Forex Updates by Solid ECN

[Solid ECN]

Gold​

Gold prices rallied upwards sharply by today’s open, as the prices are affected by the FOMC rate hike, to surpass our waited target at 2048.70 and record new historical high at 2080, to hint the continuation of the bullish trend domination on the short term and medium term basis, but we notice that the price declines quickly to settle below 2048.70, which makes us prefer to stay aside until the price confirms its situation according to this level followed by detecting its next destination clearly.

The contradiction between the technical indicators provides another reason for neutrality, as stochastic shows clear negative signals now, while the EMA50 provides the continuous positive support to the price. Note that breaching 2048.7 and holding above it will lead the price to resume the bullish wave and achieve positive targets that reach 2098, while consolidating below it will press on the price to achieve intraday bearish corrections that target testing 2017 areas initially.​

 

[Solid ECN]

Oil​

Oil prices, including Brent and WTI, dropped more than 5% after yesterday’s FED meeting regarding interest rates. Oil.WTI dropped below $69 - the lowest level since March 24, 2023. Prices fell from $71.5 per barrel to as low as $63.6 per barrel. However, prices have rebounded slightly from lows. Higher volatility was caused by rising concerns about the global economy and demand. The re-emergence of US banking problems and OPEC+'s unwillingness to intervene are also contributing factors. The collapse of First Republic Bank has increased the risk of recession in the United States and China's post-COVID demand recovery is slower than expected. The oil producers' calendar remains unchanged, with the next meeting scheduled for June.

Looking at the technical analysis of OIL.WTI on the H4 interval, after midnight the downward trend intensified and a tests of the lows from March occurred at $63.6 per barrel. However, the price decrease was temporary and bulls responded immediately at the support level resulting in a pro-growth hammer formation on the chart. If the upward trend continues, attention should be paid to two resistance levels. The first, at $71.30 is derived from measuring the 38.2% Fibonacci retracement of the last downward wave. The second resistance level is around $74 and set at the previous local lows and the next Fibonacci retracement - 50%. On the other hand, If the bearish sentiment extends, the support level should be at $66.30, which is the upper limit of the 1:1 formation breakout.​

 

[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]

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]

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]

Gold​

Gold price continues its bullish trend trajectory on Tuesday. The price of gold is currently trading around $2,030 per ounce, which is a +0.41% daily change. The upward trend channel has provided continuous positive support to gold prices - marked with dark blue parallel lines.

The stochastic indicator is beginning to gather positive momentum, indicating a potential upward movement in the price of gold. The resistance level near the range of $2,060-2,070, marked with a green line, has been tested multiple times, suggesting a strong price action and weakening resistance.

Based on these factors, it is probable that the Gold price continues to rise in the upcoming days. The first positive target is expected to be around $2,049. A break of this level could push the price above $2,068 as the next target. However, a break below the support level of $2,000 would be considered as a negative factor and could initiate a bearish correction wave. In such a scenario, the next support line is in the range of $1,960-1,970. The overall structure is bullish for gold.

Traders and investors should monitor the price action around these key levels and wait for confirmation of a breakout or reversal before making trading decisions. Technical indicators and additional market analysis could provide further insights into the potential direction of gold prices.​

 

[brunocssf]

Thank you so much for your analysis, helps me a lot.

 

[Solid ECN]

EURNZD​

EURNZD is one of the G10 FX crosses that experienced large moves so far today. The pair is trading higher as EUR got supported by hawkish comments from Joachim Nagel, Bundesbank President and ECB member. Meanwhile, NZD is the worst performing G10 currency after RBNZ lowered 1- and 2-year inflation expectations.

Starting with EUR news, Joachim Nagel said that inflation still remains too high and too strong. He continued saying that central bankers need to be sure that the inflation wave ends before they decide to pause policy tightening. He stressed it loud and clear that the latest rate hike delivered by the ECB won't be the last. While Nagel sounding hawkish is nothing new as he is one of the biggest ECB hawks, comments suggesting that more rate hikes are coming have been delivered throughout the week by various ECB members throughout this week.

