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Daily Pivots: (S1) 1.2436; (P) 1.2461; (R1) 1.2511; More...

Sideway trading continues in GBP/USD and intraday bias remains neutral first. Outlook stays bullish with 1.2343 support intact. On the upside, above 1.2545 will target 1.2759 fibonacci level first. Firm break there will target 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095. However, considering bearish divergence condition in 4H MACD, firm break of 1.2343 will confirm short term topping, and turn bias back to the downside for deeper pullback.

In the bigger picture, the rise from 1.0351 medium term term bottom (2022 low) is in progress for 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. Sustained break there will add to the case of long term bullish trend reversal. Further break of 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095 could prompt upside acceleration to 100% projection at 1.3895. For now, this will remain the favored case as long as 1.1801 support holds, even in case of deep pull back.

Daily Pivots: (S1) 1.0992; (P) 1.1021; (R1) 1.1076; More...

Intraday bias in EUR/USD remains neutral for the moment. Rejection by 1.1075 resistance indicates that consolidation from there is extending. But overall outlook will remain bullish as long as 1.0908 support holds. Break of 1.1075 will resume larger up trend from 0.9534 to 1.1273 fibonacci level. Break there will target 61.8% projection of 0.9534 to 1.1032 from 1.0515 at 1.1441.

In the bigger picture, rise from 0.9534 (2022 low) is in progress for 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. Sustained break there will solidify the case of bullish trend reversal and target 1.2348 resistance next (2021 high). This will now remain the favored case as long as 1.0515 support holds, even in case of deeper pull back.

Selloff in Australian and to a lesser extent Canadian Dollar is the main theme in the markets today, but market directions are not clear elsewhere. Euro's rally attempt against Dollar and Yen faltered following deep retreat in European benchmark yields. But the common currency is making progress in upside breakout against Sterling. Meanwhile, Yen and Swiss Franc are gaining ground as US and European yields fall. Dollar's performance is mixed for now, and further guidance from overall risk sentiment may be needed. However, the greenback could face deeper declines against Yen if treasury yield weakness persists.

Technically, 10-year yield's gap down and break of 3.460 support now suggests that recovery from 3.253 has completed after rejection by 55 D EMA. If TNX fails to close above 3.460, deeper decline would then be likely back to 3.253 support below below, to extend the whole correction from 4.333. If this scenario unfolds, USD/JPY may also fall below the 132.03 support level.

In Europe, at the time of writing, FTSE is down -0.20%. DAX is down -0.05%. CAC is down -0.60%. Germany 10-year yield is down -0.069 at 2.440. Earlier in Asia, Nikkei rose 0.09%. Hong Kong HSI dropped -1.71%. China Shanghai SSE dropped -0.32%. Singapore Strait Times dropped -0.84%. Japan 10-year JGB yield rose 0.0075 to 0.480.

Aussie down broadly following free fall in Copper

Australian Dollar is trading broadly lower today, even against New Zealand Dollar. Risk sentiment isn't much of a factor contributing to selloff considering that major European indexes are just in slight decline. Instead, the free fall in copper price might be a larger factor. But for sure, some traders could have jumped out of Aussie ahead of tomorrow's CPI release too, which is crucial to RBA rate decision on May 2, i.e., next Tuesday.

As for Copper, the fall from 4.1743 is accelerating notably today. Deeper decline is expected as long as 3.3974 resistance holds, to 3.8229 support and below. Price structures from 4.3556 (Jan high) are so far corrective looking. Hence, strong support should emerge ahead of 100% projection of 4.3556 to 3.8229 from 4.1743 at 3.6416 to complete the correction, and bring sustainable rebound. However, sustained break of 3.6416 could risk more downside acceleration back towards 3.1314 (2022 low).

AUD/NZD's steep fall from 1.0928 and firm break of 55 4H EMA indicates short term topping. It also raises the chance that whole rebound from 1.0585 has completed. Deeper decline is now in favor to 1.0732 support. Firm break there will pave the way back to 1.0585. Also, it's a bit early to determine, but fall from 1.0928 could also be the third leg of the pattern from 1.1085. Hence, any downside acceleration would push AUD/NZD back to 1.0469 low easily.

ECB Lane: Inappropriate to leave deposit rate at current 3%

ECB Chief Economist Philip Lane revealed in an interview with French newspaper Le Monde that the central bank will likely raise interest rates again at their May 4 meeting, stating, "This is still not the right time to stop." While Lane did not specify the rate hike's magnitude, he said that "it would be inappropriate to leave our deposit rate at the current level of 3%."

Lane acknowledged the decline in Eurozone inflation from 10.6% last October to 6.9% in March as a positive development, easing pressure on living costs. He expects inflation to continue falling due to supply chain bottleneck improvements and the reversal of the energy situation. However, Lane stressed that the most crucial aspect for central banks is "making sure that we get close to our target of 2% within a reasonable time period."

