Solid ECN | Professional Market Analysis | *Video*

SOLIDECN

Experienced member
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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.

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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

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SOLIDECN

Experienced member
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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.

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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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SOLIDECN

Experienced member
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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.

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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​
 

SOLIDECN

Experienced member
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The sharp tightening of the RBA monetary policy surprised investors​

The AUDUSD pair is correcting against the background of the stabilization of the USD, trading at 0.7177.

Yesterday, the Reserve Bank of Australia (RBA) decided to raise the interest rate by 50 basis points at once — from 0.35% to 0.85%, which came as a surprise to analysts who assumed a correction to 0.60%. In an accompanying statement, the head of the regulator, Philip Lowe, said that the sharp tightening of the current monetary policy parameters was a response to rapidly rising inflation and problems with the housing market, which, according to yesterday's statistics, fell into negative territory. Thus, the number of construction permits issued decreased by 2.4% after an increase of 19.2% a month earlier, and the number of permits issued for the construction of private houses increased by 0.5% after a decrease of 3.0% in the previous month. Thus, in case of a correction in the USD, the growth of the AUD/USD pair will continue.

The US currency, in turn, is held above the 102.500 mark in the USD Index against the backdrop of an ambiguous market reaction to the speech of US Treasury Secretary Janet Yellen, during which special attention was paid to the situation on the oil market. The official noted that the increase in gasoline prices in the country could have been much higher if the Joe Biden administration had not decided to release part of the reserves from the strategic reserve. It is worth noting that Yellen's rhetoric disappointed investors who were hoping to hear about concrete steps by the financial authorities to combat inflation, which has reached the highest values in the USA in 40 years.

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On the global chart of the asset, the price is trading within the Expanding Formation pattern, rising in the 5th wave. Technical indicators keep a stable buy signal, strengthening it: fast EMAS on the alligator indicator are significantly above the signal line, and the histogram of the AO oscillator forms ascending bars while in the buy zone.

Support levels: 0.7158, 0.6987 | Resistance levels: 0.7264, 0.7571​
 

SOLIDECN

Experienced member
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Consolidation near record highs​

The US dollar shows mixed trading dynamics, consolidating near new record highs and the level of 134 and continuing the development of the general uptrend since May 30.

The pressure on the positions of the yen is exerted by the prospect of maintaining the current soft monetary policy of the Bank of Japan. While virtually all major financial regulators have moved on to sharply raise interest rates (the European Central Bank (ECB) is expected to launch the program in July), the Japanese authorities are pushing for continued stimulus. Such statements were made by the Deputy Governor of the regulator Masazumi Wakatabe, who also admitted the possibility of introducing new incentives if the economic situation so requires.

Macroeconomic statistics released yesterday in Japan did not provide any noticeable support to the yen. Revised data on the dynamics of gross domestic product for Q1 2022 were revised upward from –0.2% to –0.1% in quarterly terms and from –1.0% to –0.5% in annual terms, and the Eco Watchers Survey on Current Situation in May rose from 50.4 to 54.0 points, while the forecast was for a decline to 49.2 points.

Meanwhile, the Japanese authorities announced the continuation of work in the Russian oil and gas projects Sakhalin-1 and Sakhalin-2. The decision is contained in the national Energy White Paper. It is emphasized that in the current high energy prices, the country needs stable supplies of liquefied gas, and long-term contracts can reduce the negative effect on energy security. Mitsui & Co., Ltd. and Mitsubishi Corp. own 12.5% and 10% shares of the Sakhalin-2 project, and most of the gas produced here is supplied to Japan.

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Bollinger Bands in D1 chart show quite active growth. The price range is expanding, but still does not keep pace with the development of "bullish" sentiment in the market. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic has been near its highs for a long time, indicating high risks of the US dollar being overbought in the ultra-short term.

Resistance levels: 134.54, 135.55, 136 | Support levels: 133.7, 133, 132, 131

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SOLIDECN

Experienced member
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Correction ahead of the ECB meeting​

The European currency continues the local upward movement, which began yesterday after the publication of positive data on the state of the EU economy. Now the EURUSD pair is holding around the 1.0700 mark.

