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In an interview with CNBC, Minneapolis Fed President Neel Kashkari acknowledged the uncertainty surrounding the decision whether to raise rates further in June. He highlighted, "I think right now it's a close call, either way, versus raising another time in June or skipping. What's important to me is not signaling that we're done."

Kashkari clarified that even if the Federal Reserve opted not to hike rates in June, it wouldn't signal the end of the current tightening cycle. Instead, it would be a strategic move to gather more information and potentially reinitiate the raise in July.

Considering his tenure on the committee, which spans "seven or eight years", Kashkari conceded that this period marks the highest degree of uncertainty they've faced in terms of comprehending the underlying inflationary dynamics. Consequently, he is placing a greater emphasis on inflation to guide his decisions.

He speculated, "It may be that we need to go north of 6%, let's see what happens in the underlying services economy." Yet, Kashkari is mindful of the potential impact of banking stress on inflation rates.

"But if the banking stresses start to bring inflation down for us, then maybe we're getting closer to being done. I just don't know right now," he added.

• BoJ Core CPI expected to ease
• USD/JPY steadies after extended slide

In Monday’s European session, USD/JPY is steady, trading at 137.90. The yen gained 0.53% on Friday, after a nasty slide last week in which it fell 440 points and hit a six-month low.

BoJ Core CPI expected to inch lower

Inflation has become a hot topic for Japanese policy makers, which marks a sea-change after years of deflation. Japan is dealing with inflation of around 3%, which is much lower than in other major economies but nevertheless higher than the Bank of Japan’s 2% target.

The new inflationary era has forced central banks to raise interest rates, but the BoJ remains an outlier as it has continued its ultra-loose monetary policy. Still, it appears that change is coming. There is a new sheriff in town, with Kazuo Ueda now at the helm of the BoJ. Ueda has said he would tighten policy if inflation remains sustainable at 2%, which makes every inflation reading a potential market-mover. Last week, core CPI rose to 3.4% in April, up from 3.1% a month earlier. The rise in inflation, together with a stronger-than-expected GDP report for the first quarter, has fuelled speculation that the BoJ could tighten policy in the near future.

The markets will be closely watching BoJ Core CPI, the BoJ’s preferred inflation gauge, which will be released early on Tuesday. The estimate for March stands at 2.8%, a drop lower than the 2.9% reading in February.

We’re unlikely to see interest rates rise anytime soon, but Ueda has hinted at phasing out the Bank’s yield curve control (YCC) policy. Such a move would likely send the yen sharply higher, and unsurprisingly, the possibility that the BoJ will tighten policy has attracted the attention of speculators, who are betting on a shift in policy that will boost the yen.

USD/JPY Technical

• In the Asian session, USD/JPY put strong pressure on support at 137.45. Below, there is support at 1.3615
• There is resistance at 138.37 and 139.25

• Gold (XAU/USD) has dropped by -5.6% from its recent 52-week high of US$2,067.
• Factors that caused the recent drop could be the bounce seen in the US dollar and the unwinding of long hedges linked to the US debt ceiling negotiations.
• 50-day moving average is now acting as a key intermediate resistance at US$1,991.

The bullish momentum of the shiny metal, Gold (XAU/USD) seems to have dissipated in recent weeks after it printed a fresh 52-week high of US$2,067 on 4 May 2023 and staged a decline of -5.6% to hit a low of US$1,952 on last Thursday, 18 May.

Even though on Friday, 19 May, the price actions of Gold managed to stage a rebound of +1% to close the US session at US$1,977.90 but it is still below its 20 and 50-day moving averages that are acting as resistances at around US$2,008 and USS$1,991 respectively at this time of the writing.

The recent price weakness of Gold is indirectly related to the recent rebound seen in the US dollar where the US Dollar Index has managed to stage a weekly rebound of +1.40% for the week of 8 May, its highest weekly gain since the week of 19 September 2022.

