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The Australian dollar shows a rather active decline during the Asian session, developing the "bearish" momentum formed the day before. The US dollar is gaining in value after yesterday's publication of the minutes of the meeting of the Federal Open Market Committee of the US Fed (FOMC), which pushed AUDUSD to new lows below 0.75.

Traders noted an even more resolute attitude of the regulator regarding the prospects for further tightening of monetary policy in the country. In particular, the Committee spoke in favor of reducing the Fed's balance sheet by 95 billion dollars a month, although earlier experts assumed that the volume could be only about 60 billion dollars. The dollar was also supported by comments from US Federal Reserve Board member Lael Brainard, who warned that the agency may need more than one rate hike by 0.50% at once during 2022.

In turn, the Reserve Bank of Australia, at a meeting held on April 5, decided to keep the official monetary rate at a record low level of 0.10%. The monetary policy statement said that the Australian economy remains resilient and spending is on the rise after the tide of the pandemic caused by the Omicron strain of coronavirus has subsided.

Some pressure on the positions of the Australian currency today is exerted by weak macroeconomic statistics from Australia. Export volumes in February showed zero dynamics after an increase of 8% in January. Imports at the same time rose sharply by 12% after falling by 2% a month earlier. As a result, the trade surplus in February fell sharply from 12.891 billion to 7.457 billion Australian dollars, which was significantly below the market's expectations of 12.000 billion Australian dollars. AiG Services PMI in March fell from 60 to 56.2 points.​

Bollinger Bands in D1 chart show active growth. The price range is sharply narrowing, reflecting ambiguous dynamics of trading in the short term. MACD reversed downwards having formed a new sell signal (located below the signal line). Stochastic is showing similar dynamics; however, the indicator line is already approaching its lows, indicating the risks of oversold AUD in the ultra-short term.

Resistance levels: 0.75, 0.755, 0.76, 0.765 | Support levels: 0.744, 0.7366, 0.73, 0.725​

 

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Current Trend
GBPUSD has been fluctuating in a wide range of 1.3045-1.3106 over the past three trading sessions, continuing to lose value after consolidating below the April 6 low at 1.3045 following the release of "hawkish" Minutes from the US Federal Open Market Committee (FOMC). At the moment, quotes are consolidating near the level of 1.3060.

The situation around Ukraine is still in the spotlight. Western countries continue to introduce new restrictions against the Russian economy, primarily aimed at reducing or completely banning energy imports. The export of high-tech equipment, cars and agricultural machinery is also noticeably limited. However, these measures have not yet brought the expected effect, since the special military operation continues. At the same time, the position of the Western authorities has become a catalyst for updating record highs in commodity markets, which threatens to increase inflation in many regions of the world. Against this background, British Prime Minister Boris Johnson said that the UK intends to use more fossil fuels and commission one new nuclear reactor per year in order to maintain energy security. In addition, the country's government intends to abandon imported oil and gas in order to avoid a rapid increase in energy tariffs in the future, so this autumn another round of distribution of licenses for the development of the North Sea shelf by British oil and gas enterprises will be held.

The macroeconomic statistics of the United Kingdom released the day before only confirmed the fact of a rapid increase in inflation: the Halifax House Price Index accelerated from 0.8% to 1.4% in March, while analysts expected a slowdown in dynamics to 0.4%.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD indicator is trying to reverse upwards and form a new buy signal (the histogram is trying to consolidate above the signal line). Stochastic is showing similar dynamics, trying to retreat from the oversold area (below the level of "20").

Resistance levels: 1.31, 1.315, 1.32, 1.325 | Support levels: 1.305, 1.3, 1.296, 1.29.

 

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The US dollar shows strong growth against the Japanese yen during trading in Asia, continuing the development of the "bullish" trend from April 1. At the moment, USDJPY is updating local highs from March 28 and is again preparing to test strong resistance at 125.

At the beginning of the week, the "bulls" are very optimistic, but the growth factors change slightly: the US dollar is still receiving support as a "safe" asset, becoming more attractive to investors as the US Federal Reserve tightens its monetary policy. Earlier, representatives of the regulator spoke in favor of raising the rate by 50 basis points at once during the May meeting. At the same time, as expected, a program of quantitative tightening may be launched in order to reduce the balance sheet of the Fed.

