Currency Pairs Market Analysis

[Solid ECN]

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AUDUSD​

• US indices finished yesterday's trading lower with major indices erasing all of the gains from the beginning of the session. S&P 500 dropped 0.41%, Dow Jones moved 0.11% lower and Nasdaq declined 0.85%. Russell 2000 dropped 0.72%​
• FOMC minutes showed that some Fed officials saw holding rates unchanged as appropriate at the March meeting amid banking turmoil. However, decision to hike by 25 basis points was ultimately unanimous​
• Markets are pricing in an almost-70% chance of 25 basis point rate hike at next FOMC meeting in May​
• Indices from Asia-Pacific traded mixed today - Nikkei gained, Kospi traded flat while Nifty 50 and S&P/ASX 200 pulled back. Indices from China traded slightly lower​
• DAX futures point to a slightly lower opening of the European cash session today​
• North Korea launched what seemed to be a new weapon system, possibly ICBM, towards the East Sea. Japanese authorities ordered residents of Hokkaido island, where the missile could land, to seek shelter inside buildings or underground. Evacuation order was later lifted​
• BoJ Governor Ueda said that inflation in Japan is likely to slow and the BoJ will continue with monetary easing until inflation target is reached stably and sustainably​
• RBA Deputy Governor Bullock said that pause in rate hikes in driven by job preservation and policy lags, rather than being a reaction to banking turmoil​
• AUD caught a bid after a solid jobs report for March - employment increased by 53k (exp. +20.6k) while the unemployment rate stayed unchanged at 3.5% (exp. 3.6%)​
• Chinese exports in USD terms increased 14.8% YoY in March (exp. -7.1% YoY) while imports were 1.4% YoY lower (exp. -6.4% YoY)​
• Cryptocurrencies are trading mixed - Bitcoin gains 0.4%, Ethereum drops 0.1% while Dogecoin adds 0.6%​
• Energy commodities traded lower - oil drops 0.3-0.4% while US natural gas prices decline 0.2%​
• Precious metals trade a touch higher with gold adding 0.1%​
• AUD and GBP are the best performing major currencies while CHF and JPY lag the most​

AUDUSD jumped following solid jobs data for March from Australia. However, bulls failed to sustain a break above the 0.6710 price zone and a return below this area can be observed at press time.​

 

[Solid ECN]

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AUDUSD​

Looking technically at the chart of the AUDUSD currency pair, the quotation broke out of the downward channel at the top some time ago, and we are currently observing a test of the key resistance in the area of 0.6785. If it is overcome, the way towards 0.6885 may be opened.

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[Solid ECN]

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NZDUSD​

The New Zealand dollar is the best performing currency in the G10 today. This is mainly due to the weakness of the USD, which discounted following the release of PPI inflation data from the US, which showed a decline in the headline reading from 4.6% to 2.7% y/y. Thus, the NZDUSD pair took advantage of the favorable technical situation and filled the inverted head-and-shoulders, bearish pattern that appeared on the H1 interval.

This type of price formation usually heralds a trend reversal - in this case to an upward one. After crossing the level of 0.6455, the upward movement accelerated, and the stock is currently struggling with the 61.8% measurement set on the last downward wave. In the case of a breakout above, the bulls can direct their attention towards the next resistance zone at 0.6335. On the other hand, in the event of a pullback and selling pressure, support remains at the level of 0.6245.​

 

[Solid ECN]

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EURUSD​

• Indices from Wall Street finished Friday's trading lower after Fed Waller noted that progress on inflation has been slow so far and that Fed may have to go with more than one hike before the end of the cycle​
• However, downbeat moods did not extend into a new week. Indices from Asia-Pacific are trading mostly higher today - Nikkei gains 0.1%, S&P/ASX 200 and Kospi add 0.2% while Nifty 50 trades 1% lower. Indices from China traded up to 1.2% higher​
• DAX futures point to a slightly higher opening of the European cash session today​
• Chinese Defence Minister said during his visit to Russia that China aims to have close communication and to strengthen multilateral coordination with Russian military​
• BoJ Governor Ueda said that while inflation situation in Japan is different that in other parts of the world, all options will be discussed at each policy meeting​
• US Treasury Secretary said that tightening in credit standards following banking turmoil could be a substitute for further Fed rate hikes​
• ECB President Lagarde said that path to global economic recovery is narrow but refrained from hinting whether she supports 25 or 50 basis point rate hike in May​
• Cryptocurrencies are trading mostly lower - Bitcoin drops 1.4%, Ethereum and Ripple trade 1.5% lower while Dogecoin slumps 2%​
• Energy commodities trade mixed - oil drops 0.2% while US natural gas prices climb around 2.5%​
• Precious metals trade mixed - gold gains 0.1% while silver and platinum drop 0.1%​
• AUD and CHF are the best performing major currencies while JPY and NZD lag the most​

