Currency Pairs Market Analysis

[Solid ECN]

EURUSD Economic Calendar: Quiet end to a busy week​

• European indices trade 0.3-0.5% lower ahead of the opening​
• Speeches from Fed and ECB members​
• Earnings from Deere & Co, AMC Networks​

European indices trade lower on Friday, following a downbeat US and Asian sessions. Moods on the global markets deteriorated further yesterday as higher-than-expected PPI reading added to concerns over inflation and scale of still needed tightening. USD is the best performing G10 currency but has pared some gains ahead of the European cash session open. Commodities find themselves under pressure amid stronger USD with gold trading 0.6% lower and oil dropping 0.5%.

Economic calendar for today is very light. There are no macro releases scheduled for release that tend to move the markets. The UK retail sales report was released at 7:00 am GMT and showed an unexpected increase (+0.3% MoM vs -0.5% MoM expected). GBP has had a fairly muted reaction to the release. Speeches from Fed and ECB members may offer some FX volatility

1:30 pm GMT - US, export prices for January. Expected: -0.2% MoM. Previous: 0.4% MoM
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Central bankers' speeches​

• 11:30 am GMT - ECB Villeroy​
• 1:30 pm GMT - Fed Barkin​
• 1:45 pm GMT - Fed Bowman​

Top US earnings​

• Deere & Company (DE.US) - before market open​
• AMC Networks (AMCX.US) - before market open​
• AutoNation (AN.US) - before market open​

 

[Solid ECN]

GBPJPY Keeps the Positivity​

The GBPJPY pair kept its positive stability above the additional support 159.90, to confirm surrendering to the domination of the suggested bullish bias by touching 161 level, reminding you that it is important to gather the additional positive momentum to manage to breach the moving average that forms an obstacle at 162.10, to ease the mission of reaching the additional positive stations near 163 followed by 164.45.

The expected trading range for today is between 160.4 and 162.​

 

[Solid ECN]

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NZDUSD ​

• Indices from Asia-Pacific traded mostly higher at the beginning of a new week. Nikkei and S&P/ASX 200 traded 0.1% higher, Kospi added 0.2% and Nifty 50 dropped 0.1%. Indices from China traded up to 2% higher.​
• DAX futures point to a higher opening of the European cash session today.​
• US index futures trade little change compared to Friday's cash closing prices.​
• US and Canadian traders are off for holidays today so liquidity conditions in the afternoon may be thinner.​
• US Secretary of State Blinken said that US has information suggesting that China is considering providing Russia with ammunition and lethal weapons for war in Ukraine.​
• Bloomberg reports that meeting between Blinken and his Chinese counterpart Wang Yi over the weekend was rocky and far from encouraging.​
• People's Bank of China left 1- and 5-year prime lending rates unchanged at 3.65 and 4.30%, respectively. Decision was in-line with expectations.​
• According to Reuters report, People's Bank of China has reportedly asked domestic bank to slow issuance of loans this month.​
• North Korea fired two ballistic missiles today. UN Security Council will convene at 8:00 pm GMT today to discuss the situation.​
• Cryptocurrencies are trading mixed today with major coins experiencing rather small moves. Bitcoin drops 0.2%, Ethereum trades 0.3% higher and Dogecoin adds 0.4%.​
• Energy commodities trade mixed - oil gains 0.8-0.9% while natural gas pulls back around 2%.​
• Precious metals benefit from USD weakening at the beginning of a new week - gold and silver gain around 0.1% each while platinum adds almost 0.5%.​
• AUD and JPY are the best performing major currencies while CHF, EUR and USD lag the most.​

NZDUSD bounced off the 0.62 support zone last week but failed to launch a major recovery move. There is a lot of uncertainty around NZD as RBNZ is set to announce rate decision this week (Wednesday, 1:00 am GMT) and some see a chance for rate hike cycle pause amid recent floods and cyclone hit.​

 

[Solid ECN]

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GBPUSD - The price is in a correction and a fall is possible.​

On the daily chart, the upward first wave of the higher level (1) formed, within which the wave 5 of (1) ended. Now, a downward correction is developing as the second wave (2), within which the wave of the lower level A of (2) has formed.

