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Daily Pivots: (S1) 0.9635; (P) 0.9669; (R1) 0.9722; More....

USD/CHF's rally continues today and intraday bias remains on the upside. Current up trend should target next medium term projection level at 0.9864. On the downside, below 0.9669 minor support will turn intraday bias neutral and bring consolidations. But downside of retreat should be contained above 0.9459 resistance turned support to bring another rally.

In the bigger picture, down trend from 1.0342 (2016 high) should have completed with three waves down to 0.8756 (2021 low) already. Rise from 0.8756 is likely a medium term up trend of its own. Next target is 100% projection of 0.8756 to 0.9471 from 0.9149 at 0.9864. This will now remain the favored case as long as 0.9459 resistance turned support holds.

Daily Pivots: (S1) 1.2779; (P) 1.2816; (R1) 1.2855; More...

USD/CAD's rally continues today and intraday bias remains on the upside for 1.2899 resistance. Break there should resume the larger rise from 1.2005 to 1.3022 fibonacci level. Decisive break there will carry larger bullish implications. On the downside, below 1.2776 minor support will turn intraday bias neutral and bring consolidations. But further rally will remain in favor as long as 1.2675 resistance turned support holds.

In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend from 1.4667 and that carries larger bearish implications too.

It’s up, up and away for dollar/yen, which has punched above the symbolic 130 today, the first time that has occurred since 2002. USD/JPY is trading at 130.40, up 1.53% on the day.

Japan MOF issues warning over yen

The Bank of Japan reiterated its commitment to ultra-low rates at its policy meeting on Thursday. The BoJ pledged to keep interest rates at “present or lower levels”. Notably, the central bank said it would continue to buy unlimited amounts of 10-year JGBs daily, rather than on an ad-hoc basis, in order to cap yields at 0.25%. The move to cap yields has worked, but the price has been a plunge in the yen’s value. USD/JPY rose as high as 131.01 earlier in the day, and has risen a staggering 7.11% in the month of April.

The BoJ and Japanese Ministry of Finance (MOF) have done little more than jawbone about the slide in the yen, but there has been speculation that the 130 level could be the ‘line in the sand’ which would trigger intervention in the currency markets. The MOF responded on Thursday with a strong warning, saying that the recent moves are “extremely worrying” and that the government would take “appropriate action”. Perhaps the MOF ought to take a look at BoJ’s Governor Kuroda’s statement after the policy meeting that a weak yen was good for Japan’s economy. This has been Kuroda’s view all along, but it’s hard to get worked up about MOF threats when the BoJ is winking to the markets that it’s fine with a weak yen.

The BoJ is projecting that CPI will rise to 2% in April, but the main drivers of inflation are fuel costs and mobile phone fee cuts, rather than wage growth or stronger demand. The BoJ is viewing inflationary pressures as transitory and plans to maintain its ultra-loose policy.

USD/JPY risk remains heavily tilted higher, primarily because of the US/Japan rate differential, which continues to widen. The Federal Reserve is in a very aggressive mode, with an oversize half-point hike almost a given at next week’s policy meeting. Fed Chair Powell and other FOMC members have telegraphed that further 0.50% hikes are on the table, as the Fed prepares to come out swinging in order to subdue inflation.

USD/JPY Technical

• USD/JPY has broken above resistance at 129.87. Above, there is resistance at 129.89 and 131.22
• USD/JPY has support at 128.07 and 126.74

The Reserve Bank of Australia announces its policy decision on Tuesday at 04:30 GMT. Australia's currency was on the verge of collapsing Thursday owing to fears of an impending European financial crisis and a weakening in China's economy. Even if the domestic economy is strong, it's difficult to imagine the RBA will hike rates recklessly in the face of China's economic crisis.

Will the RBA raise rates or not?

A 15-basis-point rise in the Australian cash rate is all but guaranteed for next week's meeting, according to the futures market, and with the inflation report suggesting that the central bank may be 'behind the curve', they may feel driven to act. How much higher will the RBA's cash rate be if they do move? There are two options: 15% to 0.25%, or 40% to 0.50%.

However, the former will just confirm what the market has already priced in, while also sending a signal that the RBA appears to be moving more quickly than expected before the release of the inflation report. Having said that, larger rate hikes have already been priced in for the future, making it difficult to see much upside for the Australian dollar in this regard at this point.

As a result, there are two possibilities which will have a significant response. The first is that a 40-basis point rate hike will assist to support the Australian dollar, although the momentum may be moderated by more negative risk sentiment if this is indeed the case. The second option is that the RBA decides to postpone the decision until June, which will most likely have a minimal impact on the aussie.

Two out of Australia's main four banks predict that the benchmark cash rate will be raised next week, with a third predicting that the likelihood of an increase will increase following Wednesday's unexpectedly high inflation data.

Inflation surprises earlier in the week

Australian inflation hit 5.1% in the first quarter, leading to speculation that the Reserve Bank may panic and hike interest rates more quickly. The RBA has already delivered a quarter-point rate increase, and markets forecast another nine before the year is over.

