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US initial jobless claims rose 18k to 185k in the week ending April 9, above expectation of 175k. Four-week moving average of initial claims rose 2k to 172k.

Continuing claims dropped -48k to 1475k in the week ending April 2. Four-week moving average of continuing claims dropped -30k to 1512k.

Full release here.

https://www.youtube.com/watch?v=URG4k05tiAY

AUDJPY is tiptoeing beneath the established 93.85-94.30 resistance barricade that has muted positive developments ever since the pair corrected to the 91.00 level, which is the 23.6% Fibonacci retracement level of the 80.36-94.30 up leg. Nonetheless, the bullish simple moving averages (SMAs) continue to defend the two-and-a-half-month uptrend from 80.36, which is finding some difficulty in reigniting upside momentum beyond the 6¾-year high.

Currently, the neutral Ichimoku lines are suggesting that positive driving forces have dried up, while the short-term oscillators are reflecting a mild increase in negative momentum. The MACD, north of the zero threshold, is gliding underneath its red trigger line, while the falling RSI has just pierced below the 50 level. Moreover, the negative charge in the stochastic oscillator has returned, promoting bearish moves in the pair. However, the fact that price volatility is subdued as the price is weighing on the 50-period SMA, hints that downward moves lack credibility for now.

In the negative scenario, sellers face an immediate reinforced support section between the 50- and 100-period SMAs at 93.12 and 92.38 respectively. If this region that encapsulates the Ichimoku cloud fails to provide buyers with renewed positive traction, the price may then sink towards the 91.55 low before the bears target a support base highlighted by the 23.6% Fibo of 91.00, and the 90.74 trough from March 31. A deeper retreat in the pair could strengthen negative tendencies, setting the premise for a price drop towards the 38.2% Fibo of 89.00, where the rising 200-period SMA currently resides.

Alternatively, if the price lifts off the 50-period SMA at 93.12 and over the red Tenkan-sen line at 93.39, buyers could rechallenge the 93.85-94.30 critical resistance boundary. In the event the pair navigates successfully beyond the multi-year high of 94.30, the bulls could then pilot for the 95.13 and the 95.64 barriers, which happen to be the 123.6% and the 138.2% Fibonacci extension levels of the price correction from 94.30 until the 90.74 trough.

Summarizing, AUDJPY is sustaining a neutral-to-bullish bias north of the 50- and 100-period SMAs, the cloud, and the 23.6% Fibo of 91.00. That said, a dive in the price below the March 31 trough of 90.74 could accelerate the pair’s downward trajectory.

ECB announced that the Asset Purchase Program "should be concluded in the third quarter. Monthly net purchases under the APP will continue to be EUR 40B in April, EUR 30B in May and EUR 20B in June. The calibration of net purchases for Q3 will be data-dependent and depend on the outlook.

Interest rates are held unchanged with main refinancing rate, marginal lending facility rate and deposit rate at 0.00%, 0.25% and -0.50% respectively. Adjustments to rates will take place "some time" after ending the APP and will be "gradual".

Full statement here.

Russia's aggression in Ukraine is causing enormous suffering. It is also affecting the economy, in Europe and beyond. The conflict and the associated uncertainty are weighing heavily on the confidence of businesses and consumers. Trade disruptions are leading to new shortages of materials and inputs. Surging energy and commodity prices are reducing demand and holding back production. How the economy develops will crucially depend on how the conflict evolves, on the impact of current sanctions and on possible further measures. At the same time, economic activity is still being supported by the reopening of the economy after the crisis phase of the pandemic. Inflation has increased significantly and will remain high over the coming months, mainly because of the sharp rise in energy costs. Inflation pressures have intensified across many sectors.

At today's meeting the Governing Council judged that the incoming data since its last meeting reinforce its expectation that net asset purchases under its asset purchase programme should be concluded in the third quarter. Looking ahead, the ECB's monetary policy will depend on the incoming data and the Governing Council's evolving assessment of the outlook. In the current conditions of high uncertainty, the Governing Council will maintain optionality, gradualism and flexibility in the conduct of monetary policy. The Governing Council will take whatever action is needed to fulfil the ECB's mandate to pursue price stability and to contribute to safeguarding financial stability.

Asset purchase programme (APP)

Monthly net purchases under the APP will amount to €40 billion in April, €30 billion in May and €20 billion in June. At today's meeting the Governing Council judged that the incoming data since its last meeting reinforce its expectation that net asset purchases under the APP should be concluded in the third quarter. The calibration of net purchases for the third quarter will be data-dependent and reflect the Governing Council's evolving assessment of the outlook.

The Governing Council also intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates and, in any case, for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

Key ECB interest rates

The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively.

