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Daily Pivots: (S1) 1.0936; (P) 1.1002; (R1) 1.1039; More...

Immediate focus is back on 1.1075 resistance with today's rebound in EUR/USD. Decisive break there will resume larger up trend from 0.9534 to 1.1273 fibonacci level. Break there will target 61.8% projection of 0.9534 to 1.1032 from 1.0515 at 1.1441. Meanwhile, outlook will remain bullish as long as 1.0908 support holds, in case of another retreat.

In the bigger picture, rise from 0.9534 (2022 low) is in progress for 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. Sustained break there will solidify the case of bullish trend reversal and target 1.2348 resistance next (2021 high). This will now remain the favored case as long as 1.0515 support holds, even in case of deeper pull back.

Euro is leading European majors higher today, with a little boost from improving consumer sentiment in Germany. However, it is likely that the rise is more due to concerns over regional bank woes in the US, which are triggering some risk-off sentiment. Australian Dollar is the worst performer for the day, with selloffs deepening, followed by New Zealand and Canadian Dollars. Meanwhile, Dollar is mixed for now, along with Yen. The relative performance of the US and Japanese currencies will largely depend on whether this week's decline in US treasury yields extends.

Technically, the main focuses for the US session today will be on 1.1075 resistance in EUR/USD, 0.8858 support in USD/CHF, and to a lesser extent, 1.2545 resistance in GBP/USD. Decisive breaks of these levels will confirm resumption of recent downtrend of Dollar against Europeans. Another focus is the 0.9846 minor resistance in EUR/CHF. A firm break there will confirm short-term bottoming at 0.9774 and bring a stronger rebound. This could help push EUR/USD through the mentioned 1.1075 resistance and possibly prompt upside acceleration above that level.

In Europe, at the time of writing, FTSE is down -0.27%. DAX is down -0.58%. CAC is down -0.95%. Germany 10-year yield is up 0.0022 at 2.387. Earlier in Asia, Nikkei dropped -0.71%. Hong Kong HSI rose 0.71%. China Shanghai SSE dropped -0.02%. Singapore Strait Times dropped -0.08%. Japan 10-year JGB yield dropped -0.0170 to 0.463.

US durable goods orders rose 3.2% mom in Mar, ex-transport orders up 0.3% mom

US durable goods orders rose 3.2% mom to USD 276.4B in March, well above expectation of 0.8% mom. Ex-transport orders rose 0.3% mom to USD 179.0B, above expectation of -0.2% mom. Ex-defense orders rose 3.5% mom to USD 259.3B. Transportation equipment rose 9.1% mom to USD 97.4B.

US goods trade deficit narrowed to USD -84.6B in Mar

US goods exports rose USD 4.9B to USD 172.7B in March. Goods imports dropped USD -2.5B to 257.3B. Trade deficit came in at USD -84.6B, smaller than expectation of USD -89.8B.

Wholesale inventories rose 0.1% mom to USD 919.9B. Retail inventories rose 0.7% mom to USD 773.4B.

Germany Gfk consumer sentiment rose to -25.7, improved economic and income expectations

Germany Gfk Consumer Sentiment for May improved from -29.3 to -25.7, above expectation of -27.5. In April, Economic Expectations rose sharply from 3.7 to 14.3. Income Expectations rose from -24.3 to -10.7. Propensity to Buy rose from -17.0 to -13.1.

The seventh increase in a row indicates that consumer sentiment is gathering momentum. "Following a rather small increase in the previous month, consumer sentiment is showing clear signs of an upswing this month," explains Rolf Bürkl, GfK consumer expert.

"However, the value still remains below pre-pandemic levels of around three years ago. On another positive note, income expectations have risen for the seventh time in a row, returning to the level prior to the start of the war in Ukraine for the first time."

Australia CPI down to 7.0% yoy in Q1, 6.3% yoy in Mar

Australia CPI slowed from 7.8% yoy to 7.0% yoy in Q1, slightly above expectation of 6.9% yoy. For the quarter, CPI rose 1.4% qoq, down from prior 1.9% qoq, below expectation of 1.3% qoq. Trimmed mean CPI rose 1.2% qoq, 6.6% yoy while weighted median CPI rose 1.2% qoq, 5.8% yoy.