Thus, the gross domestic product for the first quarter increased by 0.6%, ahead of analysts' forecasts of 0.3% and the previous value of 0.2%. Thus, the growth was 5.4% YoY compared to 4.7% in the previous period. Today, investors will follow the course of the meeting of the European Central Bank (ECB). Traders expect to hear specific dates for the start of tightening monetary policy, as recently, the head of the department, Christine Lagarde, has already stated the need to raise rates and curtail the asset purchase program. Analysts believe that if the increase occurs, then not today since the ECB is not yet ready for "hawkish" steps.

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The instrument moves within a wide downwards channel, approaching the resistance line. Technical indicators maintain a stable buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram forms upward bars.

Resistance levels: 1.0778, 1.1131 | Support levels: 1.0630, 1.0351​
 

SOLIDECN

Experienced member
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The market is waiting for the US inflation data​

USDCAD is correcting upwards, trading around 1.269. The Canadian currency has been actively increasing in value against the US dollar for almost the entire week; however, in the end, it lost all the gained positions, which was caused by two main factors.

First of all, the Bank of Canada released a report on financial stability, which reflected the main points of vulnerability of the national economic system. The regulator noted the negative dynamics of housing prices, which have grown by more than 50% since the beginning of the coronavirus pandemic and until now. In addition, the country has recorded an increase in the number of heavily indebted households, which in the near future may face an even greater burden due to rising interest rates on loans.

The second reason for the growth of USDCAD is the strengthening of the US dollar, which reached 103 in the USD Index. In turn, market participants almost did not react to another increase in the number of Initial Jobless Claims, which amounted to 229K against 202K a week earlier. Key expectations of investors are related to today's data on consumer inflation in the US, which may increase by 0.7% over the month and remain at 8.3% in annual terms.

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On the global chart of the asset, the price continues to trade within a wide ascending channel with dynamic boundaries of 1.2450–1.3100, having reached the support line the day before. The fluctuation range of the Alligator indicator EMAs began to actively narrow, and the histogram of the AO oscillator is forming new ascending bars, actively rising in the sell zone.

Support levels: 1.2630, 1.2463 | Resistance levels: 1.2730, 1.2890​
 

SOLIDECN

Experienced member
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ECB expects high inflation to continue
The European currency reversed and continued to decline after the European Central Bank published its decision on monetary policy. Thus, the interest rate was kept at 0.00%, and the Board of Governors announced the end of the Asset Purchase Program (APP) from July 1, 2022, to make it possible to increase the key rate by 25 basis points already at the July meeting. The regulator will not change the existing values for margin credit and deposit lines, leaving them around 0.25% and -0.50%, respectively. However, European officials do not rule out another increase in September, which will depend entirely on the inflation rate, which, according to forecasts, will remain high for a long time. According to forecasts, the consumer price index will be at 6.8% during 2022, and only in the middle of 2023 is it possible to adjust to 3.5% and 2.1% in 2024. The dynamics of the gross domestic product will also slow down – from 3.7% to 2.8%.

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The asset moves within a wide downward channel, approaching the resistance line. Technical indicators have sharply changed their readings and are turning in the direction of selling: fast EMAs on the Alligator indicator are actively approaching the signal line, and the AO oscillator histogram has formed the first downward bar.

Resistance levels: 1.0774, 1.1075 | Support levels: 1.0547, 1.0351​
 

SOLIDECN

Experienced member
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The New Zealand currency is declining against the US dollar. However, there is an obvious trend towards its strengthening relative to other currencies due to the publication of positive national macroeconomic statistics: after the removal of the main coronavirus restrictions, the flow of people crossing the border increased significantly, reaching 266.7K people in April, which significantly exceeds the figures of previous months and 15.9K in May 2020. Also, data on spending on credit cards were published earlier, which reflected an increase in the purchasing activity of the population. Thus, the May figure was 123M New Zealand dollars, which is 1.4% higher than the April data.

The US currency strengthened significantly, surpassing 104.000 in the USD Index. The upward trend was catalyzed by the publication of data on consumer prices: inflation in the United States increased to 8.6% compared to May 2021, which exceeded the analysts' forecast, which assumed that the indicator would remain at 8.3%. The US Federal Reserve did not expect the index to rise in May, but it amounted to 1.0%, significantly exceeding the consensus forecast of 0.7%, leading to an annual value increase. Such statistics mean that the US regulator will have to continue actively tightening monetary policy.

