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GBPUSD, the pound is updating local highs

The British pound is trading with the uptrend against the US currency during the morning session, updating local highs from March 4.

Eurozone countries found themselves in a vulnerable position due to the developing crisis around Ukraine. The European authorities are preparing a new package of sanctions against the Russian economy, which may include significant restrictions or even a complete embargo on energy imports. This will lead to explosive inflation in commodity markets and call into question the ability to ensure energy security. Undoubtedly, high oil and gas prices will have an extremely negative impact on the UK economy, but London today is much less dependent on imports from the Russian Federation, and therefore joined the embargo initiated by the United States earlier.

Resistance levels: 1.33, 1.335, 1.3435, 1.35.
Support levels: 1.325, 1.32, 1.31, 1.305.​

 

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Gold, a backlash against the "hawkish" rhetoric of the US Fed​

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The official said that the regulator is ready to raise the rate immediately by 50 basis points at one or more of the next meetings and will soon launch a program to reduce the balance sheet, according to the latest estimates, reaching 9T dollars. Also, The Goldman Sachs Group Inc. analysts forecast two adjustments of 50 basis points at once from the next meeting and then four increases of 25 basis points before the end of the year. The "hawkish" tone of Powell's remarks spurred US bonds higher and affected the bond market, with the US dollar index turning sideways around 98.500 amid heightened investor attention to risky assets and the yield on 10-year US Treasury bonds reached 2.81%. Against this background, gold has expectedly declined, although the demand for shelter assets has generally remained very high in recent days.

The metal is supported by the expectations of new packages of EU sanctions against the Russian economy. This week, EU leaders will meet to discuss the fifth package of restrictive measures that could include a broader ban on Russian energy imports. It is worth noting that there is no single position on this issue: Germany opposes a complete ban while not excluding the possibility of finding alternatives.

Resistance levels: 1930, 1952.5, 1974.2, 2000.
Support levels: 1900, 1877.6, 1860, 1840.​

 

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Brent Crude Oil, "black gold" returned to growth​

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Brent Crude Oil quotes continue to recover after a significant correction last week and are currently in the 116.70 area.

Fears that China will seriously reduce energy consumption due to a new outbreak of the coronavirus pandemic have not yet been justified, and peace negotiations between Russia and Ukraine have stalled, which again brought price support factors back to the fore. The possibility of new sanctions against Russian oil supplies and the lack of progress on the "nuclear deal" with Iran, which the market has been waiting for several weeks, is acting as a catalyst for the demand that is currently impossible to cover since the largest producers, Saudi Arabia and the United Arab Emirates, are not able to quickly increase production. Also, the oil infrastructure of Saudi Arabia is periodically attacked by the Yemeni Houthis, which creates problems for the export of "black gold" to the market.

Among the short-term factors for the growth of the trading instrument, the American Petroleum Institute (API) report published yesterday recorded a reduction in US inventories by 4.280M barrels at once instead of the expected growth by 0.025M barrels and a reduction in oil exports via the Caspian pipeline by 1.0M barrels per days due to damage requiring repair. The likely refusal of the EU countries to impose an embargo on supplies from Russia cannot seriously slow down the growth of quotations. It is already being taken into account by the market, as the leader of the European economy, Germany, opposes such measures.

Resistance levels: 117, 125, 132.
Support levels: 110.7, 100, 92.8.

 

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NZDUSD, the instrument retreats from local highs

The New Zealand dollar shows the development of downward corrective trend in tandem with the US currency during the Asian session, again testing the level of 0.695 for a breakdown. The NZDUSD pair has been retreating from its local highs since November 2021 without testing the strong resistance at 0.7 for a breakout.

The development of the "bearish" dynamics on the instrument is supported by technical factors, while the position of the US currency on the market changes slightly and remains quite strong against the backdrop of worsening economic prospects as the conflict over Ukraine, where Russian troops continue to conduct a special military operation, develops. Western countries are increasing sanctions pressure on the Russian economy, despite the noticeable back-effect of restrictions. The most important issue at the moment remains a potential embargo on Russian energy imports, which is likely to provoke a sharp complication of the situation in the European energy sector and lead to even greater inflationary pressures.

The positions of the New Zealand dollar are quite strong against the backdrop of trends in commodity areas. At the same time, analysts are paying attention to new outbreaks of coronavirus in New Zealand. Over the past day, more than 18K new cases of infection were detected in the country. Despite the pandemic, New Zealand's GDP returned to growth in the last quarter of 2021, but the increase was only 3.0%, falling short of economists' expectations of growth of 3.2%.