In turn, the Bank of Japan is far from a possible start of tightening monetary policy. Last week, the regulator's former chief economist, Hideo Hayakawa, predicted that the agency could change current parameters as early as July as worries about the depreciation of the yen and rising inflation rise. Hayakawa's views stand in stark contrast to those of Bank of Japan Governor Haruhiko Kuroda, who has repeatedly stated the regulator's intention to maintain an ultra-loose monetary policy even after other major central banks such as the US Federal Reserve and the Bank of England raise interest rates.

The macroeconomic statistics released in Japan on Friday provided little support to the yen. Eco Watchers Current Situation Index in March rose from 37.7 to 47.8 points, which turned out to be 10 points better than market expectations. Eco Watchers Outlook for the same period strengthened from 44.4 to 50.1 points, while the forecast was 43.5 points.

Bollinger Bands on the daily chart show a steady increase. The price range is slightly expanding, but it fails to catch the surge of "bullish" sentiment at the moment. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, having reached its highs is reversing into a horizontal plane, indicating overbought USD in the ultra-short term.

Resistance levels: 125.09, 125.6, 126, 126.5 | Support levels: 124.50, 124, 123.02, 122

 

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The Australian dollar is showing a weak corrective growth against the US dollar during the Asian session, recovering from a four-day "bearish" rally. The instrument is testing the level of 0.7420 for a breakout, retreating from its local lows of March 22. The positions of the asset remain under pressure from the development of a new wave of coronavirus incidence in China. The country's government has announced strict quarantine measures that will also affect Shanghai, a major financial and industrial center, which consumes about 4% of all oil purchased by China. As a result of the lockdown, many companies such as Tesla Inc., Bayerische Motoren Werke AG, Volkswagen AG, as well as some suppliers to Apple Inc. were forced to stop their activities. In total, a record 130K new cases of COVID-19 infection have been detected in Shanghai since March 1 this year.

Nevertheless, the Australian dollar was supported at the beginning of the week by optimistic macroeconomic statistics from China. The Consumer Price Index in China in annual terms in March accelerated from 0.9% to 1.5%, which was better than market expectations at 1.2%. On a monthly basis, however, inflation showed only zero dynamics after rising by 0.6% in February. Today's data support the buying mood for the instrument with strong statistics from Australia. National Australia Bank's Business Conditions in March strengthened from 9 to 18 points, while the Business Confidence index for the same period rose from 13 to 16 points, with a slowdown forecast to 8 points.
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Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is expanding, however, it does not keep up with the activity of trading in the last few days, which signals in favor of the development of corrective dynamics. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic, having reached its lows, is reversing upwards, indicating risks of a strongly oversold instrument in the ultra-short term.

Resistance levels: 0.745, 0.75, 0.755, 0.76 | Support levels: 0.7398, 0.7366, 0.73, 0.725​

 

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Activity on the market remains quite high, but trades in the short term are mostly flat. Today, investors are waiting for the publication of data on consumer inflation in the US. The yield on 10-year US Treasury bonds rose above 2.81% amid "hawkish" plans by the US Federal Reserve to raise interest rates at a meeting in May and the beginning of a reduction in assets against the background of 40-year record inflation in the country. Markets are confident that the regulator will tighten its monetary policy even faster to curb inflation. Along with fears that the recent surge in commodity prices will further exacerbate consumer inflation, it has pushed US Treasury yields to new multi-year highs. According to analysts, the regulator will decide to raise the rate immediately by 0.50% at the May meeting, but much will depend on the economic situation.

The Bank of Canada and the European Central Bank (ECB) will also meet this week. Experts expect the Canadian agency to raise the interest rate by 0.5%, while the ECB is likely to keep a wait-and-see position again. Nevertheless, inflation in the EU continues to beat records, which means that pressure on the position of the European regulator is increasing, and traders expect to hear clear plans for further prospects for monetary policy. The original plans to launch a rate hike cycle in June may be revised.

On the daily chart, Bollinger Bands are moving flat. The price range remains virtually unchanged but remains spacious enough for the current level of activity in the market. The MACD indicator grows, keeping a very poor buy signal (the histogram is above the signal line). Stochastic reversed downwards at 80, reacting to the "bearish" nature of trading at the end of last week.

Resistance levels: 0.9320, 0.9352, 0.9381, 0.9430 | Support levels: 0.93, 0.9279, 0.925, 0.9219.

