Currency Pairs Market Analysis

[Solid ECN]

The New Zealand dollar continues to fall against the US currency after the release of poor macroeconomic data, currently trading around the level of 0.6345.

Thus, according to the publication of Statistics New Zealand, annual wage inflation for March, measured by the labor cost index, increased to 3.0% compared to 2.6% a month earlier and reached its high in the last 13 years. Statistics also recorded an increase in the cost of labor for enterprises, which ultimately leads to an increase in prices for manufactured products, contributing, in turn, to a slowdown in economic recovery. The increase in consumer prices on an annualized basis has already exceeded wage inflation, amounting to 6.9% for March against 3.0% for April and reflecting the declining ability to pay. Also, experts predict a weakening of the national currency due to a negative impact on the economy if demand in China decreases due to the quarantine lockdowns caused by a new wave of COVID-19. From May 5, Beijing residents must provide a negative test for coronavirus in public transport, and from May 1, the same rule applies in all public places.

The US currency continues to trade above 103.000 in the USD Index, and late last week, it received significant support after the release of data on US non-farm payrolls. Despite preliminary estimates by analysts who assumed a decrease in jobs by 391K from 424K a week earlier, the figure remained unchanged, which is a positive factor for the dollar dynamics. Meanwhile, manufacturing jobs rose by 55K from 43K, and private non-farm payrolls stood at 406K against a forecast of 385K. The unemployment rate remained flat at 3.6%, instead of an expected decline to 3 5%, while the average hourly wage slowed growth from 0.5% to 0.3%, allowing investors to hope to reduce inflation. At the moment, market participants are trying to assess how the US economy will be affected by the current tightening of monetary policy by the US Federal Reserve: will it withstand pressure or still go into recession.

The instrument's quotes are traded within the global downward channel, near the support line. Technical indicators keep a stable sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram trades deep in the sell zone.

Support levels: 0.635, 0.61 | Resistance levels: 0.654, 0.68​

 

[Solid ECN]

The New Zealand dollar shows uncertain growth during trading in Asia, being pressured by the strengthening US currency ahead of the release of key data on US consumer price indices on Wednesday at 14:30 (GMT+2) and retreating from record lows renewed at the opening of the session. In the first hours of trading, the instrument tried to consolidate below the psychological level of 0.6300, where it was in June 2020.

Last week, the only important news coming from New Zealand was the unemployment report, but it failed to affect the national currency dynamics significantly. Macroeconomic data also showed rising labor costs for enterprises, which is a catalyst for higher product prices, thus putting significant pressure on the economy. Consumer price growth exceeded wage inflation, amounting to 6.9% YoY for March against 3.0% for April. Negative dynamics reflect the declining solvency of the population. Today, significant support for the New Zealand dollar is provided by new macroeconomic statistics. Thus, the volume of retail sales using electronic payment cards from New Zealand for April increased by 7% MoM after a decrease of 1.3% and by 2.1% YoY after a negative correction of 0.5% for March.

Meanwhile, investors are concerned about the prospects for a recovery in the global economy against the background of the rapid tightening of their monetary policies by the world's central banks and, in particular, the increase in interest rates to offset the negative effect of high inflation. Also, traders are focused on the introduction of new restrictive measures in China due to an increase in the incidence of coronavirus infection, which also significantly undermines the process of global economic recovery.

Bollinger bands show a steady decline on the daily chart: the price range narrow, reflecting an attempt at the appearance of corrective dynamics in the short term. MACD falls below the signal line, keeping a relatively strong sell signal. Stochastic reached its lows and reversed into a horizontal plane, indicating that NZD may become oversold in the ultra-short term.

Resistance levels: 0.6400, 0.6450, 0.6500, 0.6567 | Support levels: 0.6300, 0.6250, 0.6200, 0.6150​

 

[Solid ECN]

The yen continues to trade in a global downtrend against most of the world's competitors, and the meeting of the Bank of Japan on monetary policy that ended yesterday could not reverse this trend. Currently, the quotes of the USDJPY pair are correcting around the level of 130.44.