Michelle Marquardt, ABS head of prices statistics, said "CPI inflation slowed in the March quarter, with the quarterly rise being the lowest since December 2021. While prices continued to rise for most goods and services, many of these increases were smaller than they have been in recent quarters."

Monthly CPI slowed from 6.8% yoy to 6.3% yoy in March, below expectation of 6.5% yoy. Excluding volatile items (Fruit and vegetables and Automotive fuel) CPI, rose from 6.8% yoy to 6.9% yoy.

NZ imports surged 10% yoy, export rose 0.6% yoy in Mar

New Zealand goods exports rose 0.6% yoy or NZD 40m to NZD 6.5B in March. Imports rose 10% yoy or NZD 719m to NZD 7.8B. Monthly trade balance recorded a deficit of NZD -1.3B, larger than expectation of NZD -0.5B.

Australia contributed the most to the growth in monthly exports, with a 30% rise. Goods exports to the US was up 4.1%, EU up 28%, but down -9.6% to Japan and down -5.7% to China.

On the other hand, imports from the US leads the monthly rise, up 39%. Imports from EU and South Korea grew 24% and 20% respectively. On the other hand, imports from China was down -13%, Australia down -4.0%.

BoJ Ueda: Dealing with cost-push inflation is very difficult

In an address to parliament today, BoJ Governor Kazuo Ueda highlighted the difficulties central banks face when dealing with cost-push inflation.

Ueda explained, "In general, dealing with cost-push inflation is very difficult for central banks. On the one hand, you'd like to curb inflation. On the other hand, you don't want to tighten monetary policy knowing that cost-push inflation will cool the economy."

The governor emphasized the importance of striking the right balance, which he said, "depends on economic developments at the time, including where inflation stood at the outset."

Ueda also noted that cost-push inflation in Japan is likely to ease as prices of imported raw materials have probably peaked.

These comments come ahead of BoJ's two-day policy meeting starting on Thursday, during which the central bank is widely anticipated to maintain its ultra-loose monetary policy.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0936; (P) 1.1002; (R1) 1.1039; More...

Immediate focus is back on 1.1075 resistance with today's rebound in EUR/USD. Decisive break there will resume larger up trend from 0.9534 to 1.1273 fibonacci level. Break there will target 61.8% projection of 0.9534 to 1.1032 from 1.0515 at 1.1441. Meanwhile, outlook will remain bullish as long as 1.0908 support holds, in case of another retreat.

In the bigger picture, rise from 0.9534 (2022 low) is in progress for 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. Sustained break there will solidify the case of bullish trend reversal and target 1.2348 resistance next (2021 high). This will now remain the favored case as long as 1.0515 support holds, even in case of deeper pull back.

Economic Indicators Update

• German consumer confidence rises
• EUR/USD pushes above 1.10

EUR/USD is trading at 1.1040, up 0.60% on the day

German consumer confidence brightens

German consumer confidence continued its upswing heading into May. The German GfK consumer sentiment index rose to -25.7, up from -29.3 in April and above the estimate of -27.5 points. Not exactly red-hot numbers, but the upswing has now extended over seven straight months, a clear trend that the German consumer is becoming more optimistic about economic conditions. As well, income expectations rose for a seventh straight time, the highest level since February 2022 and the main driver for the rise in consumer confidence.

German consumers were able to breathe a sigh of relief as the feared energy crunch this past winter never materialized. Energy prices remained relatively moderate and the government pitched in with subsidies that lowered energy bills for households. Still, consumer demand has been weak, dampened by the double-barreled jab of high inflation and rising interest rates. The German economy is not in great shape, with GDP expected to stagnate in 2023, and as the largest economy in the eurozone that certainly does not bode well for the rest of the bloc.

In the US, it’s the opposite story, as consumer confidence slowed to a nine-month low in April. The Conference Board consumer confidence index slipped to 101.3, down from the March reading of 104.0, which was also the estimate. The survey found that the level of consumers planning to buy major household appliances in the next since months fell to a 13-year low, and that could spell big trouble for the economy, as consumer spending is a key driver of growth. Consumers have been resilient in the face of high inflation and rising rates, but that could be changing as the Fed’s aggressive tightening percolates through the economy.