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The trading instrument is moving within the global downtrend, approaching the year's low around 0.6220. Technical indicators reversed and gave a sell signal: fast EMAs on the Alligator indicator crossed the signal line downwards, and the AO oscillator histogram formed new downward bars below the zero line.

Resistance levels: 0.6410, 0.6566 | Support levels: 0.6220, 0.6070​
 
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SOLIDECN

Experienced member
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The pound is correcting after yesterday's negative dynamics caused by the publication of disappointing macroeconomic data, and now the GBP USD pair is trading around the level of 1.2172.

According to data for April, the UK economy slowed down by 0.3%, which led to a decrease in the growth rate to 0.2% QoQ. The negative dynamics harmed the annual GDP, which fell to 3.4% YoY from 6.4% earlier. Despite the upward correction, today's macroeconomic data did not reassure investors: the unemployment rate rose to 3.8% from 3.7% in March, and the Claimant Count Change decreased by only 19.7K instead of the expected 49 .4K against the background of correction of the average level of wages to 6.8% from 7.0% a month earlier.

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Yesterday, the instrument renewed the year's low at 1.2170 and is now trying to consolidate below it. The technical indicators reversed rather quickly and gave a new sell signal: indicator Alligator's EMA oscillation range expands downwards, and the histogram of the AO oscillator forms downward bars.

Resistance levels: 1.2317, 1.2629 | Support levels: 1.2107, 1.1952​
 

SOLIDECN

Experienced member
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Yesterday, Statistics Canada (StatCan) published data on the state of the Construction Sector, investment in which has been increasing for the seventh month in a row, adding 2.7% to 20.0 billion Canadian dollars in April. Financing for the construction of houses increased by 3.2%, and for the construction of non-residential buildings it increased by 1.4%. These data point to the stability of the real estate market in Canada, even in conditions of high inflation. Today, traders will be watching the data on Manufacturing Sales, which is expected to slow down to 1.6% from 2.5% a month earlier.

The US dollar, in turn, reached an all-time high of the year on May 12 at 104.900 in the USD Index on the back of a wave of sell-offs in risky assets, remaining stable in anticipation of today's publication of Producer Price Index data. According to forecasts, the May Producer Price Index may rise by 0.8%, which will provide an uptrend in the annual rate by 10.9%, and this, in turn, will signal a strengthening of the national currency.

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On the global chart of the asset, the price is trading within the wide upward channel with dynamic borders of 1.2450–1.3100, actively approaching the resistance line. The fluctuation range of the Alligator indicator EMAs is about to issue a buy signal, and the histogram of the AO oscillator is forming new ascending bars, actively rising in the sell zone.

Support levels: 1.2763, 1.2525 | Resistance levels: 1.2937, 1.3077​
 

SOLIDECN

Experienced member
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EUR USD, the market is waiting for the decision of the US Federal Reserve on the interest rate​

Today data on inflation in France will be published. According to analysts' forecasts, the consumer price index for May will rise by 0.6%, which will increase the rate by 5.2% YoY after 4.8% a month earlier. Yesterday, it became known that the same indicator in Germany reached a record 7.9%, adding 1.1% over the month. Sharp inflation is putting pressure on key sectors, and today's EU industrial output data will likely reflect continued negative momentum. According to experts' expectations, the value will decrease by 2.0% for April and by 1.1% YoY, which will increase pressure on the European currency.

Quotes of the American currency have consolidated after reaching the year's high, around 105.000 in the USD Index, and the market is waiting for the evening decision of the US Federal Reserve on interest rates. The consensus forecast of analysts suggests an increase in the indicator by the already familiar 50 basis points but after inflation in the United States rose to 8.6%, some experts spoke out for a sharper increase in the value by 75 basis points, which may be a completely justified action by the regulator to convince investors of the seriousness of their intentions. Also, to determine the rate for the current period, the agency will publish a monetary policy forecast for the near future.

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The trading instrument moves within a narrow downward channel, approaching the support line. Technical indicators strengthen the sell signal: indicator Alligator's fast EMA oscillation range expands downwards, and the AO oscillator histogram formed a down bar after entering the sell zone.