Thus, the regulator kept the interest rate at –0.10% and the redemption of bonds – at the same level without an upper limit. As for macroeconomic indicators, they are still holding in zero dynamics: April Services PMI amounted to 50.7 points, being higher than the March value of 50.5 points, while average wages remained at the previous 1.2%, despite the analysts' expectation of a decline of 0.9%.

Last month, the Japanese currency lost more than 5% against the US dollar, renewing the 20 years' low, against the background of the super-loose monetary policy of the Bank of Japan, as well as after a sharp increase in bond yields in the US and Europe and a rapid increase in tariffs on commodities goods that catalyzed the rise in import costs. The consumer price index in Tokyo rose from 1.3% to 2.5%, and the core value from 0.8% to 1.9%, reflecting the highest rates in the past seven years. Japan's official April inflation report will be released on May 20, but experts believe the rate will exceed its 2% target this year, hurting sales as companies pass on their costs to consumers.

Tokyo intends to maintain its stake in the Russian oil and gas projects Sakhalin-1 and Sakhalin-2. However, according to Prime Minister Fumio Kishida, imports of "black gold" will gradually decrease. The decision aims to minimize the negative impact of rising energy tariffs on the standard of living of the population and business activity.

The US currency continues to consolidate around 103.600 points in the USD Index without making sharp fluctuations ahead of the publication of data on the consumer price index in the US. For the first time in the past few quarters, analysts expect the inflation rate to fall to 8.1% from 8.5% a month earlier, which was also announced by the head of the Fed of Atlanta, Rafael Bostic, during his speech yesterday. The official said he sees no reason for an acceleration in the rate hike in June and believes that a 25 or 50 basis point adjustment is the most likely scenario for tightening monetary policy if inflation starts to slow down.

The USDJPY pair continues to trade within the global uptrend, slowing down its growth to break the year's high of 131.30. Technical indicators keep a stable buy signal: indicator Alligator's EMA fluctuations range remains wide, and the AO oscillator histogram remains high in the buy zone, forming ambiguous bars.

Support levels: 128.93, 125.14 | Resistance levels: 131.3, 135​

 

[Solid ECN]

The European currency traded with mixed dynamics against the US dollar during the Asian session, consolidating near 1.05. The day before the euro made an attempt to grow, having received support from the optimistic statements of the President of the European Central Bank (ECB), but the "bulls" failed to consolidate on new local highs. EURUSD eventually returned to the "red" zone, continuing the development of flat dynamics in the short term.

The European regulator is likely to complete the asset buyback at the beginning of Q3 2022, after which it will start raising the interest rate. This was stated by the ECB President Christine Lagarde the day before, speaking in Ljubljana. Last month, officials continued their "dovish" policy from 2011 and left the interest rate on the main refinancing operations, the rate on the deposit facility and the rate on the marginal lending facility at 0.00%, -0.50% and 0.25%, respectively. Experts believe that the ECB will increase the figures in July and September, and bring the deposit rate to 1.5% within two years. However, much will depend on the development of the military conflict in Ukraine, where the situation is still extremely tense.

Meanwhile, Hungary announced its readiness to impose an embargo on Russian resources, but the Minister of Foreign Affairs and Trade, Péter Szijjártó, voiced a number of demands. In particular, he noted that the country expects concrete measures from the EU to reduce the negative consequences for the national economy if a decision is made. According to Szijjártó, official Budapest will support the pan-European embargo if it does not concern oil pipelines. Now about 65% of oil from Russia comes through the Druzhba pipeline, and the Hungarian economy does not yet have alternative options for replacing these resources.

Macroeconomic statistics from Europe published on Wednesday did not have a noticeable impact on the instrument's dynamics. Consumer Price Index in Germany in April showed an increase of 0.8%, which also fully coincided with market expectations. In annual terms, inflation fixed at around 7.4%.

