Currency Pairs Market Analysis

[Solid ECN]

​

USDJPY​

USDJPY is one of the FX pairs that may see elevated volatility until the end of the week. This is because of a number of top-tier releases and events from the United States and Japan, scheduled for the final two days of the week. Traders will be offered a flash release of Q1 GDP report from the United States today at 1:30 pm BST and PCE inflation data for March tomorrow at 1:30 pm BST. In between those two releases, the Bank of Japan will announce its monetary policy decision.

The US GDP report is expected to show a slowdown in annualized growth rate from 2.6% in Q4 2022 to 2.0% in Q1 2023. PCE inflation for March is expected to show deceleration in core measure from 4.6 to 4.5% YoY. However, a rate decision from the Bank of Japan is potentially the biggest volatility event of the three. This will be the first BoJ meeting after Ueda took over as governor and because of that there are hopes that he may push for a change in BoJ's ultra-loose monetary policy. While it looks rather unlikely that any major policy change will be delivered tomorrow, one cannot rule out significant changes in an accompanying statement. Any hints at a hawkish shift could be a significant driver for USDJPY moves.

Taking a look at USDJPY chart at H4 interval, we can see that the pair has been trading in an upward channel since late-March. Advance was halted recently at 61.8% retracement of the downward move launched on March 8, 2023 (134.77 area) and the pair started to pull back. However, unless we see a break below the lower limit of the channel and below the lower limit of the Overbalance structure later on, technical picture continues to favor buyers.​

 

[Solid ECN]

3 markets to watch this week

First week of May looks busy, especially the second half of it, as investors will be offered top-tier macro data from North America as well as rate decisions from Fed and ECB. Stock markets will continue to react to earnings. Among top earnings releases next week one can find Apple, AMD and Qualcomm. Be sure to watch GOLD, USDCAD and US100.

GOLD

Investors will get rate decisions from two major central banks next week - Fed on Wednesday, 7:00 pm BST and ECB on Thursday, 12:45 pm BST. Both banks are expected to deliver 25 basis point rate hikes. Forward guidance will be crucial - hint that rate hike cycle is about to be paused, or nears its end, could be an important mover for GOLD which has recently struggled to climb back above $2,000 per ounce. On the other hand, hawkish guidance would be negative for precious metals and can add more fuel to recent pullback.

USDCAD

While central bank decisions will be the most closely watched events in the week ahead, investors will also be offered some top-tier macro releases. USDCAD may experience elevated volatility on Friday as jobs reports for April from the United States and Canada will be released at 1:30 pm BST. Apart from that, USD may also see some moves on the release of manufacturing ISM (Monday, 3:00 pm BST), ADP employment report (Wednesday, 1:15 pm BST) and services ISM (Wednesday, 3:00 pm BST).

US100

Solid earnings reports from Meta Platforms, Microsoft and Alphabet helped lift sentiment towards the tech sector this week. Apple, the final of the 5 US mega-tech companies, will report earnings next week on Thursday after the close of the Wall Street session. Earnings reports from two semiconductor companies - Advanced Micro Devices (Tuesday, after market close) and Qualcomm (Wednesday, after market close) - may provide additional fuel for moves on Nasdaq-100 index (US100).​

 

[Solid ECN]

​

USDCHF gathers pace ahead of US data​

USDCHF has been capped below the resistance trendline of a former bearish channel, which the price re-entered to post a new two-year low of 0.8850.

Despite the unsuccessful attempts to return above 0.9 over the past few weeks, the technical indicators show improvement in sentiment. The RSI has marked a new higher high in the bearish territory and the MACD is deviating above its red signal line. The stochastic oscillator has also changed trajectory to the upside. If the bulls run above the 20-day SMA and beyond the 0.9000 psychological level, resistance could initially develop around the 0.9070 barrier. The 50-day SMA could next come in sight at 0.9155. Breaching that obstacle too may intensify upside pressures towards the almost one-year-old resistance line from June at 0.9300.

In the event the price pulls lower again, the bears will attempt to extend the downtrend below 0.8850 and towards the support trendline from May 2022 at 0.8760. Another failure here could confirm additional losses towards the channel's lower bar at 0.8650.

