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The EUR/USD pair rose to 1.0707 on Wednesday, driven by increased local risk appetite and the belief that the currency was significantly oversold against the US dollar. This resurgence indicates a temporary rebalancing in the currency market.

In the US, newly published statistics provide fodder for economic analysis. Sales of new homes in March showed a robust increase of 8.8% month-on-month, climbing to 693,000 from February’s 637,000, surpassing expectations. The year-on-year comparison also reflected strength with an 8.3% increase. Additionally, the weighted average price of a sold house in the US rose to USD 524.8 thousand from USD 488.6 thousand in February, pointing to a market that is still vibrant despite elevated interest rates.

These indicators are inherently pro-inflationary, suggesting that consumer behaviour has adapted well to elevated interest rates. Continued activity in the housing market is likely to sustain inflationary pressures in the US for an extended period. If interest rates were to be lowered, the attractiveness of buying property would increase further, prompting the Federal Reserve to keep higher rates to temper economic overheating.

Despite substantial efforts by the Fed to stabilise price pressures, the US economy shows a high degree of resilience to changed conditions. This adaptability is a mixed blessing, maintaining economic vitality but complicating inflation management.

As long as the Fed keeps interest rates at the current peak of 5.5% per annum, the US dollar will likely retain its strength. Any current weakening of the dollar is seen as a temporary adjustment rather than a trend reversal.

EUR/USD technical analysis

On the H4 chart, the EUR/USD pair formed a consolidation range around 1.0666. A correction to 1.0713 occurred after the market exited the range on the upside. The pair is expected to decline to 1.0660 for a retest from above before potentially developing another growth structure towards 1.0733. The movement from 1.0601 is considered a correction of the last decline wave. After completing this corrective phase, a new downward wave to 1.0585 may begin. This outlook is supported by the MACD indicator, where the signal line is below zero but ascending, while the histograms are at maximums, poised for a decline.

On the H1 chart, after fulfilling the local correction target at 1.0713, a decline to 1.0660 is anticipated. Subsequently, the development of a growth wave to 1.0733, the main correction target, may occur. The Stochastic oscillator, currently below 50, is expected to drop to 20, supporting the potential for further adjustments before any upward movements.

The US dollar’s gains stalled last week, and on Tuesday, it lost a third of a cent against a basket of major currencies to 105.4 from a peak of 106.3 the week before.

Yesterday’s pullback more closely resembles the start of broader profit-taking than a reversal of the dollar’s upward trend since early March.

The dollar was somewhat overheated after the 10-12 April spike. In addition, earlier this month, the DXY entered the turning area of last October. As it often happens, the ascent to the previous extremums is fast, but their overcoming indicates a change of the market regime, which happens only after a significant shakeout.

The formal reason for the weakening of the dollar on Tuesday was the positive dynamics of stock indices and the strengthening of the pound, with less certainty for a soon rate cut from BoE.

Now, there are higher chances for deepening the DXY correction with the potential to go down to 105.3 or even to the area of 104.8-105.0, where many turning points are concentrated. Such a plunge would increase the appeal of buying the dollar against major currencies, removing the technical overheating.

The ability to rise from current levels opens a fast road to the April highs near 106.3, with the finale of this journey near 108.0. The bearish scenario for the dollar, in our view, will be activated in the event of a failure under 104.8, forcing a search for support in the 103.80-104.0 area.

• WTI futures develop within a bullish channel since December
• Price retreats from a 6-month high but finds support at 50-day SMA
• Oscillators suggest intensifying positive momentum

WTI oil futures (June delivery) have been in a constant uptrend since bottoming out at 69.97 in December, posting a fresh six-month peak of 86.90 on April 12. Despite experiencing a pullback from its highs, the price managed to find its feet at the 50-day simple moving average (SMA) and recoup some losses.

Should the rebound resume, immediate resistance could be found at 84.69, which is the 61.8% Fibonacci retracement of the 95.02-67.97 downleg. Jumping above that zone, the price may challenge the recent six-month peak of 86.90. Even higher, the 78.6% Fibo of 89.23 could prevent further upside attempts.

Alternatively, bearish actions could send the price lower to test the 50.0% Fibo of 81.50, a region that the price has repeatedly violated in the past few sessions but has failed to close below it. Further retreats could then cease at the 38.2% Fibo of 78.30. Failing to halt there, the price may descend towards the 23.6% Fibo of 74.35.

