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EURUSD: progress in negotiations between Russia and Ukraine pushes the price up​

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The European currency shows moderate growth against the US dollar during the Asian session, developing a strong "bullish" momentum formed the day before. EURUSD is testing 1.111 for a breakout and is located near the local highs of March 17.

The appearance of optimistic moods of investors was facilitated by the preliminary results of the meeting of the Russian and Ukrainian delegations, which ended in Turkey the day before. The parties announced significant breakthrough in the negotiations, which, in theory, could contribute to the de-escalation of the military conflict on the territory of Ukraine. Russian Defense Minister Sergei Shoigu also said that due to the transition of the current agreements into practice, the command decided to temporarily suspend the advance of troops in a number of areas. At the same time, it is noted that noticeable contradictions still remain between the parties, primarily on the territorial issue. Russia is expected to present its counter proposals today.

Another factor contributing to the growth of EUR/USD is the rally in eurozone bond yields. German 2-year Treasuries posted a substantial daily gain of 10 basis points for the first time since 2015. Continued positive dynamics will allow overcoming the key level of 0.0%.

In the meantime, market participants are waiting for the publication of a block of statistics on business sentiment in the euro area for March, as well as data on consumer inflation in Germany for the same period, which will be released today. Forecasts suggest a further increase in price pressure against the backdrop of a widespread decline in business confidence and activity. For example, the Gfk Consumer Confidence Survey for April in Germany released the day before fell from -8.5 to -15.5 points, which turned out to be significantly worse than market forecasts at the level of -12 points.

Bollinger Bands in D1 chart show moderate growth. The price range is slightly expanding, barely keeping up with the surge in "bullish" sentiment in recent days. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic is showing similar dynamics; however, the indicator line is already approaching its highs, indicating the risks of overbought EUR in the ultra-short term.

Resistance levels: 1.115, 1.1185, 1.122, 1.1255
Support levels: 1.11, 1.1051, 1.1, 1.0957.​

 

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USDJPY, data on the labor market of Japan was positive

After more than a month of unsuccessful attempts to stop the fall, the Japanese currency finally approached the resistance level and significantly strengthened against the US dollar, which became the catalyst for the movement of quotes to the 121.88 area. The reason for the positive dynamics was the data from the Ministry of Internal Affairs and Communications of Japan on the state of the national labor market.

As the report showed, unemployment in the country in February fell to 2.7% from 2.8% a month earlier, while the price-adjusted forecast assumed that the value would remain around 2.8%. The total number of unemployed decreased by 30K to 1.88M, while the number of vacancies relative to applicants increased markedly with 121 open vacancies per 100 people, which contrasts with the previous result of 100/120.

However, the pressure on the yen continues to come from the decision of the Bank of Japan to purchase an unlimited number of 10-year government bonds at a rate of 0.25% after their yield jumped to a six-year high of 0.245%. Quotations are also negatively affected by rising commodity prices, which increase the country's trade deficit.

The quotes of the American currency reached annual highs, turned around and corrected down after US President Joe Biden, during a discussion of the draft budget for next year, called for adjusting its figure to 5.79T dollars, of which 813B is planned to be directed to financing the defense industry. This proposal caused bewilderment in the public since, in the context of a sharp increase in energy and food prices, it would be reasonable to increase the item of support for the population and the economy but not the defense budget.

The currency pair is moving within the global uptrend, correcting downwards. Technical indicators keep a stable buy signal, which has not yet reacted to the pair's decline. The EMA fluctuation range on the Alligator indicator is still quite wide, and the AO oscillator histogram is forming new up bars.

Resistance levels: 123.7, 126.3 | Support levels: 120.8, 117.3​

 

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NZDUSD, trend replaced by an upward one​

The NZDUSD pair is strengthening to the level of 0.6980, as under the influence of rapidly rising commodity prices, the export-oriented economy of New Zealand is showing growth. Optimism about the negotiations between the Russian and Ukrainian delegations, which took place yesterday in Turkey, allows investors to pay attention to risky assets, as well as euros and shares of European companies.

Meanwhile, the New Zealand economy is showing strong growth, as evidenced by the publication of updated data on construction permits for February: the indicator increased by 10.5% for the month, although in January the value was negative and amounted to -8.7%.

Thus, the NZD/USD pair changes the long-term trend to an upward one, breaking through the key resistance level of 0.6910. For the "bulls", new targets are opening in the area of 0.7055 and 0.7200, and the 0.6910 mark passes into the category of support levels and shifts to the area of 0.6885.

