the US Federal Reserve will be continued. According to current expectations, the department will raise the rate by 50 basis points at the next two meetings in June and July, after which a pause will be taken to assess the effectiveness of the measures taken.

On Friday, Canada limited itself to the publication of labor productivity, which fell by 0.5% in the first quarter, significantly better than analysts’ expectations of a decline of 1.2%. Recall that inflation in April consolidated at the maximum value for 31 years, 6.8%, significantly exceeding the regulator’s goal of 2.0%, gas prices added more than 35%, and food products – increased by about 10%. The reason for the negative dynamics of the authorities is the escalation of the military conflict in Ukraine, which caused a rise in the price of wheat, most of which is grown in this territory, as well as increasing disruptions in supply chains, leading to an increase in tariffs for the transportation of goods. Bank of Canada Deputy Governor Paul Beaudry notes the risks of a rapid increase in inflation and predicts the continuation of the policy of tightening monetary policy parameters by the country’s financial authorities with interest rate adjustment to the upper limit of the neutral range or above it.

On the daily chart, Bollinger Bands are steadily declining: the price range changes slightly but remains quite spacious for the current level of activity in the market. The MACD indicator is falling, keeping a strong sell signal (the histogram is below the signal line). Stochastic has been near its lows for a long time, indicating that USD may become oversold in the ultra-short term.

Resistance levels: 1.2600, 1.2650, 1.2700, 1.2750 | Support levels: 1.2549, 1.2500, 1.2450, 1.2400

318

Australian dollar remains under pressure

During the Asian session, the AUDUSD pair shows ambiguous trading dynamics, consolidating near the level of 0.7200.

On Tuesday, investors are focused on the decision of the Reserve Bank of Australia (RBA) on interest rates, which added activity to a fairly calm market. The regulator decided to increase the value by 50 basis points, contrary to the expected growth of only 25, from 0.35% to 0.85%. The accompanying statement noted that inflation in the country increased significantly, although it remained on average lower than in other advanced economies. Officials predictably identified the consequences of the COVID-19 pandemic and the development of the military conflict in Ukraine as external factors. Negative dynamics within the country were also noted, particularly a reduction in production capacity and a poor labor market. RBA forecasts suggest that inflationary risks will continue to grow but will be adjusted to 2–3% target levels next year.

Macroeconomic statistics from Australia exert little pressure on the positions of the instrument. Thus, the service sector’s activity index from AiG in May fell sharply from 57.8 to 49.2 points, which was worse than the average analysts’ forecasts.

Meanwhile, investors are watching the rhetoric of the Chinese authorities regarding the development of relations with Australia. Thus, Chinese Foreign Minister Wang Yi, as part of a tour of eight countries in the Asia-Pacific region, announced the need to restart them. It is worth noting that the activity of Chinese representatives in the region is of concern to official Canberra since the Chinese authorities have already managed to sign more than fifty agreements with island states on trade and security, while another ten countries are still considering such a possibility. Experts believe that the state to which the island regions will join will eventually gain control over the entire Pacific Ocean, and the Chinese authorities will probably not give up trying to conclude these agreements.

On the daily chart, Bollinger Bands are actively growing: the price range is narrowing, indicating the emergence of multidirectional trading dynamics in the short term. The MACD indicator is trying to reverse into a downward plane, forming a new sell signal (the histogram is trying to settle below the signal line). Stochastic remains confidently down but is rapidly approaching its lows, indicating that the Australian dollar may become oversold in the ultra-short term.

Resistance levels: 0.7202, 0.7250, 0.7300, 0.7350 | Support levels: 0.7150, 0.7100, 0.7050, 0.7000.

319

The rise in oil prices contributes to the strengthening of the pair

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

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

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

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

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

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

320

Consolidation pending the results of the ECB meeting

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

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

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

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

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

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

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Economic indicators disappoint investors

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

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

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

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

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