Also, there were news reports that stated there were potential breakthroughs in the US debt ceiling limit extension negotiation talks between the Biden Administration and the House Republicans that could trigger some form of hedges positions unwinding on Gold that was taken earlier as long hedges if the US government fails to extend its debt ceiling limit on 1 June.

Let’s now decipher the latest price movement of Gold from a technical analysis perspective.

Gold (XAU/USD) Technical Analysis – Short-term corrective decline within a major uptrend

Fig 1:  Gold (XAU/USD) trend as of 22 May 2023 (Source: TradingView, click to enlarge chart)

Since its 4 May 2023 swing high of US$2,067, Gold (XAU/USD), a whisker away from its current all-time high of US$2,075 printed on 7 August 2020, has reversed down from its major ascending channel upper limit/resistance and traded below the 50-day moving average since 18 May 2023.

These observations suggest that a short-term corrective decline is likely to be in play for Gold within a major uptrend phase that is still intact since the 3 November 2022 low of US$1,616.

As depicted on the 1-hour chart, the price actions of Gold have evolved into a minor descending channel since its 10 May 2023 minor swing high of US$2,048 with its channel resistance coincides with the 50-day moving average resistance at around US$1,991.

In addition, the 1-hour RSI has retreated from a corresponding resistance at the 68% level (close to the overbought region of 70% & above) which indicates that short-term downside momentum remains intact.

The near-term supports rest at US$1,950, the former swing high area of 01/02 February 2023, and US$1,940, defined by the lower limit of the minor descending channel and a cluster of Fibonacci extension levels.

On the flip side, a clearance with an hourly close above US$1,991 short-term pivotal resistance negates the bearish tone for the next intermediate resistance that is coming in at US$2,021 (minor congestion zone of 12/15 May 2023 & the 61.8% Fibonacci retracement of the recent slide from 4 May 2023 high to 18 May 2023 low).

The Euro extends bounce from temporary base at 1.0760 into second straight day, after failing to register a clear break below daily cloud (spanned between 1.0796 and 1.0875). Fresh strength was sparked by weaker dollar and oversold conditions on daily chart, which prompted a partial profit-taking.

Recovery is likely to be limited while holding below 1.0870/80 zone (converged 10/55DMA’s/daily cloud top/broken Fibo 38.2% of 1.0516/1.1095, reverted to resistance) as overall structure on daily chart is bearish (rising negative momentum/daily Tenkan/Kijun-sen in bearish configuration).

Last week’s bearish close marked the second consecutive week in red and weighs on near-term action, supporting scenario of limited correction before bears regain control.

Caution on sustained break above daily cloud top and daily Tenkan-sen (1.0875/83) which would generate initial signal of reversal and shift near-term focus to the upside, with lift above daily Kijun-sen (1.0927) needed to confirm.

Res: 1.0848; 1.0875; 1.0883; 1.0927.
Sup: 1.0805; 1.0760; 1.0737; 1.0700.

With the euro experiencing a rather difficult month and confirming the various seasonality studies, this week’s data calendar has the potential to offer even more excitement. In particular, the preliminary PMI prints and the German IFO survey are expected to be closely scrutinized as certain market participants are trying to counter the elevated ECB rate hiking expectations. The euro would definitely enjoy a boost following its recent performance against both the US dollar and the pound.

ECB is on a preset course

ECB members’ intentions remain clear. They want to continue raising rates as inflation remains unchecked, despite the cumulative 375 bps of hikes since July 2022. The market appears to believe them as it is currently pricing in an 84% probability for a 25 bps rate hike at the June 15 meeting. Similarly, professional forecasts are overwhelmingly on board with this rate move as, at a recent poll, 62 out of 62 analysts endorsed this outcome. Having said that, are this week’s data releases really important for the ECB outlook?

Considering that the next meeting’s decision is almost a done deal, this week's data figures could affect the 2023 monetary policy outlook only if they hold sizeable surprises. In more detail, an impressive set of data would cement the rate expectations for the remainder of the year and could potentially raise the possibility of a stronger rate hike at the June meeting. The ECB does not like to surprise the markets, but the hawks would probably increase their pressure in order to get a 50 bps rate decision next month.