Bollinger Bands on the D1 chart still maintain a moderate downward direction. The price range is actively narrowing, reflecting the emergence of multidirectional trading dynamics in the short term. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, on the contrary, keeps its downward direction, indicating the predominance of "bearish" sentiment in the ultra-short term.

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

Resistance levels: 1.0576, 1.064, 1.069, 1.0726 | Support levels: 1.05, 1.047, 1.04, 1.035

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[Solid ECN]

The US dollar is confidently leading the pair with the Swiss franc, and the current growth already claims to be the most significant since the fall of 2010, when USDCHF exchange rate strengthened by more than 20K points in two months. Now the quotes of the trading instrument are in the area of 1.0027.

One of the main reasons for the rapid uptrend is the negative situation with the increase in prices for products within the country. According to a recent report, the Swiss Producer Price Index added 1.3% in April to 108.4 points, well above 100.0 of early last year. The main increase in prices was observed for oil products and metallurgy products. Compared to March 2021, inflation across the entire product line was 6.7%, a significant jump for the conservative Swiss economy.

The American currency is trading steadily above the level of 104.000 in the USD Index, continuing to ignore the negative macroeconomic statistics and strengthening against the background of statements by the US Federal Reserve, as well as the head of the White House. The day before, Joe Biden said that the US government intends to reduce the budget deficit by 1.5 trillion dollars. The decision should help reduce inflationary pressures, while the US president did not specify what steps the authorities would take. In February of this year, the federal debt exceeded 30 trillion dollars and amounted to 30.012 trillion dollars.

On the global chart of USD/CHF, the price is trading in an active uptrend. Technical indicators are in the state of a stable buy signal, indicating a likely continuation of growth: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram is increasing in the buy zone.

Support levels: 0.9935, 0.9718 | Resistance levels: 1.0050, 1.0200​

 

[Solid ECN]

The European currency shows a mixed dynamics of trading against the US dollar during the Asian session, consolidating near 1.044 and expecting new drivers to appear on the market. The day before, the euro showed weak growth, continuing the development of Friday's momentum, which allowed the instrument to retreat from record lows since January 2017.

In the meantime, the news and macroeconomic background remained quite negative, and the reasons for the growth of the instrument were mainly technical factors. Yesterday's data from Europe somewhat disappointed buyers; however, in general, they didn't influence the situation on the market much. The eurozone Trade Deficit in March amounted to 17.6 billion euros, which turned out to be significantly worse than last month's data (-11.3 billion euros) and forecasts that suggested an improvement in dynamics to -6.6 billion euros.

Today, investors are focused on the updated statistics on the dynamics of GDP in the euro area for Q1 2022. Earlier data indicated that the European economy grew by 0.2% QoQ and 5% YoY. Also during the day, quarterly Employment statistics will be published and a speech by the President of the European Central Bank (ECB) Christine Lagarde will take place, where the official is likely to correct the regulator's forecasts regarding the vector of monetary policy in the near future.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is slightly widening from below but does not conform to the surge of the "bearish" sentiment of the end of the previous week yet. MACD indicator is growing, having formed a new buy signal (located above the signal line). Stochastic is showing similar dynamics, having rebounded from the level of "20" and signaling in favor of the development of corrective growth in the ultra-short term.

Resistance levels: 1.047, 1.05, 1.0576, 1.064 | Support levels: 1.04, 1.035, 1.03, 1.025

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[Solid ECN]

The Australian dollar shows active growth against the US currency during trading in Asia, testing a strong psychological barrier at the level of 0.7000. AUD/USD renews local highs from May 11, although yesterday the Australian dollar showed a sharp drawdown, which was caused by the publication of disappointing macroeconomic statistics from China.

Retail Sales in China fell sharply by 11.1% in April after falling by 3.5% a month earlier, although analysts had expected a decline of 6%. The pace of Industrial Production in the country in April showed a decline of 2.9% after rising by 5% in March. The forecasts assumed that positive dynamics would remain at the level of 0.7%.