The mid-term trend in the NZDUSD pair has long been replaced by an upward one. As part of the growth last week, the bidders reached the target zone 3 (0.6963-0.6949), which buyers are trying to break out at the moment. If successful, the next will be target zone 4 (0.71030-0.7089). Key trend support: 0.6848-0.6834.

Resistance levels: 0.7055, 0.72 | Support levels: 0.6885, 0.6739, 0.665.​

 

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EURUSD, the threat of cutting off gas supplies to the EU has decreased

Today is the deadline for transferring payments to rubles for Russian energy resources by "unfriendly" countries. The change in the settlement procedure was introduced since the foreign exchange reserves of the Central Bank of the Russian Federation were frozen by the EU countries after the start of a special military operation in Ukraine. After negative comments from EU leaders, investors feared that the Russian authorities might permanently cut off gas supplies. Still, tensions eased yesterday after German Chancellor Olaf Scholz and Italian Prime Minister Mario Draghi contacted Russian President Vladimir Putin to elaborate on the proposed calculation scheme. It was a signal that supplies would not stop, and the EU countries were ready to make contact.

The American currency has been declining for the second session in a row. This time, the reason for the negative dynamics was the report on the poor growth of the US economy. Analysts expected that Q4 GDP would increase by 7.1%, but the growth was only 6.9%. Additional pressure on the dollar was provided by poor Nonfarm Payrolls, which increased by only 455K, which is significantly lower than 486K a week earlier.

The asset moves within a wide downward channel and yesterday's local growth did not affect the general trend. Technical indicators maintain a global sell signal: fast EMAs on the Alligator indicator are below the signal line, while the AO oscillator histogram remains in the sell zone.

Resistance levels: 1.1226, 1.148 | Support levels: 1.1075, 1.0843​

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USDCHF, the US dollar is recovering its positions

The US dollar shows moderate growth against the Swiss franc during the Asian session, recovering from a sharp decline the day before, which led to updating local lows from March 7. Investors are turning their attention back to the defensive asset as expectations decline for a peace deal between Russia and Ukraine that would bring about a final ceasefire. However, buyers are cautious ahead of the publication of a large block of US macroeconomic statistics at the end of the week. The focus is on the Friday's report on the labor market for March, which will re-evaluate the prospects for an earlier tightening of monetary policy by the US Federal Reserve during the May meeting. Earlier, the Chair of the regulator, Jerome Powell, did not rule out the possibility of raising the rate by 50 basis points at once in response to the continuing growth of inflationary pressure.

The macroeconomic statistics from the US and Switzerland published yesterday did not have a significant impact on the dynamics of the instrument. The index of economic expectations in Switzerland from the ZEW Institute in March showed a sharp decline from 9 to -27.8 points, which turned out to be significantly worse than market expectations of growth to 9.1 points. In turn, US data reflected a slight decline in GDP dynamics for Q4 2021 from 7% to 6.9%. In addition, the ADP Employment Change Report showed an increase of only 455K new jobs after an increase of 486K.

On the D1 chart Bollinger Bands are reversing into the descending plane. The price range is expanding from below; however, it fails to catch the surge of the "bearish" sentiment at the moment. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic keeps a downward direction but is located near its lows, which indicates the risks of oversold USD in the ultra-short term.

Resistance levels: 0.9250, 0.9300, 0.9341, 0.9381 | Support levels: 0.9219, 0.9200, 0.9175, 0.9148​

 

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USDCHF, the US dollar is recovering its positions​

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The US dollar shows moderate growth against the Swiss franc during the Asian session, recovering from a sharp decline the day before, which led to updating local lows from March 7. Investors are turning their attention back to the defensive asset as expectations decline for a peace deal between Russia and Ukraine that would bring about a final ceasefire. However, buyers are cautious ahead of the publication of a large block of US macroeconomic statistics at the end of the week. The focus is on the Friday's report on the labor market for March, which will re-evaluate the prospects for an earlier tightening of monetary policy by the US Federal Reserve during the May meeting. Earlier, the Chair of the regulator, Jerome Powell, did not rule out the possibility of raising the rate by 50 basis points at once in response to the continuing growth of inflationary pressure.

The macroeconomic statistics from the US and Switzerland published yesterday did not have a significant impact on the dynamics of the instrument. The index of economic expectations in Switzerland from the ZEW Institute in March showed a sharp decline from 9 to -27.8 points, which turned out to be significantly worse than market expectations of growth to 9.1 points. In turn, US data reflected a slight decline in GDP dynamics for Q4 2021 from 7% to 6.9%. In addition, the ADP Employment Change Report showed an increase of only 455K new jobs after an increase of 486K.

On the D1 chart Bollinger Bands are reversing into the descending plane. The price range is expanding from below; however, it fails to catch the surge of the "bearish" sentiment at the moment. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic keeps a downward direction but is located near its lows, which indicates the risks of oversold USD in the ultra-short term.