EURUSD lost some ground on Friday after hawkish comments from Fed's Waller. While new week was also launched with a move lower, bulls managed to regain ground and are now trying to push the pair back above 1.10 mark.​

 

[Solid ECN]

EURUSD​

Bulls are losing momentum this session, while the euro against the dollar pulls back below the 1.10 level. The correction in the U.S indices is supporting the USD’s recovery, however, the pair is currently testing an important support zone. If the price stays above the uptrend line, the bullish scenario could resume again. However, if a breakout of this zone appears, then a further pullback cannot be excluded.

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[Solid ECN]

AUDJPY​

• US indices finished yesterday's trading slightly higher. S&P 500 gained 0.33%, Dow Jones moved 0.30% higher and Nasdaq added 0.28%. Russell 2000 was an outperformer and rallied 1.22%​
• Downbeat moods could be spotted during the trading in Asia today - Nikkei gained 0.4%, S&P/ASX 200 moved 0.4% lower, Kospi dropped 0.3% and Nifty 50 traded 0.2% lower. Indices from China traded mixed​
• DAX futures point to a slightly higher opening of the European cash session today​
• Chinese GDP growth reached 4.5% YoY in Q1 2023 and was much better than 4.0% YoY expected by analysts. However, on a quarterly basis growth reached 2.2% QoQ and was in-line with expectations​
• Monthly activity data from China for March came in mixed. Chinese retail sales surged 10.6% YoY in March (exp. 8.0% YoY), industrial production increased 3.9% YoY (exp. 4.7% YoY) and urban investments were 5.1% YoY higher (exp. 5.8% YoY)​
• According to RBA minutes, RBA members considered a rate hike at April meeting before ultimately deciding on a pause. Minutes showed that there is a stronger case to pause rates and assess whether there is need for more tightening​
• BoJ Governor Ueda said that buying government debt is part of monetary policy and is not aimed at monetising it​
• Cryptocurrencies are trading slightly higher today - Bitcoin gains 0.4% higher, Ethereum gains 0.6% and Dogecoin jumps 1.3%​
• Energy commodities trade mixed - oil gains 0.3% while US natural gas prices drop over 1% following yesterday's rally​
• Precious metals gain amid USD weakening - gold and silver trade 0.3% higher while platinum adds 0.2%​
• AUD and EUR are the best performing major currencies while USD and JPY lag the most​

AUDJPY gains following the release of upbeat Chinese Q1 GDP data. The pair climbed above a downward trendline at the end of the previous week and is continuing to advance towards the 91.00 resistance zone.​

 

[Solid ECN]

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AUDUSD​

The Australian dollar is one of the best performing major currencies today. RBA minutes turned out to be neither dovish, nor hawkish. On one hand, the document showed that RBA members considered a rate hike before ultimately deciding on leaving rates unchanged. On the other hand, the document noted that the Bank should reassess whether there is still need to undertake additional tightening. AUD, however, caught a bid following release of better-than-expected GDP data from China. The Chinese economy grew at a pace of 4.5% YoY in Q1 2023, much faster than 4.0% YoY expected by economists. Moreover, retail sales data for March showed a 10.6% YoY jump - also better than the 8.0% YoY increase expected. Industrial production data for March missed estimates but showed higher growth than in February.