EUR/USD Technical

• EUR/USD is testing resistance at 1.1023. Above, there is resistance at 1.1056
• There is support at 1.0966, followed closely by at 1.0933

US goods exports rose USD 4.9B to USD 172.7B in March. Goods imports dropped USD -2.5B to 257.3B. Trade deficit came in at USD -84.6B, smaller than expectation of USD -89.8B.

Wholesale inventories rose 0.1% mom to USD 919.9B. Retail inventories rose 0.7% mom to USD 773.4B.

Full US goods trade balance release here.

US durable goods orders rose 3.2% mom to USD 276.4B in March, well above expectation of 0.8% mom. Ex-transport orders rose 0.3% mom to USD 179.0B, above expectation of -0.2% mom. Ex-defense orders rose 3.5% mom to USD 259.3B. Transportation equipment rose 9.1% mom to USD 97.4B.

Full US durable goods orders release here.

Yesterday's report showed that inflation in Australia in the first quarter of 2023 fell from a 33-year high. The consumer price index rose only by 1.4% in annual terms, although analysts had expected +1.9%.

Now market participants are focusing on the meeting of the Reserve Bank of Australia on May 2; it is expected that it will resume raising rates and thereby complete the pause made after a series of 10 increases.

Reacting to the news, the Australian dollar broke through the low of April, while the daily AUDUSD chart shows that the market as a whole looks weak, because:

→ important support (1), which has been in effect since autumn 2022, has been breached;

→ rebounds from this line were weak, the price did not reach the median line (2);

→ MA (200) points down.

The bears may make even more progress today, as at 15:30 (GMT+3) the US GDP and unemployment news will be published, which may strengthen the USD.

Gold experienced a moderate pullback after peaking at the 13-month high of 2,048 in mid-April. Since then, the price has been trading without a clear direction within a rectangle pattern, while the congested region that includes the 50-period simple moving average (SMA) and the lower bound of the Ichimoku cloud has repeatedly curbed upside efforts.

The momentum indicators currently suggest that the bullish forces are subsiding. Specifically, the stochastic oscillator is set to post a bearish cross, while the RSI is losing ground but remains above its 50-neutral mark.

Should the fortified zone hold, the price could reverse lower to test the 1,993 hurdle. If that barricade fails, the bears may target the April low of 1,969, which is also the lower end of the recent sideways move. Failing to halt there, bullion could descend towards the crucial support zone of 1,950.

On the flipside, if the price manages to jump above its 50-period SMA, 2,012 could prove to be the first obstacle for buyers to clear. Further advances might then stall at the April resistance of 2,032. A jump above that region could set the stage for the 13-month peak of 2,048.

In brief, gold seems to be in a consolidation phase, with its latest advance faltering around a crucial technical region. Therefore, it could be argued that a break above or below the recent range is required for the price to adopt a clear directional impetus.

Australian dollar remains under increased pressure from risk aversion and holding firmly in red for the fourth consecutive day, with softer than expected inflation data for the first quarter, adding to negative sentiment.

Australian inflation eased further from the highest in over three decades, with stronger than forecasted drop in core inflation, contributing to expectations that inflation has peaked and fading bets for RBA’s 25 basis points rate hike next week.

Fresh weakness in Wednesday’s Asian / European trading hit the lowest in six weeks, in extension of nearly 1% drop on Tuesday.

Break of 0.6620 zone former higher base (also Fibo 76.4% retracement of 0.6563/0.6805) generated strong bearish signal, reinforced by confirmation of a double-top (0.6793/0.6805), opening way for attack at key supports at 0.6563/47 (2023 low of Mar 10 / Fibo 61.8% of larger 0.6170/0.7157 uptrend), with daily close below 0.6620 needed to confirm.

Daily studies in full bearish setup support the action, though oversold stochastic suggests that bears are likely to face headwinds on approach to 0.6563 target.

Corrective upticks should be ideally capped by solid barriers at 0.6620/44 (broken Fibo 76.4% / base of thick weekly cloud) to keep bears intact and offer better selling opportunities.

Res: 0.6620; 0.6644; 0.6656; 0.6697.
Sup: 0.6589; 0.6563; 0.6547; 0.6500.

• AUD/USD drops to 6-week low
• Australian inflation falls in Q4
• First Republic shares slide by 50%

AUD/USD is trading at 0.6606, down 0.31%. Earlier, AUD/USD fell to a low of 0.6595, its lowest level since March 15^th.

