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After setting a 19-year high, USDJPY is correcting and testing a strong support level at 127.1 against the backdrop of a depreciation of the dollar. Due to the radically different approach in the conduct of monetary policy by the regulators of Japan and the United States, the instrument is likely to continue to strengthen in the long term; however, at the moment, waiting for the decision of the US Federal Reserve on the interest rate, scheduled for June 15, quotes are declining with the target at 124.5. It is expected that the indicator will be increased by 50 basis points to 1.50%.

The decision of the US Fed will largely be influenced by the minutes of the Federal Open Market Committee (FOMC), the publication of which is expected on Wednesday at 20:00 (GMT+2). If the document indicates that the US labor market will continue to recover as a result of an increase in rates, then the dollar is likely to resume growth after the correction; otherwise, the US currency will continue to decline until mid-June. The rate of USD/JPY will largely be determined by the monetary policy of the US Federal Reserve, since the wait-and-see position of the Bank of Japan, which is not ready to move to a rate increase, is already known to investors.

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The long-term trend is upward. At the moment, a correction is developing, within which market participants are trying to break through the level of 127.1, in case of consolidating below which the correction will continue with the target at 124.50, after which a new growth cycle can be expected.

The medium-term trend remains upward, but the first signs of its change are appearing. Last week, market participants tested the key trend support at 127.98–127.65, which was held, leading to the growth of USD/JPY. By the end of the week, the entire growth was offset by sales. Now the price is trying to consolidate below the key support, and if the sellers succeed, the trend will change to a downtrend, and the target zone 2 (124.78–124.47) will become the target for the decline.

Resistance levels: 131.1, 133.36, 135.07 | Support levels: 127.1, 124.5, 121.5

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The US dollar shows a slight decline against the Japanese yen in Asian trading, holding close to the local lows of April 27 and testing the level of 127.5 for a breakdown. The US currency is under pressure again, reacting to optimistic macroeconomic publications from Europe and Japan.

Friday's statistics, reflecting the growth of Japan's National Consumer Price Index from 1.2% to 2.5% and the National CPI excluding Fresh Food from 0.8% to 2.1%, increases the skepticism of market participants regarding the actions of the Bank of Japan to maintain ultra-soft monetary policy, especially given the pressure on households amid rising spending without a significant increase in wages. However, regulator representatives believe that the indicator is unlikely to consolidate above the target level of 2% and, according to forecasts, core inflation will correct to 1% by 2024. In turn, Minister of State for Financial Services Shunichi Suzuki called the rapid weakening of the national currency an extremely undesirable phenomenon. According to him, consultations are being held with the financial authorities of the G7 member countries to take measures to curb excessive volatility and erratic actions of the regulator, which could have a negative impact on the economy.

The pressure on the dollar quotes intensified at the beginning of the week after the "hawkish" speech of the head of the European Central Bank (ECB) Christine Lagarde, who actually announced the start of measures to tighten monetary policy in July. As previously expected, the regulator will first complete the quantitative easing program, after which it will start raising interest rates, the pace of which is likely to coincide with the US Federal Reserve, that is, the correction will go in increments of 50 basis points.

Support for the yen today is provided by a relatively optimistic macroeconomic statistics on business activity. Jibun Bank Manufacturing PMI in May fell from 53.5 to 53.2 points, which, however, turned out to be better than negative forecasts of a decline to 52 points. Jibun Bank Services PMI over the same period strengthened from 50.7 to 51.7 points, while experts expected the figure to correct down to 50.6 points.

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Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range expands from below, making way for new local lows for the "bears". MACD is going down, keeping a fairly stable sell signal (located below the signal line). Stochastic, having approached the level of "20", reversed into a horizontal plane. At the same time, the current readings of the indicator still indicate the growing risks of the US dollar being oversold in the ultra-short term.

Resistance levels: 128, 128.62, 129.39, 130 | Support levels: 127.5, 127, 126.3, 125.6

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The NZDUSD pair has stopped its upward trend and is correcting downwards around 0.6432 due to today's poor macroeconomic data.