On the other hand, a significant downside surprise at the data prints would allow the ECB doves to become more vocal. They are clearly not happy with the continuously restrictive monetary policy and could try to win over the support from the more balanced members of the governing council. However, they seem to be far from achieving their target of stopping the repeated rate hikes, especially as the labour market continues to tighten. Consequently, the market could pare back some of its rate expectations. At the moment, a total of 58 bps of rate hikes are priced in for 2023.

All eyes on the PMIs

Amidst this environment, the preliminary PMIs for May for Germany and the euro area aggregates will be published on Tuesday. This is the last set of PMIs to be released ahead of the June 15 ECB meeting; the final May PMI figures will come on June 5, but they are usually not market moving. With the Services sector expected to confirm its healthy status, the focus is once again on the manufacturing component of the survey.

Both the German and French indicators are in the 45-level region signaling a shrinking sector. While in France the recent demonstrations for the pension system amendments could offer some justification for the lower figure, the German print is troubling. It adds to concerns that have been building up since the preliminary GDP growth for the first quarter of 2023 surprised on the downside in late April.

IFO survey and final first quarter GDP for 2023 on the menu as well

Further zooming into Germany, this week we get our favourite IFO survey.  The May print of the Business climate survey is seen edging lower with the Expectations component offering again a glimpse of hope. The survey figures have been on an upward trend since the September 2022 lows, but they are still far from pointing to a strong growth outlook.

In this context, professional forecasts continue to paint a mixed picture for the German GDP. Both the IMF and the IFO centre have penciled in a -0.1% annual change for 2023 with the government and the EU Commission appearing more optimistic with their +0.3% and +0.2% forecasts respectively. It is evident that China’s economic underperformance is affecting Germany, troubling the market and politicians, contrary to strong expectations for a significant positive impact.

Euro remains under pressure

The recent weakness of the euro is evident against the pound. Since the February 3, 2023 high, this pair has been on a downward path. We highlighted the formation of a descending triangle that tends to favour bearish moves. On May 9, 2023 the pair broke below the 0.8721 level, the lower boundary of the triangle, but is struggling to record a significant move lower.

The euro would really enjoy a boost and a move back inside the identified pattern. However, unless we get exceptional data and the market starts to think about a 50 bps rate hike, the impact is expected to be rather muted. On the other hand, the euro bears are keen on recording another correction and to try breaking the 0.8635-0.8670 area.

EURUSD - H4 Timeframe

Last week, during the PPI live market trading session in the telegram group, I mentioned that the US Dollar was gradually nearing a resistance level and could soon get weaker. This exactly played out and led to the price rejection from the pivot zone as seen in the chart above. However, I still uphold the overall bearish sentiment in the EURUSD market, and I have thus marked the likely supply zone price would react from. The highlighted supply zone has confluences from twin resistance trendlines, bearish moving averages array, as well as the 50-period moving average resistance.

Analyst’s Expectations:

• Direction: Bearish
• Target: 1.07766
• Invalidation: 1.08752

EURCAD - Daily Timeframe

Whenever I see the moving averages arrayed in either an increasing or decreasing order as we have on the EURCAD chart above, I tend to simply look for trades in the direction of that order. Another notable confluence is the fact that price has made an initial reaction to the pivot zone just slightly below the 100-Day moving average. Based on these criteria, I would expect price to rise slightly higher, towards the 50-Day moving average, even higher.

Analyst’s Expectations:

• Direction: Bullish
• Target: 1.47064
• Invalidation: 1.45239

EURJPY - H4 Timeframe

When I noticed that the 50-period moving average had crossed below the 100-period moving average on the EURJPY chart, my initial deduction was that price might be preparing for a reversal. The candlestick pattern formed by the reaction from the highlighted supply zone gave me the confirmation I needed. The candlestick pattern indicates that the buyers may have been overpowered at that supply zone by a new influx of sellers. Hence, my sentiment on EURJPY would remain bearish unless by some unexpected market stroke, price rises above the supply zone.

