Forex News Analysis by LiteForex

EUR/USD

Today, during the Asian session, the EUR/USD pair slightly falls, correcting after yesterday's strong growth, when the markets reacted to results of the Fed interest rate meeting. As expected, the regulator left it unchanged at 0.25%, while designating the COVID-19 epidemic as the main threat to the US economy. Officials were not specific in their forecasts regarding the labor market and the timing of a possible tightening of monetary policy, which significantly disappointed investors. Also, USD is under pressure of US Q1 GDP data. According to preliminary data, the US economy slowed down by 4.8% YoY after rising by 2.1% YoY in the previous period. Analysts had expected GDP to fall by 4% YoY. European investors are focused on Thursday’s ECB interest rate meeting, as well as April statistics on consumer inflation.

GBP/USD

Today, during the Asian session, the GBP/USD pair shows ambiguous dynamics, trading near the local highs of April 17, renewed last Tuesday. The pound reacted slightly to yesterday's publication of disappointing US GDP data but still ended the day in the green zone due to the corrective USD sentiment, as well as uncertain results of the Fed meeting. A similar meeting of the ECB will take place on Thursday but analysts do not expect any noticeable changes. Today, US initial jobless claims data will be released. UK key statistic will appear on Friday: March data on consumer lending and April Markit Manufacturing PMI will be released.

NZD/USD

Today, during the Asian session, the NZD/USD pair is growing slightly, renewing local highs since March 13. Now, NZD has added about 0.20% and is preparing to test the level of 0.6150 for a breakout. The appearance of “bullish” dynamics is due to the publication of disappointing US Q1 GDP data and the results of the Fed meeting, which did not allow investors to orientate in the near future. In turn, pressure on the currency is exerted by uncertain macroeconomic statistics from New Zealand and China. Thus, the New Zealand activity forecast from ANZ for April sharply worsened from –26.7% to –55.1%. The business optimism index for the same period fell from –63.5 to –66.6 points, which, however, was better than market expectations of –69.5 points.

USD/JPY

Today, during the Asian session, the USD/JPY pair falls, developing a confident “bearish” trend towards the mid-March lows in the short/ultra-short term. Investors are inclined to buy yen as a shelter asset amid disappointing macroeconomic statistics from the US and ambiguous results of yesterday's Fed meeting. Meanwhile, uncertain macroeconomic statistics from Japan does not allow the yen to grow more confidently. Thus, according to preliminary estimates, industrial production for March fell by 5.2% YoY after a decrease of 5.7% YoY for last month. Production lost 3.7% MoM after a decline of 0.3% MoM for February. Analysts had expected a stronger decrease – by 5.2% MoM.

XAU/USD

Today, during the Asian session, gold prices are stable and continue to trade slightly above 1700.00. Yesterday's Fed’s interest rate decision practically did not support the instrument, nor did the appearance of US Q1 GDP data, which were worse than expected. It is likely that investors are still quite optimistic, and news of possible easing of quarantine restrictions increases their interest in risk. At the same time, it is worth noting the growing demand for the Japanese currency against the US dollar for example. Today, traders will pay attention to the ECB meeting, as well as the accompanying and following publication of a large number of key macroeconomic statistics from Europe and the United States.

AUD/USD: technical analysis
AUD/USD, H4

On the H4 chart, a downtrend is forming and an upward correction is observed. The instrument is trading near the lower border of Bollinger Bands; the indicator cloud is expanded, which indicates the likely resumption of decline in the short term, at the end of the correction. MACD histogram is in the negative zone, gradually increasing volumes; the signal line is about to cross the zero level from above, after which a signal will be formed to open short positions. Stochastic is in the oversold zone and its lines are directed horizontally.

AUD/USD, D1

On the D1 chart, the uptrend is still in force. The instrument corrected to the center line of Bollinger Bands; the indicator cloud is narrowing, and a lateral trend is likely to form in the short term. MACD histogram is in the positive area. The signal line is crossing the body of the histogram from below retaining a signal for opening long positions. Stochastic left the overbought zone, having formed a sell signal; the oscillator lines are directed downwards.