Summing up, the short-term bias for USDCHF seems to be improving, though selling interest may not fade unless the pair climbs back above 0.9.​

 

[Solid ECN]

​

AUDUSD​

• Asian shares were mixed on Tuesday, with some markets closed or anticipating holidays.So far, markets do not react in any particular way to the latest development in the U.S. banking sector.​
• Japan's Nikkei 225 (JAP225) is down 0.3% to 29,150 with no trading sessions in Tokyo for the rest of the week due to the Golden Week holidays.​
• EU main indices are expected to open slightly lower in today's trading session, with Germany's DE30 down 0.15% at 16,030 and France's FRA40 down 0.08% at 7,460.​
• US main CFD on indices are trading slightly higher, with US500 futures up 0.11% at 4,184 points and US100 futures up 0.13% at 13,300 points.​
• The Reserve Bank of Australia (RBA) held a policy meeting at 5:30 (BST). Unexpectedly, RBA raised the official cash rate to 3.85%. This came as a surprise to investors who had expected the RBA to keep OCR unchanged. ​
• The Australian dollar rose to its highest level in a week due to an unexpected rate hike. In fact, the bank even suggested that there could be more rate increases in the future. AUDUSD is trading 1.2% higher at 0.6706. ​
• The Reserve Bank Board of RBA is concerned that predictions of continued high inflation will lead to bigger rises in both prices and wages. RBA also stated that soft landing will be difficult to achieve.​
• Markets are bracing for the U.S. Federal Reserve's upcoming interest rate decision, with oil prices and currencies remaining relatively stable. Oil Brent is trading at $79.4 and is up 0.05%. The US dollar depreciated slightly with EURUSD trading 0.12% higher at 1.0989.​
• Morgan Stanley is reportedly planning to start a new wave of job reductions due to concerns about expenses and the delay in dealmaking recovery due to fears of a recession. Sources suggest that a cut of around 3,000 positions globally by the end of this quarter is discussed.​

The AUDUSD currency pair has risen to its highest level in a week, reaching 0.6704 points after rising from 0.66199 points. Currently, there have been no observed corrections in the price movement.​

 

[Solid ECN]

​

EURUSD in Breakout Mode​

• The EURUSD continues to go sideways in a tight trading range holding above the moving average (blue line).​
• The market is still Always In Long. However, the past five trading days have had a lot of overlapping bars. This increases the risk of more trading range price action.​
• The bulls want the tight bull channel to continue up, and the bears want a downside breakout and test of prior lower highs, such as April 17th.​
• The bears need to get a close below the moving average. Without it, traders will continue to buy at the moving average, betting it will act as support.​
• At the moment, the odds are that the bull channel that began in March will convert into a trading range and test prior lower highs. However, without a downside breakout, the market will probably have to go sideways and develop more selling pressure.​

​

 

[Solid ECN]

GBPCHF All set to fall

GBPCHF is currently at 1.1198 in a range and looking for a breakout of slope support. We are in the start of a channel, and we are looking for a continuation to the 1.000 Fibo at 1.1149 with a further target the ATR target at the 1.1125 area.

Watch the USDX for direction. The average daily true range (ATR) for the pair is 69 pips per day and it's 180 day average is 82 pips per day. USDX is currently moving up but at a range top-watch for it to short.

 

[Solid ECN]

​

USDCAD​

Despite natural gas price sideways fluctuation between 1.950 support and 2.500 resistance, the major indicators provide the negative momentum again, to increase the chances of renewing the negative attempts in the near term and medium term period.

Succeeding to break 1.950 support line will open the way to form new bearish waves to target the historical support at 1.4800 followed by reaching the psychological support at 1.​

 

[Solid ECN]

GBPUSD touches the target​

The GBPUSD pair continued to rise yesterday to succeed touching 1.2580 level, noticing that the price begins today with new rise to attempt to confirm breaching this level, to continue suggesting the bullish trend for the upcoming period, reminding you that our next station is located at 1.2650.