 

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GBPUSD, pending statistics on the dynamics of consumer prices​

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The British pound traded with an uptrend against the US currency during the morning session, trying to regain a foothold above 1.3. Activity on the market remains quite low, as market participants are waiting for the publication of a block of macroeconomic statistics from the UK on the dynamics of consumer prices.

Inflation is one of the key indicators today, since the world regulators largely rely on it when choosing the vector of monetary policy. According to current forecasts, the UK Consumer Price Index in March will accelerate from 6.2% to 6.7%, updating record highs.

At the moment, the positions of the pound are supported by relatively optimistic data on the UK labor market, which were published the day before. ILO Unemployment Rate unexpectedly decreased from 3.9% to 3.8% with a neutral forecast. Average Earnings Excluding Bonus for the same period accelerated growth from 3.8% to 4.0%, which coincided with analysts' forecasts. Average Earnings Including Bonus increased from 4.8% to 5.4%. Only BRC Like-For-Like Retail Sales were noticeably disappointing, dropping 0.4% in March after rising 2.7% a month earlier.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is slightly narrowing, 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 remains horizontal for some time, holding close to the level of "20". The indicator readings signal the risks of the pound being oversold in the ultra-short term.

Resistance levels: 1.305, 1.31, 1.315, 1.32 | Support levels: 1.3, 1.296, 1.29, 1.285​

 

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The European currency shows moderate growth against the US dollar during the Asian session, developing a "bullish" signal formed the day before, when the instrument retreated from its March 7 local lows.

The growth of buying activity in the single currency is facilitated by technical factors, as well as some correction of the US dollar after the publication of consumer and industrial inflation, which, as expected, renewed record highs. The Producer Price Index released the day before rose by 1.4% in March after rising by 0.9% a month earlier. Analysts expected an acceleration of only up to 1.1%. In annual terms, the growth rate of producer prices accelerated from 10.3% to 11.2%, which was also higher than the market forecast at 10.6%. Such statistics once again confirm the fact that many politicians and economists were mistaken last year, arguing that the rapid rise in prices is only a temporary phenomenon.

Support for the single currency is also provided by the meeting of the European Central Bank (ECB), which will be held today. Despite the fact that analysts' forecasts do not imply any changes in the vector of the monetary policy of the European regulator, the comments of its representatives will be extremely important. Traders are primarily interested in the timing of the start of the rate increase, since the central banks of developed countries have already managed to resort to tightening monetary policy. Investors will focus on a statement by the ECB President Christine Lagarde, including information on how long after the end of the quantitative easing program a cycle of rate hikes could begin, given the complex combination of inflation far above the target and a slowdown in the national economic recovery due to a sharp jump in energy prices.

On the D1 chart, Bollinger Bands demonstrate a tendency to reverse into a horizontal plane. The price range is also trying to consolidate, but within a fairly wide range, fully consistent with the observed dynamics. MACD is reversing upwards and forming a new buy signal (located above the signal line). Stochastic is showing the same dynamics being located in the middle of its area.

Resistance levels: 1.09, 1.0957, 1.1, 1.1051 | Support levels: 1.086, 1.0835, 1.08, 1.0767

 

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AUDUSD shows a moderate decline during the Asian session, testing 0.74 for a breakdown. The instrument is preparing to finish yet another trading week in the "red" zone; however, due to the active growth of the Australian currency last Tuesday, the total losses can be characterized as insignificant.

In addition to the rising US dollar, quotes are under pressure from weak macroeconomic statistics from Australia, published the day before. Employment Change in March was recorded at around 17.9K, which was below market expectations at the level of 40K and significantly inferior to 77.4K shown in February. At the same time, Full-Time Employment decreased from 121.9K to 20.5K, while the dynamics of Part-Time Employment improved from -44.5K to -2.7K. The Unemployment Rate remained at 4%, while many experts were confident that it would stay below this psychological level. At the same time, Consumer Inflation Expectations rose from 4.9% to 5.2% in April, while analysts had projected a decline to 4.6%.

Investors continue to monitor the consequences of the Russian-Ukrainian conflict. The Australian government imposed targeted financial sanctions on 14 Russian state-owned enterprises of strategic and economic importance. In particular, PJSC Gazprom, PJSC Rostelecom, JSC United Shipbuilding Corporation, JSC Ruselectronics, PJSC Novorossiysk Commercial Sea Port, PJSC Alrosa, JSC Russian Railways, and others were included in the list.