Resistance levels: 0.9250, 0.9300, 0.9341, 0.9381 | Support levels: 0.9219, 0.9200, 0.9175, 0.9148​

 

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EURUSD, euro is correcting at the end of the week​

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The European currency shows flat dynamics of trading against the US dollar during the Asian session, consolidating near 1.1060 and waiting for new drivers. The day before, the euro showed a sharp weakening against the US currency, which did not allow the instrument to consolidate on new local highs from March 1.

The return of "bearish" trend was due to the growth of negative sentiments regarding the impact of sanctions against Russia on the global and European economy in particular. Among other things, analysts are trying to assess the prospects for interruptions in gas supplies to the EU due to the introduction of a new mechanism for paying current and subsequent contracts in rubles. Many European countries have said they will not make concessions to Russia, which could lead to a potential cessation of exports by the Russian Federation.

The macroeconomic statistics from the EU published yesterday had only a minor impact on the dynamics of the instrument. Retail Sales in Germany rose by 0.3% in February, which was slightly worse than market expectations at the level of 0.5%. In annual terms, sales volumes slowed down from 10.4% to 7.0%, while experts expected a fall to 6.1%. At the same time, the German labor market in March showed very encouraging resilience on the eve of a new possible crisis. The Unemployment Change in the country fell by 18K, slowing down, however, after a decline of 33K.
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In the D1 chart, Bollinger Bands are reversing horizontally. The price range is almost unchanged, reflecting the development of flat dynamics of trading in the short term. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, having reached the level of "80", reversed into a descending plane, reacting to the appearance of corrective dynamics on the results of Thursday.

Resistance levels: 1.11, 1.115, 1.1185, 1.122 | Support levels: 1.1051, 1.1, 1.0957, 1.09​

 

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AUDUSD, the instrument is testing 0.7500 for the breakout

During the Asian session, the AUD/USD pair is actively growing, re-testing the level of 0.7500 for the breakout. The instrument is developing a "bullish" momentum formed at the end of the last week. However, the general dynamics of the short-term outlook remain flat for now.

A strong report on the US labor market, published on Friday, did not allow quotations to consolidate on new local highs. However, the data from Australia were also positive. Thus, the AiG manufacturing activity index rose from 53.2 to 55.7 points for March, which outpaced the average market forecasts, while the Australian Commonwealth Bank manufacturing PMI index rose from 57.3 to 57.7 points over the same period against neutral expectations of investors. The National Reserve Bank Commodity Price Index accelerated from 34% to 40.9% in March, well above the expected 10% rise. At the same time, statistics on the credit market disappointed traders: for February, the volume of mortgage loans issued decreased by 4.7% after increasing by 1% last month, although preliminary market estimates suggested an increase of 1%. An additional "bearish" factor for the asset is the index of the number of vacancies published today by the Australian financial group ANZ. For March, the indicator slowed down sharply from 8.4% to 0.4%, significantly worse than market forecasts of 1.6%.​

Support and resistance
On the daily chart, Bollinger bands are steadily rising: the price range is actively narrowing, indicating ambiguous trading dynamics in the short term. The MACD indicator falls, keeping a poor sell signal (the histogram is below the signal line). Stochastic interrupted its confident fall and reversed into a horizontal plane approximately in the center of its working area.

Resistance levels: 0.755, 0.76, 0.765, 0.77 | Support levels: 0.75, 0.744, 0.7366, 0.73​

 

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USDJPY, consolidation pending new drivers

The US dollar shows flat dynamics in Asian trading, consolidating near 122.50. USD/JPY recovered sharply after a corrective pullback from last week's high at 125.10 after the publication of a strong report on the US labor market for March, which largely justified analysts' expectations.

According to statistics, 431K new jobs were created outside the agricultural sector, which turned out to be slightly worse than preliminary estimates of 490K, while the Average Hourly Earnings grew even more than expected, adding 5.6%, and the Unemployment Rate fell from 3.8% to 3.6%, while investors expected only 3.7%. In general, positive indicators on the labor market allow the US Federal Reserve to continue to implement its "hawkish" plans. In May, the market expects an increase in interest rates by 50 basis points at once, as well as the launch of a quantitative tightening program, which will reduce the US regulator's balance sheet.