Statistics New Zealand (Stats NZ) reported that total Q1 retail sales corrected by 0.5% after rising by 8.8% in the last quarter of 2021 amid a 4.0% decline in car sales and a decline in the construction sector by 5.5%, while the segment of electrical goods added 2.7%. It brings the total value of goods purchased to 28.4B New Zealand dollars, up 8.0% from March 2021, but the sharp decline quarter-on-quarter sent a negative signal to investors.

The USD Index declines to 102.2 amid US President Joe Biden's recent announcement that a possible waiver of customs duties on goods of 25% from China is under consideration, and the final decision will be made after consultations with Treasury Secretary Janet Yellen. According to some experts, the current Asian tour of the head of the White House may be a sign of an imminent change in policy towards the two countries, which will be a serious step towards establishing trade ties between the US and China.

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The instrument moves within the global downward channel, forming a new wave of corrective growth. Technical indicators keep a weakening sell signal: fast EMAs on the Alligator indicator approach the signal line, and the AO oscillator histogram forms upward bars.

Resistance levels: 0.6535, 0.6858 | Support levels: 0.6348, 0.6208
 

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The European currency shows a slight decrease against the US dollar during the Asian session, correcting after the "bullish" start of the week, which led to the renewal of local highs for the instrument from April 25. Quotes are still supported by the moderate weakness of the dollar, which reacts negatively to the publication of mixed macroeconomic statistics. In addition, investors positively assessed the rhetoric of the President of the European Central Bank (ECB) Christine Lagarde, who actually announced the imminent completion of the quantitative easing program and a possible increase in interest rates by 50 basis points in July.

Traders also assess the statement of the President of the European Commission, Ursula von der Leyen, who announced a number of steps to reduce the EU's dependence on Russian energy resources. The authorities intend to accelerate the transition to "green" energy, increasing the current target values from 9% to 13% by 2030. In particular, the construction of solar roofs in new buildings is proposed. About 300 billion euros will be needed for energy reforms, of which about 72 billion euros will be grants and 225 billion can be obtained in the form of loans. Up to 2 billion euros will be needed for oil infrastructure, taking into account the cessation of shipments of Russian oil.

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Meanwhile, macroeconomic statistics from the euro area, released the day before, turned out to be negative. Markit Services PMI fell from 57.7 to 56.3 points, which turned out to be worse than market expectations for a reduction to 57.5 points. Composite PMI fell from 55.8 to 54.9 points, which also turned out to be weaker than market forecasts at the level of 55.3 points.

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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). The indicator is trying to consolidate above the zero level. Stochastic, having reached its highs, reversed into a horizontal plane, indicating overbought EUR in the ultra-short term.

Resistance levels: 1.0747, 1.08, 1.085, 1.09 | Support levels: 1.07, 1.064, 1.06, 1.05
 

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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.

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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.

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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
 

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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.

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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

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This week, the EURUSD pair continued to grow and tested the 1.0742 mark (Murray [4/8]), but could not break higher. Currently, the price movement is determined by the rhetoric of the monetary authorities of the EU and the USA, pushing macro statistics into the background.

During the week, the euro was supported by statements by the head of the European Central Bank (ECB) Christine Lagarde, who allowed the probability of an increase in deposit rates from -0.5% to a positive level by September, that is, twice in the next four months. The beginning of the tightening cycle pushes the euro up against its main competitors.

On the other hand, the US currency is under pressure due to fears of an impending recession of the national economy, although experts disagree on the impact of the upcoming crisis. The publication of the minutes of the last meeting of the US Fed's Open Market Committee (FOMC) did not clarify the situation for investors. As expected, officials confirmed the need for several more rate hikes by 50 basis points, but there were no hints of a sharper increase. At the same time, the members of the regulator did not rule out the possibility of abandoning the neutrality of the rate, which means continuing to correct the indicator after its level reaches 2.50%-2.75%. This will become necessary if the final aim of weakening to the target level of 2.0% is not achieved.

Today, the market expects new statistics on US GDP in Q1 2022. It is predicted that the US economy will shrink by 1.3%, which may contribute to a new growth of the EURUSD pair. 