Resistance levels: 1.0498, 1.0776 | Support levels: 1.0353, 1.01​
 

SOLIDECN

Experienced member
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USD TRY, Turkish statistics alarm investors​

According to the Turkish Statistical Institute (TurkStat), Retail Sales added 14.7% in April 2022, supported by a 31.3% increase in sales of non-food products, while the same indicator for fuel and food corrected down by 2.8% and 1.1% respectively. Despite the positive results, the Inflation Research Group (ENAG), created by Turkish scientists and economists, seriously doubted their reliability. According to experts, the agency deliberately understates data on consumer price dynamics, and the May figure was not 73.50%, as stated in official statistics, but 161.0%. Against this background, the Turkish government is considering the possibility of banning independent economic analysts from publishing statistics without prior approval from TurkStat.

In turn, the US currency reached 105 in the USD Index and consolidated there, in anticipation of the evening publication of the US Federal Reserve's decision on the interest rate, which can be increased once again by at least 50 basis points. There is practically no doubt about the correction of the value, and the implementation of the forecast will only increase the upward momentum in the trading instrument.



The USD TRY quotes are rising as part of another wave of global growth, approaching the all-time high of 2021 at around 18.25. Technical indicators maintain a steady buy signal: the range of EMA fluctuations on the Alligator indicator is still directed upwards and the AO oscillator histogram is trading in the purchases area, forming new ascending bars.

Support levels: 16.9, 16.15 | Resistance levels: 17.5, 18.25​
 

SOLIDECN

Experienced member
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USD JPY, the market is waiting for decisive steps from the Bank of Japan​

The USD JPY pair shows extremely unstable trading dynamics as investors are waiting for a two-day meeting of the Bank of Japan on monetary policy, being corrected around 134.36.

The yen is rapidly declining amid ultra-soft policy from the country's main financial regulator, and inflation in May rose sharply to 2.5% from 1.2%, which requires the authorities to take steps to contain it. As for the local macroeconomic background, foreign trade data were published today, among which the increase in imports by 48.9% in May is particularly notable, which led to a serious correction in the trade balance to –2.384T yen from –842.8B for the month previously.

The American currency unexpectedly for investors remained at the beginning of the week at 105 in the USD Index after the decision of the US Federal Reserve to raise the rate by 75 basis points to 1.75%. Also, the regulator plans to increase the pace of treasury and mortgage securities sales from September to 60B and 35B dollars, respectively, from the current 30B and 17.5B dollars. By the end of the year, the agency expects that the rate will reach 3.4%, and in 2023, the rate of increase will be reduced, and the indicator will stop around 3.8%, after which it is planned to start a cycle of reduction in 2024 and bring the value to 3.4%.

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The instrument is moving within the global uptrend, having renewed another high of the year at 135.5 yesterday. Technical indicators maintain a stable buy signal: indicator Alligator's EMA oscillation range expands upwards, and the histogram of the AO oscillator forms new rising bars.
Resistance levels: 136, 142.2 | Support levels: 130.9, 126.75
 

SOLIDECN

Experienced member
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EUR USD, investors expect inflation data in the EU​

The European currency is trading with a slight slowdown after yesterday's strong growth, caused by investors' reaction to the wage increase in the EU in the first quarter by 2.70% from 1.50%, but today's data will have a key impact on the dynamics of the instrument. In the middle of the day, Eurostat will publish May's CPI, which estimates inflation, and the monthly increase could be 0.8% against the 0.6% shown in April, and the growth will remain around 8.1% YoY. As for the core consumer price index, which does not consider food and fuel prices, analysts do not expect positive dynamics and expect the value to remain at the April level of 3.8%.

After three days of being near the year's highs, around 105 in the USD Index, Quotes of the American currency reversed downwards and rolled back to 104 against the backdrop of disappointing data on the US labor market. Initial Jobless Claims amounted to 229K, which exceeds the quoted market expectations of 215K, and the total number of citizens receiving payments from the state consolidated at 1.312M compared to 1.309M last week. Investors drew attention to a significant decrease in the index of manufacturing activity from the Philadelphia Fed in June to –3.3 points from 2.6 points in May.

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The trading instrument moves within a narrow downward channel, approaching the support line. Technical indicators maintain a global sell signal: indicator Alligator's EMA oscillation range downwards, and the AO oscillator histogram has formed another down bar in the sell zone.