In any event, investors are more anxious about Chinese stock market lockdowns and falling stock markets than they are about the Reserve Bank of Australia's (RBA) rate hikes, which have already been factored into their valuations.

Aussie turns higher after 11-week low

Against the US dollar, the aussie is currently holding above the eleven-week low of 0.7074 that posted earlier in the day. If the RBA doesn’t bring forward its rate hike, a move back towards the 0.7050-0.6990 area is very possible ahead of the 18-month low of 0.6965.

In the bullish scenario, aussie/dollar could make a push up towards the 0.7165 resistance before attempting to reach the 200-day simple moving average (SMA) at 0.7287. Even higher, the market could meet the 0.7457 hurdle.

All in all, if there is a drop below the 18-month low, the market will switch to bearish in the medium-term.

The currency market has gone a little crazy. Key currency pairs with the dollar have reached significant round levels, attracting attention, and the extent of US currency appreciation continues to pick up speed.

EURUSD on Thursday morning fell to 1.05, the last intermediate round level before parity. However, the 1.06 that the bears took yesterday is more important from a historical perspective. The current currency market dynamics look like a final capitulation of the bulls on the euro.

GBPUSD has fallen back to 1.25, taking back more than 60% of the amplitude of the pandemic rise. This is also a crucial intermediate stage before the last defensive line at 1.2000, which has repeatedly stopped the sellers’ onslaught over the previous six years.

The USDJPY has taken another round figure, breaking 130 on Thursday morning. The last time the yen was this cheap was in April 2002.

The dollar index shows the sharpest increase since the beginning of the week in more than two years. Last time we saw such dollar performance was in a mix with a crash in the stock markets and an all-out flight into short-term US government bonds.

But now we see the opposite, with stock indices gaining for the second day in a row, finding support near last month’s lows. We are not catching a flight to the ‘defensive dollar’ but rather an interest in a ‘strong dollar economy’.

Interest in the US currency is growing out of a combination of confidence in a sharp Fed rate hike in the coming months (which other countries’ peers will not be able to do) and a continued macroeconomic solid performance at the same time. The second hypothesis is likely to be put to a severe test in the coming weeks, but right now, it is a thesis that is working for the USD.

Perhaps the only thing that can restrain dollar buyers now is the Fed, but the American Central Bank has already started a week of silence before the next FOMC meeting. Therefore, we will not know how the FOMC will react to a strong dollar until next Wednesday.

There are hopes that the Fed will ease expectations of a key rate hike in the coming months because a sharp rate hike may come as an economic shock and could be a spoke in the wheels of an economy that is moving at full throttle.

At the same time, it is unlikely that strengthening the US currency will alarm the regulator as it helps to bring down inflationary pressures and inflation expectations, which is the number one target for monetary policy right now.

Spot gold fell to 10-week low on Thursday registering a firm break of psychological $1900 level and a marginal close below important technical support at $1890 (Fibo 61.8% of $1780/$2070 / lows of Mar 29 and Apr 25) on Wednesday that added to negative signals.

The yellow metal lost traction after recovery failed at $2000 barrier in mid-April and came under pressure from surging dollar on prospects for more aggressive Fed that hurt demand, along with lockdowns in China due to new wave of Omicron variant infections.

Probe below $1900/$1890 pivots cracked support at $1875 (100DMA) but need to register a clear break lower (after attacks at $1900 zone failed several times in past two months) to signal continuation of the bear-leg from $1998 and open way for extension towards $1848 (Fibo 76.4%), possibly to $1833 (200DMA).

Res: 1900; 1907; 1911; 1925.
Sup: 1875; 1872; 1848; 1833.

The USDJPY accelerated sharply higher on Thursday and broke above psychological 130 barrier, to hit 20-year high and test pivotal Fibo barrier at 130.65 (76.4% retracement of 1998/2011 147.68/75.55 downtrend.

The Japanese yen is in strong downtrend for over one year, with fresh increased pressure coming from the Bank of Japan’s decision to keep ultra-low interest rates and maintain its massive stimulus, diverging from its major peers which already started shifting towards tighter monetary policy.

The pair advanced nearly 1.7% in the Asian and early European session on Thursday, with sustained break above 130.00/65 pivots, to generate fresh bullish signal for further rally.

Technical studies on daily chart are in full bullish setup and support the action, along with overall dollar-supportive fundamentals, as geopolitical tensions rise and continue to prompt traders into safe-haven greenback.

US GDP data for the first quarter of 2022 are the key event today, with estimation for the US economy’s growth to reduce pace to 1.1% from 6.9% in Q4, however, previous data point to optimistic view that the economy would stay on recovery track.

This would add to positive signals for the greenback, which remains supported by expectations for the Fed’s aggressive approach to the monetary policy tightening in the coming months and safe-haven buying.

Bulls are on track for the second consecutive strong monthly advance and focus Jan 2002 high at 135.16, violation of which would unmask 1998 peak at 147.68.

Broken 130 level reverted to initial support, followed by previous high of Apr 20 at 129.40 and rising 10DMA (128.15).

Res: 130.92; 131.28; 131.86; 132.80.
Sup: 130.00; 129.40; 128.98; 128.33.