The Australian dollar is being supported today by the minutes of the meeting of the Reserve Bank of Australia (RBA). The regulator was rather optimistic about the prospects for inflation, noting that it is likely to return to target levels as external risks stabilize. Representatives of the department expect that by mid-2024, consumer prices may fall to the upper limit of the indicated range of 3%. As for interest rates, the RBA expects them to increase further to 1.5% by the end of 2022 and to 2.5% by the end of 2023.

On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is narrowing from above, remaining spacious enough for the current activity level in the market. MACD indicator is growing having formed a stable buy signal (located above the signal line). Stochastic shows similar dynamics, quickly approaching its highs and reflecting the risks of overbought Australian dollar in the ultra-short term.

Resistance levels: 0.7, 0.705, 0.71, 0.7164 | Support levels: 0.6950, 0.69, 0.6827, 0.675

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[Solid ECN]

The pair may continue to decline
Against the backdrop of a depreciation of the American currency, the GBPUSD pair is correcting within the local trend around 1.2343.

Today the pressure on the pound may be exerted by data on the labor market in the UK for April. According to statistics, the unemployment rate was 3.7%, down from 3.8% in March. The level of labor productivity remained around 0.7%. It is worth noting another reduction in the number of applications for unemployment benefits, which decreased by 56.9K, after a decrease of 46.9K a month earlier. Thus, it becomes obvious that the growth rate of the UK economy is not as high as previously expected, which negatively affects the national currency.

The main driver of yesterday's asset growth was the US dollar, which in the index fell by half a point, reaching 104.200 amid the publication of a renewed forecast for the growth of the US economy for 2022 and 2023. According to the new forecast of The Goldman Sachs Group Inc., due to the serious tightening of monetary policy, GDP for 2022 was lowered to 2.4% from 2.6% in the previous forecast, and GDP for 2023 was lowered to 1.6% from 2.2% before. Also, investors could react negatively to the NY Empire State report, according to which the index of manufacturing activity in the US fell to 11.60 points in May from 24.60 points in April.

The asset has left the global downstream channel and is currently completing a reverse test of the passed support. Technical indicators keep a sell signal: indicator Alligator's EMA fluctuations range is still quite wide, and the histogram of the AO oscillator is trading deep in the sell zone.

Resistance levels: 1.245, 1.3 | Support levels: 1.216, 1.19​

 

[Solid ECN]

GBPUSD, the pound is consolidating at local highs​

The British pound is trading with mixed dynamics against the US currency during the morning session, holding in the area of local highs from May 5 and resistance at around 1.2500.

The pound was supported the day before by strong data on the UK labor market for March-April. Claimant Count Change in April decreased by 56.9 thousand after falling by 81.6 thousand a month earlier. Analysts expected a decline of only 38.8 thousand. The Average Earnings Excluding Bonus accelerated in March from 4.1% to 4.2%, which coincided with experts' estimates. The Average Earnings Including Bonus accelerated its growth from 5.6% to 7.0%, which turned out to be significantly better than the market's expectations of a slowdown to 5.4%. ILO Unemployment Rate in the UK in March fell from 3.8% to 3.7% with neutral forecasts.

Today, investors are awaiting the publication of statistics on consumer inflation for April. Current forecasts suggest a further acceleration of the indicator from 7% to a new record high of 9.1%. If market expectations are justified, pressure on the Bank of England may increase sharply, forcing the regulator to act more decisively on the issue of tightening monetary policy.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range narrows slightly from above, but still remains spacious enough for the current level of market activity. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic retains upward direction but is located near its highs, which indicates the risks of overbought instrument in the ultra-short term.

Resistance levels: 1.25, 1.26, 1.2674, 1.28 | Support levels: 1.24, 1.225, 1.2163, 1.21

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[Solid ECN]

The European currency is relatively stable against the US dollar during trading in the Asian session and is consolidating near local highs from May 5. The day before, the instrument showed active growth, which allowed leveling the results of Wednesday's "bearish" trend and brought the euro to a high at around 1.0600. EUR/USD was supported yesterday by expectations of the imminent end of quarantine due to the coronavirus in Shanghai, which will allow many enterprises to resume normal operation and have a positive effect on the dynamics of foreign trade.