Resistance levels: 1.0630, 1.0778 | Support levels: 1.0377, 1.0151
 

SOLIDECN

Experienced member
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USD JPY, development of a new upward momentum​

After a correction to 131.40, the pair USD JPY starts a new upward momentum with the target at 135.50 amid investor disappointment in the policy of the Bank of Japan. Today the regulator decided to leave the interest rate unchanged at –0.10%. At a subsequent press conference, department head Haruhiko Kuroda said it was appropriate now to maintain the current strong monetary easing to support the economy, which is needed for profitable companies to benefit from the poor yen and get a boost in capital expenditures, higher wages and a strengthening trend from income to expenses. It, in turn, should boost inflation to the 2.00% target. The Bank of Japan will continue to closely monitor the impact of the yen on the economy and prices and, in the event of a sharp change in the situation, will be ready to respond accordingly.

The Japanese authorities intend to create a specialized headquarters, the main task of which will be to monitor the market and combat the rise in the cost of living of the population and rising inflation in the country against the backdrop of rising energy costs and the weakening yen. Hirokazu Matsuno, Secretary General of the Cabinet of Ministers of Japan, noted that experts would also assess the impact of tightening the American regulator's monetary policy parameters and, in particular, the increase in the interest rate to 1.75% on the national economy. It is noted that the anti-crisis body will begin work on June 21.

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It is likely that in the long term, the growth of the USD JPY pair will continue to 139 and 141 since, from a fundamental point of view, the US dollar will strengthen due to the tightening of the monetary policy of the US Federal Reserve and the increase in interest rates.

The long-term trend is upward. After the test of key support around 131, a new impulse began, which was to renew the weekly high around 135.5. In case of breakdown, the positive dynamics will continue to 139. According to the RSI indicator, there is a divergence on the chart, leading to a technical correction in the medium term.

The medium-term trend is upwards. This week, the traders tested the key trend support 131.63–131.29, after which the price began to rise to the high of the week in the 135.50 area, and zone 3 (137.10–136.72) will become its next target.

Resistance levels: 135.50, 139, 141 | Support levels: 131.40, 126.50, 124.08

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SOLIDECN

Experienced member
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NZD USD, technical analysis​


H4
On the four-hour chart, at the level of 0.6224, a "bullish" Inverted Hammer candlestick analysis pattern is formed, which is a signal for a price reversal at the bottom. The "bullish" trend in the asset is also confirmed by the appearance of the Engulfing Pattern, which indicates that, most likely, the asset has reached the bottom and is currently forming a reversal. A more likely scenario for further movement of the NZD USD quotes is an uptrend towards the resistance level of 0.6476, overcoming which will allow the "bulls" to head higher to the zone of 0.6709–0.6986. An alternative scenario is possible if the support level of 0.6224 is overcome with the target of 0.5931–0.5694.

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D1
The daily chart shows the formation of a Double Bottom price pattern, which is a reversal. In addition, a confirming signal is the formation of a Bullish Candle at the support level of 0.6224, which indicates the prevailing "bullish" power. The reversal is also confirmed by the formation of a Hammer Pattern indicating that buyers have taken control of the market and intend to raise the price in the range of 0.6476–0.6986.

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Support levels: 0.6224, 0.5931, 0.5694 | Resistance levels: 0.6476, 0.6709, 0.6986​
 

SOLIDECN

Experienced member
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USD CAD - May high update​

The US dollar continues to strengthen due to the policy of the US Federal Reserve aimed at tightening the parameters of the national monetary policy, and USD CAD is trading around 1.2995.

Last week, the regulator decided to raise the interest rate by 75 basis points to 1.75%, as a result of which the US dollar strengthened against the Canadian currency and updated the May high at 1.3065. US Federal Reserve Chairman Jerome Powell confirmed the authorities' readiness to fight the highest inflation in the last 40 years and said that the changes made will increase the attractiveness of the national currency and increase the number of transactions nominated in it. Also, the authorities will continue to monitor the global economic situation, and, if necessary, will again adjust the rate upward at the next meeting at the end of July.

Meanwhile, the Canadian dollar is declining following oil prices: WTI Crude Oil lost 7.7% last week and it looks like the negative dynamics will only intensify. Today, the General Administration of Customs of the People's Republic of China presented a report that notes a record increase in imports of "black gold" from the Russian Federation: the figure reached 8.42 million tons, exceeding the April value by 25%, while the volume of supplied liquefied gas amounted to 400 thousand tons, which is 56% higher than in May last year. Analysts believe that the displacement of Saudi Arabia from the list of leaders among energy suppliers became possible against the backdrop of the implementation of the Russian authorities' discount policy in the sale of oil.