Taking a look at AUDUSD chart at D1 interval, we can see that the pair bounced off an important mix of support today - an intersection of 50- and 200-session moving average (orange circle). Demand side reaction to this technical support hints that another upward impulse may be about to start. In such a scenario, resistance zone in the 0.6780 area, marked with 38.2% retracement of October 2022 - January 2023 upward move may be the next target for the bulls.​

 

[Solid ECN]

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EURUSD​

Statements by the CEOs of major US banks today sounded 'disinflationary' today. CEO of Bank of America, Moynihan indicated that inflation rates in the US are falling and BofA's CEO, Bortwhick conveyed that the bank is seeing lower mortgage demand. Both of these comments look rather unfavorable for the 'greenback' and may suggest that the Fed will reconsider a possible rate hike in May. But James Bullard, the St.Louis Fed chair known for his hawkish stance, spoke on the situation in the US economy - his comments strengthened the dollar. Nevertheless, EURUSD is rebounding and trying to face a key short-term resistance level.

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Fed Bullard​

• Forecasts of a recession in the US ignore the strength of the labor market, and savings from the pandemic still have to be used after all, boosting demand;​
• With little tangible progress on inflation, interest rates must continue to rise;​
• The risk of banking stress causing widespread problems seems to have diminished, but we are still watching the situation closely;​
• The Fed should avoid giving extensive decision guidance at its next meeting and keep all options on the table as possible;​
• I still see an appropriately restrictive interest rate of 5.50%-5.75%. We are leaning toward keeping the rate longer until inflation is brought under control.​

EURUSD is trying to stop the declines. However, the short-term resistance line in the form of the SMA200 on the M15 interval may prove crucial. The US Congress is scheduled to vote on the debt ceiling bill next week.​

 

[Solid ECN]

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GBPUSD Gained after higher than expected UK CPI reading!​

• UK CPI (M/M) Mar: 0.8% (est 0.5%; prev 1.1%)​
• UK CPI (Y/Y) Mar: 10.1% (est 9.8%; prev 10.4%)​
• UK CPI Core (M/M) Mar: 0.9% (est 0.6%; prev 1.2%)​
• UK CPI Core (Y/Y) Mar: 6.2% (est 6.0%; prev 6.2%)​

Details of today's inflation report. High UK inflation is largely driven by food prices. This is likely to prompt the BoE to make another 25bp hike.

Details of today's inflation report. High UK inflation is largely driven by food prices. This is likely to prompt the BoE to make another 25bp hike.​

 

[Solid ECN]

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EURGBP​

The British pound is the best performing currency in the broad FX market at the moment. The EURGBP pair is trading close to 0.35% down today, triggered by a strong UK CPI reading. The UK's March CPI inflation reading came in at 10.1% YoY against a forecast of 9.8% and the previous reading of 10.4%. Core inflation continued unabated and came out at 6.2% against an expected fall to 6.0%. It had previously been 6.2%.

As reported by Reuters, the decline in price pressures in the UK economy is disappointing, raising the prospect of another interest rate hike in the UK. The swaps market is currently pricing in an 80% chance of a 25 basis point hike at a future BoE meeting. Let's remember that the UK has the highest inflation rates among Western European countries and is the only one struggling with double-digit inflation.

UK Finance Minister Jeremy Hunt said Wednesday's data confirms why the government must continue its efforts to bring inflation down.

The EURGBP pair lost ground sharply after raising the odds of the BoE continuing its interest rate hike cycle. The currency pair has drifted below support levels set by exponential moving averages, so a further reaction to these levels could be a key factor creating further movement in the pair.​

 

[Solid ECN]

EURUSD​

• March 2023 German PPI inflation comes in at 7.5% YoY (forecast: 9.9%; previous: 15.8%)​
• In MoM terms, inflation dynamics fall by -2.6% against expectations of -0.6% and the previous level of -0.3%.​

The EURUSD pair has been subject to increased volatility in recent minutes. First, the ECB's Knot commented that the ECB still has a lot of work to do in terms of fighting inflation and an extension of the rate hike cycle into June and July is possible. On the other hand, the strong fall in PPI inflation somewhat sweetens the tone of the ECB banker's comments.​

 

[Solid ECN]

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NZDUSD​

The New Zealand dollar has been one of the worst performing major currencies today. The sell-off was primarily caused by the inflation report, which showed that price growth in the economy is slowing much faster than expected. The quarterly data showed that inflation on a QoQ basis came in at 1.2% against forecasts of 1.7% and an earlier reading of 1.4%. In YoY terms, inflation came in at 6.7% against expectations of 7.1% and an earlier reading of 7.2%.