Lane does not believe the current situation resembles the 1970s-style persistent inflation, but he cautioned against the risk of ending up in such a scenario. Lane underlined the importance of ECB raising interest rates to ensure a "timely" return to the 2% inflation target. Regarding the European economy, he noted that while it is not stagnant, it follows a more modest path than expected prior to the pandemic and the Russian war against Ukraine.

BoJ Governor Ueda stresses need for continued monetary easing

BoJ Governor Kazuo Ueda addressed parliament today, emphasizing, "In light of current economic, price and financial developments, it's appropriate to maintain monetary easing, now conducted through yield curve control."

Ueda reiterated the importance of keeping Japan's monetary policy loose to achieve the 2% inflation target in a sustainable and stable manner, along with wage hikes. He added that if wage growth and inflation accelerate faster than expected and require tightening monetary policy, BoJ is prepared to respond by raising interest rates.

Despite this, Ueda warned of the risk of inflation falling further below expectations, calling it "very worrying." He noted that "the risk of inflation undershooting forecasts is bigger than the risk of overshooting," emphasizing the need to maintain the BoJ massive stimulus for the time being.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0992; (P) 1.1021; (R1) 1.1076; More...

Intraday bias in EUR/USD remains neutral for the moment. Rejection by 1.1075 resistance indicates that consolidation from there is extending. But overall outlook will remain bullish as long as 1.0908 support holds. Break of 1.1075 will resume larger up trend from 0.9534 to 1.1273 fibonacci level. Break there will target 61.8% projection of 0.9534 to 1.1032 from 1.0515 at 1.1441.

In the bigger picture, rise from 0.9534 (2022 low) is in progress for 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. Sustained break there will solidify the case of bullish trend reversal and target 1.2348 resistance next (2021 high). This will now remain the favored case as long as 1.0515 support holds, even in case of deeper pull back.

Economic Indicators Update

Australian Dollar is trading broadly lower today, even against New Zealand Dollar. Risk sentiment isn't much of a factor contributing to selloff considering that major European indexes are just in slight decline. Instead, the free fall in copper price might be a larger factor. But for sure, some traders could have jumped out of Aussie ahead of tomorrow's CPI release too, which is crucial to RBA rate decision on May 2, i.e., next Tuesday.

As for Copper, the fall from 4.1743 is accelerating notably today. Deeper decline is expected as long as 3.3974 resistance holds, to 3.8229 support and below. Price structures from 4.3556 (Jan high) are so far corrective looking. Hence, strong support should emerge ahead of 100% projection of 4.3556 to 3.8229 from 4.1743 at 3.6416 to complete the correction, and bring sustainable rebound. However, sustained break of 3.6416 could risk more downside acceleration back towards 3.1314 (2022 low).

AUD/NZD's steep fall from 1.0928 and firm break of 55 4H EMA indicates short term topping. It also raises the chance that whole rebound from 1.0585 has completed. Deeper decline is now in favor to 1.0732 support. Firm break there will pave the way back to 1.0585. Also, it's a bit early to determine, but fall from 1.0928 could also be the third leg of the pattern from 1.1085. Hence, any downside acceleration would push AUD/NZD back to 1.0469 low easily.

• EURCAD under bullish pressure
• Likely to rise to resistance level 1.5090

EURCAD currency pair under the bullish pressure after the price broke the resistance level 1.4923 (which stopped the previous impulse wave 1 in the middle of March).

The breakout of the resistance level 1.4923 accelerated the active impulse wave 3 which belongs to the intermediate impulse wave (5) from February.

Given the clear daily uptrend, EURCAD can be expected to rise further toward the next resistance level 1.5090 (target for the completion of the active impulse wave 3).

• EURJPY reversed from strong resistance level 148.50
• Likely to fall to support level 146.60

EURJPY currency pair recently reversed down from the multi-month resistance level 148.50 (which stopped the previous impulse wave (A) in October).

The resistance level 148.50 was further strengthened by the upper daily Bollinger Band.

Given the strength of the resistance level 148.50 and the overbought daily Stochastic, EURJPY currency pair can be expected to fall further toward the next support level 146.60 (low of the previous correction (ii)).

• BoJ Governor Ueda says BOJ will maintain policy
• BOJ Core CPI rises to 2.9%
• US will release UoM Consumer Confidence later today
• USD/JPY is trading at 133.87, down 0.28% on the day.

BoJ Core CPI climbs to 2.9%

Inflation in Japan is much lower than what we’re seeing in other major economies, but nevertheless, inflation continues to be closely watched by the Bank of Japan. There has been speculation that the central bank will make a shift in policy, given that inflation is above 3%, above the target of 2%. Earlier today, BoJ Core CPI, the preferred inflation indicator of the central bank, climbed to 2.9% in March. This was higher than expected and above the 2.7% gain a month earlier.