If the assumption is correct, after the end of the wave B of (2), the GBPUSD pair will fall to the area of 1.1400 – 1.1155. In this scenario, critical stop loss level is 1.2437.

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[Solid ECN]

NZDJPY​

NZDJPY may be entering a volatile week. The Reserve Bank of New Zealand is scheduled to announce the next monetary policy decision on Wednesday at 1:00 am GMT. There is a lot of uncertainty around this announcement. Money markets price in around 40 basis points of tightening and majority of economists polled by Bloomberg see 50 bp rate hike as the base case scenario. However, calls for a lower hike or even a pause have been mounting recently as New Zealand is facing floods and damage from a cyclone. A decision to pause rate hikes to wait and see what damage to the economy weather has done, would be surprising and would likely trigger a pullback on NZD market.

When it comes to the JPY-side, an event to watch this week is the confirmation hearing of Kazuo Ueda in the lower house of the Japanese parliament scheduled for Friday, February 24. Ueda has been nominated to succeed Kuroda as Bank of Japan head and this week's confirmation hearing will be his first appearance since nomination. Any suggestions that the Bank of Japan may exit or roll down highly expansionary policy under his watch could trigger moves on the JPY market.

Taking a look at NZDJPY chart at D1 interval, we can see that the pair has been largely trading sideways as of late. The pair failed to break above the midpoint of the trading range in the 84.50 zone. Apart from previous price reactions, this zone is also marked with a 200-session moving average. Moves on the pair has been recently confined to the inner 82.50-84.50 range and high-volatility events scheduled for this week, especially RBNZ decision, could lead to a breakout, direction of which may determine the direction of the next big move.​

 

[Solid ECN]

AUDUSD Approaches Major Resistance​

The Australian dollar is the best performing G10 currency today as rising copper prices seem to support the resources-linked currencies amid subdued USD demand. AUDUSD bounced off the lowest level since January 6 touched on Friday and returned above 0.6900 level, however hawkish FED and simmering tensions between US and China may limit the upside movement. Currently the pair is approaching local resistance at 0.6925, which is marked with previous price reactions, 50% Fibonacci retracement of the last upward wave and 50 SMA (green line). Break higher would pave a way towards the next resistance at 0.6980, however if sellers manage to regain control and halt advances, then another downward impulse towards support at 0.6870 may be launched. Aussie may experience increased volatility in the evening and the coming Asian session, during the releases of flash PMI for February and RBA minutes.

One can observe a significant weakness of the US dollar, despite heightened geopolitical tensions.

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[Solid ECN]

EURUSD​

The bullish momentum of recent months eased in February. The last sessions have been marked by some indecision in the price that ended up consolidating.

On the dollar index chart, we can see that there may be room for further declines in the dollar. Friday's daily candle rejected the 200-period EMA and if the price moves back below the 200- and 50-period EMAs, then the EUR could gain against US Dollar weakness.

AUD leads the gains this trading session.

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[Solid ECN]

USDJPY - Growth is possible.​

On the daily chart, the third wave of the higher level 3 of (1) formed, a downward correction ended as the fourth wave 4 of (1), and the fifth wave 5 of (1) develops. Now, the first wave of the lower level i of 5 is forming, within which the wave (iii) of i is developing.

If the assumption is correct, the USDJPY pair will grow to the area of 138.20 – 142.17. In this scenario, critical stop loss level is 129.64.

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[Solid ECN]

