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NZD/USD: the likelihood of a decline in the USD increased
Current trend
The NZD/USD pair corrects and is currently trading near the level of 0.7181, trying to consolidate within an uptrend.
The latest statistics from New Zealand did not affect the price significantly. Thus, the Q1 producer purchase price index increased by 2.1%, while a quarter earlier the growth was only 0.1%. The selling price index increased by 1.2%, which was higher than the previous value of 0.5%. The Reserve Bank of New Zealand's net debt may fall to 34.00%, up from 39.70% in the last analyst forecast.
Although the publication of the US Federal Reserve Open Market Committee (FOMC) Meeting Minutes did not give clear hints of further actions of the regulator on monetary policy, the statements of several officials forced investors and analysts to take even more seriously a possible change of course at the next meetings. Inflation is accelerating and the authorities need to take measures to contain it. The debt market reacted sharply to the increased likelihood of rate hikes. The yield on the key 10-year US Treasuries reached 1.680%, while yesterday morning it was 1.641%. An increase in yield is a negative signal for USD, which is now on the verge of a new cycle of decline.
Support and resistance
The price moves within the local upward correction. Technical indicators keep a poor buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram is in the buy zone.
Support levels: 0.7131, 0.6950.
Resistance levels: 0.7257, 0.7443.
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USD/JPY: positive reports support the yen
Current trend
The USD/JPY pair is correcting around the level of 108.71.
The Japanese currency began to rally after the country's Ministry of Health announced approval for the use of two vaccines: from the companies Moderna and AstraZeneca. According to the Ministry of Health, the Moderna vaccine will begin to be used as early as May 24 but the use of the AstraZeneca vaccine has been postponed for now. Also, the instrument is positively influenced by macroeconomic statistics. Japan's nationwide core consumer price index for April was –0.1% YoY, better than analysts’ expectations of –0.2%. The consumer price index reached –0.4%, while the Service PMI is at the level of 45.7 points.
The key data for the American currency was an unexpected reduction in the number of Initial Jobless Claims, amounting to 444K, which is less than the expected 450K. The average number of applications over the past 4 weeks also decreased to 504.75K against 535.25K a week earlier. However, the positive was short-lived, and data on the manufacturing activity index from the Federal Reserve Bank of Philadelphia for May stopped the upward trend. The indicator dropped to 31.5 points from 50.2 points a month earlier.
Support and resistance
The instrument moves within an upward corrective trend, forming an upward channel, which can subsequently transform into a Flag pattern. Technical indicators are in a state of uncertainty: fast EMAs on the Alligator indicator almost crossed with the signal line, and the histogram of the AO oscillator approached the transition level.
Resistance levels: 109.33, 110.75.
Support levels: 108.35, 107.48.
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