Sample Category Title

• CADJPY reversed from support level 94.80
• Likely to rise to resistance level 97.00

CADJPY previous reversed up from major support level 94.80 (which stopped the previous sharp downtrend in the middle of January), standing near the lower daily Bollinger Band.

The upward reversal from the support level 94.80 created the daily Japanese candlesticks reversal pattern Hammer – similar to the one the pair created in January.

Given the oversold daily Stochastic and the strong yen sales, CADJPY can then be expected to rise further toward the next resistance level 97.00 (top of the previous correction 2).

• EURJPY reversed from key support level 140.00
• Likely to rise to resistance level 143.65

EURJPY recently reversed up from key support level 140.00 (which has been reversing the price from the start of February).

The support level 140.00 was strengthened by the 61.8% Fibonacci correction of the previous upward impulse (1) from January and by the lower daily Bollinger Band.

EURJPY can then be expected to rise further toward the next resistance level 143.65 (top of the previous Evening Star).

The USDJPY bounces on Monday after Friday’s action left long-tailed Doji, with short-lived dip below psychological 130 support signaling a bear-trap and forming reversal pattern on daily chart.

Initial signal of direction change still needs more evidence, with break of daily cloud base (131.81), seen as a minimum requirement, with extension above the cloud top (132.69) needed to confirm reversal.

Daily cloud twists on Friday and was so far magnetic, though prevailing negative tone on daily studies (rising negative momentum / moving averages in full bearish setup) may cause more significant negative impact on fresh bulls, which already came under pressure on 4-hr hart (fading bullish momentum / overbought stochastic).

Slight optimism on easing tensions in banking sector prompted traders into dollar from safe-haven yen, however persisting concerns that crisis may deepen, as markets are not convinced that the worst is already behind us, continue to weigh and require caution.

Look for initial signal on today’s closing and reaction at daily cloud base.

Res: 131.81; 132.37; 132.70; 133.00.
Sup: 130.98; 130.74; 130.00; 129.64.

Markets

Investors adopted a glass-half-full approach at the start of the new week, extending an intraday recovery that lifted Wall Street out of the red on Friday. Optimism today was further fueled by Bloomberg reporting over the weekend that US authorities are considering to extend the liquidity-offering programme in such a way that it gives the current US bank in focus, First Republic, more time to restore its balance sheet. Equities in Europe bounced 1%, recouping about half of the losses incurred on Friday. US stocks open with 0.2-0.8% gains. Core bond yields shoot higher and money markets in areas including the US, UK and eurozone, pare back their premature cutting bets. ECB’s Nagel in this respect was pretty clear: the central bank must be resolute in fighting inflation: “[…] we’ll continue to move forward resolutely on the path of monetary normalization until inflation is contained and price stability is restored.” Aside from more rate hikes, he calls for an acceleration in QT from the summer. Nagel added that Europe’s banking and financial system is resilient but the ECB has suitable instruments (other than rates) to offer support if needed. German yields jump between 12.9 (30y) and 17.0 bps (2y). The 2% support in the country’s 10y yield thus survives another test that begun end last week. US yields surge in a similar curve shift (7.2 to 19.2 bps) with the 2y yield testing the symbolic 4% mark. Economic data was scant but in any case did not thwart the upleg. The German Ifo indicator rose from 91.1 to 93.3, defying expectations for a stabilization at 91. It is the highest reading since February 2022, before the Russian invasion. Both the current assessment (from 93.9 to 95.4) and the expectations component (from 88.4 to 91.2) improved.

The Japanese yen suffers the most on currency markets. Risk-on and the core bond yield rally lifts USD/JPY from 130.56 to 131.68. EUR/JPY rebounds from 140.57 to 141.85. The euro and the dollar are worthy to each other. EUR/USD ekes out a small gain to 1.078. The trade-weighted DXY index is holding steady above 103. Last week’s risk-off failed to support the traditional safe haven that the USD normally is. That’s because concerns about financial stability originated specifically from the US. Consequently, when fears ebb like today, the dollar’s appeal isn’t dented as much as would be the case otherwise. Sterling isn’t giving up the fight for EUR/GBP 0.88. The pair however did leave the intraday lows at around 0.878 behind as the first US investors started joining.

News & Views

According to GKI Economic Research, economic sentiment in Hungary rose markedly in March to -13.8 from -18.2 as both consumer expectations (-43.8 from -51.9) and business confidence (-3.2 from -6.4) improved. In the business sector, expectations of industrial and service companies improved significantly, while expectations in construction and trade deteriorated noticeably, but to a lesser extent. According to GKI, companies’ efforts to raise prices declined substantially, while their willingness to hire rose. Consumers are no more worried than they were in 2020, during the panic of the Covid outbreak. However, pessimism is still very strong. The assessment of the state of the Hungarian economy was more positive than in February, both among households and businesses. In other news from the country, government party Fidesz nominated Eva Buza and Zoltan Kovacs for the monetary council of the National bank of Hungary. Buza said that price stability is the MNB’s primary goal. Inflation needs to be curbed to single digits by the end of the year. She also advocated fiscal and monetary policy coordination is needed. Recently, MNB governor Matolcsy and Prime Minster Orban openly disagreed on the trajectory for monetary policy. The forint trades even trades marginally weaker today (EUR/HUF 385.75 area) even as risk sentiment improved.