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AUDUSD​

• Indices from Asia-Pacific traded mixed today. Nikkei and S&P/ASX 200 dropped 0.2% each, Kospi and Nifty 50 gained 0.1% while indices from China traded mostly lower.​
• DAX futures point to a more or less flat opening of the European cash session today.​
• RBA minutes showed that Australian central bankers see inflation as more broad and persistent than expected. The document also strongly hinted that rate hike pause at meeting in February was not an option.​
• New Zealand Treasury said in a statement that reconstruction after a cyclone hit will be a boost to the New Zealand economy. Treasury noted, however, that boost to the demand will increase inflationary pressures in the economy and may cause RBNZ to hold rates at higher levels for longer.​
• BoJ Governor Kuroda expects wage growth in the Japanese economy to accelerate as labor market gets tighter.​
• Australian manufacturing PMI index ticked higher in February, from 50.0 to 50.1. Services index moved from 48.6 to 49.2.​
• Japanese manufacturing PMI dropped from 48.9 to 47.4 in February (exp. 49.2).​
• Cryptocurrencies are trading mixed with major coins posting decent gains. Bitcoin trades 1% higher, Ethereum gains 0.6% and Dogecoin moves 0.4% higher.​
• Energy commodities trade mixed - Brent drops 0.6%, WTI trades 0.9% lower and US natural gas prices increased 0.3%.​
• Precious metals pull back as USD strengthens - gold trades 0.2% lower, silver drops 0.5% and platinum declines 0.7%.​
• USD and GBP are the best performing major currencies while NZD and AUD lag the most.​

In spite of a rather hawkish RBA minutes release, Australian dollar is pulling back today. AUDUSD is one of the worst performing major FX pairs as USD is on the rise. AUDUSD made an attempt at breaking back above a price zone marked with 50-session moving average (green line) and 50% retracement of the downward move launched in April 2022 but failed and a pullback was launched.​

 

[Solid ECN]

AUDNZD​

• Wall Street dropped hard during the first session after a long weekend. S&P 500 dropped 2.00%, Dow Jones moved 2.06% lower, Nasdaq plunged 2.50% and Russell 2000 slumped 2.70%.​
• While US stocks launched the day in bad moods, declines accelerated after solid US data (services PMI coming back above 50) boosted USD and Treasury yields, with 10-year rate climbing above 3.9%.​
• Indices from Asia-Pacific traded lower as well but scale of the drop was smaller. Nikkei dropped 1.3%, S&P/ASX 200 traded 0.3% lower, Kospi slumped 1.7% and Nifty 50 declined 1%. Indices from China traded 0.2-0.8% lower.​
• DAX futures point to a flat opening of the European cash session today.​
• NZD gained after RBNZ delivered a 50 bp rate hike, putting cash rate at 4.75% - the highest level since late-2008. Majority of economists expected such a move but there were some calls for 25 bp hike or even pause following a recent cyclone hit.​
• RBNZ signaled need for more rate hikes and confirmed its peak rate forecast at 5.50%.​
• AUD weakened following disappointing data for Q4 2022. Wage index increased by 0.8% QoQ (exp. 1.0% QoQ) while construction work completed dropped by 0.4% QoQ (exp. +1.5% QoQ).​
• Cryptocurrencies trade mostly lower - Bitcoin drops 1.6% while Ethereum and Dogecoin decline 1% each. Litecoin bucks the trend and gains 1%.​
• Energy commodities are pulling back amid overall increase in risk aversion - Brent drops 0.3%, WTI trades 0.4% lower and US natural gas prices plunged 2.5%.​
• Gold and silver trade little change while platinum and palladium jump around 0.8% each.​
• NZD and JPY are the best performing major currencies while AUD, CAD and USD lag the most.​

AUDNZD is plunging today amid a mix of NZD-positive and AUD-negative news. The pair pulled back from the resistance zone marked with 61.8% retracement and plunged back below recently-broken 200-session moving average (purple line). AUDNZD is attempting to make a break below the zone marked with 50% retracement, which would pave the way for a test of 1.0870 area, marked with 38.2% retracement.​

 

[Solid ECN]

NZDUSD

New Zealand dollar is the top performing G10 currency today. Strength of NZD is driven by the rate hike announced by the Reserve Bank of New Zealand earlier today. RBNZ delivered a 50 basis point rate hike. While the decision was in-line with expectations of most economists, there were some concerns that RBNZ may decide to slow the pace of tightening following a recent hit from cyclone Gabrielle.

