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The New Zealand dollar shows active growth against the US dollar during the Asian session, quickly recovering from the decline the day before, which proceeded against the backdrop of a sharp strengthening of the US currency. The US dollar was supported yesterday by the "hawkish" rhetoric of the Chairman of the US Federal Reserve, Jerome Powell, who reiterated the regulator's readiness to do everything necessary to curb inflation, which, in his opinion, threatens the foundations of the US economy.

Meanwhile, macroeconomic statistics from the US again turned out to be negative. Building Permits Change in April fell by 3.2% after rising by 1.2% a month earlier. Analysts had expected positive dynamics to remain at 1.0%. Housing Starts in April decreased from 1.728 million to 1.724 million. The MBA Mortgage Applications fell 11% as of May 13 after rising 2% in the previous period.

Today's data from New Zealand do not have a significant impact on the dynamics of the instrument. Anyway, the Producer Price Index Input in Q1 2022 increased by 3.6% after rising by 1.1% in the previous quarter. The Producer Price Index Output for the same period accelerated from 1.4% to 2.6%.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic keeps its upward direction but is rapidly approaching its highs, which reflects the risks of overbought NZD in the ultra-short term.

Resistance levels: 0.6400, 0.6450, 0.6500, 0.6567 | Support levels: 0.6300, 0.6250, 0.6200, 0.6150

 

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The European currency is relatively stable against the US dollar during trading in the Asian session and is consolidating near local highs from May 5. The day before, the instrument showed active growth, which allowed leveling the results of Wednesday's "bearish" trend and brought the euro to a high at around 1.0600. EUR/USD was supported yesterday by expectations of the imminent end of quarantine due to the coronavirus in Shanghai, which will allow many enterprises to resume normal operation and have a positive effect on the dynamics of foreign trade.

In turn, yesterday's macroeconomic data from the US put moderate pressure on the positions of the US currency. Initial Jobless Claims for the week ended May 13 increased from 197 thousand to 218 thousand, which was higher than market expectations by 18 thousand. Philadelphia Fed Manufacturing Index declined sharply in May from 17.6 to 2.6 points, while analysts expected the decline to only 16 points.

The Minutes of the European Central Bank (ECB)'s meeting released the day before also contributed to the moderate growth of the single currency. In the report, the regulator pointed to the increasing risks associated with a sharp growth in inflation in the region, but at the same time maintained optimistic forecasts for both Q3 and Q4 of 2022. Also, many members of the ECB board are gradually speaking out in favor of tightening monetary policy. Analysts consider the rate hike at the end of summer or early autumn as most likely.

Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is slightly expanded from above, remaining spacious enough for the current activity level in the market. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic approached the level of "80" and reversed into a horizontal plane, reflecting the mixed nature of trading at the end of the current trading week.

Resistance levels: 1.06, 1.064, 1.069, 1.0726 | Support levels: 1.05, 1.0459, 1.04, 1.035

 

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After reaching a critical point around 0.6220, the NZD/USD pair went into correction under the influence of a temporary weakening of the US dollar and against the backdrop of rising commodity prices.

All commodity currencies show a strong recovery from yesterday's low, while commodities are becoming more expensive. Oil quotations increased by 3–4%, while benchmark prices for WTI Crude Oil are at 110 dollars per barrel. US gasoline futures rose above 4 dollars per gallon for the first time, putting additional pressure on consumers ahead of the summer driving season.

Traders are focusing on next week's Reserve Bank of New Zealand meeting, where many expect the regulator to raise rates by 50 basis points, which could push the New Zealand dollar to 0.6555.

However, the long-term trend for the instrument remains downwards. At the moment, a correction is developing, within which the asset is trying to break through the resistance level of 0.6420, after which the growth will continue with the target at 0.6555. If the "bears" hold this level, then the decline is likely to continue to the month's minimum at around 0.6220.

The medium-term trend is trying to reverse upwards. If this week the trading closes above 0.6360, then the trend change will be consolidated, and the instrument will rise to the target zone 2 (0.6500–0.6486).