In turn, yesterday's macroeconomic data from the US put moderate pressure on the positions of the US currency. Initial Jobless Claims for the week ended May 13 increased from 197 thousand to 218 thousand, which was higher than market expectations by 18 thousand. Philadelphia Fed Manufacturing Index declined sharply in May from 17.6 to 2.6 points, while analysts expected the decline to only 16 points.

The Minutes of the European Central Bank (ECB)'s meeting released the day before also contributed to the moderate growth of the single currency. In the report, the regulator pointed to the increasing risks associated with a sharp growth in inflation in the region, but at the same time maintained optimistic forecasts for both Q3 and Q4 of 2022. Also, many members of the ECB board are gradually speaking out in favor of tightening monetary policy. Analysts consider the rate hike at the end of summer or early autumn as most likely.

Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is slightly expanded from above, remaining spacious enough for the current activity level in the market. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic approached the level of "80" and reversed into a horizontal plane, reflecting the mixed nature of trading at the end of the current trading week.

Resistance levels: 1.06, 1.064, 1.069, 1.0726 | Support levels: 1.05, 1.0459, 1.04, 1.035

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[Solid ECN]

USDCHF, D1
On the daily chart, the price is actively correcting downwards from the 1.0025 area. Currently, it is close to 0.9675 (retracement of 38.2%). Its breakdown will give the prospect of further decline to the levels of 0.9565 (retracement of 50.0%) and 0.9460 (retracement of 61.8%). However, the price will have to break through the descending fan. The repeated consolidation of quotations above the level of 0.9810 (retracement of 23.6%) may lead to a return to the area of 1.0025. Technical indicators do not give a single signal: the Bollinger Bands are directed upwards, the MACD histogram is shrinking in the positive zone, and the Stochastic has entered the oversold zone, which does not exclude a reversal.

USDCHF, W1
On the weekly chart, the price has reversed near the upper boundary of the ascending channel and is also declining. Quotes are close to the level of 0.9670 (retracement of 61.8%), consolidation below which will give the prospect of a decline to the levels of 0.9510 (retracement of 50.0%), 0.9350 (retracement of 38.2%). Otherwise, the quotes will be able to return to the area of 1.0000. Technical indicators do not give a single signal: the Bollinger Bands are directed upwards, the MACD histogram is increasing in the positive zone, but the Stochastic is preparing to leave the overbought zone and form a sell signal.

In general, in the near future, with a breakdown of the level of 0.9670 (retracement of 38.2%, D1, 61.8%, W1), it is possible that the price will continue to decline to the levels of 0.9565 (retracement of 50.0%, D1), 0.9510 (retracement of 50.0%, W1), 0.9460 (retracement of 61.8%, D1). If the level of 0.9810 breaks out (retracement of 23.6%, D1), growth will be able to resume to 1.0025 (retracement of 0.0%, D1).

Resistance levels: 0.9810, 1, 1.0025 | Support levels: 0.9670, 0.9565, 0.9510, 0.946​

 

[Solid ECN]

During the Asian session, the USDCHF pair is weakening moderately, approaching the local lows of May 2, renewed on Friday. At the end of the weekly session, the US currency showed the strongest decline against the franc over the past few months, rapidly retreating from record highs and strong psychological resistance around 1.

Among other things, the US dollar was significantly pressured by a sharp decline in the yield of US 10-year Treasuries, which reached the three-week low at 2.77% last Thursday, while earlier during the month, it was at 3.2%. The macroeconomic statistics from the USA also was disappointing. There is no significant growth in retail sales, and the pace of industrial production rose by only 0.7% instead of the expected 1%.

