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• ECB will ensure that the policy rates will be brought to levels sufficiently restrictive
• ECB expects to discontinue the reinvestments under the APP as of July
• ECB slows rate hiking pace to 25bps (as expected), bringing key rate to 3.75%

The ECB kept the door open for more hikes but it looks like they are positioning for the June or July meeting that takes rates to a restrictive level.  They will be data-dependant as they are aware that the lags and strength of transmission to the real economy remain uncertain. Inflation is too high so they had to say that they will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target.

The ECB slowed their rate hiking pace to a quarter-point, bringing the Main Refinancing Rate to 3.75%, one of the lowest rates against the other major central banks.  These last few meetings were supposed to be the time when the ECB plays catch up with their rate hikes, but it is starting to look like they might be done tightening soon.

The euro tumbled alongside European bond yields after the ECB statement.  US jobless claims posted the biggest rise in six weeks and a hot unit labor cost report for the first quarter also gave the dollar some support.  Jobless claims rose 242,000, slightly above the 240,000 consensus estimate and an increase from the prior 230,000 reading.  The US labor market is softening, albeit not quickly enough to justify rate cuts. Sticky US inflation should keep the Fed on hold until year end.

All eyes will be on ECB’s Lagarde press conference as she will have a lot to clarify from the statement.

https://www.youtube.com/watch?v=BQ2_t3tvfwI

Bulls were able to take control of the market, and after touching a low of $1,805 on May 1, the ETH/USD pair moved upwards, touching a high of $1,916 today in the early Asian trading session. The bullish engulfing pattern is above the $1,805 handle on the H1 timeframe. It's a bullish pattern, which signifies the end of a bearish phase.

The market opened bullish this week. The ETH price remains well supported above the $1,800 level and is back above the pivot point.

The relative strength index is at 61.03, indicating a strong demand for Ether and a continuation of the buying pressure in the market.

Both the STOCH and CCI are neutral, meaning that the price is expected to enter into a consolidation zone in the short-term range.

A bullish reversal pattern with the 50-period moving average in the 2-hour timeframe was formed.

Most of the technical indicators are bullish. Most moving averages are bullish at the current Ethereum price of $1,899.

ETH is now trading above the 100-hour simple and 200-hour exponential moving averages.

• ETH price is showing a bullish reversal above the $1,805 mark.
• The short-term range is expected to be mildly bullish.
• The average true range indicates low market volatility.
• The ETH price ranges near the support of the channel.

ETH Bullish Reversal Is above $1,805

On the daily chart, ETH is trading just below its pivot level of $1,900 and is moving in a mild bullish channel. The price is about to break its classic resistance level of $1,904 and its Fibonacci resistance level of $1,907. Supports are $1,870 and $1,886.

Some of the technical indicators signal neutral market sentiment.

We can see the formation of a bullish engulfing pattern in the 2-hour timeframe.

The key support levels to watch are $1,866, which is a 14-day RSI at 50, and $1,890, which is a 3-10 day MACD oscillator.

The Week Ahead

ETH price remains well supported above $1,800, indicative of the bullish momentum, and the next visible targets are located at $1,900 and $1,950 in the medium-term range in the H1 timeframe.

We see a short-term bullish trend line from $1,805 toward $1,912.

The immediate short-term outlook for ETH has turned mildly bullish, the medium-term outlook has turned bullish, and the long-term outlook is neutral in present market conditions.

The resistance zone is at $1,925, which is a 38.2% retracement from the 4-week low, and at $1,965, which is a 14-3 day raw stochastic at 50.

The weekly outlook is $2,000, with a consolidation zone of $1,970.

Bulls were able to take control of the market last week, and after touching a low of $85.16 on May 1, the price started to correct upwards against the US dollar, touching a high of $89.82 today in the early Asian trading session.

There is a morning star pattern above the $85.16 handle on the H1 timeframe. It signifies the end of a bearish phase and the start of a bullish phase in the market.

The momentum indicator is back over zero in the H4 timeframe, indicating a bullish trend.

A bullish harami pattern is forming in the 30-minute timeframe.

Also, Litecoin is trading below its 100-hour simple moving average and 200-hour exponential moving average and above its pivot level of $88.5.

The relative strength index is at 51.92, indicating a neural demand for Litecoin and the shift towards consolidation.

Litecoin price remains above some of the moving averages, which are giving a bullish signal at current market levels of $88.20.

Both the ADX and CCI are signaling neutral market conditions, which means that the price is expected to move in a narrow range in the short term.

The short-term outlook for Litecoin has turned mildly bullish.

• Some of the technical indicators are bullish.
• Litecoin bullish reversal is seen above the $85.16 level.
• The RSI is neutral.
• The average true range indicates low market volatility.

Litecoin Bullish Reversal Is Seen above $85.16

Litecoin's price continues to move in a bullish trend above the $85.00 level. Due to the improved investor sentiments, the Litecoin-to-USD exchange rate is now looking to cross $90.00 in the D1 timeframe.

The momentum indicator is back over zero in both the 2- and 4-hour timeframes.

Some of the technical indicators signal a neutral market sentiment.

LTCUSD is about to break its classic resistance level of $88.29 and Fibonacci resistance level of $88.42, after which the path towards $90 will get cleared.