The bullish channels continue to organize the suggested bullish wave, which gets continuous support by the EMA50, noting that holding above 1.2510 is important to achieve the waited targets, as breaking it will press on the price to achieve some intraday bearish correction before turning back to rise again.​

 

[Solid ECN]

USDCAD

As is usually the case for the first Friday of a new month, traders will be offered jobs data from the United States and Canada. Both reports will be released at 1:30 pm BST today, meaning that USDCAD is likely to experience a jump in short-term volatility around that hour.

Of course, the US report will draw more attention. The NFP report for April is expected to show an employment gain of 180k as well as an uptick in the unemployment rate to 3.6%. Wages are expected to increase 0.3% MoM but on an annual basis wage growth is seen staying unchanged at 4.2% YoY. Labour market data has been quite solid as of late and yet it did not discourage Fed from hinting that a pause in rate hike cycle is coming at the next meeting in June. Having said that, the impact of potential NFP beat today may be more short-term and won't alter rate expectations. When it comes to Canadian data, employment is expected to have increased by 21.5k jobs in April while the unemployment rate also ticked higher, from 5.0 to 5.1%.

Taking a look at USDCAD chart at D1 interval, we can see that the pair has been trading sideways recently. An attempt to break above the 1.3675 resistance zone was made at the turn of April and May but bulls failed to push the pair above it. Pair started to pull back and is now testing and support zone ranging around 1.35 handle and marked with 200-session moving average (purple line), previous price reactions as well as 23.6% retracement of the upward move launched in June 2021.​

 

[Solid ECN]

EURUSD leans on the moving average

EURUSD pair tested the EMA50 that formed good support at 1.1010 and kept its stability above it, to start today positively and attempts to resume the main bullish trend, noticing that stochastic provides clear positive signals now, waiting to motive the price to provide more positive trades in the upcoming sessions, waiting to breach 1.1075 to confirm rallying towards 1.1150 as a next target.

Therefore, we will continue to suggest the bullish trend on the intraday and short term basis, noting that breaking 1.1010 will stop the positive scenario and put the price under additional negative pressure to head towards visiting 1.0945 level before any new attempt to rise.​

 

[Solid ECN]

EURJPY

Beginning of a new week on the markets has been calm so far. Worse than expected German industrial production reading for March did not have much impact on EUR or European indices. German industrial output dropped 3.4% MoM, missing -1.3% MoM estimate quite significantly. One more piece of data from Europe will be released today - Sentix index for May at 9:30 pm BST. However, it is unlikely to trigger major moves on the EUR market as well. Speech from ECB Lane at 3:00 pm BST may trigger some short-term volatility. We also had release of Bank of Japan minutes during the Asian session but it turned out to be a non-event as it related to early-March meeting which was still chaired by Kuroda.

Taking a look at EURJPY at D1 interval, we can see that the pair has managed to halt recent correction at 147.50 support zone and is now trying to recover back to recent highs in the 151.00 area. A move above 149.00 mark was made today. Should the upward move continue and the pair breaks above the 151.00 area, a test of the upper limit of the upward channel, currently in the 153.20 area, cannot be ruled out in the near-term.​

 

[Solid ECN]

EURUSD is Recovering

The EURUSD pair's decline stopped at 1.0966 level, to rebound bullishly and settle above the EMA50, to head towards recovering and resume the main bullish wave again, on its way to test 1.1075 level as a first station, noting that breaching this level will extend the bullish wave to reach 1.1150 areas as a next target.

Therefore, we expect to witness more bullish bias in the upcoming sessions, and the price needs to consolidate above 1.1010 to continue the suggested rise, as breaking it will put the price under new negative pressure to head towards visiting 1.0945 level initially.

 

[Solid ECN]

NZDUSD

The NZDUSD pair shows more bullish bias to move away from 0.6290, which supports the continuation of the bullish wave for the rest of the day, and the way is open to achieve our next target at 0.6380, supported by the EMA50 that carries the price from below, noting that holding above 0.6290 is important to achieve these targets.

The expected trading range for today is between 0.6260 support and 0.6370 resistance​

 

[Solid ECN]

​

EURJPY holds below the barrier​

EURJPY pair approached 149.35 barrier yesterday, while the lack of the positive momentum forced it to provide new negative close to confirm its affection by the bearish bias for now, noticing its crawl towards 148.35.