Resistance levels: 0.642, 0.6555, 0.672 | Support levels: 0.622, 0.595

 

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The pound shows the uptrend in trading with the US currency during the morning session, testing the level of 1.2550 for a breakout and updating local highs from May 5. The strengthening of the British currency at the beginning of the week is facilitated by the growth of corrective sentiment for the US dollar against the backdrop of a noticeable decrease in the yield of US Treasury bonds.

Also, traders are still taking a lead from relatively optimistic macroeconomic statistics from the UK on Friday, which turned out to be significantly better than negative forecasts. In April, Retail Sales added 1.4% after falling by 1.2% a month earlier, although analysts had expected a decline of 0.2%. In annual terms, the indicator showed a sharp drop of 4.9% after increasing by 1.3% in March, while preliminary market estimates suggested a more active decline of 7.2%. Retail Sales excluding Fuel increased by 1.4% MoM, but decreased by 6.1% YoY, while the forecast was for a contraction of 0.2% MoM and 8.4% YoY.

Today, statistics on housing prices in the UK were released. Rightmove House Price Index increased by 2.1% in monthly terms and by 10.2% in annual terms, which turned out to be slightly higher than the previous values at the levels of 1.6% MoM and 9.9% YoY.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD indicator is growing keeping a buy signal (located above the signal line). Stochastic shows an unsteady uptrend, but is located in close proximity to its highs, which points to the risk of overbought GBP in the ultra-short term.

Resistance levels: 1.26, 1.2674, 1.28, 1.29 | Support levels: 1.2500, 1.24, 1.2250, 1.2163

 

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During the Asian session, the USDCHF pair is weakening moderately, approaching the local lows of May 2, renewed on Friday. At the end of the weekly session, the US currency showed the strongest decline against the franc over the past few months, rapidly retreating from record highs and strong psychological resistance around 1.

Among other things, the US dollar was significantly pressured by a sharp decline in the yield of US 10-year Treasuries, which reached the three-week low at 2.77% last Thursday, while earlier during the month, it was at 3.2%. The macroeconomic statistics from the USA also was disappointing. There is no significant growth in retail sales, and the pace of industrial production rose by only 0.7% instead of the expected 1%.

The franc is supported by the positive dynamics of industrial production in Switzerland. In the first quarter, this indicator increased by 7.9% after a 7.3% increase in the previous period. Last week, the head of the Swiss National Bank, Thomas Jordan, said that the regulator's "dovish" policy, based on maintaining a negative interest rate, will continue. Still, officials are ready to act if inflation rises above 2.0%, focusing on global trends in determining monetary policy.

On the daily chart, Bollinger bands reverse into a horizontal plane: the price range is expanding from below, remaining spacious enough for the current level of activity in the market. The MACD indicator is falling, keeping a strong sell signal (the histogram is below the signal line). Having reached its lows, Stochastic reversed into a horizontal plane, indicating that the US dollar may become oversold in the ultra-short term.

Resistance levels: 0.9762, 0.9847, 0.9900, 1 | Support levels: 0.9700, 0.9637, 0.9600, 0.9535

 

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The US dollar shows a slight decline against the Japanese yen in Asian trading, holding close to the local lows of April 27 and testing the level of 127.5 for a breakdown. The US currency is under pressure again, reacting to optimistic macroeconomic publications from Europe and Japan.

Friday's statistics, reflecting the growth of Japan's National Consumer Price Index from 1.2% to 2.5% and the National CPI excluding Fresh Food from 0.8% to 2.1%, increases the skepticism of market participants regarding the actions of the Bank of Japan to maintain ultra-soft monetary policy, especially given the pressure on households amid rising spending without a significant increase in wages. However, regulator representatives believe that the indicator is unlikely to consolidate above the target level of 2% and, according to forecasts, core inflation will correct to 1% by 2024. In turn, Minister of State for Financial Services Shunichi Suzuki called the rapid weakening of the national currency an extremely undesirable phenomenon. According to him, consultations are being held with the financial authorities of the G7 member countries to take measures to curb excessive volatility and erratic actions of the regulator, which could have a negative impact on the economy.