Key levels

Resistance levels: 0.6410, 0.6445, 0.6470, 0.6485, 0.6510.
Support levels: 0.6370, 0.6337, 0.6300.

USD/CHF: the pair is rising

Current trend

The pair, which decreased last week, is showing strong growth amid the recovery of USD Index quotes and weak macroeconomic statistics from Switzerland.

CHF is under pressure from the negative statistics released in Switzerland yesterday. SECO Consumer Climate for Q2 2020 reached an absolute low for the entire history, amounting to –56 points, which is significantly worse than the previous quarter by –7 points. Consumer Price Index for April also turned out to be worse than expected, reaching –0.4% against the forecast of –0.1%.

Data from the US came out below expected, but in the current situation, investors perceive a slight deviation from the predicted values as a positive factor. Services PMI in April fell to 26.7 points against the forecast of 27 points, while Markit Composite PMI fell to 27 points from 27.4 points, while the forecast did not suggest changes in the indicator.

Support and resistance

The Triangle pattern continues to form on the global chart of the asset and over the past two sessions, the price has reached the line of resistance of the pattern. Both indicators are in uncertainty, since the moment of implementation of the pattern is already close. The situation is borderline, but according to the statistics of this pattern, the probability of growth is higher.

Resistance levels: 0.9760, 0.9880.
Support levels: 0.9610, 0.9500.

GBP/USD: the pair is traded lower

Current trend

GBP/USD continues to show a downtrend against the backdrop of the growth of USD to a basket of world currencies.

This week, a bunch of macroeconomic statistics from the UK was published. In addition to the fact that the Bank of England decided to leave the interest rate at 0.10%, the data on business activity indices in the services and manufacturing sectors also turned out to be very positive. Composite PMI in April was 13.8 points against the forecast of 12.9 points, while the Services PMI reached 13.4 points against expectations of 12.2. Construction PMI, which dropped to 8.2 points against expectations of 22.0 points, was the only disappointment.

Although USD is gaining strength against most global currencies, US labor market data continue to disappoint. ADP Employment Change was again worse than the forecast, collapsing by 20,236K with a forecast of a decrease of 20,050K, which is the worst indicator in the history of publication of the index.

Support and resistance

There is almost no doubt that on the local timeframe, the reversal Head and Shoulders pattern is forming. At the moment, the price is trying to overcome the neck line of the pattern, which will be a signal for opening sell positions. Technical indicators have already reversed and issued leading signals.

Resistance levels: 1.2450, 1.2640.
Support levels: 1.2260, 1.1900.

Brent Crude Oil: oil continues to recover

Current trend

Brent crude oil prices continue to rise steadily and are held at around USD 28 per barrel. Quotes are gradually recovering due to several positive factors.

The increase in oil prices is promoted, first of all, by a gradual recovery in demand for oil products from the main importer, China. Yesterday, China published data on the level of imports for April, which amounted to –14.2% against expectations of –11.2%, but Chinese customs reported an increase in oil product purchases in April to 10.4M barrels per day instead of 9.7M in March.

The second factor was the gradual reduction of oil reserves in storage. According to API, weekly reserves totaled 8.400M barrels, instead of 10.000M a week earlier. According to EIA, stocks are declining at an even faster pace: the figure was 4.590M barrels, with a forecast of 7.759M, down from 8.991M barrels a week earlier.

Support and resistance

The asset continues to be inside the wide downward channel and for the fourth day has been held near the resistance line. The AO oscillator acted as a leading one and issued a buy signal, having crossed the zero level from below. But the Alligator trend indicator is in no hurry: fast EMAs, although they are directed upwards, have not yet crossed the signal line.

Resistance levels: 32.40, 38.70.
Support levels: 23.50, 17.00.