Moving onto NZD news, the Reserve Bank of New Zealand lowered its 1- and 2-year ahead inflation expectations. 1-year expectations dropped from 5.11 to 4.28% while 2-year expectations were lowered from 3.30 to 2.79%. This can be seen as a dovish move as lower inflation expectations suggest that RBNZ is progressing in its fight against inflation and may not need to raise rates too much. Money markets currently see just 25 basis points of additional tightening through July.

Taking a look at EURNZD chart at D1 interval, we can see that the pair has halted recent sell-off at 50% retracement of the upward impulse launched in mid-December 2022. Recovery move was launched yesterday and gains accelerated today. The pair climb above resistance zone in the 1.7420 area, marked with 38.2% retracement and is looking towards a test of the 50-session moving average (green line).
​

 

[Nagy Akos]

Why this section stop working? I followed it. Thank you

 

[Solid ECN]

EURTRY​

• Indices from Asia-Pacific are trading mostly higher today. Nikkei gains 0.7%, S&P/ASX 200 adds 0.1%, Nifty 50 jumps 0.4% and Kospi trades flat. Indices from China trade up to 1.2% higher​
• European and US index futures trade slightly above Friday's cash closing prices​
• NBC reports that meeting to discuss debt ceiling between US President Biden and congressional leaders was scheduled for Tuesday​
• With almost all votes counted, no single candidate managed to score an over-50% result in Turkish presidential elections, meaning that a run-off between incumbent president Erdogan and opposition candidate Kilicdaroglu is likely to take place in 2 weeks (May 28, 2023)​
• According to preliminary results, Erdogan's party AKP managed to win parliamentary elections with 35.6% votes and secure 268 seats in 600-seat parliament​
• Turkish lira has been rather calm so far today as investors wait for an official confirmation that run-off in presidential elections will be needed​
• According to Financial Times, G7 countries and European Union consider banning restarting of the Russian gas pipelines if Moscow has previously halted supplies via them​
• According to Reuters, G7 also aims to more strictly target sanctions evasion involving third countries​
• Iraqi oil minister said he does not expect OPEC+ to announce more oil output cuts at June meeting​
• ECB's De Guindos said that rate hike cycle in EMU is on the final stretch and that's why ECB decide to return to 25 basis point moves​
• According to Reuters report, it was advised during BoJ-government meeting that Bank of Japan considers changing its policy approach should CPI and wages keep rising​
• Energy commodities trade mixed - oil drops 0.3% while natural gas jumps 0.7%​
• Precious metals advance - gold gains 0.2% while silver and platinum trade 0.3% higher​
• AUD and NZD are the best performing major currencies while JPY and USD lag the most​

Turkish lira is trading a touch higher against USD and EUR today, as a run-off will be needed to decide the next Turkish president. It looks like there are expectations for a tight race with TRY seeing rather muted moves.​

 

[Solid ECN]

GBPUSD: Pound ticks lower after concerning UK macro figures​

The British pound lost ground early in the European session following the publication of weak macro data from the UK, reducing the chance of a hawkish turn from the Bank of England. The reading for March showed that the unemployment rate in the UK rose to 3.9% against an expected 3.8% and an earlier reading of 3.8%. What's more, the negative overtones of the publication were provided by a big jump in unemployment claims, which came in at 46.7 thousand against an earlier reading of 26.5 thousand (today's reading beat analysts' expectations by more than 49%. Wage growth excluding bonuses is also down and came in at 6.7% y/y vs. the expected 6.8% y/y. At the moment, the money market is pricing in a 30% chance of a halt to the hike cycle at the upcoming BoE meeting in June.

Preliminary data from the UK's tax office showed the first drop in total headcount in more than two years in April, down 136,000 from March.

The GBPUSD pair reacted with declines to today's UK data reading, however, the scale of the sell-off has already been largely negated. The downward impulse stopped at the support defined by the 200-period exponential moving average (golden curve), which is currently the main support on the H4 interval.​

 

[Solid ECN]

Gold​

Hawkish comments from a number of Fed members as well as better-than-expected macro data from the United States is providing support for the US dollar today. Fed members speaking today have been reluctant to speak about any immediate rate cuts and instead hinted that rates may rise further if no sufficient progress on inflation is made. On top of that, retail sales and industrial production data for April, which was released today in the evening, turned out to be better-than-expected with retail sales ex-autos and gas jumping 0.6% MoM higher (exp. 0.2% MoM) and industrial production increasing 0.5% MoM (exp. 0.0% MoM). As a result, USD is the best performing G10 currency today. This in turn is putting pressure on precious metals, which are also benefitting from an increase in uncertainty amid lack of agreement on US debt ceiling.