The pressure on the dollar quotes intensified at the beginning of the week after the "hawkish" speech of the head of the European Central Bank (ECB) Christine Lagarde, who actually announced the start of measures to tighten monetary policy in July. As previously expected, the regulator will first complete the quantitative easing program, after which it will start raising interest rates, the pace of which is likely to coincide with the US Federal Reserve, that is, the correction will go in increments of 50 basis points.

Support for the yen today is provided by a relatively optimistic macroeconomic statistics on business activity. Jibun Bank Manufacturing PMI in May fell from 53.5 to 53.2 points, which, however, turned out to be better than negative forecasts of a decline to 52 points. Jibun Bank Services PMI over the same period strengthened from 50.7 to 51.7 points, while experts expected the figure to correct down to 50.6 points.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range expands from below, making way for new local lows for the "bears". MACD is going down, keeping a fairly stable sell signal (located below the signal line). Stochastic, having approached the level of "20", reversed into a horizontal plane. At the same time, the current readings of the indicator still indicate the growing risks of the US dollar being oversold in the ultra-short term.

Resistance levels: 128, 128.62, 129.39, 130 | Support levels: 127.5, 127, 126.3, 125.6

 

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The European currency shows a slight decrease against the US dollar during the Asian session, correcting after the "bullish" start of the week, which led to the renewal of local highs for the instrument from April 25. Quotes are still supported by the moderate weakness of the dollar, which reacts negatively to the publication of mixed macroeconomic statistics. In addition, investors positively assessed the rhetoric of the President of the European Central Bank (ECB) Christine Lagarde, who actually announced the imminent completion of the quantitative easing program and a possible increase in interest rates by 50 basis points in July.

Traders also assess the statement of the President of the European Commission, Ursula von der Leyen, who announced a number of steps to reduce the EU's dependence on Russian energy resources. The authorities intend to accelerate the transition to "green" energy, increasing the current target values from 9% to 13% by 2030. In particular, the construction of solar roofs in new buildings is proposed. About 300 billion euros will be needed for energy reforms, of which about 72 billion euros will be grants and 225 billion can be obtained in the form of loans. Up to 2 billion euros will be needed for oil infrastructure, taking into account the cessation of shipments of Russian oil.

Meanwhile, macroeconomic statistics from the euro area, released the day before, turned out to be negative. Markit Services PMI fell from 57.7 to 56.3 points, which turned out to be worse than market expectations for a reduction to 57.5 points. Composite PMI fell from 55.8 to 54.9 points, which also turned out to be weaker than market forecasts at the level of 55.3 points.

Bollinger Bands in D1 chart show moderate growth. The price range is expanding but it fails to conform to the surge of "bullish" activity at the moment. MACD grows, preserving a stable buy signal (located above the signal line). The indicator is trying to consolidate above the zero level. Stochastic, having reached its highs, reversed into a horizontal plane, indicating overbought EUR in the ultra-short term.

Resistance levels: 1.0747, 1.08, 1.085, 1.09 | Support levels: 1.07, 1.064, 1.06, 1.05​

 

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After reaching the level of 1.004, USDCHF corrected to 0.958 and continues to trade near it amid the depreciation of the US dollar, which is losing value against all major competitors. The sale is caused by the desire of investors to get better prices for entering long positions of the asset before the US Federal Reserve raises the interest rate at a meeting on June 15. It is expected that the regulator will adjust the value by 50 basis points to 1.50%. If the forecast is justified, the US currency will continue its strengthening, which began a year ago.

In turn, the Swiss National Bank will decide on the interest rate a day later, on June 16. Over the past few years, the regulator has kept the indicator at a record low level of –0.75%, and if the rhetoric of officials changes this time, the franc may react with an increase in the exchange rate against the dollar, but Swiss monetary tightening is unlikely to be as aggressive as in the USA. In this regard, one can assume a further increase in USD/CHF in the long term.

The long-term trend remains upward. At the moment, a correction is developing in the asset, within which market participants tested the support level of 0.958. If this level is kept, the growth will continue with the nearest target around 0.9757. If 0.958 is broken down, the correction will continue with the target at 0.945.

