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The USDJPY edges lower on Wednesday, keeping negative bias below psychological 140 barrier, after repeated failure to clear this level in past three days.

Overall picture is still bullish but weakening, as falling 14-d momentum is approaching the border of negative territory and RSI / Stochastic are heading south.

Break of pivotal supports at 138.54/26 zone (rising 20DMA / June 1 trough / Fibo 23.6% of 129.64/140.93 rally) is needed to generate strong bearish signal (also to complete a daily failure swing pattern) for extension of pullback from 2023 high at 140.93.

Conversely, prolonged sideways mode could be expected while the price stays above 138.26 pivot, though the action will remain bearishly aligned as long as 140 barrier caps.

Res: 139.73; 140.00; 140.93; 142.25.
Sup: 138.54; 138.26; 137.77; 137.29.

Market picture

The cryptocurrency market is up 2.7% to $1.121 trillion, approaching the middle of its trading range for the past month. Strong growth momentum late on Tuesday allowed for a brief recovery of capitalisation lost after news of SEC actions against Binance and Coinbase.

Bitcoin has risen 4% in the last 24 hours to $26.85K, finding strong support on dips below $25.5K. Such active buying is a sign that crypto enthusiasts are confident that a US regulator on the warpath will not cause global problems for cryptocurrencies.

Technically, yesterday’s strong buying has somewhat lowered the temperature of concerns about the near-term outlook for the price. It was back above the 200-week average and within the closing ranges of the last four weeks. Nevertheless, a wait-and-see approach now seems more prudent as Bitcoin has yet to prove its ability to gain further strength. A significant bullish signal would be a surpass of $27.5K, where many local highs and the 50-day moving average are concentrated.

News background

Binance has issued a statement saying that it will “vigorously defend itself” in the case against the SEC. Binance has also refuted allegations that the platform puts customer funds at risk. The platform has been accused of falsifying trading volumes and trading in unregistered securities and has mentioned 61 tokens at once, including big names such as SOL, ADA, MATIC and ATOM.

In its crusade against crypto, the SEC sued Coinbase, the largest US crypto exchange. According to the agency, several tokens on the exchange fit the definition of securities: SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO.

SEC chief Gary Gensler said on CNBC that the modern world doesn’t need cryptos.

Charles Hoskinson, Cardano founder, called on the crypto industry to unite against SEC authoritarianism to prevent totalitarian control of people’s finances. He said the regulator was “turning the US into an Orwellian dystopia” and introducing the digital dollar would give the Fed complete control over people’s finances.

On the hourly chart of GBP/USD at FXOpen, the pair started a recovery wave from the 1.2370 zone. The British Pound is now trading above the 1.2400 pivot level against the US Dollar.

It tested the 1.2440 resistance and stayed above the 50-hour simple moving average. To start a fresh increase, the pair must clear and settle above the 1.2440 resistance zone.

The first major resistance is near the 1.2460 level. If there is a clear upside break above the 1.2460 resistance, the pair could rise toward the 1.2500 level in the near term. The next major resistance sits near the 1.2540 level.

On the downside, the first major support is near the 1.2400 level. The main support is forming near the 1.2370 level, below which GBP/USD might accelerate lower toward the 1.2320 support.

In the latest Economic Outlook, OECD has slightly upgraded global growth forecasts, and stressed the need for central banks to maintain restrictive monetary policies to curtail inflation.

OECD now projects global economic expansion at 2.7%, a slight upgrade from its previous forecast of 2.6% in March. The US and China, the world's two largest economies, saw their growth forecasts for 2023 nudged upwards by 0.1%, to 1.6% and 5.4% respectively.

In Eurozone, growth forecast was modestly bumped up by 0.1 points to 0.9%. However, Germany, the zone's largest economy, saw a significant downgrade with zero growth now expected. UK, on the other hand, received a boost with OECD predicting 0.3% growth rather than an economic contraction. Japan's GDP growth forecast was slightly revised down to 1.3%.

Despite the optimistic revisions, OECD chief economist Clare Lombardelli underscored the challenges ahead in a commentary accompanying the report.

"The global economy is turning a corner but faces a long road ahead to attain strong and sustainable growth," Lombardelli stated. She added, "The recovery will be weak by past standards."

Highlighting the ongoing inflationary pressures globally, Lombardelli advocated for a continued restrictive monetary stance from central banks. "Central banks need to maintain restrictive monetary policies until there are clear signs that underlying inflationary pressures are abating," she urged.

Full OECD economic outlook here.

Speaking at a Dutch parliamentary hearing, ECB Governing Council member and Dutch central bank head Klaas Knot highlighted the optimistic stance of financial markets about inflation, and warned about the potential pitfalls.

