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Key Highlights

• Crude oil bulls are aiming for a fresh increase above the $85.00 level.
• The price broke a key bearish trend line with resistance at $83.50 on the 4-hour chart.
• Gold prices are consolidating below the $2,350 resistance.
• Bitcoin prices are recovering higher above the $63,500 resistance zone.

Crude Oil Price Technical Analysis

After a major decline, Crude oil prices found support at the $81.20 zone. The price formed a base and recently started a recovery wave above the $82.50 level.

Looking at the 4-hour chart of XTI/USD, the price broke a key bearish trend line with resistance at $83.50. There was a move above the $83.00 zone and the 200 simple moving average (green, 4-hour).

However, the bears are active near the 100 simple moving average (red, 4-hour) and $84.80. On the upside, the price is facing hurdles near the $84.80 level. The next major resistance is near the $85.00 zone, above which the price may perhaps accelerate higher.

In the stated case, it could even visit the $86.50 resistance. If not, the price might dip lower and test the $83.00 support. The first major support on the downside is near the $82.50 level.

The next major support is at $82.00 or, below which the price might test $80.50. Any more losses might send oil prices toward $80.00.

Looking at Gold, the price remained stable above the $2,300 level and the bulls could now aim for a fresh increase above $2,350.

Economic Releases to Watch Today

• Euro Zone CPI for April 2024 (YoY, Preliminary) - Forecast +2.4%, versus +2.4% previous.
• Euro Zone CPI for April 2024 (MoM, Preliminary) - Forecast +0.5%, versus +0.8% previous.
• Chicago Purchasing Manager’s Index for August 2024 – Forecast 44.9, versus 41.4 previous.

Australia's retail sales fell -0.4% mom in March, well below expectation of 0.2% mom.

Ben Dorber, ABS head of retail statistics, highlighted the impact of cost of living pressures on consumer behavior.

He further noted the stagnation in the sector, stating, "Underlying retail turnover has been flat for the past six months and was up only 0.8 percent compared to March 2023."

This represents one of the weakest growth rates on record for this period, excluding the unique economic circumstances induced by the pandemic and the introduction of GST.

Full Australia retail sales release here.

ANZ Business Confidence dropped notably from 22.9 to 14.9 in April. Own Activity Outlook similarly decreased from 22.5 to 14.3.

The survey highlighted escalating cost pressures as a primary concern for businesses. Cost expectations rose from 74.6 to 76.7, marking the highest level since last September. Conversely, wage expectations decreased from 80.5 to 75.5. Profit expectations also worsened, deepening from -3.8 to -9.8.

Pricing intentions, which indicate how businesses plan to adjust their selling prices, increased slightly from 45.1 to 46.9. Inflation expectations showed a marginal decrease from 3.80% to 3.76%.

ANZ analysts pointed to several factors contributing to this environment of cost-push inflation amidst weak demand. Rising oil prices due to escalating tensions in the Middle East, coupled with recent decline in New Zealand Dollar have increased the cost of imports significantly. Additionally, the recent increase in the minimum wage, effective from April 1, although smaller than previous years, has added another layer of cost for businesses.

Full NZ ANZ business confidence release here.

Japan's industrial sector showed a robust rebound in March, with production rising by 3.8% mom, surpassing expectations of a 3.4% increase. This significant uptick represents a strong recovery from the previous month's -0.6% yoy decline.

Production of machinery, including semiconductor manufacturing equipment, jumped by 11.6% mom, while output in electronic parts and devices saw 9.2% mom increase.

According to manufacturers surveyed by Japan's Ministry of Industry, the up trend in industrial output is expected to continue, with projections of a 4.1% rise in April and a further 4.4% expansion in May.

Contrastingly, the retail sector did not fare as well. Retail sales in March increased by only 1.2% yoy, falling short of 2.2% yoy growth anticipated and marking a deceleration from February's robust 4.7% yoy increase. On a month-on-month basis, retail sales contracted -1.2%, reversing the 1.7% gain observed in February.

• GBPUSD rising inside minor correction 2
• Likely to rise to resistance level 1.2700

GBPUSD currency pair continues to rise inside the minor correction 2, which started earlier, when the pair reverse dup with the daily Morning Star form the key support level 1.2335.

The active wave 2 belongs to the intermediate downward impulse wave (C) from the start of April

Give the strongly bullish sterling sentiment, GBPUSD air can be expected to break the daily down channel from March and to rise further to the next resistance level 1.2700 (top of wave (B)).

Markets

Japanese markets were closed for Showa day today. Still, despite (or maybe due to) holiday thinned market conditions, the yen moved sharply up and down this morning. At first, Friday’s post BoJ yen weakening due to persistent policy divergence between the BoJ and colleagues from other developed countries continued and even accelerated. USD/JPY briefly surpassed the 160 barrier, a level not seen since April 1990. However, ‘out of the blue’ the yen regained 5-yen. Was USD/JPY 160 the line in the sand for (hidden) interventions? Japanese authorities see value in keeping their cards close to their chest and didn’t comment, but news agencies, referring to sources familiar with the matter, reported that interventions indeed occurred. Over the next days, in more normal market conditions, we will learn more on how many resources the Japanese Fin Min is prepared to put on the table and how effective their strategy might be to slow the freefall of the currency. The supposed interventions had some brief knock-effects on the dollar overall (DXY currently trades in the 105.60/70 area from 106 early in Asian dealings). However, after all, the impact on the likes of EUR/USD was limited.