Resistance levels: 0.7, 0.704, 0.71, 0.715.
Support levels: 0.6924, 0.69, 0.6866, 0.684.​

 

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GBPUSD, UK inflation rises again​

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CPI rose by 0.8% MoM for February, which contributed to an increase in the annual rate to 6.2%. The core retail price index increased to 8.3% YoY, exceeding the January value of 8.0%. In general, the negative dynamics was predicted by analysts but they assumed that the February inflation would not be higher than 5.9%. Talking about estimates for a longer term, the figures are about 7.0% by the middle of the year, which will require serious steps from the Bank of England.

The US dollar index made a slight upward spurt, reaching 98.800 against the background of the rhetoric of several US Federal Reserve officials. Thus, Cleveland Fed Chairman Loretta Mester said she considers it reasonable to raise the interest rate to at least 2.5% by the end of this year since any other increase will not be able to cope with record inflation. Her colleague, the head of the San Francisco Fed, Mary Daly, also adheres to the rapid pace of adjusting the value but believes that it will be enough to sharply raise the rate by several levels at once, after which economic growth and consumer prices will stabilize.

The GBP/USD pair move within the global downward channel and, reversed at the support line, are heading upwards. Technical indicators keep a sell signal: indicator Alligator’s EMA fluctuations range remains wide, and the histogram of the AO oscillator is in the sell zone.

Resistance levels: 1.3259, 1.3513.
Support levels: 1.3100, 1.2900.​

 

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USDJPY, US dollar hits highs of the end of 2015

The US dollar continues its strong growth in the USDJPY pair during Asian trading, renewing all-time highs since December 2015 and testing 123 for a breakout. The "bulls" are further supported by a wave of risk aversion that is boosting demand for safe-haven currencies, as well as strong US Treasury yields, which hit a new two-year high of 2.5%, up more than 1 percentage point since early December.

In addition, the exchange rate of the trading instrument is strengthening against the backdrop of the aggressive rhetoric of the US Fed, aimed at combating a record inflation for 40 years, which reached 7.9% in annual terms in February. The regulator launched a cycle of the interest rate hike this month, and in May it may decide to adjust it immediately by 50 or even 75 basis points. It is also expected that in the near future the Fed will begin to reduce its own balance sheet, which, according to the latest estimates, reaches 9 trillion dollars.

The yen gained momentum after the Bank of Japan announced its readiness to purchase an unlimited number of 10-year bonds at 0.25%. The regulator continues to go against the main trend in terms of tightening monetary policy. Due to low inflation, the country's financial authorities have kept the short-term interest rate on commercial bank deposits at -0.1% per annum, and the target yield on ten-year government bonds is near zero. Macroeconomic statistics released last Friday in Japan pointed to the acceleration of inflation in the Tokyo region in March from 1.0% to 1.3%, while the forecast was 1.5%. According to the Bank of Japan Governor Haruhiko Kuroda, the growth rate of consumer prices may reach 2% in April or later, but this will not be the basis for an immediate reaction from officials.

Resistance levels: 123.5, 124, 124.5, 125.
Support levels: 122.42, 122, 121.4, 120.5.​

 

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GBPUSD, correction before the speech of the Bank of England Governor

Traders remain concerned about the situation in Eastern Europe, and are also trying to assess how much the global economy will slow down, given the unprecedented sanctions restrictions against the Russian economy. Earlier, the United Kingdom, following the United States, announced a complete embargo on oil and gas supplies from Russia, sharply condemning the conduct of a special military operation on the territory of Ukraine. EU countries cannot yet completely abandon Russian energy resources, but are trying to find ways to reduce their dependence.

In the meantime, quotations on the commodity markets are once again showing strong growth after some correction, which has an extremely negative impact on global inflationary risks. According to a survey by The Sunday Times, 67% of UK citizens already face difficulties in paying for heating and electricity. In early February, the UK consumer electricity price cap was increased by 54% and from 1 April the monthly charge for each household could rise by 693 pounds a year.

Resistance levels: 1.32, 1.3250, 1.33, 1.335.
Support levels: 1.31, 1.305, 1.3, 1.296.​

 

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USDCAD, in anticipation of additional growth drivers

The USDCAD pair tests the level of 1.2500 for a breakout, retreating from local lows of January 20, renewed last Friday, and waiting for additional growth drivers to appear.