"Financial markets are extraordinarily optimistic and are expecting inflation to drop as fast as it rose. For next year even rate decreases are already priced in," Knot observed.

However, the Dutch central bank chief noted that this rosy outlook might invite unforeseen challenges, especially if the path to inflation stabilization necessitates a longer than anticipated period of monetary tightening. This could potentially reignite tension within the financial markets.

"Exactly in such a situation, a longer than expected period of monetary tightening to keep inflation in check will increase the risk of renewed stress on financial markets," he cautioned.

In an interview by De Tijd, ECB Executive Board member Isabel Schnabel noted that "given the high uncertainty about the persistence of inflation, the costs of doing too little continue to be greater than the costs of doing too much."

She emphasized "once inflation has become entrenched in the economy, it becomes much more costly to fight it," adding that "We have more ground to cover. It will depend on the incoming data by how much more rates will have to increase."

On the topic of market expectations of two more additional 25bps hikes, Schnabel remained data-driven. She responded, "That will depend on the incoming data. Let me be very clear: A peak in underlying inflation would not be sufficient to declare victory: we need to see convincing evidence that inflation returns to our 2% target in a sustained and timely manner. We are not at that point yet."

Regarding monetary policy transmission precess, Schnabel explained, "A rise in the policy rate first has an impact on financing conditions, then on the real economy, and ultimately on wages and prices." She revealed that ECB's staff analysis suggests the effects of tighter monetary policy are currently in progress, with the impact on inflation expected to peak in 2024.

However, Schnabel cautioned that uncertainty persists around the strength and speed of this process, admitting, "it may take longer than was previously the case to see the impact of our policy."

Full interview of ECB Schnabel here.

Daily Pivots: (S1) 1.5956; (P) 1.6082; (R1) 1.6153; More...

Intraday bias in EUR/AUD stays on the downside at this point. Current fall from 1.6785 should target 100% projection of 1.6785 to 1.6134 from 1.6513 at 1.5862. On the upside, above 1.6143 minor resistance will turn intraday bias neutral first. But risk will stay on the downside as long as 1.6513 resistance holds, in case of recovery.

In the bigger picture, a medium term top is possibly in place at 1.6785 already, on bearish divergence condition in D MACD. Fall from there is seen as correcting whole up trend from 1.4281 (2022 low). Deeper decline is expected as long as 1.6513 resistance holds, to 38.2% retracement of 1.4281 to 1.6785 at 1.5828. Strong support could be seen there to complete the first leg of the corrective pattern.

Daily Pivots: (S1) 0.8596; (P) 0.8610; (R1) 0.8621; More....

Intraday bias in EUR/GBP stays neutral for consolidation above 0.8566. Upside of recovery should be limited by 0.8660 support turned resistance and bring another fall. Break of 0.8566 will resume the fall from 0.8977, and target 161.8% projection of 0.8977 to 0.8717 from 0.8874 at 0.8453. Nevertheless, firm break of 0.8660 will confirm short term bottoming, and turn bias back to the upside for stronger rebound.

In the bigger picture, current development argues that whole decline from 0.9267 (2022 high) is still in progress. This is part of the long term range pattern from 0.9499 (2020 high). Deeper fall would be seen through 0.8545 support. This will now remain the favored case as long as 0.8717 support turned resistance holds.

Daily Pivots: (S1) 148.86; (P) 149.28; (R1) 149.72; More....

Intraday bias in EUR/JPY stays neutral for the moment. On the downside, below 148.58 temporary low will extend the corrective pattern from 151.60 with another falling leg. Deeper fall would be seen to 146.12 support and possibly below. On the upside, however, above 151.05 will target 151.60 high. Firm break there will resume larger up trend to 153.64 projection level.

In the bigger picture, rise from 114.42 (2020 low) is in progress. Next target is 61.8% projection of 124.37 to 148.38 from 138.81 at 153.64. Sustained break there will pave the way to 100% projection at 162.82. For now, medium term outlook will remain bullish as long as 139.05 support holds, even in case of deep pull back.

Daily Pivots: (S1) 172.85; (P) 173.32; (R1) 173.95; More...

Intraday bias in GBP/JPY stays neutral as consolidation from 174.66 is extending. Deeper pull back cannot be ruled out, but outlook will stay bullish as long as 167.82 support holds. Break of 174.66 will resume larger up trend to 100% projection of 148.93 to 172.11 from 155.33 at 178.51.

In the bigger picture, up trend from 123.94 (2020 low) is extending. Next target will be 161.8% projection of 122.75 (2016 low) to 156.59 (2018 high) from 123.94 at 178.69. For now, medium term outlook will remain bullish as long as 165.99 resistance turned support holds, even in case of deep pull back.