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Change in the Nasdaq100. The selling on the Nasdaq100 from 12 to 19 April, which sent the index down more than 7%, has stimulated buying interest this week. They see falling prices as an opportunity to buy stocks at a reduced cost.

RSI dynamics. The rebound of the index coincided with the recovery of the RSI indicator on daily charts after it reached the oversold zone (below 30). Nevertheless, the April correction can be seen as a normalisation after a period of overbought conditions.

The Fear and Greed Index remains in the “fear” zone, with a low of 32 last week and a subsequent recovery to 40. A similar stock market correction lasting three months last year also included periods of improving sentiment as part of an overall downtrend.

Current Situation and Expectations. The Nasdaq100 lost about 1.2% on Wednesday, and the drop from high to low in futures was 2% in 8 hours. The 17700 level has become resistant again. Changes in Fed key rate expectations and investor inertia backed by macroeconomic reports could lead to a repeat of last year’s market pattern with a multi-month correction.

Potential downside targets. The area of the 200-day moving average, passing through 16300 and pointing upwards, could be a potential downside target. There is more chance of support in the 15800-16000 range, where the market encountered strong resistance in July 2023 and pushed back for upside in November.

The Japanese yen continues to lose ground on Thursday. In the European session USD/JPY is trading at 155.61, up 0.17%. Earlier, the yen dropped to a 34-year low of 155.74.

Friday will be a busy day out of Japan. Tokyo Core CPI, which excludes food, is a key leading indicator of nationwide inflation trends. It is expected to drop to 2.2% in April, down from 2.4% in March. The Tokyo core-core rate, which excludes food and energy, is also expected to fall, from 2.9% in March to 2.7% in April. The March reading marked the first time that the core-core rate fell below 3% since November 2022.

Inflation played a key factor in the Bank of Japan’s historic decision in March to raise interest rates out of negative territory. The BoJ wants to see service inflation and wage growth to rise in order to ensure that inflation remains sustainable at the 2% target.

BoJ expected to stand pat

The Bank of Japan meets on Friday as the Japanese yen continues to lose ground. The yen has lost about 10.4% against the US dollar in 2024 and this sharp descent in such a short period has set off alarm bells in Tokyo. The BoJ’s tightening in March hasn’t stopped the bleeding, as the BoJ has said that it will maintain an accommodative policy and the US/Japan rate differential remains hasn’t narrowed as the Fed has delayed rate cuts.

The BoJ is expected to maintain policy settings at the meeting but Governor Ueda may sound hawkish in order to provide some support for the yen. The meeting could turn out to be a non-event but the threat of intervention from the Ministry of Finance is sure to be on the minds of investors.

The US releases the initial estimate for GDP for the first quarter. The market estimate stands at 2.5% y/y, compared to 3.4% in Q4 2023. The US economy has been robust and rising inflation has not only delayed rate cuts but there is even talk that the Fed could raise rates in order to put the brakes on inflation.

USD/JPY Technical

• USD/JPY tested support at 155.30 earlier. Below, there is support at 154.13
• There is resistance at 155.96 and 157.13

In recent trading sessions, the dollar has been trading quite differently to leading currencies. Thus, the yen is reaching historical lows, European currencies have managed to correct, and the Australian and Canadian dollars are testing strategic supports.

USD/JPY

The absence of currency interventions from the Bank of Japan and strong macroeconomic data from the United States are pushing the USD/JPY pair to new levels, above which the price has not risen since 1990. However, in the coming trading sessions the situation may change dramatically:

• Today at 15.30 (GMT +3:00) US GDP data for the first quarter will be published
• Tomorrow at 5.30 (GMT +3:00) a meeting of the Bank of Japan will take place, at which a decision on the base interest rate will be announced.

This week, Japanese Finance Minister Shunichi Suzuki issued what is now the strongest possible warning about the possibility of intervention. "I will not deny that these events have laid the groundwork for Japan to take appropriate action (in the foreign exchange market), although I will not say what those actions might be," the official said.

According to technical analysis of USD/JPY, the pair is in a phase of exponential growth, which can be interrupted at any significant resistance. If a downward pullback begins, the price may drop to 154.70-1.53.60.

USD/CAD

The rise in commodity prices contributed to the start of a corrective pullback in the USD/CAD pair. On the daily timeframe, one can observe the development of the dark clouds combination, which was mentioned in a recent review. From the technical analysis of the USD/CAD pair it follows that the price found support at 1.3640; a repeated rebound from this level could lead to the pair returning above 1.3700. If the price consolidates below 1.3640-1.3620, a larger downward correction in the direction of 1.3480-1.3360 may begin.