Any adjustments to the key ECB interest rates will take place some time after the end of the Governing Council's net purchases under the APP and will be gradual. The path for the key ECB interest rates will continue to be determined by the Governing Council's forward guidance and by its strategic commitment to stabilise inflation at 2% over the medium term. Accordingly, the Governing Council expects the key ECB interest rates to remain at their present levels until it sees inflation reaching 2% well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at 2% over the medium term.

Pandemic emergency purchase programme (PEPP)

The Governing Council intends to reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2024. In any case, the future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance.

In the event of renewed market fragmentation related to the pandemic, PEPP reinvestments can be adjusted flexibly across time, asset classes and jurisdictions at any time. This could include purchasing bonds issued by the Hellenic Republic over and above rollovers of redemptions in order to avoid an interruption of purchases in that jurisdiction, which could impair the transmission of monetary policy to the Greek economy while it is still recovering from the fallout from the pandemic. Net purchases under the PEPP could also be resumed, if necessary, to counter negative shocks related to the pandemic.

Refinancing operations

The Governing Council will continue to monitor bank funding conditions and ensure that the maturing of operations under the third series of targeted longer-term refinancing operations (TLTRO III) does not hamper the smooth transmission of its monetary policy. The Governing Council will also regularly assess how targeted lending operations are contributing to its monetary policy stance. As announced, it expects the special conditions applicable under TLTRO III to end in June this year. The Governing Council will also assess the appropriate calibration of its two-tier system for reserve remuneration so that the negative interest rate policy does not limit banks' intermediation capacity in an environment of ample excess liquidity.

***

The Governing Council stands ready to adjust all of its instruments within its mandate, incorporating flexibility if warranted, to ensure that inflation stabilises at its 2% target over the medium term. The pandemic has shown that, under stressed conditions, flexibility in the design and conduct of asset purchases has helped to counter the impaired transmission of monetary policy and made the Governing Council's efforts to achieve its goal more effective. Within the Governing Council's mandate, under stressed conditions, flexibility will remain an element of monetary policy whenever threats to monetary policy transmission jeopardise the attainment of price stability.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

Bitcoin rose 4.3% on Wednesday to end the day around $41,300, Ethereum added 4% to reach 3100, and both remain near those levels early Thursday. The leading altcoins from the top ten have risen in price over the past day from 0.7% (Binance Coin) to 5.4% (Avalanche).

According to CoinMarketCap, the total capitalization of the crypto market has grown over the past 24 hours by 2.3% per day, to $1.92 trillion. The Bitcoin Dominance Index rose 0.3% to 41.0%.

Cryptocurrency index of fear and greed added to Thursday added 3 more points to 28 and moved into a state of “fear”.

Bitcoin was in demand in the US session amid a rebound in stock indices and a decline in the US dollar. The US currency began to correct downwards after a 9-day growth, which contributed to the revival of all risky assets.

Alex Mashinsky, CEO of the Celsius Network crypto-lending platform, said that Bitcoin will soar above $100,000 as early as 2022 because of capital flight from the stock market to cryptocurrencies. According to him, bitcoin began to behave as a protective asset against the backdrop of a deterioration in the general situation in the world.

Crypto lending platform Nexo has announced the release of the world’s first credit card secured in cryptocurrency based on the Mastercard payment system. The card will allow you to spend funds without having to sell crypto assets. They will be used as collateral to secure the loan.

According to IntoTheBlock, the number of long-term investors in the Shiba Inu token has grown 20 times since the beginning of the year. However, hodlers hold only 5% of the total capitalization of the meme token.

The Dollar is correcting on Thursday morning, losing around 1% from Wednesday’s peak, when the dollar index rose to its highest since May 2020. It has caught our attention that Gold and the Dollar have been moving in tandem since the start of the year. A historically rare and short-lived combination that has only intensified recently. Gold and the Dollar have risen back-to-back over the past week, having retreated somewhat from local highs yesterday.

The correlation between the Dollar and Gold is easily explained by the flight of investors away from the conflict. The pull into Gold is more like a knee-jerk reflex. Much of it is speculation that investors will buy Gold as protection against inflation, financial system weakness or geopolitical instability.

However, it is worth realising that the alternative to traditional finance now is not Gold, but cryptocurrencies, which have no storage costs and are better shareable and transferable.

In modern finance, Gold often gets a role of a commodity asset. In other words, we could see this correlation break down as early as the next few days.