Bitcoin found buyers’ support Wednesday morning after touching levels below $38K, followed by a relatively calm rise to $39.4K as of Thursday morning with a strengthening of 2.4% in 24 hours. Ethereum added 1.4% over the same interval, with the other leading altcoins in the top 10 showing mixed dynamics, ranging from a 0.6% decline (XRP) to a 2% gain (Solana).

The cryptocurrency Fear & Greed Index was up 3 points to 24 by Thursday but remains in “extreme fear”.

Total cryptocurrency market capitalisation, according to CoinMarketCap, rose 1.6% overnight to $1.8 trillion. Bitcoin again finds itself one step ahead of the cryptocurrency market, being not only its largest representative but also its locomotive. Bitcoin’s dominance index has added 0.3% to 41.5%.

Short-term, Bitcoin has gained support on the decline to an important support area, withstanding an onslaught of sellers since late February. But at the same time, it remains below the support line of the last ten months, hinting at a pause in the decline but not a final victory for the buyers.

For its part, bitcoin has been helped by the US stock market, where buyers have stepped up on the S&P500’s decline in the February and March lows. The stock market is now acting as a guide for the first cryptocurrency.

However, it is hardly fair to say that the cryptocurrency market is entirely secondary. There are some reasonably internal solid drivers out there.

For example, bitcoin supply in the market has been falling steadily, reaching late 2018 levels, Arcane Research notes. Active BTC hoarding is causing a shortage in the market and pushing exchange prices upwards. Virtually, bitcoin holders are getting richer from these community tactics.

The crowd is buying back the decline to local lows and intends to hold bitcoin for some extended period.

Fort Worth in Texas was the first US city to start mining bitcoin at the initiative of a millennial mayor. In doing so, the city promises not to sell the coins.

US crypto investor Grayscale said it is considering entering the European market amid an expanding market for digital assets.

The mayor of Buenos Aires has called for blockchain technology to make tax collection more efficient.

US research firm NBER reported that 60% of Salvadorans stopped actively using the Chivo wallet after spending a welcome bonus in BTC. This result is called a failure of the bitcoin experiment.

The developers of the Cardano blockchain have increased the block size by 10%, to 88Kb. This should improve the bandwidth and performance of decentralised applications on the network.

WTI oil futures are trading around the mid-Bollinger band, which is currently north of the 100.00 border, after the commodity found positive traction prior to reaching the lower Bollinger band. The climbing longer-term 100- and 200-day simple moving averages (SMAs) are defending the broader bullish structure, while the 50-day SMA has yet to reflect any dominance in negative forces.

The short-term oscillators are not indicating any definitive driving forces in the black liquid, endorsing a neutral tone for now. The MACD and the RSI, which are both static around their neutral thresholds, are not transmitting any directional messages, while the positively charged stochastic oscillator is promoting positive moves in the commodity.

Noteworthy, is the recent consolidation’s range, which is tightening with the price recording lower highs and higher lows. Furthermore, the squeezing of the lower and upper Bollinger bands is inferring that a surge in volatility is anticipated, which suggests a more profound move in the price may unfold in the near-term.

For positive developments to be rekindled, the price would need to overstep the 50-day SMA and the adjacent 103.00 barrier, which may then reveal the next resistance obstacle at 105.40. If bullish forces intensify, the price could then challenge the upper Bollinger band at 106.93 before confronting the 109.17 nearby high. Successfully recapturing the area beyond this high may cheer buyers to propel for the 114.08 resistance mark and the high of 116.62, recorded on March 24.

Alternatively, if the 50-day SMA and the 103.00 handle curb advances, immediate support could emanate from the mid-Bollinger band at 100.65 and the 100.00 border. Dropping lower, the price may then target the 95.27 trough and the lower Bollinger band beneath at 94.66. Next, the crucial 90.05-92.66 support section could put selling pressures to the test should sellers retain command. A break of this key barricade may then reel in the 87.45 trough.

Summarizing, WTI oil futures are exhibiting a neutral picture with a lack of directional impetus. That said, for a clearer direction to evolve, the price would need to either pilot past the 109.17 high or sink beyond the critical 90.05-92.66 support foundation.

Offshore Chinese Yuan's decline resumes today with USD/CNH hitting as high as 6.637 so far. Earlier this week, PBoC announced to cut the foreign exchange reserve ratio by 100bps from 9% to 8%. That was aimed providing liquidity to stabilize exchange rate. But so far the impact was very brief.

Capital was seen flowing out of China in accelerated manner since march, due to divergence in policies with other major central bank. Russia invasion of Ukraine, and the risk of tough spread of tough Shanghai like lockdowns added additional uncertainty.

Nevertheless, technically, USD/CNH is now at an important resistance of 38.2% retracement of 7.1961 (2020 high) to 6.3057 (2022 low) at 6.6458. Strong resistance could be seen at the current level to cap upside. Break of 6.544 support would indicate short term topping. However, sustained break of 6.6458 would be a significant development, which could push USD/CNH further to 61.8% retracement at 6.8560.