The swap market is currently pricing in a near 78% chance of a 25 basis point interest rate hike at the next RBNZ meeting. As recently as this morning, those odds were close to 85%, so the surprise inflation reading has lowered the prediction for a further hike. The RBNZ had forecast Q1 inflation at an annualized rate of 7.3%, slowing to 6.6% in Q2. As such, today's reading of 6.7% for Q1 goes a long way to putting the brakes on further aggression in the tightening cycle.

Looking at the NZDUSD price chart, we can see that the pair has broken out below the support zone set by the April 17 low and is currently trading near the levels outlined by the 38.2% Fibo retracement of the upward wave started in October 2022. For the moment, the key support and resistance levels are: (support) the zone between the previously mentioned 38.2 retracement and the 50% Fibo measure; (resistance) the downward trendline initiated in February 2023.​

 

[Solid ECN]

EURUSD​

Flash PMI indices for April from France and Germany were released at 8:15 am BST and 8:30 am BST, respectively.

French reading was mixed - services index showed a big and unexpected improvement while the manufacturing sector showed large and also unexpected deterioration. Deterioration in manufacturing, which reached 35-month low, can be explained with massive employee strikes that are occuring in France in response to new pension reform. Improvement in services is puzzling but we will have to wait for the final release for details.

German reading was mixed on the same note - miss in manufacturing and beat in services. However, in case of German data, strikes cannot be used as an explanation so we will have to wait for final data with sector/industry breakdown.

France​

• Manufacturing: 45.5 vs 47.9 expected (47.3 previously)​
• Services: 56.3 vs 53.5 expected (53.9 previously)​

Germany​

• Manufacturing: 44.0 vs 45.6 expected (44.7 previously)​
• Services: 55.7 vs 53.3 expected (53.7 previously)​

EUR ticked higher following the release of French data but the move was minimal. Indices also moved higher in a knee-jerk move but have later turned lower. Those moves were magnified after German release with EURUSD adding to previous gains and DE30 deepening slide.

DE30 deepens drop below 15,900 pts price zone after mixed PMIs from France and Germany.​

 

[Solid ECN]

EURUSD​

Flash PMI indices for April from France and Germany were released at 8:15 am BST and 8:30 am BST, respectively.

French reading was mixed - services index showed a big and unexpected improvement while the manufacturing sector showed large and also unexpected deterioration. Deterioration in manufacturing, which reached 35-month low, can be explained with massive employee strikes that are occuring in France in response to new pension reform. Improvement in services is puzzling but we will have to wait for the final release for details.

German reading was mixed on the same note - miss in manufacturing and beat in services. However, in case of German data, strikes cannot be used as an explanation so we will have to wait for final data with sector/industry breakdown.

France​

• Manufacturing: 45.5 vs 47.9 expected (47.3 previously)​
• Services: 56.3 vs 53.5 expected (53.9 previously)​

Germany​

• Manufacturing: 44.0 vs 45.6 expected (44.7 previously)​
• Services: 55.7 vs 53.3 expected (53.7 previously)​

EUR ticked higher following the release of French data but the move was minimal. Indices also moved higher in a knee-jerk move but have later turned lower. Those moves were magnified after German release with EURUSD adding to previous gains and DE30 deepening slide.

DE30 deepens drop below 15,900 pts price zone after mixed PMIs from France and Germany.​

 

[Solid ECN]

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Chart of the Day - EURUSD​

EURUSD is pulling back this morning. The move lower is driven mostly by strengthening of the US dollar. The main currency pair tried to recover some losses after the release of mixed PMIs for France and Germany that showed major improvement in the services sector and significant deterioration in manufacturing. While flash PMIs failed to trigger a strong recovery move, they seem to have been enough to halt declines.

Taking a look at EURUSD at the H1 interval, we can see that the pair dropped to the 1.0940 area, where the short-term upward trendline can be found. Bulls managed to defend this price zone and now we can see the pair trying to climb back above 1.0950. From a technical point of view, this is a bullish development but whether this translates into a large upward impulse will depend on whether bulls manage to break above the 1.0980 resistance zone that has been limiting upward moves this week. Should such a break occur, EUR bulls may target recent highs in the 1.1070 area next.