Analyst’s Expectations:

• Direction: Bearish
• Target: 147.402
• Invalidation: 149.851

EURNZD - Daily Timeframe

If you’ve followed and digested my analysis up until this point, then you likely already guessed my sentiment on this one - Bullish! As you can see, the moving averages are arrayed in an increasing order which readily suggests a rising price action. Then, having a pivot zone that aligns perfectly with the 100-Day moving average and a support trendline adds the final piece of the puzzle. My initial target on this EURNZD trade is the 50-Day moving average.

Analyst’s Expectations:

• Direction: Bullish
• Target: 1.74317
• Invalidation: 1.71437

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

It seems like the Canadian consumer has a firm grip on their wallet, which is no surprise given the current economic climate. Inflation in April crept up from 4.3% to 4.4%, adding to the financial woes. With soaring interest rates, it's no wonder consumers are feeling the pinch. Brace yourselves for the April retail sales report, which is expected to bring more bad news. Headline retail sales are predicted to slow to -1.4%, while the core rate is anticipated to fall to -0.8%. Not exactly the recipe for economic growth, right? If the report confirms these predictions, it might shake up investors and send the Canadian dollar on a downward spiral. The Bank of Canada won't be thrilled with the slight increase in inflation, but at least the core rate, a more reliable gauge, moved lower. Keep an eye on the BoC's meeting on June 7th, where interest rates are expected to remain at 4.50%. As for the US, it's a quiet day on the economic calendar, but we do have Jerome Powell and two FOMC members delivering public remarks. The market sentiment surrounding the June meeting has shifted, with a reduced chance of a pause and a higher chance of a 25 basis points hike. The Fed's consistently hawkish stance and a strong US economy have played a part in this revision.

EURCAD - H4 Timeframe

EURCAD closed last week with a major reaction off the pivot zone, after having broken out of the channel. Considering the bullish array of the Moving Averages, the reaction from the pivot zone, and the 100-Day moving average support, I believe price would attempt to reach for the 50-Day moving average; or slightly higher even. Based on the bearish outlook of the fundamental analysis as explained earlier, I have reasons to believe this is the logical direction to go for EURCAD.

Analyst’s Expectations:

• Direction: Bullish
• Target: 1.47029
• Invalidation: 1.45055

AUDCAD - Daily Timeframe

AUDCAD is trading within a descending channel at the moment, and seems to be in search of a valid supply zone from which it can recover sufficient momentum to continue its decline. It is on this ground that I have marked out the nearest supply zone that most readily provides the kind of confluences I like to see; a trendline resistance, rally-base-drop supply zone, as well as the 100 and 200 Day moving averages resistance - sweet confluences worth trading from my experience.

Analyst’s Expectations:

• Direction: Bearish
• Target: 0.88859
• Invalidation: 0.90890

GBPCAD - Daily Timeframe

In the case of GBPCAD, the price action presents a largely bullish scenario. On the chart, we can see the price trading within a rising channel with the latest reaction being a bounce off the trendline support. My confluences on this trade include: the trendline support, 50-Day moving average support, overall bullish moving averages array, and the bullish market structure (since price recently broke above a previous high).

Analyst’s Expectations:

• Direction: Bullish
• Target: 1.72459
• Invalidation: 1.67055

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

Hello fellow traders. In this technical article we’re going to take a look at the Elliott Wave charts charts of USDCHF forex pair published in members area of the website. As our members know USDCHF has recently made recovery against the 0.944 04 peak that has unfolded as Elliott Wave Double Three Pattern. It made clear 7 swings from the lows and completed correction at the extreme zone (Blue Box- selling area) . In further text we’re going to explain the Elliott Wave pattern and trading strategy

Before we take a look at the real market example, let’s explain Elliott Wave Double Three pattern.