Australian inflation heads south

Australia’s inflation levels have been falling and the downward trend continued in the first quarter. The headline figure slowed to 7.0%, down from 7.8% in Q4 and a notch above the market consensus of 6.9%. On a quarterly basis, headline CPI from 1.9% to 1.3%, versus the market consensus of 1.4%. The monthly CPI for March fell from 6.8% to 6.1%, below the estimate of 6.6%.

Core CPI, which is considered a more reliable gauge of inflation trends, headed lower and beat the estimates, falling from 6.9% to 6.6% y/y (7.2% est.). On a quarterly basis, core CPI dropped to 1.2%, down from 1.7% and below the estimate of 1.4%.

The key takeaway from these positive numbers is that they appear to have cemented another rate pause at the May 2^nd meeting. The odds of a pause have risen from 83% prior to the inflation report to 100% at present. It looks safe to say that inflation has peaked, although the cautious RBA is unlikely to use the “P” word just yet. At the same time, it is premature to declare victory in the inflation battle, with headline inflation and the core rate running more than three times the RBA’s target band of 2-3%. Despite the market’s confidence in another pause, some economists feel that the RBA remains concerned that the high core rate could fuel a price wage spiral if it doesn’t tighten further.

First Republic’s shares sink

AUD/USD is also under pressure as the banking crisis is back in the headlines. First Republic Bank shares fell by 50% after the Bank’s earnings report showed that deposits plunged by 40% in the first quarter. Risk sentiment has fallen as First Republic’s future very survival is at stake, and if banking jitters worsen, the US dollar could continue to climb higher.

AUD/USD Technical

• There is resistance at 0.6657 and 0.6791
• 0.6459 and 0.6353 are providing support

EUR/USD started a downside correction from the 1.1070 resistance. USD/CHF is rising and might aim for more gains above the 0.8930 resistance.

Important Takeaways for EUR/USD and USD/CHF

• The Euro started a fresh decline from the 1.1070 resistance against the US Dollar.
• There is a key bullish trend line forming with support near 1.0970 on the hourly chart of EUR/USD at FXOpen.
• USD/CHF started a fresh increase above the 0.8900 resistance zone.
• There was a break above a major bearish trend line with resistance near 0.8895 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair faced rejection near the 1.1070 level. The Euro started a downside correction from the 1.1072 resistance against the US Dollar.

There was a move below the 50-hour simple moving average at 1.1015. The pair dipped below the 1.1000 support before the bulls appeared near 1.0970 when the RSI reached oversold conditions. There is also a key bullish trend line forming with support near 1.0970.

The pair is now consolidating and facing resistance near the 1.1000 level. The first major resistance is near the 50-hour simple moving average at 1.1015. It coincides with the 50% Fib retracement level of the downward move from the 1.1067 swing high to the 1.0964 low.

An upside break above the 1.1015 level might send the pair toward the 76.4% Fib retracement level of the downward move from the 1.1067 swing high to the 1.0964 low.

The next major resistance is near the 1.1070 level. Any more gains might open the doors for a move toward the 1.1120 level. If there is no move above 1.1015, the pair might start a fresh decline. On the downside, immediate support is near the trend line at 1.0970.

The next major support is near the 1.0945 level. A downside break below the 1.0945 support could start a steady decline toward the 1.0910 level.

USD/CHF Technical Analysis

On the hourly chart of USD/CHF at FXOpen, the pair declined heavily below the 0.8960 support. The US Dollar gained bearish momentum below the 0.8930 level.

Finally, it tested the 0.8860 support. The pair is now attempting a recovery wave from 0.8860. There was a break above a major bearish trend line with resistance near 0.8895, the 23.6% Fib retracement level of the downward move from the 0.9003 swing high to the 0.8860 low, and the 50-hour simple moving average.

The pair is now facing resistance near the 50% Fib retracement level of the downward move from the 0.9003 swing high to the 0.8860 low at 0.8930.

The next major resistance is near the 0.8960 level. If there is a clear break above the 0.8960 resistance zone, the pair could start another increase. In the stated case, it could test 0.9000.

On the downside, immediate support is near the 50-hour simple moving average at 0.8895. The next major support is near the 0.8860 level. Any more losses may possibly open the doors for a move toward the 0.8825 level or even 0.8800 in the coming days.