And from the fundamental point of view, the chances are higher that the dollar offensive might be renewed in the coming days. On Wednesday and Thursday, we see typical profit-taking before the long weekend after the rally. Behind the Dollar are expectations of extremely hawkish moves by the Fed, as FOMC members are fuelling the idea of a one-time 50-point rate hike in early May and are not ruling out one or two more such moves at subsequent meetings. So far, the economy has allowed the screws to tighten and is even “begging for it”.

At the same time, we should not forget that markets, especially the currency markets, are a waiting game. The Dollar climbed so high on a wave of extreme expectations. Their easing has the potential to trigger a reversal.

The dollar index hit bottom at the end of May last year. And we wouldn’t be surprised if, at the end of the May 4 meeting or after the next employment release on May 6, the Dollar hits the ceiling, as investors will gradually lock in profits and roll back expectations. The Dollar’s reversal may push Gold prices to new historic highs above $2100 by the end of this quarter and exceeds $2500 before this year ends.

The USDJPY stands at the back foot on Thursday, but still with limited downside, after Wednesday’s shooting start indicated that bulls might be running out of steam.

Traders reduced pace ahead of Easter holiday, which usually causes lower volumes, with price adjustment seen as the main scenario so far.

Daily tech show fading bullish momentum and south-heading stochastic after reversing from overbought territory that adds to signals of consolidative/corrective phase, while weekly studies are also overbought, as the pair is on track for the sixth consecutive bullish weekly close, but so far without clearer signals of reversal.

Weaker US yields weigh on dollar today, however underlying uptrend is intact, with mild pullback likely to precede fresh push higher, as the greenback remains inflated by global uncertainty.

Initial support lays at 124.76 (Tuesday’s low) followed by more significant rising 10 DMA (124.25) and 20DMA (122.88) which should contain deeper dips and keep larger bulls in play.

Only extension and close below 121.27 (Mar 31 through) would sideline bulls and signal deeper correction.

Res: 125.69; 126.00; 126.31; 126.55.
Sup: 125.08; 124.76; 124.25; 123.79.

Cable keeps positive tone in European trading on Thursday, following almost 1% advance on Wednesday (the biggest one-day gains since 9 July 2021).

Repeated failures to clearly breakthrough 1.30 support resulted in strong bounce that generates of initial signal of a double-bottom formation on daily chart, although stronger advance is still needed to give more evidence of a pattern formation.

Wednesday’s bullish engulfing and today’s extension above 50% retracement of 1.3298/1.2972 bear-leg marks initial reversal signal, which looks for confirmation on close above 1.3135 (50% retracement) to expose next key levels at 1.3174 and 1.3221 (Fibo 61.8%/Fibo 76.4% respectively).

Daily studies are improving, but still lacking clearer direction signal as 14-d momentum continues to head north and approach the centreline which separates negative from positive territory and MA’s are mixed.

Near-term bias is expected to remain with bulls if the pair registers repeated close above 1.3097 (Fibo 38.2% of 3298/1.2972), while failure here and return below 10DMA (1.3075) would revive bears.

Res: 1.3147; 1.3174; 1.3221; 1.3273.
Sup: 1.3097; 1.3075; 1.3049; 1.3000.

The euro has posted slight gains ahead of today’s ECB policy meeting and is trading at 1.0916 in the European session.

ECB expected to maintain rates

We are seeing central banks respond to spiralling inflation with tighter policy. On Tuesday, both the Reserve Bank of New Zealand and the Bank of Canada implemented super-size increases of 0.50%, although the Canadian and New Zealand dollars moved in different directions after the moves. The ECB holds its policy meeting later today and is expected to maintain rates, even though, in the words of ECB President Lagarde, this will put the ECB “out of sync” with the Federal Reserve.

The eurozone has not been immune from rising inflation, which has galvanized the Fed and BoE into increasing rates. Earlier this week German CPI for March rose to 7.3% YoY, up from 5.1% gain in February. Eurozone inflation also accelerating, but the Ukraine war has caused plenty of uncertainty and turbulence in the markets, which has dampened any expectations of any tightening by the ECB in the short term. Western European nations could impose additional sanctions on Moscow, but such a move would also hurt growth in the eurozone and complicate things for ECB policymakers.

Investors will be keeping a keen eye on the rate statement and Lagarde’s press conference. Will the central bank hint that rate increases could be coming later in the third or fourth quarters? Or will the Bank send a message that it is not prepared to tighten policy while a war is raging in the eurozone’s backyard? If the ECB wants to send out a hawkish message even though it is maintaining rates, it could announce that it may raise rates as QE is scaled back. This would be a shift in guidance and could boost the euro, as the current stance is that the Bank will not raise rates prior to winding up QE.

EUR/USD Technical

• There is resistance at 1.1008 and 1.1141
• 1.0838 is a monthly support level. Below, there is support at 1.0705