Bitcoin: technical analysis

Current trend

The BTC coin continues to be traded within the framework of the global Expanding Formation pattern and at the moment the formation of the next rising wave inside it is ending. In the local format, at today’s morning trading, the price overcame the 23.6% Fibonacci retracement level, which could mean the beginning of a deep correction downwards. The Alligator indicator EMAs, although in a state of a global buy signal, are starting to reverse. The histogram of the AO oscillator is in the positive zone, but has begun to form bars with a downtrend.

Support and resistance

Resistance levels: 8700.00, 9960.00.
Support levels: 7928.00, 7293.00, 6657.00.

Morning Market Review

EUR/USD

EUR shows flat dynamics against USD during today's Asian session, consolidating after a surge of "bullish" sentiment when investors were selling USD amid the publication of weak macroeconomic statistics from the US. The Consumer Price Index excluding Food and Energy in April fell by 0.4% MoM after a decrease of 0.1% MoM in March. Experts expected a decline of 0.2%. In annual terms, the index fell from 2.1% YoY to 1.4% YoY, which also turned out to be noticeably worse than the forecasts of 1.7% YoY. In turn, the attractiveness of USD increased slightly after a speech by Fed officials who agreed that the regulator is unlikely to resort to negative interest rates. In addition, support for USD was provided by new alarming statistics on the incidence of coronavirus in those countries that have eased restrictions.

GBP/USD

GBP slightly strengthened against USD during today's Asian session, retreating from local lows since April 21. GBP remains under pressure amid the uncertain prospects of trade negotiations between the UK and the EU, which are obviously complicated by the erupted economic crisis. The period during which the UK can agree with the EU to postpone the transitional deadline after Brexit, expires in June. Nevertheless, British Prime Minister Boris Johnson has repeatedly stated that he is against the postponement. It is possible that the current economic crisis could affect this decision, but the market does not have any additional information yet. Today, investors are focused on macroeconomic statistics from the UK on the dynamics of industrial production and GDP for March.

AUD/USD

AUD is stable against USD today, trading near the opening level of yesterday's afternoon session. Macroeconomic statistics from Australia turned out to be neutral and failed to have a significant impact on the dynamics of the instrument. Westpac Consumer Sentiment in May grew by 16.4% after falling by 17.7% in the previous month. Wage Price Index in Q1 2020 increased by 0.5% QoQ and 2.1% YoY, which fully coincided with the expectations of investors. In turn, the instrument was pressured by news about China’s ban on the import of Australian meat after Australia’s calls to investigate the origin of COVID-19.

USD/JPY

USD is trading near zero against JPY during today's Asian session, consolidating after falling the day before when USD retreated from its three-week highs. The reason for the surge in "bearish" sentiment was the publication of disappointing macroeconomic data from the US on the dynamics of consumer inflation in April. Today, investors are focused on the Japanese macroeconomic statistics, which was quite optimistic. Bank Lending in April increased by 3% YoY after growth by 2% YoY in the previous month. Analysts had expected growth by 2.1% YoY only. The Eco Watchers Survey on Current Situation in April fell from 14.2 to 7.9 points, which also turned out to be better than market forecasts about a decrease to 4.2 points.

XAU/USD

Gold prices show flat dynamics during today's Asian session, developing the usual picture of ambiguous trading in the short/medium term. Support for the instrument was provided by new spikes in the incidence of coronavirus in those countries that decided to ease quarantine restrictions. Rumors about the possible second wave of the epidemic immediately spread to the market, but so far the current figures do not allow clear conclusions. More confident growth of gold was hindered by the results of speeches by the Fed representatives, who almost unanimously expressed their opinion regarding the inappropriateness of introducing negative interest rates in the United States.