Taking a look at GOLD at D1 interval, we can see that the price of this precious metal is dropping more than 1% today and has broken below the psychological $2,000 per ounce mark. A near-term support zone to watch can be found in the $1,980 area, where the 50-session moving average (green line) and 38.2% retracement of the upward move launched at the turn of February and March 2023 can be found. A break below this hurdle would pave the way for a test of the 50% retracement in the $1,940 area. However, a key support zone to watch can be found around 1% lower in the $1,922 area, where the lower limit of the Overbalance structure can be found.​

 

[Solid ECN]

Jap225​

Economic Outlook

Japanese NIKKEI 225 is on the rise trading near an all-time high following positive GDP data and supportive comments from country leaders. The Japanese economy grew at a faster-than-expected rate of 1.6% in Q1, surpassing the projected 0.7% growth. This strong economic performance has boosted market optimism.

The recent earnings season has been a positive catalyst for Japanese equities, supported by Warren Buffett's endorsement and improvements in corporate governance. The projected operating profit growth in the fiscal year ending March 2024 is about 6% for Tokyo Price Index (Topix) companies. Additionally, Goldman Sachs sees a potential in the Japan market, attributing the gains to corporate reforms and easy monetary policy.

The Bank of Japan (BoJ) may consider revising its Yield Curve Control (YCC) policy in the upcoming June meeting, supported by the robust GDP outcome. However, the BoJ is likely to remain patient in taking any policy actions and may wait until next year to make rate hikes, as they review recent developments in inflation and other macroeconomic data. Current interest rate is maintained at -0.1% level and has remained unchanged since 2016. The argument for the YCC policy to remain unchanged is the government's approval of an electricity bill rise, which likely will support inflation to stay above 2% for a longer period.

JAP225 (Nikkei 225) index is trading at 30,100 points, which is near its all-time high of 30,500. The price is also approaching the upper line of an uptrend channel (marked with blue line) that started in early March. The next significant resistance level should be expected at 30,500, indicating a potential target for further price gains. On the other hand, the support levels are identified at 29,300 and 28,300, which can act as price floors in case of a downward movement.

The MACD indicator, a momentum oscillator, indicates a strong bullish momentum without any signs of divergence at the moment. This suggests that the upward trend may continue, supporting the bullish outlook for the Nikkei 225 index. Traders and investors will be closely monitoring the resistance and support levels for potential trading opportunities.​

 

[Solid ECN]

Oil​

US Energy Information Administration (EIA) released a weekly report on change in US oil and oil-derivative inventories at 3:30 pm BST today. API data released yesterday in the evening suggested a quite significant build of 3.69 million barrels during the previous week as well as a drop in gasoline and distillate inventories.

Official data released by EIA today showed an even bigger build in US crude oil inventories and a deeper draw in gasoline inventories. Distillate inventories were barely changed compared to a week ago.



Report can be seen as bearish for prices and the market saw it exactly as that. Oil moved lower following the release of EIA report and is now attempting to break below 50% retracement of the downward move launched on May 10, 2023.​

 

[Solid ECN]

DE 30​

German DAX rallied over the past two days, adding almost 2% over Wednesday and Thursday combined. The upward move was being continued on the futures market during the Asian session today as optimism over possible agreement on US debt ceiling drove equities higher. As a result, DAX futures (DE30) briefly traded above 16,300 pts mark at fresh all-time highs.

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Taking a look at DE30 chart at H1 interval, we can see that the upward move on the German index accelerated after breaking above the 15,810-16,085 pts range. While the index pulled back a bit after reaching a fresh ATH, there is still some room for gains from a technical point of view. A textbook range of the upside breakout from the aforementioned 15,810-16,085 pts trading range suggests a possibility of the upward move to as high as 16,355 pts - or around 0.6% higher from current market price.