The pair may see some volatility around 2:45 pm BST when flash PMIs from the United States for April are released. Market expects a small deterioration in both manufacturing and services.​

 

[Solid ECN]

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JPY Recovers losses ahead of upcoming BOJ meeting​

Japanese central bankers will meet this week to decide on monetary policy (Friday). This will be the first meeting under new Bank of Japan governor Ueda. There was some hope in the markets that change at BoJ helm will result in change in BoJ policy. However, Ueda so far has been hinting at continuation of the ultra-loose policy of his predecessor, at least for now. On the other hand, Sankei reports that the central bank may review and assess the past 10 years of monetary policy. One cannot rule out that even in spite of lack of change in policy or statement, assessment alone may offer some guidance. JPY is recovering some of its recent losses as the meeting draws closer.

USDJPY is trading higher today, due to USD strength, but has lost some ground after the Sankei news report. USDJPY continues to trade in an uptrend started at the end of March but has run into resistance in the 135.00 area.​

 

[Solid ECN]

Coca-Cola on wave of strong demand and higher prices

Like other companies in the industry, the Coca-Cola Company has increased the prices of its products, but this has not affected consumer demand. In recent years, as pandemic-related restrictions have disappeared, the company has seen an increase in productivity. This is mainly due to consumers being willing to pay more for drinks in public places such as restaurants, stadiums and concerts.

Current premarket trading on Wall Street indicates that Coca-Cola (KO.US) shares have broken above the important resistance set by the local peaks of December 2022.​

 

[Solid ECN]

EURUSD

EURUSD has once again moved above the resistance zone at 1.10 USD. If this break is sustained, a continuation of the upward movement towards the next resistance level at 1.1273 is not excluded.

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[Solid ECN]

USD dips after US survey, new home sales data

A pack of US data was released at 3:00 pm BST today. While both soft and hard data was released, the market was more focused on the former, especially Conference Board consumer confidence reading for April. CB reading turned out to be a disappointment with headline index dropping from 104.2 to 101.3 (exp. 104.0). Lower reading was driven by a drop in expectations subindex. Other data released simultaneously to CB reading turned out to be mixed - new home sales increased 9.6% MoM in March and beat expectations while Richmond Fed index came in lower than expected.

US data released at 3:00 pm BST today​

• Conference Board Consumer Confidence for April:101.3 vs 104.0 expected (104.2 previously)​
• Present situation: 151.1 vs 151.1 previously​
• Expectations: 68.1 vs 73.0 previously​
• Richmond Fed manufacturing index for April: -10.0 vs -8.0 expected (-5.0 previously)​
• New home sales for March: 683k vs 630k expected (640k previously)​

Markets barely saw any reaction to the release of US data. USD ticked lower with EURUSD attempting to halt a decline in the 1.10 area while US index futures moved slightly higher following the release.

EURUSD attempts to bounce off the 1.1000 area after release of US survey and housing market data.​

 

[Solid ECN]

AUDUSD

Investors' morning attention in the FX market turned towards Australia, where we learned the latest inflation data. Australia's headline CPI came in at 1.4% k/k in Q1 2023 (versus the expected 1.3%). However, the AUDUSD pair saw declines, dictated by a lower core inflation reading (1.2% quarter-on-quarter versus expectations of 1.4%). By weight, it is core inflation that is the more important factor creating predictions for future RBA policy.

The Reserve Bank of Australia has forecast and continues to forecast a slowdown in inflation in the near future. The bank's rhetoric comments relatively bluntly that changes in monetary policy have a lagged effect on economic activity and its indicators. The combination of these two factors persuaded the RBA to hold the cash rate steady at its April meeting, and today's decline in core inflation will add to the case for another pause at the RBA's next meeting on 2 May. At the moment, the swap market is pricing in a near 80% probability of holding rates at 3.6%.

Looking at the technical situation of the AUDUSD currency pair, we can see that the AUD is weakening against the US dollar and is currently descending into the support area defined by the March 2023 lows and the 61.8% Fibo retracement of the upward wave initiated in October 2022. The nearest region of resistance is the confluence of the 50-, 100- and 200-day exponential moving averages marked on the chart.​