BoJ Governor Ueda will chair his first policy meeting on Thursday-Friday, and despite speculation that the BoJ will tighten policy, I expect Ueda to maintain all policy settings. Ueda has pledged to do just that and reiterated his “more of the same” pledge earlier today, in a speech to parliament. Ueda stated that “it’s appropriate to maintain monetary easing, now conducted through yield curve control”. The Governor repeated that monetary policy needed to remain ultra-loose in order to achieve sustainable inflation at the 2% target.

What was noteworthy in Ueda’s remarks was a nod to the possibility of raising interest rates, if wage growth and inflation climb faster than expected. This scenario doesn’t appear all that realistic given the current economic conditions. Ueda dampened any expectations of reducing the massive stimulus programme, saying that such a move could push inflation lower and undershoot expectations, which would be “very worrying”.

The US will release UoM Consumer Confidence later today. Consumer confidence is expected to come in at 104.0, little changed from the 104.2 reading in March. If the estimate is wide of the mark, we could see some movement from the US dollar.

USD/JPY Technical

• USD/JPY continues to test resistance at 1.3427. Next, there is resistance at 1.3499
• 133.41 and 1.3269 are providing support

ECB Chief Economist Philip Lane revealed in an interview with French newspaper Le Monde that the central bank will likely raise interest rates again at their May 4 meeting, stating, "This is still not the right time to stop." While Lane did not specify the rate hike's magnitude, he said that "it would be inappropriate to leave our deposit rate at the current level of 3%."

Lane acknowledged the decline in Eurozone inflation from 10.6% last October to 6.9% in March as a positive development, easing pressure on living costs. He expects inflation to continue falling due to supply chain bottleneck improvements and the reversal of the energy situation. However, Lane stressed that the most crucial aspect for central banks is "making sure that we get close to our target of 2% within a reasonable time period."

Lane does not believe the current situation resembles the 1970s-style persistent inflation, but he cautioned against the risk of ending up in such a scenario. Lane underlined the importance of ECB raising interest rates to ensure a "timely" return to the 2% inflation target. Regarding the European economy, he noted that while it is not stagnant, it follows a more modest path than expected prior to the pandemic and the Russian war against Ukraine.

Full interview of ECB Lane here.

Hello Traders, in this article we will go through how EURAUD reacted higher after reaching a blue box area. Here at Elliott Wave Forecast we have in place a system that allows us to measure an area in which we can expect a react to take place. We call it equal legs area or blue box area as you might have seen within our charts.

These areas provide us with at least an 85% chance of a minimum of 3 waves bounce or reaction to take place. Consequently, we can use these areas to enter in the market with a defined entry, Stop Loss and exit strategy.

The pair has been trading within a larger degree cycle since 08.25.2022. In the near term cycle it has ended wave 1 of (3) on 04.13.2023 and a 3 waves pullback was then expected. Once we had establish the first leg lower in ((w)) and then connector bounce ((x)) we presented to our members the equal legs area to buy from. Let’s have a look on how we saw it during our Midday update on 04.17.2023.

EURAUD 1 Hour Midday update 04.17.2023

As we can see we were expecting then the last leg lower within wave ((y)) of 2 to end within 1.62197 – 1.61048 equal legs area. From there we are expecting the pair to find support for wave 3 of (3).

Now let’s see how it has reached the area and what is the latest update from 04.25.2023 Asia update.

EURAUD 1 hour Asia update 04.25.2023

The pair has touched the equal legs area at 1.62182 and already reacted higher within wave ((i)) of 3 with one more high expected in (v) to end ((i)) before a 3 waves pullback in ((ii)) to follow. As a result now the trade should be set risk free after the reaction and letting it play out with the set target for wave 3 or short term traders can already take profit. Wave ((ii)) pullback should find support above 1.62182 for wave ((iii)) of 3 higher.

Daily Pivots: (S1) 166.87; (P) 167.30; (R1) 168.05; More...

Intraday bias in GBP/JPY remains neutral as consolidation from 167.95 is extending. Further rally is expected as long as 165.38 support holds. On the upside, break of 167.95 will resume the rebound from 155.33 to 169.26 resistance. However, firm break of 165.38 will argue that the corrective pattern from 172.11 is starting another falling leg. Intraday bias will be back on the downside for 162.75 support and below.

In the bigger picture, as long as 38.2% retracement of 123.94 (2020 low) to 172.11 (2022 high) at 153.70 holds, medium term bullishness is retained. That is, larger up trend from 123.94 (2020 low) is still in progress. Break of 172.11 high to resume such up trend is expected at a later stage.