Morning Market Review

EUR/USD

Today, during the Asian session, the EUR/USD pair is slightly falling, continuing to develop the “bearish” impulse formed yesterday. The negative dynamics was due to another wave of USD strengthening in response to the Fed Chairman Jerome Powell’s speech, which contributed to the growth of negative sentiment in the market. Powell spoke rather sharply about the prospects for the recovery of the US economy, noting that it would be "a long period of poor growth and a widespread drop in income." Also, the official directly appealed to Congress to take additional stimulation measures. Wednesday’s macroeconomic statistics faded into the background. The dynamics of industrial production in the EU in March decreased by 11.3% MoM, which was slightly better than market expectations of –12.1 MoM. Also, the production fell by 12.9% YoY, exceeding the forecast of –12.4% YoY.

GBP/USD

Today, during the Asian session, the GBP/USD pair maintains a moderate downward trend, renewing local lows of April 7. Now the instrument is trying to consolidate below 1.2200. Investors are focused on a large block of UK macroeconomic statistics, released on Wednesday. Many indicators were better than their extremely negative forecasts but it did not contribute to the growth of interest in the British currency. So, UK GDP for March fell by 5.8% MoM after a weakening of 0.2% MoM for February. Analysts had expected a much more significant drop – by 8% MoM. The British economy lost 2% QoQ with a forecast of –2.5% QoQ. Industrial production for March accelerated its decline from –0.1% MoM to –4.2% MoM with a forecast of a decrease of 5.6% MoM. The indicator fell by 8.2% YoY, while the market expected a decline of 9.3% YoY.

NZD/USD

Today, during the Asian session, the NZD/USD pair shows ambiguous dynamics. The instrument is trying to correct after an active decline yesterday when the New Zealand dollar was under pressure from the publication of the RBNZ protocols. As expected, the regulator kept the interest rate at the previous level of 0.25% but also reported a sharp increase in the volume of the quantitative easing program from 33B to 60B NZD. Also, the published protocols reflected the bank’s strong commitment to decrease interest rates to negative values ​​if the situation requires. On Thursday, New Zealand will begin the process of phasing out the previously introduced quarantine restrictions, which should positively affect the dynamics of the labor market and industrial production.

USD/JPY

Today, during the Asian session, the USD/JPY pair is moderately declining, developing a “bearish” trend, which replaced the growth of Tuesday. Despite the fairly strong position of the American currency in the market, the yen looks quite promising in the current struggle for the title of shelter asset, which is partly due to the publication of disappointing US macroeconomic statistics and a speech by the head of the Fed Jerome Powell. On Thursday, investors are focused on the release of US Initial Jobless Claims for the week of May 8. Analysts expect growth of about 2.5 million, which is slightly lower than the 3.17 million recorded over the past period.

XAU/USD

Today, during the Asian session, gold prices are falling, testing the level of 1700 for a breakdown. At the same time, the instrument is near its weekly highs, which it keeps due to the growth of negative sentiment in the market. Yesterday's speech by Fed Chairman Jerome Powell intensified investor concerns regarding the prospects for a recovery in the US economy, although Powell rejected the idea of ​​introducing negative interest rates again. Instead, the chairman of the regulator called on the US Congress to increase the volume of economic assistance packages, which currently reaches $3B.

Brent Crude Oil: oil continues to grow

Current trend

Oil prices continue to rise steadily and are staying around $30 per barrel.

Yesterday, the international energy agency published a monthly report that said that demand for energy was balanced due to the lifting of restrictive measures in several countries and the new OPEC+ deal, which began to operate last week. According to statistics, the drop in demand fell from 9.3 million to 8.6 million barrels per day.

The second positive factor for the instrument was the data on reserves of “black gold” from the EIA agency, according to which crude oil reserves amounted to –0.745 million instead of the forecast of 4.147 million, which is much better than 4.590 million a week earlier. The market took this data positively, although according to API data, inventories increased to 7.580 million against the forecast of 5,000 million.