Elliott Wave Double Three Pattern

Double three is the common pattern in the market , also known as 7 swing structure. It’s a reliable pattern which is giving us good trading entries with clearly defined invalidation levels.
The picture below presents what Elliott Wave Double Three pattern looks like. It has (W),(X),(Y) labeling and 3,3,3 inner structure, which means all of these 3 legs are corrective sequences. Each (W) and (Y) are made of 3 swings , they’re having A,B,C structure in lower degree, or alternatively they can have W,X,Y labeling.

USDCHF 4h Hour Elliott Wave Analysis 05.16.2023

USDCHF ended cycle from the 0.94404 peak as 5 waves structure. Currently the pair is giving us 2 red recovery that is unfolding as Elliott Wave Double Three Pattern. Correction has ((w))((x))((y)) black inner labeling, when the price structure is still incomplete. We expect to see more short term strength in 7th swing toward 0.90238-0.91204 area to complete correction. At that zone we would like to be sellers. We can see either decline toward new lows or larger 3 waves pull back at least. Invalidation for the selling setup would be break above 1.618 fib ext level: 0.91204

USDCHF 1h Hour Elliott Wave Analysis 05.22.2023

USDCHF made extension higher and reached our selling zone : 0.90238-0.91204. The pair found sellers and made nice reaction from the blue as we expected. All short positions should be risk free at this stage+ partial profit taken. Current view suggests 2 red recovery completed at 0.90625 high. As far as the price holds below that peak, further weakness should follow. We should wait for a break of 1 red low, before selling the pair again.

Market picture

Cryptocurrency market capitalisation fell 2% over the week to $1.12 trillion, mostly fluctuating between $1.11 trillion and $1.14 trillion. The market is in no hurry to pick a trend, bringing the cap back into its chosen range and moving on to news of the US debt ceiling and the Fed’s next move.

Bitcoin is back below $27K this new week, finding support from buyers on dips to the 200-week moving average, which is a notable indication the market still believes in the return of a long-term uptrend in Bitcoin. It is also a bullish signal for the cryptocurrency sector.

On the other hand, if Bitcoin fails to push back from this support soon, it will be an excuse for the bears to increase the pressure.

Ethereum has been treading water for around $1810 all last week, clearly waiting for an outside signal. Other top ten altcoins showed mixed dynamics, ranging from a 4.6% drop (Solana) to an 8.5% rise (XRP).

News background

Crypto whales could soon start selling Bitcoin, according to Lookonchain. Experts have highlighted the transfer of 1,750 BTC to the Binance exchange. The pressure will mount if other holders follow suit.

Robert Kennedy Jr, US presidential candidate who has consistently supported digital assets, called Bitcoin “an exercise in democracy”. The politician has pledged to protect the rights of Bitcoin owners and miners if he is elected the next US president.

Heisenberg Capital founder Max Keiser agreed with SEC chief Gary Gensler that all crypto assets other than bitcoin should be considered securities. He cited the example of El Salvador, where BTC has been legalised, and this adoption model could become the standard.

MicroStrategy founder Michael Saylor said the company wants to use the Ordinals protocol to build applications. He believes that Bitcoin NFT technology has the potential to drive innovation in the digital asset market.

A 30% tax on cryptocurrency mining proposed by US President Joe Biden would force the industry offshore, said Marathon Digital CEO Fred Thiel.

Exactly 13 years ago, programmer Laszlo Heinitz, for the first time in history, paid for a real product with bitcoins — two Papa John's mushroom pizzas with sausages, tomatoes and onions. The purchase cost him “only” 10k bitcoins (25 USD at the exchange rate at that time, almost $270 million at the current price of 1 bitcoin in US dollars).

Then cryptocurrencies were practically unknown, now they are being discussed at the G7 summit. At a meeting in Japan, the leaders agreed to continue consultations on how to regulate digital assets.

Meanwhile, bitcoin traders are looking with apprehension at the BTC/USD chart, which is forming a bearish head and shoulders (SHS) pattern. According to the classics of technical analysis, the breakdown of the “neck” level around 26,800 can lead to a downtrend. However, for this, sellers will have to apply serious pressure to overcome the support from the bottom line (1) of the ascending channel and the psychological mark (2) of USD 25k per bitcoin.