On the daily chart, Bollinger Bands are moderately declining. The price range expands, making way to new local lows for the "bears". MACD is preserving a stable sell signal (located below the signal line). Stochastic, having tried to reverse upwards at the beginning of the current week is directed downwards again, indicating the continuing risks of the instrument being oversold in the ultra-short term.

Resistance levels: 0.745, 0.75, 0.755, 0.76 | Support levels: 0.74, 0.7366, 0.73, 0.725

 

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USDJPY, the US dollar updates record highs

The US dollar shows a moderate growth in Asian trading, renewing new record highs and approaching 127.00, but there are no drivers for its breakout yet. Last week, April 13, the yen reached its lowest level against the US currency since 2002, losing about 40% in value compared to the 2011 high.

Investors are returning to the market after the Easter week and are still inclined to buy safer assets, given that the fundamental background does not contain positive signals. The greatest support for currencies at the moment comes from the actions of world central banks, which are rapidly adjusting the current monetary policy in the hope of containing record inflation rates. In particular, it is expected that during the May meeting, the US Federal Reserve will announce an increase in interest rates by 50 basis points at once, and will also launch a quantitative tightening program.

Meanwhile, the ultra-soft monetary policy of the Bank of Japan against the backdrop of relatively low inflation in the country keeps the national currency in a weaker position. The regulator is expected to raise its inflation forecast for fiscal year 2022 to above 1.5% from the current 1.1%, while national economy growth expectations will be lowered from 3.8%. Statistics on inflation in Japan will be published on Friday. It is predicted that by the end of March, the national Consumer Price Index may accelerate from 0.9% to 1.3%.

Along with this, the Bank of Japan is exploring the possibility of launching its own digital currency (CBDC). Bank of Japan Chief Executive Shinichi Uchida said financiers will look at features to set a limit on the amount of transactions as a safeguard against unpredictable movement of deposits from financial institutions, as well as the possibility of rewarding token holders. At the same time, it is emphasized that the digital yen will not be used to achieve a negative interest rate.
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Bollinger Bands on the daily chart show a steady increase. The price range expands slightly from above, freeing a path to new record highs for the "bulls". MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic has been near its highs for a long time, indicating the risks of the US dollar being overbought in the ultra-short term.

Resistance levels: 127, 127.5, 128 | Support levels: 126.3, 125.6, 125.09, 124.5​

 

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The British pound is falling during the morning session, testing the strong support at 1.3 for a breakdown. GBPUSD updates local lows from April 13, when the asset showed a sharp increase.

The US currency is supported by expectations of further tightening of monetary policy by the US Federal Reserve and an increase in the key rate by 50 basis points at once during the May meeting of the regulator. In addition, investors are still reluctant to redirect their capital into risky assets, fearing a further deterioration in the global economy. Despite the unprecedented sanctions against Russia, the special military operation on the territory of Ukraine continues, and at the moment the peace talks have faded into the background. The parties, apparently, hope to take more advantageous positions in the negotiation process, having shown success at the front.

Meanwhile, Western countries continue to introduce more and more restrictive measures. In the near future, EU officials will discuss the sixth sanctions package, which may relate to the most painful issue, restrictions on the import of oil and oil products. In the EU, there is still no consensus on the embargo on Russian supplies, due to the significant dependence on imported energy resources, but the general trend towards a gradual phase-out is still emerging. According to the forecasts of the operator of the united British energy system National Grid, the UK is ready to send significant volumes of natural gas to European countries in order to minimize their losses after the imposition of sanctions, using its terminals and the national system of gas transportation. Summer exports are expected to reach 5.1 bcm, well above the 2021 figure of 0.7 bcm.

Today, investors are waiting for the speech of the representative of the Bank of England Catherine Mann, as well as the Governor of the British regulator Andrew Bailey.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is narrowing, limiting the prospects for the development of the "bearish" trend in the short term. MACD is going down having formed a new sell signal (trying to consolidate below the signal line). Stochastic shows a more confident decline, but is quickly approaching its lows, indicating the risks of the oversold pound in the ultra-short term.

Resistance levels: 1.305, 1.31, 1.315, 1.32 | Support levels: 1.3, 1.296, 1.29, 1.285

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