The franc is supported by the positive dynamics of industrial production in Switzerland. In the first quarter, this indicator increased by 7.9% after a 7.3% increase in the previous period. Last week, the head of the Swiss National Bank, Thomas Jordan, said that the regulator's "dovish" policy, based on maintaining a negative interest rate, will continue. Still, officials are ready to act if inflation rises above 2.0%, focusing on global trends in determining monetary policy.

On the daily chart, Bollinger bands reverse into a horizontal plane: the price range is expanding from below, remaining spacious enough 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). Having reached its lows, Stochastic reversed into a horizontal plane, indicating that the US dollar may become oversold in the ultra-short term.

Resistance levels: 0.9762, 0.9847, 0.9900, 1 | Support levels: 0.9700, 0.9637, 0.9600, 0.9535

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[Solid ECN]

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.

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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[Solid ECN]

On the daily chart, the downward wave of the higher level C of (B) develops, within which the fifth wave v of (C) develops. Now, the third wave of the lower level (iii) of v of (C) has formed, and a local correction is ending to develop as the fourth wave (iv) of v.

If the assumption is correct, after the end of the correction, the pair EURUSD will fall to the levels of 1.03 - 1.02. In this scenario, critical stop loss level is 1.0868.

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[Solid ECN]

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.

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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[Solid ECN]

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.

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.

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​

 

[Solid ECN]

On the daily chart, the third wave of the higher level 3 forms, within which the wave (3) of 3 develops. Now, the third wave of the lower level iii of 3 of (3) is forming, within which the wave (iii) of iii has ended, and a local correction is ending as the fourth wave (iv) of iii.

If the assumption is correct, after the end of the correction, the USDCHF pair will grow to the levels of 1.0072–1.02. In this scenario, critical stop loss level is 0.9526.

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[Solid ECN]

The USDJPY continues to decline for the third week in a row and is now in the 127 area.

The American currency was under pressure from market participants' fears of a possible recession, however, US Fed officials and, in particular, the head of the Federal Reserve Bank of San Francisco, Mary Daly, tried to reassure investors, stating that there would not be a serious decline in indicators as a result of a sharp increase in interest rates. Nevertheless, most experts are pessimistic and confident that a slowdown in economic growth cannot be avoided, but how strong it will be is still unclear. Against this background, further steps of the regulator become especially important. Today, the minutes of the last meeting of the Federal Open Market Committee (FOMC) will be published, in which investors will look for information regarding further rate hikes.

The position of the Japanese yen also does not look stable, primarily due to rising inflation, which puts pressure on household demand and business activity. Thus, according to the May data published earlier, the index of business activity in the manufacturing sector of Japan, instead of growing from 53.5 to 53.8 points, fell to 53.2 points, but the index for the service sector rose from 50.7 to 51.7 points, which due to temporary support from the reduction of quarantine measures. The government said in a report released today that the economy is showing signs of recovery, but downside risks due to the negative effects of the coronavirus pandemic in China and the Ukrainian crisis are intensifying. In general, they are taken less seriously by investors than the risks of a recession in the US economy.

The price of the USDJPY pair is near 127 (Fibo retracement of 23.6%), consolidation below which will give the prospect of further decline to the levels of 125 (Murray [4/8], Fibo retracement of 38.2%) and 122.75 (Fibo retracement of 50). .0%). The key for the "bulls" seems to be 129.20 (the middle line of the Bollinger Bands), the breakout of which will allow quotes to continue moving towards 131.25 (Murray [6/8]).

Technical indicators signal the possibility of further decline: the Stochastic is directed downwards, and the MACD histogram is decreasing in the positive zone.

Resistance levels: 129.20, 131.25 | Support levels: 127, 125, 122.75​

 

[Solid ECN]

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​

 

[Solid ECN]

On the daily chart, the first wave of the higher level (1) develops, within which the third wave 3 of (1) formed. Now, a downward correction is developing as the fourth wave 4 of (1), within which the wave a of 4 is forming.

If the assumption is correct, the pair will fall to the levels of 124.40–122.38. In this scenario, critical stop loss level is 131.24.

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