 

[Solid ECN]

Oil​

WTI (OIL.WTI) launched a new week's trade lower as failure to make progress on the US debt ceiling over the weekend brings us closer to the US default. On top of that, the Chinese decision to ban Micron chips is also risking reigniting tensions between the US and China.

 

[Solid ECN]

EURUSD​

Flash PMI indices for May from France and Germany were released at 8:15 am BST and 8:30 am BST, respectively. Data was expected to show a small improvement in the manufacturing sector as well as deterioration in the services sector.

Indeed, it was the case with French data with manufacturing index climbing in-line with expectations and services index dropping more than expected. However, things looked different in case of German data as manufacturing index there disappointed and dropped instead of improving while services gauge unexpectedly jumped. In both countries manufacturing sector remained below 50 points threshold, indicating a recession, while services sector remain above 50 points threshold, indicating an expansion.

EUR and European indices dropped in a knee-jerk move after the French release, with EURUSD dropping deeper below 1.08 mark. While equity indices managed to recover from those losses later on, they faced another wave of selling following German data. Meanwhile, EUR attempted to recover after German data and moved back towards the 1.08 mark.​

 

[Solid ECN]

Bitcoin​

• US debt deal was reached during a weekend​
• Beijing “Web3 Innovation and Development White Paper” introduction​

Bitcoin experienced a price increase over the week, reaching above $28,000, attributed to various factors. One significant development was the announcement of a debt ceiling deal by the White House, which boosted market sentiment and led to a 4.9% increase in Bitcoin and a 4.9% increase in Ether. Additionally, a Chinese governmental agency released a white paper outlining suggestions for China's Web3 policy, signaling progress in a country that has been reevaluating its approach to cryptocurrencies.

The release of the white paper in Beijing coincided with new digital asset regulations in Hong Kong, sparking further interest in China's stance toward the crypto industry. The document, titled "Web3 Innovation and Development White Paper," recognizes Web3 technology as an essential aspect of future Internet industry development. Beijing's municipal government aims to establish the city as a prominent global innovation hub for the digital economy, allocating a minimum of 100 million yuan annually until 2025 for this purpose. As a reminder, retail investors in Hong Kong are allowed to trade cryptocurrencies starting from the 1st of June.​

 

[Solid ECN]

USDJPY​

USDJPY quotes started the new week with a correction. Looking technically at the D1 interval, before the weekend the price reached the upper limit of the wide upward channel, where sellers appeared. For now it is far too early to think about a change in sentiment, nevertheless the last upward wave was made in one go, so there is a risk of a deeper downward correction. Should the discount actually gain momentum, the 137.30 - 137.90 zone should be regarded as key support. Resistance remains around the 141.00 level, which is the area of the upper limit of the aforementioned upward channel.

Looking at the lower time frame - H1, we can see the very strong uptrend. The key short-term support is the level of 139.60, which is derived from the lower limit of the 1:1 structure and the EMA100 average. According to the overbalance methodology, only a break of this support could lead to a deeper discount.

 

[Solid ECN]

Crude Oil​

Brent crude is losing 4% today, which can be linked to several factors. The US media is talking about uncertainty regarding the debt ceiling agreement, as several Republicans have made it clear that they will not support the bill. In addition, there are increasing question marks over China and further demand growth.

Nonetheless, the key factor that is likely to support price declines at this point is the disagreement within the enlarged OPEC+ cartel. Recently, Saudi Arabia's oil minister warned contract sellers about the possibility of OPEC+ action, which could suggest another potential production cut. On the other hand, Russia's energy minister says Russia is happy with the current course of events and prices. However, there have been signs that Russia may also be producing and exporting more than the internal arrangements in the cartel. This threatens a potential 'break-up' of the entire agreement, which could lead to a return of supply of as much as 2 million barrels per day, although of course one has to bear in mind the limited capacity for such a rapid increase in production. Nevertheless, recently, Iraq or the UAE were said to have hinted that they would like to produce more.

Strong declines in Brent crude were triggered by uncertainty about the sustainability of the OPEC+ agreement and uncertainty about demand from China or globally if the US were to eventually go bankrupt. The nearest support is around USD 68 per barrel, where the 23.6 retracement is located.​