The mid-term trend is downward. This week the traders reached the target zone 4 (0.9615–0.9605), in case of a breakdown of which the decline will continue with the target in the area of the target zone 5 (0.9509–0.9499). Otherwise, a correction will start with the target at the trend line 0.9691–0.9681.

Resistance levels: 0.9757, 1.004 | Support levels: 0.958, 0.9450, 0.9363​

 

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The pound is trading with multidirectional dynamics during the morning session, keeping close to the local highs of May 5. The growth of the instrument is still supported by some weakness of the US currency, as the demand for it is gradually decreasing as there are signals about further tightening of monetary policy in Europe and the UK. Earlier, the President of the European Central Bank (ECB), Christine Lagarde, announced the readiness of the regulator to curtail the quantitative easing program in June, and then launch a cycle of raising the interest rate, which would help curb a sharp rise in inflation.

Significant pressure on the dollar position was exerted by weak macroeconomic statistics from the US, published the day before. Durable Goods Orders slowed from 0.6% to 0.4% in April, worse than analysts' neutral forecasts, while Nondefense Capital Goods Orders excluding Aircraft, rose only 0.3% over the same period after an increase of 1.1% in March. Average market forecasts assumed a slowdown to 0.5%.

According to a study by Loughborough University, the rapid inflation in the UK, which reached 9% in April, had the most negative impact on the living standards of families with children. Prices for consumer goods and services have risen by an average of 400 pounds MoM, or 13% YoY, with food prices up 9.3% over the past year and childcare costs up 6.7%. Meanwhile, chief executive of Ofgem, the independent energy regulator for Great Britain, Jonathan Brearley, has predicted a further 42% increase in electricity tariffs by October, adding more than 800 pounds to the average annual bill. Thus, already next winter, about 9.6 million British families will face a fuel shortage, since about a tenth of the family budget will be directed to pay for electricity.

Bollinger Bands in D1 chart show moderate growth. The price range expands, freeing a path to new local highs for the "bulls". MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic, being at its highs, is again trying to reverse downwards, indicating risks of overbought GBP in the ultra-short term.

Resistance levels: 1.2600, 1.2674, 1.2800, 1.2900 | Support levels: 1.2500, 1.2400, 1.2250, 1.2163

 

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This week, the EURUSD pair continued to grow and tested the 1.0742 mark (Murray [4/8]), but could not break higher. Currently, the price movement is determined by the rhetoric of the monetary authorities of the EU and the USA, pushing macro statistics into the background.

During the week, the euro was supported by statements by the head of the European Central Bank (ECB) Christine Lagarde, who allowed the probability of an increase in deposit rates from -0.5% to a positive level by September, that is, twice in the next four months. The beginning of the tightening cycle pushes the euro up against its main competitors.

On the other hand, the US currency is under pressure due to fears of an impending recession of the national economy, although experts disagree on the impact of the upcoming crisis. The publication of the minutes of the last meeting of the US Fed's Open Market Committee (FOMC) did not clarify the situation for investors. As expected, officials confirmed the need for several more rate hikes by 50 basis points, but there were no hints of a sharper increase. At the same time, the members of the regulator did not rule out the possibility of abandoning the neutrality of the rate, which means continuing to correct the indicator after its level reaches 2.50%-2.75%. This will become necessary if the final aim of weakening to the target level of 2.0% is not achieved.

Today, the market expects new statistics on US GDP in Q1 2022. It is predicted that the US economy will shrink by 1.3%, which may contribute to a new growth of the EURUSD pair.

The key for the "bulls" remains the level of 1.0742, consolidation above which will allow the quotes to continue the upward movement to the levels of 1.0864 (Murray [5/8]), 1.0986 (Murray [6/8]). If the level of 1.0550 breaks down (the middle line of the Bollinger Bands), the decline can resume, and the price will return to 1.0376 (Murray [1/8], the lower line of the Bollinger Bands), 1.0253 (Murray [0/8]). Technical indicators do not give a single signal: the Bollinger Bands reverse upwards, the Stochastic reverses downwards in the overbought zone, the MACD histogram decreases in the negative zone.

Resistance levels: 1.0742, 1.0864, 1.0986 | Support levels: 1.0550, 1.0376, 1.0253​