News that may affect the pair's pricing:

• today: 15.30 (GMT +3:00) weekly data on the number of initial applications for unemployment benefits in the US
• tomorrow: 15.30 (GMT +3:00) publication of the basic price index of personal consumption expenditures in the USA for April

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Market picture

Over the past 24 hours, the cryptocurrency market has lost more than 3.5%, falling to a capitalisation of $2.37 trillion. Bitcoin shows a decline with a similar amplitude; Ethereum lost less than 3%, while BNB added 0.1%, and Solana fell by 6.5%.

On Wednesday, Bitcoin retreated significantly from its 50-day moving average, which we see as an important manifestation of bearish strength. Most crypto traders clearly took this signal.

For example, on the daily charts of Solana and Cardano, the rebound over the past ten days now looks like a tactical retreat by the bears, who decided to sell the market again on Wednesday. It is worth keeping a close eye on whether selling can bring the price below the previous local lows, around $125 for Solana and $0.4 for Cardano.

News background

The possibility of creditors of bankrupt platform Mt.Gox selling 142,000 BTC (over $9bn) in the coming weeks could “spook the market” and put pressure on bitcoin, according to K33 Research. Mt.Gox is expected to distribute its assets of 142,000 BTC, 143,000 BCH and 69 billion yen to customers by 31 October 2024. Lenders will start receiving bitcoins as early as next month.

After the halving, demand for Bitcoin will be five times the supply due to the reduction in daily issuance volume, Bitfinex expects.

After the fourth halving, Bitcoin has finally displaced gold as the most deficit asset in the context of rising supply, Glassnode noted. Capital continues to flow into BTC despite “volatility, negative headlines and cyclical drawdowns”.

Standard Chartered, an investment bank, retreated its positive outlook on the spot Ethereum-ETF and now doubts the SEC will approve the instrument in May. The bank reiterated its previous forecast of $150K for Bitcoin at the end of 2024 and $8K for ETH. Cryptocurrencies may resume growth after the market’s congestion of longs is lifted.

Coinbase is launching a $15 million television advertising campaign to promote the benefits of crypto payments. The exchange will air three spots on four TV channels during the NBA playoffs broadcasts.

According to Bloomberg, trading of a spot bitcoin-ETF from Bosera Capital and HashKey Capital on the Hong Kong Stock Exchange will start on 30 April. The spot bitcoin-ETF was approved by the Hong Kong Securities and Futures Commission on 15 April.

Strong rally extends into fourth consecutive day and retests pivotal barriers at 0.6526/29 (converged 200/55DMA’s) which capped attack previous day.

Fresh strength offsets for now bearish signal on formation of daily inverted hammer candlestick on Wednesday, left after upside rejection and subsequent pullback.

Aussie dollar was boosted by hotter than expected Australia’s inflation and keeps bullish sentiment, however, reaction at key barriers at 0.6526/36 zone (converged 200/55DMA’sc / Fibo 61.8% of 0.6644/0.6362 bear-leg) is likely to define near-term direction.

Daily studies show overbought stochastic and 14-d momentum still in the negative territory, which may negatively impact near-term action, with repeated failure to clear pivotal barriers, to add to warnings about possible recovery stall.

On the other hand, daily cloud is above the price and twists next week that might be magnetic.

Markets await release of key US economic data today (GDP) and on Friday (PCE) expecting more details about the condition of the US economy and inflation and fresh signals about Fed’s next steps on monetary policy.

Res: 0.6536; 0.6552; 0.6571; 0.6585.
Sup: 0.6500; 0.6469; 0.6453; 0.6428.

• USDJPY trades at its highest level since April 1990
• Momentum indicators flag extremely overbought conditions
• For now, Japanese authorities seem reluctant to intervene

USDJPY has been in a steady uptrend after finding its feet near the 200-day simple moving average (SMA) in early March. On Thursday, the pair posted a fresh 34-year peak, extending its rally within a territory that the Japanese authorities were expected to defend.

Should bullish pressures persist, the price could storm to fresh multi-year highs before it challenges 154.64, which is the 123.6% Fibonacci extension of the 151.90-140.24 downleg.  Further upside attempts could then come to a halt at the 161.8% Fibo of 159.10. Conquering this barricade, the bulls may attack the April 1990 high of 160.40.

On the flipside, if the pair experiences a pullback, initial support might be found at the 123.6% Fibo of 154.63. Lower, the November 2023 high of 151.89 could prove to be the next barrier for the bears to overcome. Failing to halt there, the price could descend towards the April support of 150.76.

In brief, USDJPY has been posting a series of consecutive multi-year highs, but the advance is starting to look overdone from a technical perspective.

• US 100 cash index is in the red, a tad below the 100-day SMA
• Market sentiment remains bearish ahead of key US data
• Momentum indicators mostly bearish; all eyes on the stochastic

The US 100 cash index is in the red again today, trading a tad below the 100-day simple moving average (SMA) and around 6% lower from its recent all-time high. Despite the moderately positive earnings round, the market momentum remains negative ahead of some key US data prints that could gravely affect the overall rhetoric at the May 1 Fed meeting.