The Bank of Japan in these terms lags far behind the US Federal Reserve and many other global financial regulators. Extremely low inflation rates allow the Japanese regulator to maintain an ultra-soft monetary policy, stimulating the recovery of the national economy. During the March 18 meeting, the Bank of Japan left the short-term discount rate on current accounts of financial institutions at -0.1%, unchanged since 2016. In addition, officials announced a gradual reduction in Japanese government bonds to pre-COVID-19 levels. Thus, the "dovish" rhetoric remains, despite the fact that rising consumer prices and increased geopolitical risks may put strong pressure on the Japanese economy. However, the demand for the yen as a safe-haven asset will continue to decline as the spread between the US Fed's and the Bank of Japan's interest rates widens.​

Support and resistance
Bollinger Bands on the daily chart show a steady growth. The price range is actively narrowing from below, reflecting the emergence of multidirectional trading dynamics in the short term. MACD is declining keeping a weak sell signal (located below the signal line). Stochastic, having reached the level of "20" is reversing upwards, signaling in favor of the development of corrective growth in the ultra-short term.

Resistance levels: 123, 124, 124.5, 125 | Support levels: 122, 121.26, 120.5, 120​

 

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GBPUSD, flat dynamics in the short term

The pound shows a weak upward dynamics of trading during the morning session, developing the "bullish" momentum formed the day before, when GBPUSD retreated from the local lows of March 30. Demand for the British currency remains quite low, and in general, the instrument shows rather flat dynamics in the short term, due to growing risks of increased pressure against the Russian economy due to the situation in Ukraine.

Western countries are discussing the introduction of another package of sanctions against the Russian economy, referring to the crimes of the Russian military in the Ukrainian city of Bucha. New restrictions could include a ban on Russian ships using EU ports, an embargo on coal, oil or gas supplies, and personal sanctions.

The UK announced a complete embargo on Russian oil imports back in March, as the dependence of the British economy on energy from the Russian Federation is significantly lower than that of European countries. However, prices for "black gold", gasoline and gas are growing here too, threatening the pace of national economic recovery. Earlier, the Governor of the Bank of England, Andrew Bailey, warned that the country could face the most powerful crisis since 1970, and inflation by the end of 2022 could reach 9%.

It should also be noted that the British Chancellor of the Exchequer Rishi Sunak said that he had instructed the Royal Mint to develop and issue its own non-fungible token (NFT) by this summer. Thus, the British authorities are trying to take a leading position in the crypto space and take the regulation of digital assets in the country to a new level. In particular, some tokens will be included in the national payment system to legalize work with them, traders will be able to receive advice when trading, and groups will be created to interact with crypto assets, chaired by ministers and members of regulatory bodies in the UK and industry.
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In the D1 chart, Bollinger Bands are reversing horizontally. The price range is almost constant, remaining rather spacious for the current level of activity in the market. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic turned into a horizontal plane in the center of its area, indicating an approximate balance of power in the short and ultra-short term.

Resistance levels: 1.315, 1.32, 1.325, 1.33 | Support levels: 1.31, 1.305, 1.3, 1.296​

 

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EURUSD, the euro develops a downtrend​

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The European currency is trading with a slight decrease against the US dollar during the Asian session, testing 1.0900 for a breakdown and updating local lows from March 9. Market sentiment correlates with the predominantly "bearish" trend in EURUSD since the end of last week.

Investors are assessing the prospects for further acceleration of inflation in the region as the EU considers the introduction of another package of sanctions against the Russian economy after evidence of war crimes in the Ukrainian city of Bucha. It is expected that the new restrictions will affect the import of coal for 4 billion euros per year, as well as equipment for the gas industry, transport and other industries for 10 billion euros per year. The sanctions will also affect the ban on investment, in particular; it is planned to introduce new measures against financial institutions and state-owned enterprises, as well as a number of representatives of the Russian authorities and their families. The European Union will stop buying fertilizers, timber and a number of food products from Russia, which in the current realities is estimated at about 5.5 billion dollars a year. Imports of Russian oil, as well as natural gas, remain practically unchanged, since for many EU countries this is a fundamental issue of energy security. In particular, Germany and Hungary oppose a complete embargo. At the moment, the EU buys almost 40% of all gas and about 60% of oil and oil products from Russia.

Macroeconomic statistics from Europe published on Tuesday turned out to be restrainedly optimistic, but did not have a noticeable impact on the market. The Composite Manufacturing PMI in the eurozone in March rose from 54.5 to 54.9 points with a neutral forecast. The Services PMI for the same period increased from 54.8 to 55.6 points, while analysts did not expect any changes here either.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is expanding, but at the moment it is not keeping up with the surge of "bearish" sentiment. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic retains stable downward direction but is located in close proximity to the zero level, which indicates the risks of oversold euro in the ultra-short term.

Resistance levels: 1.0957, 1.1, 1.1051, 1.11 | Support levels: 1.09, 1.086, 1.08, 1.0767