RBNZ Governor Orr said that there was barely any consideration for a 25 basis point rate hike as it is too early to determine impact of cyclone hit and that discussion was centered around a 50 bp rate move. RBNZ Chief Economist said that cyclone hit boosts demand for labour but it is possible that the build-back programme will exert upward pressure on inflation. Minutes showed that discussion was whether to hike rates by 50 or by 75 basis points. Ultimately, the official cash rate was increased by 50 bp to 4.75% - the highest level since late-2022. Moreover, the peak rate forecast was confirmed at 5.5% and it is expected to be reached Q1 2024. Interestingly, the cash rate forecast for June 2023 was cut from 5.4 to around 5.15%. While RBNZ sees need for more tightening ahead, it should also be said that Governor Orr noted that the Bank is still expecting recession in New Zealand in a 9-12 months period.

Taking a look at NZDUSD chart at D1 interval, we can see that the pair has recently pulled back and tested the lower limit of a trading range in the 0.6200 area. A 50 bp RBNZ rate hike today helped the pair bounce off the 0.62 handle and while initially it looked like a recovery move may be launched, gain started to be erased as USD regained ground.​

 

[Solid ECN]

AUDUSD - A fall is possible.​

If the assumption is correct, the AUDUSD pair will fall to the area of 0.6645 – 0.6524. In this scenario, critical stop loss level is 0.7008.

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[Solid ECN]

NZDUSD - A fall is possible.​

If the assumption is correct, the NZD/USD pair will fall to the area of 0.6008–0.5890. In this scenario, critical stop loss level is 0.6388.

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[Solid ECN]

AUDUSD​

The Australian dollar is the worst performing G10 currency today, dragged down by disappointing macro data. Australia's seasonally adjusted wage price index rose by 3.3% YoY in Q4, after an upwardly revised 3.2% rise in Q3 and below analysts’ estimates of 3.5%. This was the highest reading since Q4 of 2012, amid further improvement in business conditions in the wake of the COVID pandemic. Wages in the private sector quickened to 3.6%, the highest since Q3 of 2012; while those in the public one accelerated to 2.5%, the highest since Q2 of 2019.

Meanwhile construction work completed dropped by 0.4% QoQ, well below market estimates of 1.5% rise, while Australia’s Westpac Leading Index marked -0.1% figure in January, the second time in a row. Also stronger-than-expected US economic data and hawkish remarks from policymakers also bolstered expectations the Fed would keep pushing interest rates higher to bring down inflation, weighing on the Aussie further. Today market attention will focus on the release of the latest FOMC monetary policy meeting minutes, due later during the US session, which may determine the short-term trajectory for the pair.

From technical point of view, AUDUSD approaches a major support zone between 0.6810 - 0.6790, which is marked with previous price reactions and 78.6% Fibonacci retracement of the upward wave launched at the beginning of the year. Should break lower occur, sell-off may deepen towards the lower limit of the 1:1 structure at 0.6725 or even January lows at 0.6688. Nevertheless as long as price sits above the aforementioned support zone, another upward impulse may be launched towards local resistance at 0.6870.​

 

[Solid ECN]

USDCAD - Growth is possible.​

If the assumption is correct, the USDCAD pair will grow to the area of 1.3691–1.3850. In this scenario, critical stop loss level is 1.3440.

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[Solid ECN]

USDCHF - Growth is possible.​

If the assumption is correct, the USDCHF pair will grow to the area of 0.9455 – 0.9600. In this scenario, critical stop loss level is 0.9213.

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[Solid ECN]

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EURUSD​

EURUSD has been trading lower since the beginning of February. The main currency pair pulled back almost 4% off the daily high reached on February 2, 2023. Outperformance of USD over EUR can be reasoned with monetary policy. Both ECB and Fed are committed to continuing tightening their policies. However, while it is widely believed that the ECB will continue to tighten, it was not so sure for the Fed. The Fed has slowed the pace of rate hikes to 25 basis points at the latest meeting. However, the message sent by Powell during the press conference was hawkish and a streak of better-than-expected US data since the latest FOMC meeting has further boosted expectations that Fed is not done yet. Moreover, FOMC minutes released yesterday showed that a number of Fed members saw a need for another 50 bp rate hike. Having said that, the outlook for ECB policy has not changed while the outlook for Fed policy got more hawkish and this is driving declines in EURUSD.