According to data published by the Confederation of British Industry, reported sales in retailing in March were broadly stable (1 from 2). However, sales for the time of the year improved from 6 to 12 and orders placed at suppliers also improved from -25 to -2. Retailers even turned further positive on future sales. The expected volume of sales (retailing) for April rose to 9 from -18, the first positive figure after 6 months of negative readings. Last week, the Bank of England in the communique after its policy meeting already indicated that GBP growth in the country is now expected to increase slightly in Q2 while a decline of 0.4% was expected in February. Q1 activity was still seen  contracting marginally (0.1%).

USDJPY staged a fierce recovery over the last few sessions. The pair found fresh buy orders near 129.65 and has risen to challenge the 131.70 region, where a battle is currently taking place between bulls and bears. Despite this rebound though, the market has not escaped its downtrend. 

The price structure on the four-hour chart still consists of lower highs and lower lows. Similarly, the 50-period moving average (MA) has crossed below the 200-period one, forming a so-called 'death cross'. Both suggest the overall picture remains negative.

Momentum studies reflect the latest spike in the price, as the RSI has crossed above 50 while the MACD is above its red trigger line. However, neither oscillator reveals much about the next directional wave.

For buyers to remain in control, they would need to pierce above the 131.70 zone, which also encapsulates the 50-period moving average. In this case, the next area to provide resistance might be around the 133.00 handle, which was the latest local high.

Now in case sellers come back into action, the 130.50 territory could be their first target. Slicing below this area, the focus would turn to the recent low of 129.65, where the lower Bollinger band is also located. Any further declines would signal the resumption of the prevailing downtrend, opening the door towards 129.00.

In short, the latest recovery in USDJPY is not enough to alter the broader negative outlook. For that to change, buyers would need a new high above 133.00. 

Gold continues its impressive streak of gains for the fourth week in a row. At the beginning of this week, the price of a troy ounce of the precious metal is around 1,973 USD.

This increase in the price of gold indicates that the market is looking for a "safe haven" from the effects of the banking crisis, which remains one of the main threats to the global economy. In addition, the US Federal Reserve's ambiguous stance on the future interest rate makes gold quite attractive to investors.

At the end of last week, the European banking sector came under pressure again, which caused an increase in anxiety in stock markets around the world. The concern was caused by the decline in the shares of the largest European bank Deutsche Bank.

Against the backdrop of this uncertainty, gold is again becoming a "safe haven" for the capital market, which makes it one of the most demanding investment assets in the face of economic uncertainty. Some analysts believe that the price of gold may continue to rise in the near future, until there is stability in the financial markets.

On H4, XAU/USD has performed an impulse of decline to 1934.24 and growth to 2003.30. At the moment, a consolidation range is forming at these levels. If the price breaks out of it downwards, a link of correction to 1895.00 might follow. If the price breaks through upwards, the wave might continue to 2012.12. Technically, this scenario is confirmed by the MACD. Its signal line is above zero, directed strictly down to renew the lows.

On H1, XAU/USD has performed a structure of decline to 1977.90. At the moment, a consolidation range is forming around it. With an escape from it downwards, the wave might continue to 1952.50. Then growth to 1977.90 might follow, and then — a decline to 1927.00. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is above 20, aiming strictly upwards.

Daily Pivots: (S1) 129.93; (P) 130.43; (R1) 131.23; More...

Intraday bias in USD/JPY remains neutral for the moment and more consolidations could be seen above 129.62. But outlook stays bearish as long as 132.99 resistance holds. Break of 129.62 will target a test on 127.20 low. Decisive break there will resume larger decline from 151.93 to 61.8% projection of 151.93 to 127.20 from 137.90 at 122.61.

In the bigger picture, rebound from 127.20 should have completed at 137.90 as a corrective move. The down trend from 151.93 (2022 high) is still in progress. Break of 127.20 will resume this down trend and target 61.8% projection of 151.93 to 127.20 from 137.90 at 122.61. This will now be the favored case as long as 137.90 resistance holds.

Daily Pivots: (S1) 0.9160; (P) 0.9189; (R1) 0.9227; More...

Range trading continues in USD/CHF and intraday bias stays neutral. Outlook is unchanged that corrective pattern from 0.9058 low is in progress. Another rise cannot be ruled out, but upside should be limited by 0.9474 fibonacci level. On the downside, firm break of 0.9058 will resume larger down trend from 1.1046.

In the bigger picture, fall from 1.1046 (2022 high) should still be in progress with 38.2% retracement of 1.0146 to 0.9058 at 0.9474 intact. Prior rejection by 55 week EMA was a medium term bearish sign. Break of 0.9058 will resume such decline towards 0.8756 support (2021 low). But overall, this fall is still as a leg in the long term range pattern from 1.0342 (2016 high). So, downside should be contained by 0.8756 to bring reversal.

Daily Pivots: (S1) 1.2185; (P) 1.2239; (R1) 1.2287; More...

Range trading continues in GBP/USD and intraday bias stays neutral. With 1.2177 minor support intact, further rally is expected. On the upside, break of 1.2342 will target 1.2445/6 resistance zone. Firm break there will resume larger rally from 1.0351, and target 1.2759 fibonacci level. On the downside, however, break of 1.2177 minor support will argue that corrective pattern from 1.2445 is extending with another falling leg, and turn bias to the downside for 1.2009 support instead.

In the bigger picture, price action from 1.2445 are seen as a corrective pattern to rise from 1.0351 medium term bottom (2022 low). Resumption of the rally from 1.0351 is expected and break of 1.2446 will target 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. This will remain the favored case as long as 38.2% retracement of 1.0351 to 1.2445 at 1.1645 holds.