Support and resistance

The price continues to rise steadily and almost reaches the initial correction level 23.6% Fibonacci. Its breakout will mean the beginning of full correction. Yesterday, the Alligator indicator issued a buy signal, indicating the upward intersection of the signal EMA with two fast ones. Earlier, the histogram of the AO oscillator has already crossed the zero line, giving a buy signal.

Resistance levels: 31.50, 39.20.
Support levels: 27.70, 20.00.

Morning Market Review

EUR/USD

EUR shows a slight increase against USD during today's Asian session, trying to develop the uncertain "bullish" momentum that formed on the market at the end of last week. Last Friday's trading took place against the background of the publication of a large number of interesting macroeconomic statistics from the eurozone and the USA. The focus of European investors was on the GDP dynamics of the eurozone and Germany in Q1 2020. As expected, Germany's GDP fell by 2.2% QoQ after falling by 0.1% QoQ over the previous period. In annual terms, German GDP fell by 2.3% YoY with a forecast of reduction of only 2% YoY. Eurozone GDP for the same period decreased by 3.8% QoQ and 3.2% YoY, which justified forecasts. Employment Change in the eurozone in Q1 2020 decreased by 0.2% QoQ, which unexpectedly turned out to be better than market expectations of –0.4% QoQ.

GBP/USD

GBP shows uncertain correctional dynamics against USD during today's morning session, trading near local lows since March 26. Following the results of the past week, GBP showed a steady decline, and the strongest weakening of its positions fell on Friday, amid the publication of macroeconomic statistics from the USA. Investors were disappointed by US data on the dynamics of retail sales. In April, the indicator decreased by 16.4% MoM after a decrease of 8.3% MoM in March. Analysts expected negative dynamics at the level of –12% MoM. Retail Sales excluding Autos for the same period fell by 17.2% MoM after a decrease of 4% MoM last month. The real dynamics again turned out to be significantly worse than the forecasts of –8.6% MoM. At the same time, the consumer sentiment on USD was supported by unexpectedly strong data on the level of consumer sentiment. Michigan Consumer Sentiment Index rose from 71.8 to 73.7 points in May, with a forecast of a decrease to 68 points.

NZD/USD

NZD is slightly strengthening against USD during today's Asian session, trying to correct after an active decline at the end of last trading week. The instrument is trying to consolidate above 0.5950, relying mainly on a number of technical factors. NZD remains under pressure against the background of a noticeable increase in trade tension between the United States and China. Donald Trump accuses China of insufficient information regarding the risks of coronavirus, threatening to sever all ties with official Beijing. At the end of last week, it became known that the US administration is considering introducing new restrictions on the export of US technology to China. In particular, the Chinese Huawei corporation, which had previously noticeably suffered from sanctions, could again be under a serious blow. China responded by warning that it would take the necessary protective measures and called on the US for constructive dialogue and cooperation.

USD/JPY

USD is stable against JPY during today's Asian session and continues to develop flat dynamics in the short term. Amid the worsening prospects for the global economic recovery after the coronavirus, demand for safe assets remains stably high, not allowing any currency in the USD/JPY pair to take the lead. Macroeconomic statistics from the USA published at the end of the last trading week turned out to be contradictory; however, it only increased investor concerns about the timing of the economy’s return to the previous track. In turn, the Japanese data, released on Monday, gave investors hope. Annual statistics on the dynamics of Japan's GDP for Q1 2020 reflected a decrease of 3.4% YoY after a decrease of 7.3% YoY in the previous period. Analysts had expected the economy to fall by 4.6% YoY. On a quarterly basis, GDP fell by 0.9% QoQ, which also turned out to be better than market expectations of –1.2% QoQ.

XAU/USD

Gold prices show strong growth during today's Asian session, updating record highs since October 2012. The instrument is supported by the growth of trade tension between the USA and China, which is added to the already familiar fears regarding the prospects of the global economic recovery after the coronavirus. Macroeconomic statistics from the United States published last Friday could not significantly improve investor sentiment, although it should be noted that the market was optimistic about the growth of consumer confidence indices.