This negative sentiment is depicted in most momentum indicators. More specifically, the Average Directional Movement Index (ADX) is pointing to a decent bearish trend in place, and the RSI continues to hover comfortably below its midpoint. Interestingly, the stochastic oscillator is trying to break above both its moving average and oversold territory (OS). Should this move pick up pace, it could be seen as a strong bearish signal and thus open the door to a lower low in the US 100 index.

Should the bears remain confident, they could try to push the US 100 index below the 16,767-17,007 range that is populated by the December 28, 2023 and November 22, 2021 highs. Lower, the busy 15,708-16,050 area could be tested provided of course that the bears manage to overcome the key 200-day SMA at 16,333.

On the flip side, the bulls are trying to retake the market reins and lead the US 100 index above the crucial 17,443-17,797 area that is defined by the January 24, 2024 high and the 100-day SMA. They could then gradually test the resistance set by the 17,937-18,041 area, and if successful, open the door for a move towards the recent all-time high.

To sum up, US 100 index bears are preparing for a new downleg, especially if the incoming US data remains strong, aiming for a lower low and to gradually lay the foundations for a more protracted correction.

The USD/JPY pair reached an all-time high on Thursday, touching the 155.50 level. This development comes as the Bank of Japan (BoJ) starts its two-day monetary policy meeting with widespread expectations that the interest rate will remain unchanged at zero. Investors are keenly watching for any aggressive signals from the BoJ, as further declines in the yen could prompt Tokyo to intervene in the currency market. However, any such intervention is expected to provide only a short-term respite for the yen.

The primary driver behind the yen's weakness remains the significant disparity in monetary policies between the Bank of Japan and the US Federal Reserve, particularly regarding interest rates. The current situation will likely persist if there is no shift in these policies.

Last week, BoJ Governor Kazuo Ueda indicated at the G-20 summit that the regulator might consider raising rates if the yen's weakness leads to a sustained increase in import prices. The BoJ is closely monitoring inflation trends, and should the consumer price index approach the 2% target, the bank may adopt a more decisive stance.

The yen has been on a consistent downward trajectory since 13 March this year, showing few signs of interruption.

USD/JPY technical analysis

On the H4 chart, USD/JPY found support at 153.65, and the fifth wave of growth is unfolding. The pair is expected to reach 155.85 soon. Following this, a corrective move to at least 154.60 (testing from above) is anticipated, potentially followed by further growth towards 156.56. This target represents the primary objective of the growth wave. This bullish scenario is technically supported by the MACD oscillator, whose signal line is above zero and trending upwards.

On the H1 chart, USD/JPY has established support at 154.55, with the upward structure aiming for 155.85. Currently, the growth to 155.73 has been executed. A slight retracement to 155.20 (testing from above) may occur next. After reaching this level, the likelihood of an ascent to 155.85 will be reassessed. This technical outlook is confirmed by the Stochastic oscillator, whose signal line is currently above 80, poised for a drop to around 50.

USDJPY hits new multi-decade highs, following eventual break of key 155.00 zone, where the action was capped in anticipation of intervention from Japanese authorities at these levels.

Fading intervention fears unleashed bulls which now focus targets at 156.36 and 157.73 (Fibo projections) with stronger bullish acceleration to open way for attack at psychological 160 barrier (last time traded in June 1990).

Confirmation of strong bullish signals generated on break of pivotal Fibo barrier at 152.60 (38.2% of larger 277.65/75.55 downtrend) and 155.00, which requires monthly close above these levels, would add to strong bullish stance.

Technical studies are bullish on all larger timeframes (day/week /month) and contribute to overall positive outlook, boosted by dollar-favorable fundamentals.

However, some corrective actions should be anticipated in the near term, as studies are overbought.

Limited pullback should offer better opportunities to re-enter bullish market, with initial support at 154.65 (10DMA) followed by 153.28 (20DMA) and key 152.60 (broken Fibo barrier) which should contain extended dips to keep larger bulls intact.

Res: 156.36; 157.73; 159.11; 160.00.
Sup: 155.00; 154.65; 153.28; 152.60.

ECB Executive Board Member Isabel Schnabel acknowledged that the consensus that the path to disinflation is proving to be "quite bumpy," especially as the process is in its "last mile". The "biggest concern" is the persistent inflation within the services sector, which remains stubbornly high.

Schnabel emphasized the importance of closely monitoring unit labor costs. She noted at a conference today, "One aspect that we are looking at very vigilantly is the development of unit labor cost."

"Wage growth remains relatively strong but it seems to be gradually easing in line with what we have in our projections," she added.

However, Schnabel expressed particular concern over another crucial economic indicator: "The more concerning part is productivity growth," she remarked, as Eurozone has been experiencing negative productivity growth for several quarters.