In brief, although WTI futures underwent a setback, they quickly regained traction following the deflection at the 50-day SMA. Hence, a resumption of the recent rebound remains the most likely scenario as the momentum indicators are tilted to the upside.

Market picture

The crypto market added 0.5% in 24 hours to $2.46 trillion as a rebound in risk appetite in stocks helped altcoins attract buying interest. The Crypto Fear & Greed Index added 1 point to 72 (Greed).

Bitcoin is avoiding sharp swings and is trading at $66.75K on Wednesday morning, adding 0.3% in 24 hours but remaining inside the previous day’s range. It looks like a very cautious testing of the 50-day moving average (now at $67.3K), but just shy of surpassing it for the third day in a row.

Ethereum appears more upbeat, adding 2.3% in 24 hours to $3250, once again near the highs since 13 April. However, Ethereum’s decline has been deeper, pulling the price back below the support area of March and the first few days of April. Right now, the price is 6% below the 50-day MA that Bitcoin is nearing.

News background

Thanks to Bitcoin’s halving, crypto assets are recovering from losses caused by geopolitical tensions, ETC Group noted. The positive effects of the halving are not expected to begin to manifest themselves until about 100 days after the event – in August.

The US SEC has extended the review period for Franklin Templeton’s application to launch an Ethereum-based spot ETF. The next deadline is 11 June. After that date, the SEC will have to either give the green light or reject the application to launch the new product.

Bitcoin is entering a “DeFi summer” similar to Ethereum in 2020 thanks to record fees, Bernstein noted. Activity on the network is largely due to the launch of the Runes protocol.

According to The Block Data Dashboard, the combined market value of USD-linked stablecoins has risen to $165.2bn, the highest since June 2022, with 70% of this market share in USDT.

A class action lawsuit has been filed against Binance in Canada. A group of investors claim that the exchange violated local securities laws. Binance announced that it would cease operations in Canada back in May 2023.

The Consumer Price Index for Australia was released this morning. According to ForexFactory:

→ CPI in quarterly terms: actual = 1.0%, expected = 0.8%, previous value = 0.6%;

→ CPI in annual terms: actual = 3.5%, expected = 3.4%, previous value = 3.4%.

Rising inflation figures suggest that the Reserve Bank of Australia's tight monetary policy may continue beyond expectations - which is why the Australian dollar has jumped higher relative to other currencies.

Thus, from the minimum of the year against the US dollar, recorded on April 19, the Ausssie rose in price by more than 2%.

Technical analysis of the AUD/USD chart today shows that:

→ the price has reached the median of the ascending channel. Previously, this line served as support (as shown by the arrows), so there is reason to believe that it will provide resistance after rapid growth;

→ at the same time, the key support appears to be the level of 0.64, where the lower border of the channel lies;

→ the RSI indicator is in the overbought zone.

It is possible that in the short term there will be a correction after a sharp increase in the price of AUD/USD — for example, by 50% of the A→B impulse.

And to assess the long-term outlook, the upcoming release of important data for the United States will provide valuable information:

→ US GDP, tomorrow at 15:30 GMT+3

→ Personal Consumption Expenditures (PCE) USA, on Friday at 15:30 GMT+3.

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Gold price rallied above $2,400 before correcting lower. Crude oil price is rising and it could climb further higher toward the $85.50 resistance.

Important Takeaways for Gold and Oil Prices Analysis Today

• Gold price rallied significantly above $2,400 and recently corrected lower against the US Dollar.
• It cleared a key bearish trend line with resistance at $2,310 on the hourly chart of gold at FXOpen.
• Crude oil prices are moving higher above the $82.00 resistance zone.
• There was a break above a connecting bearish trend line with resistance at $82.00 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price was able to climb above the $2,350 resistance, as mentioned in the previous analysis. The price even broke the $2,400 level before the bears appeared.

The price traded close to the $2,420 zone before there was a downside correction. There was a move below the $2,355 pivot zone. The price settled below the 50-hour simple moving average and RSI dipped below 50. Finally, it tested the $2,290 zone.

The price is now correcting losses above the 23.6% Fib retracement level of the downward move from the $2,417 swing high to the $2,291 low. It surpassed a key bearish trend line with resistance at $2,310.

Immediate resistance on the upside is near the 50-hour simple moving average and $2,330. The next major resistance is near the 50% Fib retracement level of the downward move from the $2,417 swing high to the $2,291 low at $2,355.