Taking a look at EURUSD chart at D1 interval, we can see that the main currency pair broke below the lower limit of the Overbalance structure at 1.0660 earlier this week. In theory, this mean that EURUSD trend has reversed bearish. Should we see declines deepen, the nearest support level to watch on the pair are 1.0575 (100-day EMA) and 1.0470 (38.2% retracement of the upward move launched in September 2022. On the other hand, should we see buyers regain control, it would be prudent for traders to wait to see whether EURUSD breaks back above the 1.0660-1.0702 zone before taking action.​

 

[Solid ECN]

EURTRY: CBRT Cuts Rates by 50 bp, TRY Weakens​

Central Bank of Republic of Turkey announced its latest rate decision today at 11:00 am GMT. Median expectation among economists surveyed by Bloomberg was for a 100 basis point rate cut while median expectation in Reuters poll was for 50 basis point rate hike. CBRT decided to go with a 50 basis point rate cut, slashing the one-week repo rate from 9.00 to 8.50%. The Bank said that decision was allowed by improvement in inflation trends and that scale of rate cut is adequate to support recovery. Central bank said that it is assessing the economic impact and damage of recent earthquakes that hit Turkey and Syria.

EURTRY gained following a 50 bp rate cut from CBRT.​

 

[Solid ECN]

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USDJPY​

• Wall Street indices had a volatile session yesterday but have ultimately finished trading with decent gains. S&P 500 gained 0.53%, Dow Jones added 0.33%, Nasdaq moved 0.72% higher and Russell 2000 jumped 0.71%​
• Indices from Asia-Pacific traded mixed today. Nikkei gained 1.3%, S&P/ASX 200 moved 0.3% higher, Kospi dropped 0.6% and Nifty 50 traded flat. Indices from China traded 0.5-1.4% lower​
• DAX futures point to a slightly higher opening of the European cash session​
• Ueda, nominee to succeed Kuroda as BoJ chief, said that he sees inflation as peaking but warned that inflation trends do not improve, yield curve control will need to be maintained.​
• Speaking of tweaking BoJ yield curve control tool, Ueda said that targeting shorter-dated yields is one of the options on the table (BoJ currently targets 10-year yield)​
• Ueda did not make any specific comments on FX rates apart from saying that discussion on a specific JPY levels should be avoided ​
• According to a Reuters poll, almost half of Japanese companies want the Bank of Japan to exit the negative rate policy. 47% of respondents think that new BoJ governor should change policy​
• China made a cease-fire proposal to Russia and Ukraine. However, it is said that proposal gives too much concessions to Russia and is unlikely to win backing in Kyiv​
• According to Der Spiegel report, Russia is holding talks with China over supply of Chinese combat drones as well as know-how needed to manufacture them in Russia​
• French finance minister Le Maire said that a new sanctions package on Russia is being prepared ​
• Japanese CPI accelerated from 4.0 to 4.3% YoY in January (exp. 4.5% YoY). Core CPI accelerated from 4.0 to 4.2% YoY (exp. 4.2% YoY)​
• Cryptocurrencies trade mixed but scale of moves is really small. Bitcoin drops 0.1%, Ethereum gains 0.1% and Dogecoin adds 0.2%​
• Brent and WTI trade around 0.6% higher each while US natural gas prices drop 0.7%​
• Gold gains 0.2%, platinum adds 0.1% and silver trades flat. Palladium rallies over 1%​
• NZD and JPY are the best performing major currencies while CHF and USD lag the most​

USDJPY experienced some volatility during Ueda confirmation hearings, but is ultimately trading little changed compared to pre-hearing levels. The pair is trading in a short-term 134-135 range.​

 

[Solid ECN]

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NZDCAD​

The NZDCAD pair continued to provide correctional bearish tracs due to facing strong negative pressures caused by stochastic crawl below 50 level, to suffer additional losses and settle near 0.8360 level.

We notice the price consolidation within the bullish track that depends on 0.8390 level forming strong support line that allows us to wait to gather the additional positive momentum to manage to start activating the bullish track and expect to rally towards 0.8430, followed by attempting to breach 0.8485 obstacle in order to ease the mission of reaching additional stations in the upcoming period.​