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The key for the "bulls" remains the level of 1.0742, consolidation above which will allow the quotes to continue the upward movement to the levels of 1.0864 (Murray [5/8]), 1.0986 (Murray [6/8]). If the level of 1.0550 breaks down (the middle line of the Bollinger Bands), the decline can resume, and the price will return to 1.0376 (Murray [1/8], the lower line of the Bollinger Bands), 1.0253 (Murray [0/8]). Technical indicators do not give a single signal: the Bollinger Bands reverse upwards, the Stochastic reverses downwards in the overbought zone, the MACD histogram decreases in the negative zone.

Resistance levels: 1.0742, 1.0864, 1.0986 | Support levels: 1.0550, 1.0376, 1.0253
 

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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%.

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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

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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.

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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

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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.

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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

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The Australian dollar shows an uncertain decline, correcting after two sessions of fairly active growth, as a result of which AUDUSD updated local highs from May 5. The US dollar is trying to recover its positions, but so far the further decline of the instrument is limited by restrained optimism from China.

Tomorrow restrictions on the work of enterprises will be lifted in Shanghai, which will mean the end of the quarantine caused by another wave of coronavirus, which had an extremely negative impact on the supply of a number of high-tech products to world markets. The Beijing authorities are also partially easing the restrictions and gradually allowing the operation of some public transport and retail facilities. Optimism about the Chinese economy was also confirmed by macroeconomic publications from China. Non-Manufacturing PMI in May rose from 41.9 to 47.8 points, which, however, turned out to be worse than optimistic forecasts of an increase to 50.7 points. NBS Manufacturing PMI strengthened in May from 47.4 to 49.6 points, which coincided with the average market forecasts. In addition, investors reacted positively to the growth in Private Sector Credit in Australia in April from 0.4% to 0.8%, as well as the increase in Company Gross Operating Profits from 2% to 10.2% in Q1 2022.

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Bollinger Bands on the daily chart show a steady increase. The price range is narrowed, being spacious enough for the current activity level in the market. MACD is growing, maintaining a strong buy signal (the histogram is above the signal line and is consolidating above the zero level). Stochastic reached its highs, which points to the risks of overbought Australian dollar in the ultra-short term.

Resistance levels: 0.7202, 0.725, 0.73, 0.7341 | Support levels: 0.715, 0.71, 0.705, 0.7

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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.

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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

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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.

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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

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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.

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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

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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.

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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

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During the Asian session, the NZDUSD pair is consolidating near 0.6470 and local lows of May 27. Yesterday, the instrument attempted corrective growth but failed to consolidate on new highs and returned to the red zone closer to the close of the daily session.

On Wednesday, the asset was supported by positive data from China and Australia, where the slowdown in economic growth was slightly milder than analysts predicted: an increase in the Caixin Manufacturing PMI for May was recorded from 46 to 48.1 points, while the forecast for growth was only up to 47 points. Manufacturing activity will likely grow at a more robust pace going forward as factories in Shanghai resume operations from June 1 after a long lockdown.

In turn, pressure on the instrument yesterday was exerted by cautiously optimistic data from the US Manufacturing PMI, and the monthly economic review from the US Federal Reserve published closer to the close of the session. The regulator noted a moderate economic recovery in almost all twelve districts. However, some of them have slowed growth as economic conditions continue to deteriorate. Retail is facing rising food and energy prices, and housing markets react to rising interest rates.

New Zealand Prime Minister Jacinda Ardern intends to discuss with US President Joe Biden the issue of response to the conclusion of agreements in the field of trade, politics, and security by the Chinese authorities with representatives of the island states of the Indo-Pacific region. Some experts attribute the intensification of China's activities in the region to the possible consequences of the military conflict in Ukraine. Still, many believe that in this way, the PRC authorities are trying to dominate the region and then use these territories to deploy military bases, which creates significant concern for the New Zealand authorities and Australia.

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On the daily chart, Bollinger bands are growing moderately: the price range is narrowing rather quickly, reacting to the appearance of a predominantly "bearish" dynamics in the market. The MACD indicator is falling, forming a new sell signal (the histogram is trying to consolidate below the signal line). Stochastic shows a much more confident decline, but at the moment, it is rapidly approaching its lows, indicating the risks of the New Zealand dollar being oversold in the nearest time intervals.

Resistance levels: 0.65, 0.6567, 0.66, 0.665 | Support levels: 0.645, 0.64, 0.63, 0.625

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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.

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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
 

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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.

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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

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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.

usdjpy-1.png

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

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