Solid ECN | Professional Market Analysis | *Video*

SOLIDECN

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The British pound is trading up against the US currency, trying to recover from four sessions of decline, which led to new record lows since June 2020. The instrument remains under pressure from extremely low demand for risky assets, which, in turn, pushes the US currency to update record highs.

Despite an attempt by the Bank of England to stabilize the situation, experts fear that a sharp rise in interest rates could have an extremely negative impact on the recovery of the British economy, up to the onset of a recession. Meanwhile, the situation with energy resources remains tense, given that the EU and the UK continue to increase sanctions pressure against the Russian economy in response to a special military operation in Ukraine. Last Sunday, the leaders of the G7 countries held talks via videoconference, during which they supported the decision to phase out energy resources, as well as a ban on oil imports from Russia.

The data published the day before put additional pressure on the British currency. Thus, BRC Like-For-Like Retail Sales in April showed a decrease of 1.7% after falling by 0.4% a month earlier, while analysts expected an acceleration of negative dynamics, but expected a slightly more modest decrease of –1.6%. Tomorrow, investors will follow the publication of updated data on the dynamics of UK GDP for Q1 2022.

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Bollinger Bands on the daily chart show a steady decline. The price range is narrowing, reflecting the emergence of multidirectional trading dynamics in the short term. MACD indicator reverses to growth while forming a new buy signal (the histogram is about to consolidate above the zero level). Stochastic shows similar dynamics, recovering from its lows, indicating the risks of oversold pound in the ultra-short term.

Resistance levels: 1.24, 1.25, 1.26, 1.2674 | Support levels: 1.225, 1.22, 1.215, 1.21

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SOLIDECN

Established member
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The Australian currency continues unsuccessful attempts to change the global trend against the US dollar, but there are again obstacles to growth. At the moment, the AUDUSD pair is correcting at 0.6961.

Yesterday, the Australian dollar corrected upwards after publication of data on the index of business confidence from the National Bank of Australia, which amounted to 20 points in April, having risen from 15 points a month earlier. At the same time, Q1 retail sales amounted to 1.2%, significantly lower than 7.9% in the previous period but higher than analysts' pessimistic forecast, which assumed a decline to 1.0%. Today, positive statistics were leveled by data on the consumer sentiment index from Westpac with a forecast for May, which reflected a decrease in the index by 5.6% after falling by 0.9% in April. The statistics clearly show signs of a slowdown in the economy, which negatively affects the national currency's exchange rate.

The main pressure on the instrument is exerted by the US dollar, whose quotes are at high levels close to 104 in the USD Index. The key event of this week will be today's publication of a report on consumer prices, which will show the real state of inflation in the US. Most regional FRB officials have already spoken out in favor of the expected decline to 8.1% from the current 8.5%, which, in turn, is not in line with other economic indicators. If actual inflation continues to rise, this could completely undermine the market's confidence in the actions of the US Federal Reserve and its forecasts.

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The price moves within the Expanding formation pattern on the global chart, having reached the support line. Technical indicators keep a sell signal, reflecting the beginning of a possible reversal: indicator Alligator's EMA fluctuations range slightly narrows, and the AO oscillator histogram forms multidirectional bars.

Resistance levels: 0.7, 0.7265 | Support levels: 0.69, 0.67​
 

SOLIDECN

Established member
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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%.

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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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SOLIDECN

Established member
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During the Asian session, the USDCAD pair is growing moderately, retesting the level of 1.3 for a breakout after an active decline yesterday, when the “bears” lost their positions by the close of the day session. As a result, the instrument failed to retreat from its all-time highs since November 2020, renewed on Tuesday.

Investors reacted to the publication in the US of April statistics on consumer inflation, which is one of the main guidelines for the US financial regulator when choosing a monetary policy vector. Thus, the consumer price index excluding food and energy in April accelerated from 0.3% to 0.6%, which was higher than analysts' expectations of 0.4%, and the figure slowed down from 6.5% to 6.2% YoY, which also was better than preliminary market estimates of 6.0%.

On Thursday, traders are focused on the US Initial Jobless Claims. Also during the day will be published April data on manufacturing inflation. Corresponding to consumer prices, some correction is expected from manufacturing inflation. Among Canadian publications, it is worth paying attention only to the speech of the representative of the Bank of Canada, Toni Gravelle.

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On the daily chart, Bollinger Bands steadily grow: the price range slightly expands from above, letting the “bulls” renew local highs. MACD grows, keeping a strong buy signal (the histogram is above the signal line). Stochastic reached its highs and reversed into a downwards plane, indicating that the US dollar may become overbought in the ultra-short term.

Resistance levels: 1.305, 1.31, 1.315, 1.32 | Support levels: 1.3, 1.295, 1.29, 1.285

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SOLIDECN

Established member
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The British pound shows an uptrend in trading, correcting after another decline the day before, as a result of which GBPUSD updated its lows since May 2020. The growth of the pound on Friday is due to the strengthening of technical factors, while the fundamental picture changes slightly and still contributes to the further weakening of the British currency.

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Due to the difficult situation in the labor market, the disruption of product supply chains, as well as rising energy prices, the cost of living crisis will affect about 1 million Britons, the National Institute for Economic and Social Research (NIESR) has calculated. According to the data presented, inflation in the country may accelerate to 14.4% by the end of this year, reaching 40-year peak levels. Against this background, about 250K people may find themselves in extreme poverty, and the economy itself may go into recession. To solve the problem, concrete measures of assistance from the government, totaling 4.2 billion pounds, will be required.

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Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is changing slightly, but remains rather spacious for the current level of activity in the market. MACD is trying to reverse upwards but preserves its previous sell signal (located below the signal line). Stochastic has been located in close proximity to its lows for quite a long time, which points to the risk of oversold GBP in the ultra-short term.

Resistance levels: 1.225, 1.24, 1.25, 1.26 | Support levels: 1.2163, 1.2074, 1.2, 1.19​
 

SOLIDECN

Established member
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The US dollar is slightly declining against the Japanese yen in Asian trading, once again trying to consolidate below 129.00. The positions of the American currency are under some pressure after the publication of disappointing macroeconomic statistics last Friday. In addition, traders are in a hurry to close long positions in the asset, fearing a corrective decline in the US government bonds, which retreated from their record highs at the end of last week.

The Japanese currency is supported today by the statistics from Japan on producer inflation. Producer Price Index accelerated in April from 0.8% to 1.2%, which turned out to be stronger than analysts' neutral forecasts. The Producer Price Index for corporate goods over the same period YoY strengthened from 9.5% to 10%, while the market expected a slight decline to 9.4%.

Last week it became known that Japan and the United States will develop cooperation in the field of research and production of semiconductors. It is predicted that the partnership agreement will be signed during the meeting scheduled for May 23. This will allow Japan to reduce its dependence on supplies from South Korea and Taiwan. In addition, the parties will work on projects in the defense, space, and cyberspace sectors. At the moment, the Japanese government intends to adjust the defense budget, increasing it to 106 billion dollars and bringing it to 2% of Gross Domestic Product against the backdrop of growing geopolitical tensions from China, North Korea and Russia, as well as the escalation of the military conflict in Ukraine.

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On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is narrowing actively, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is going down preserving a stable sell signal (located below the signal line). At the same time, the current indicator readings weakly correlate with real market dynamics. Stochastic stopped the development of the "bearish" dynamics near the level of "20", indicating the emergence of multidirectional trading in the ultra-short term.

To open new positions, it is necessary to wait for the trade signals to become clear.

Resistance levels: 129.39, 130.00, 130.79, 131.33 | Support levels: 128.62, 127.5, 127, 126.3

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