Aside from the developments in Japan, preliminary April inflation data from Belgium, Spain and Germany provided a first insight in the potential outcome of the EMU inflation release scheduled tomorrow. Spanish headline inflation slightly reaccelerated to 3.4% from 3.3% on a monthly dynamic of 0.6%. Core inflation slowed slightly more than expected from 3.3% to 2.9%. German HICP inflation showed a similar picture at 0.6% M/M and 2.4% Y/Y (from 2.3%), as higher energy prices put some upward pressure on inflation dynamics. The EMU inflation path might be more bumpy in the months ahead, but today’s data don’t suggest a big upward surprise for tomorrow’s EMU flash CPI release. Such an outcome (2.4% headline, 2.6% core expected) leaves the ECB scenario for a first 25 bps June rate cut intact. After a protracted drift north, US and EMU yields today cautiously build on Friday’s ‘technical correction’. US yields are easing between 1 bp (-2-y) and 2.5 bps (10-y). German yields decline between 3 bps (2-y) and 4.5 bps (30-y). Going into key US and EMU data later this week, we don’t draw firm conclusions from today’s price action. European equites are trading mixed (EuroStoxx 50 -0.3%). The dollar is losing modest ground, maybe partially due to the decline in USD/JPY. EUR/USD rebounded to 1.071, but the technical picture remains neutral for now. In line with last week price action, sterling slightly outperforms the euro. EUR/GBP trades again in the middle of the previous consolidation pattern between 0.85 and 0.86. Markets currently still see less than two 25 bps BoE rate cuts this year compared to almost 75 bps of ECB easing. Contrary to the EMU (GDP data) and the US (ISM, Payrolls, Fed) there are few important UK data scheduled for release this week.

News & Views

The Belgian economy grew by 0.3% in Q1 2024, the National Bank of Belgium’s flash estimate showed today. GBFP as a result was 1.3% bigger compared to the same quarter last year. The initial reading only shows a sectoral breakdown. Value added rose by 0.3% q/q in industry. Activity slowed in the services sector, which nonetheless posted positive growth of 0.3%. Finally, value added in the building industry fell by 0.2%. A separate release from Statbel revealed Belgian inflation picking up from 3.18% to 3.37% in April with energy (from -1.61% to 9.19%) adding the first positive contribution since March 2023. Core inflation declined to 3.26% from 3.85% while a gauge for services inflation proved much stickier (from 5.04% to 4.93%). Inflation for rents has edged down to 5.43% from 5.62% while food (including alcoholic beverages) stood at 0.25% this month, compared to 3.21% last month.

Spanish premier Sanchez is staying in office. The socialist announced that today after withdrawing from all public appearances for several days last week. Sanchez considered quitting after a judge opened a case against his wife Begona Gomez over alleged influence-peddling and corruption on a complaint of an anti-corruption organization with far-right links. Sanchez denounced the move saying the investigation is a right-wing intimidation campaign. His resignation would most likely have toppled the current fragile minority government, resulting in snap elections in an increasingly fragmented political landscape and less than one year after the previous one. Next month is an important one politically, with Catalonia holding regional elections on May 12. It’s not yet clear whether the recent developments have affected Sanchez’s Socialist Party being on course to take power from the incumbent separatists.

Graphs

USD/JPY: yen rebounds on presumed interventions after weakening beyond USD/JPY 160 barrier.

EUR/SEK: Krone stays in the defensive as Q1 contraction suggests need for Riksbank support.

German 10-y yield: taking a breather as inflation data keep scenario for first ECB rate cut in June alive.

EuroStoxx50: still struggling to avoid sell-on upticks pattern

Daily Pivots: (S1) 1.0660; (P) 1.0707; (R1) 1.0739; More...

Intraday bias in EUR/USD stays neutral and outlook is unchanged. On the upside, above 1.0752 will resume the rebound to 55 D EMA (now at 1.0780). On the downside, break of 1.0673 minor support will turn intraday bias to the downside for retesting 1.0601 low.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern to rise from 0.9534 (2022 low). Current fall from 1.1138 is seen as the third leg. While deeper decline is would be seen to 1.0447 and possibly below, strong support should emerge from 61.8% retracement of 0.9534 to 1.1274 at 1.0199 to complete the correction.

Daily Pivots: (S1) 1.2448; (P) 1.2495; (R1) 1.2540; More...

Intraday bias in GBP/USD remains on the upside at this point. Rebound from 1.2298 short term bottom would target 55 D EMA (now at 1.2582). Sustained break there will argue that fall from 1.2892 has completed already, and bring further rise to this resistance. Nevertheless, on the downside, break of 1.2448 minor support will bring retest of 1.2298 low instead.

In the bigger picture, price actions from 1.3141 medium term top are seen as a corrective pattern to up trend from 1.0351 (2022 low). Fall from 1.2892 is seen as the third leg. Deeper decline would be seen to 1.2036 support and possibly below. But strong support should emerge from 61.8% retracement of 1.0351 to 1.2452 at 1.1417 to complete the correction.

Daily Pivots: (S1) 0.9111; (P) 0.9130; (R1) 0.9165; More....

Intraday bias in USD/CHF remains neutral as sideway consolidation continues. On the upside, firm break of 0.9151 will resume the rally from 0.8332 and should target 0.9243 key resistance next. On the downside, break of 0.9085 will turn bias to the downside for deeper pullback.

In the bigger picture, price actions from 0.8332 medium term bottom as tentatively seen as developing into a corrective pattern to the down trend from 1.0146 (2022 high). Further rise would be seen as long as 0.8884 resistance turned support holds. But upside should be limited by 0.9243 resistance, at least on first attempt. However, decisive break of 0.9243 will argue that the trend has already reversed and turn medium term outlook bullish.