We expect to renew the negative attempts to target the first station at 147.50, reminding you that breaking this level might force it to suffer additional losses that might extend towards 146.60 followed by reaching 145.65 support line.​

 

[Solid ECN]

GBPUSD presses on the channel's support line

GBPUSD pair ended yesterday negatively, to test the intraday bullish channel's support line, noticing that the price begins today with slight decline to move below this support, while stochastic reaches the oversold areas now, to form positive motive that we are waiting to assist to push the price to resume the main bullish wave and head to achieve gains that reach 1.2850.

Therefore, the overall bullish trend will remain valid for the upcoming period, supported by the EMA50, and the price needs to breach 1.2625 to confirm resuming the bullish track, noting that failing to achieve the required breach will push the price to achieve additional decline that its next target reaches 1.2550.​

 

[Solid ECN]

USDCAD approaches the extended target

USDCAD pair continued to decline yesterday to approach 1.3300 level, but it bounced bullishly to settle above 1.3350, noticing that stochastic lost its positive momentum to reach the overbought areas now, which forms negative motive that we expect to push the price to resume the negative trades and head to achieve additional negative targets that reach 1.3265.

Therefore, we will continue to suggest the bearish trend for the upcoming period, noting that breaching 1.3385 will stop the negative scenario and lead the price to start correctional bullish wave on the intraday basis.​

 

[Solid ECN]

GBPJPY repeats the positive closes

The GBPJPY pair repeated providing positive closes above the extra support at 169.25 level, confirming its readiness to resume the bullish attack, to notice its fluctuation near 170.70.

note that stochastic begins providing positive momentum by its rally above 50 level will ease the mission of reaching the initial extra target at 172.13, then wait for attacking the extra barrier at 172.50 level, which represents the key for detecting the expected trend in the upcoming period. The expected trading range for today is between 169.70 and 171.40.​

 

[Solid ECN]

GBPUSD

GBPUSD pair kept its stability above the beached resistance of the bullish flag, to keep the bullish trend scenario valid for the upcoming period, supported by the EMA50, waiting to visit 1.2700 followed by 1.2850 levels mainly.

Stochastic current negativity might cause some temporary sideways fluctuation before resuming the expected rise, which will remain valid conditioned by the price stability above 1.2565.​

 

[Solid ECN]

GBPUSD

Should the Bank of England deliver onto those expectations and hike rates by 25 basis points, the main rate would climb to 4.50% - the highest level since October 2008. However, as such an outcome is well expected and priced in, investors will look for hints on what comes next.

Should we see an increase in the number of MPC members who favor keeping rates unchanged, GBP may find itself under pressure. Last time, 7 MPC members opted for increasing rates while 2 preferred keeping them unchanged. Also, a new set of economic projections will be released and it will be closely watched, especially inflation forecasts. UK CPI inflation slowed in March but stayed above 10% YoY mark and should new forecasts show higher inflation expectations, it could be a bullish signal for GBP as it would hint at a need for more rate hikes. Markets currently see a rate peak at around 5.00% in September-November 2023.

Taking a look at GBPUSD chart at H1 interval, one can see that the pair has been pulling back this morning. Pair dropped below the support zone marked with 38.2% retracement of the upward impulse launched on May 2, 2023 (1.2585 area). Downward move did not stop there with pair continuing to move lower and dropping below 200-hour moving average (purple line). An attempt to climb back above this moving average can be spotted at press time but should bulls fail to do so, the pair may look towards a test of the support zone marked with 50% retracement in the 1.2557 area.​

 

[Solid ECN]

EURUSD​

The EURUSD pair ended yesterday below 1.0945 level, to fall under expected negative pressure in the upcoming sessions, targeting 1.0865 level as a next correctional target.

Therefore, we are waiting for more expected decline on the intraday basis, supported by the negative pressure formed by the EMA50, noting that breaking the targeted level will push the price to achieve additional bearish correction that its next target reaches 1.0795, while the expected decline will remain valid unless breaching 1.0945 and getting daily close above it.​