The whole picture in the market changes slightly. Traders are still analyzing warning signs from Eastern Europe, trying to assess the prospects for global inflation and economic growth against a special military operation in Ukraine. Further escalation of the conflict significantly increases the demand for safe assets, but investors are increasingly giving their preference to the US currency, as the US Federal Reserve launched a cycle of raising interest rates. Also, as early as May, the rate growth rates may be increased, given the record inflation in the US and the relatively positive situation in the national labor market. The “bulls” are also supported by the escalation of tension between Russia and the West, the imposition of mirror economic sanctions by the states, and the lack of progress in ceasefire negotiations between representatives of the Russian and Ukrainian delegations. The next face-to-face round is scheduled for March 28–30. It will be held in Turkey.

The US macroeconomic statistics released on Friday were negative. Thus, the index of consumer confidence from the University of Michigan in March decreased from 59.7 to 59.4 points, while analysts did not expect changes. The pending home sales fell by 4.1% in February after falling by 5.8% in January. Analysts had expected positive dynamics at 1.0%. Meanwhile, the 10-year US Treasury yield rose by 5.4 basis points to its highest level since May 2019, around 2.54%, which pushed the US dollar index to a two-week high.

Resistance levels: 1.2558, 1.2600, 1.2650, 1.2700.
Support levels: 1.2450, 1.2400, 1.2335, 1.2300.​

 

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NZDUSD, upward momentum begins to weaken

The New Zealand dollar shows mixed trading dynamics against the US currency in the Asian session, consolidating near the support at around 0.69.

Yesterday the instrument fell sharply, but this was due only to technical factors, as well as market hopes that the US Federal Reserve will accelerate the tightening of monetary policy in the near future. In particular, it is assumed that the regulator will raise the interest rate in May by 50 basis points at once, and will also launch quantitative tightening mechanisms. In addition, the benchmark 10-year US Treasury yield hit a multi-year high of 2.557% the day before, making the US currency even more attractive to invest in.

The demand for the US dollar is also supported by the development of the military conflict in Ukraine. Traders are frustrated with the negotiation process, which has not led to any results so far. In turn, the sanctions pressure is only increasing, and Russia is already preparing to take retaliatory measures. In particular, Russian President Vladimir Putin ordered all payments for gas to be converted into rubles, which many European countries considered a violation of existing contracts. In addition, the authorities of Shanghai, home to about 25 million people, have introduced a record in two years lockdown due to the outbreak of the coronavirus. For the duration of the restrictions, transport communication will be stopped, most enterprises will switch to a remote mode of operation. Experts believe that a prolonged lockdown could affect demand for commodities such as crude oil, as well as threaten to collapse the global economy.

Bollinger Bands on the daily chart show a steady increase. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is going down preserving a stable sell signal. Stochastic is showing similar dynamics; however, the indicator line is rapidly approaching its lows, indicating the risks of NZD being oversold in the ultra-short term.

Resistance levels: 0.6924, 0.696, 0.7, 0.705.
Support levels: 0.6866, 0.684, 0.6795, 0.6766.​

 

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AUDUSD, Australia's economy is recovering

The Australian currency continues to trade at stable levels around 0.7484 after the publication of positive macroeconomic statistics. This morning, the head of the Australian Bureau of Statistics, Ben James, said that the recovery of trade turnover is proceeding faster, which is also confirmed by data on retail sales, which added 1.8% in February. According to the official, the indicator reached such a high level for the second time in the history of observations after a sharp surge in November last year. In particular, significant growth was recorded in catering (+9.7%), clothing retail (+11.2%), and sales in department stores (+11.1%). At the same time, the retail food trade continues to experience difficulties, and the decline of 2.9% demonstrates this.

Meanwhile, Prime Minister Scott Morrison announced that the country's 2023 federal budget had set record funding for infrastructure projects, which will receive around 18B Australian dollars. The most significant funds will be spent on the construction of intermodal and cargo terminals in Melbourne (3.6B dollars) and the modernization and increase in the capacity of the railway network on the east coast of the continent (4.5B dollars). As expected, the Federal Parliament of Australia will consider the budget prepared by the country's government already today.

The price is moving within a wide side channel on the global chart, having reached the resistance line yesterday. Even though the technical indicators are in a buy signal, this level is quite solid, and the price may not break immediately. The most likely scenario would be a rollback of quotes and a full downward correction.

Resistance levels: 0.7540, 0.7750.
Support levels: 0.7442, 0.7165.​