The tightening of monetary conditions by the US Federal Reserve acts as a catalyst for the upward movement of the US dollar, as a result of which USD/CAD may rush to 1.3360 after the breakdown of the resistance level of 1.3065. Thus, there is a high probability that the trading instrument will continue to strengthen in the long term.

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The long-term trend is upward. Last week, the May high was updated at 1.3065 and if the price fixes above it, the next buy target will be at 1.3157. Strong levels, from which new long positions can be considered, formed in the area of 1.2950 and 1.2860.

The mid-term trend changed to an uptrend last week, when the target zone 1 (1.2766 – 1.2745) was broken out and the target zone 2 (1.2985 – 1.2963) was reached, above which the traders will try to consolidate this week. If successful, the growth of the trading instrument will continue with the target in the area of the target zone 3 (1.3212 - 1.3189). The key trend support is shifting to the levels of 1.2856 – 1.2835.

Resistance levels: 1.3065, 1.3157, 1.336 | Support levels: 1.2950, 1.2860, 1.2525

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SOLIDECN

Experienced member
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USD CHF, the pair is trading within a wide range of 1.004 – 0.956​

Last week, the Swiss National Bank unexpectedly raised interest rates by 50 basis points to –0.25% for the first time in seven years, which caused the USD CHF pair to fall to 0.9650. Officials, led by Chairman Thomas Jordan, also spoke of the possibility of further tightening monetary policy and added that they would remain "active" in the foreign exchange market. Meanwhile, inflation in Switzerland continues to rise: the producer price index for May increased by 0.9%, and the upward trend is likely to continue, as a result of which the regulator will raise rates at the next meetings, which in the medium term can strengthen the Swiss franc.

However, the long-term trend in the USD CHF pair remains upward. After the test of 1.0040 and the buyers' inability to break through it, the price went into a correction and is currently testing the support level of 0.9650. If traders hold this level, the asset will continue to grow with the target at the month's high, and in case of a breakdown, a correction is expected with the target at the key support of the trend at 0.9560.

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The medium-term trend is downwards, and within its framework, the trading instrument has broken through the target zone 3 (0.9710 – 0.9699). The next sell target is zone 4 (0.9601–0.9591). Last week, the asset corrected to the key trend resistance area of 0.9738–0.9728, held by market participants. As a result, the USD CHF pair is now falling with the first target around last week's low of 0.9622.

Resistance levels: 1.0040, 1.012 | Support levels: 0.9650, 0.956

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USDJPY - The probability of a downward correction remains​

The USD JPY pair is trading around 135.11. The asset failed to break the resistance level of 135.5, which suggests the development of a downward correction. Last Friday, the Bank of Japan decided to leave interest rates unchanged at –0.10%. Earlier, representatives of the regulator have repeatedly announced their intention to adhere to the course of ultra-soft monetary policy to increase household spending and stabilize the labor market. Now the focus of investors is on the minutes of the meeting on the monetary policy of the central bank, which will be published on Wednesday. Considering the latest changes, inflation in Japan was 2.5% YoY, and the base indicator reached 2.1%, which is above the target level of 2.0%. Traders want to know how long the current approach to monetary policy will last and when to expect a move to tighten.

As for the US dollar, the likelihood of its appreciation remains against the backdrop of the policy pursued by the US Federal Reserve. On Friday, the department's chairman, Jerome Powell, reaffirmed his determination to contain inflation, which peaked in the last 40 years, and declared his readiness to continue adjusting interest rates further.

After the technical correction, the next target for the USD JPY pair quotes will be 139 and 141.

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The long-term trend is upwards. Now the price is trading below the resistance level of 135.5, which implies the possibility of opening short positions with the target at 131.4 but in case of its breakout, the positive dynamics will continue to 139.

The medium-term trend remains upwards. Last week, traders unsuccessfully tested the key trend support 131.63–131.29, as a result of which an increase in the number of open long positions was recorded, the target of which is to renew the high of the last week and then move to zone 3 (137.09–136.72).

Resistance levels: 135.5, 139, 141 | Support levels: 131.4, 126.5, 124.08​
 
 
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