Litecoin price faces stiff resistance at $90.13, which is a 38.2% retracement from the 13-week high, and at $92.57, at which the price crosses the 18-day moving average.

The Week Ahead

Litecoin price remains well supported above the $85.00 level; resistances are located at $88 and $90.

Most technical indicators signal a bullish sentiment in the market.

Litecoin to USD exchange rate is expected to stay above the important support level of $86.64, which is a 3-10 day MACD oscillator, and at $87.11, which is a pivot point.

The short-term outlook for Litecoin has turned mildly bullish, the medium-term outlook is bullish, and the long-term outlook is neutral at present market conditions.

The weekly projection of Litecoin price is $95, with a consolidation zone of $92.

• NZDCAD broke daily down channel
• Likely to rise to resistance level 0.8570

NZDCAD currency pair recently broke the resistance trendline of the daily down channel from December (which encloses the previous intermediate ABC correction (B)).

The breakout of this down channel continues the minor impulse wave 3 of the intermediate impulse wave (B) from the middle of last month.

NZDCAD can be expected to rise further toward the next resistance level 0.8570 (which reversed the pair multiple times in March, target price for the completion of the active impulse wave 3).

• AUDCHF reversed from support level 0.5865
• Likely to rise to round resistance level 0.6000

AUDCHF currency pair recently reversed up from the key support level 0.5865 (which stopped the previous short term impulse wave 5) intersecting with the lower daily Bollinger Band.

The upward reversal from the support level 0.5865 stopped the previous intermediate impulse wave (3).

Given the strength of the support level 64.40, AUDCHF can be expected to rise further toward the next round resistance level 0.6000.

• WTI reversed from key support level 64.40
• Likely to rise to resistance level 70.00.

WTI crude oil recently reversed up from the key support level 64.40 (previous monthly low from March) standing well below the lower daily Bollinger Band.

The upward reversal from the support level 64.40 is currently forming the daily Japanese candlesticks reversal pattern Hammer.

Given the oversold daily Stochastic, WTI crude oil can be expected to rise further toward the next round resistance level 70.00.

US initial claims rose 13k to 242k in the week ending April 29, higher than expectation of 235k. Four-week moving average of continuing claims rose 3.5k to 239k.

Continuing claims dropped -38k to 1805k in the week ending April 22. Four-week moving average of continuing claims dropped -4.5k to 1828k.

Full US jobless claims release here.

ECB raised its three key interest rates by 25bps today, with main refinancing rate, marginal lending rate, and deposit rate becoming 3.75%, 4.00%, and 3.25%, respectively, effective May 10.

In the accompanying statement, ECB explained that incoming information broadly supports the assessment of the medium-term inflation outlook that the Governing Council formed at its previous meeting." While headline inflation has declined recently, the ECB noted that "underlying price pressures remain strong."

The central bank acknowledged that the transmission of past rate increases to euro area financing and monetary conditions has been forceful, but added that "the lags and strength of transmission to the real economy remain uncertain."

ECB emphasized its commitment to ensuring that policy rates are "sufficiently restrictive" to achieve a timely return of inflation to the 2% medium-term target, stating that rates will be kept at these levels "for as long as necessary".

The Governing Council will continue to follow a data-dependent approach, basing its policy rate decisions on assessments of inflation outlook in light of incoming economic and financial data, underlying inflation dynamics, and strength of monetary policy transmission.

Full ECB statement here.

The inflation outlook continues to be too high for too long. In light of the ongoing high inflation pressures, the Governing Council today decided to raise the three key ECB interest rates by 25 basis points. Overall, the incoming information broadly supports the assessment of the medium-term inflation outlook that the Governing Council formed at its previous meeting. Headline inflation has declined over recent months, but underlying price pressures remain strong. At the same time, the past rate increases are being transmitted forcefully to euro area financing and monetary conditions, while the lags and strength of transmission to the real economy remain uncertain.

The Governing Council's future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target and will be kept at those levels for as long as necessary. The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction. In particular, the Governing Council's policy rate decisions will continue to be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission.

The key ECB interest rates remain the Governing Council's primary tool for setting the monetary policy stance. In parallel, the Governing Council will keep reducing the Eurosystem's asset purchase programme (APP) portfolio at a measured and predictable pace. In line with these principles, the Governing Council expects to discontinue the reinvestments under the APP as of July 2023.

Key ECB interest rates

The Governing Council decided to raise the three key ECB interest rates by 25 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 3.75%, 4.00% and 3.25% respectively, with effect from 10 May 2023.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)

The APP portfolio is declining at a measured and predictable pace, as the Eurosystem does not reinvest all of the principal payments from maturing securities. The decline will amount to €15 billion per month on average until the end of June 2023. The Governing Council expects to discontinue the reinvestments under the APP as of July 2023.

As concerns the PEPP, the Governing Council intends to reinvest the principal payments from maturing securities purchased under the programme 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.

The Governing Council will continue applying flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to countering risks to the monetary policy transmission mechanism related to the pandemic.

Refinancing operations

As banks are repaying the amounts borrowed under the targeted longer-term refinancing operations, the Governing Council will regularly assess how targeted lending operations are contributing to its monetary policy stance.

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The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission. The ECB's policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed. Moreover, the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:45 CET today.