An upside break above the $2,355 resistance could send Gold price toward $2,400. Any more gains may perhaps set the pace for an increase toward the $2,420 level. If there is no fresh increase, the price could continue to move down.

Initial support on the downside is near the $2,310 level. The first major support is $2,290. If there is a downside break below the $2,290 support, the price might decline further. In the stated case, the price might drop toward the $2,265 support.

Oil Price Technical Analysis

On the hourly chart of WTI Crude Oil at FXOpen, the price started a decent increase against the US Dollar. The price gained bullish momentum after it broke the $81.10 resistance.

There was a break above a connecting bearish trend line with resistance at $82.00. The bulls pushed the price above the 50-hour simple moving average and the RSI climbed toward 65. There was a clear move above the 50% Fib retracement level of the downward move from the $85.48 swing high to the $80.59 low.

Immediate resistance is near the $83.60 level. It is close to the 61.8% Fib retracement level of the downward move from the $85.48 swing high to the $80.59 low.

If the price climbs further higher, it could face resistance near $84.30. The next major resistance is near the $85.50 level. Any more gains might send the price toward the $87.00 level.

Conversely, the price might correct gains and test the $82.70 support. The next major support on the WTI crude oil chart is near the 50-hour simple moving average at $82.00. If there is a downside break, the price might decline toward $81.10. Any more losses may perhaps open the doors for a move toward the $80.00 support zone.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

German Ifo Business Climate rose from 87.8 to 89.4 in April, above expectation of 88.5. Current Assessment Index rose from 88.1 to 88.9, above expectation of 88.7. Expectations Index also improved from 87.5 to 89.9, above expectation of 88.9.

By sector, manufacturing rose from -9.9 to -8.5. Services rose from 0.4 to 3.2. Trade rose from -22.9 to -22.0. Construction rose from -33.2 to -28.5.

If said, "Companies were more satisfied with their current business. Their expectations also brightened. The economy is stabilizing, especially thanks to service providers."

Full German Ifo release here.

• GBPUSD posts new 5-month low
• Price holds in bearish tendency
• MACD and stochastics suggest upside move

GBPUSD is recovering from the five-month low of 1.2300 that was posted on Monday and is heading towards the restrictive region of 1.2495-1.2520. The pair has started a bearish tendency since the price peaked at 1.2892 in the short-term timeframe.

According to technical oscillators, the MACD is trying to cross its trigger line to the upside beneath the zero level. Also, the stochastic oscillator is moving strongly higher following the rebound off the oversold territory.

If traders continue to buy the pair, then the price could meet the aforementioned region and the 20-day simple moving average (SMA) around 1.2520. Slightly higher, the 200-day SMA at 1.2555 and the near-term descending trend line at 1.2585 may block the upside movement.

On the other hand, a move lower again could retest the previous trough of 1.2300 before tumbling further towards the 1.2180 bottom, registered on November 10.

In a nutshell, GBPUSD is in a bearish mode in the short-term picture as it is standing beneath the downtrend line and the SMAs.

At a conference today, Joachim Nagel, Bundesbank President and ECB Governing Council member, said that if data in the next six weeks bolster confidence in achieving ECB’s 2% inflation target, he would support a reduction in interest rates in June. However, he emphasized that "such a step would not necessarily be followed by a series of rate cuts.”

He stressed the current climate of uncertainty, noting, "Given the current uncertainty, we cannot pre-commit to a particular rate path." This approach underscores ECB's strategy of making decisions "meeting by meeting and based on incoming data."

Further, Nagel admitted of his reservations and expressed that he is "not fully convinced yet" that price growth is firmly on a path toward target. Core inflation, particularly within the services sector, remains elevated, driven by persistent strong wage growth, which tends to be more durable than goods inflation.

Nevertheless, by June "we will know a lot more," about the inflation path, he added.

Daily Pivots: (S1) 191.45; (P) 192.15; (R1) 193.47; More..

GBP/JPY is still bounded in range below 193.51 and intraday bias remains neutral. Further rally is expected with 189.97 support intact. On the upside, firm break of 193.51 will resume larger up trend to 195.86 long term resistance. Nevertheless, decisive break of 189.97 will indicate that it's at least correcting the rise from 178.32, and target 38.2% retracement of 178.32 to 193.51 at 187.70.

In the bigger picture, current rally is part of the up trend from 123.94 (2020 low), and is in progress for 195.86 long term resistance (2015 high). Break of 187.94 support is needed to be the first sign of medium term topping. Otherwise, outlook will remain bullish in case of retreat.