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ECB Governing Council member Gabriel Makhlouf said today, ECB has reached the point "act". And, "the balance of advantage has tilted decisively towards the need for further action, albeit not necessarily at a similar pace to that of other central banks".

"Our objective is for inflation to be at 2% over the medium term - levels are significantly above that now, and it is time for the Council to move to end net asset purchases under the asset purchase programme next month or in July," he said.

Makhlouf added, it's "realistic to expect that the first move in the ECB's interest rates will happen soon after net asset purchases end and that rates are likely to be in positive territory by early next year." But he didn't specify when the rate hike would occurs.

"The era of negative rates is reaching its conclusion," he said.

In this technical blog we’re going to take a quick look at the Elliott Wave charts of NZDUSD forex pair. As our members know, the pair shows bearish sequences in the cycle from the February 2021 peak. The pair has made 3 waves bounce recently, that has reached our selling zone and gave us good trading opportunities. In the further text we are going to explain the Elliott Wave Forecast and the trading strategy.

NZDUSD H1 Elliott Wave Analysis 05.11.2022

NZDUSD is correcting the cycle from the 0.65682 peak. Recovery has already reached blue box at 0.63552-0.64021 area to complete 2 red recovery. We recommended members to avoid buying the pair while we’re favoring the short side from the blue box. Strategy is selling the pair at the marked zone. Invalidation for the trade would be break above 1.618 fibs extension: 0.64021. As the main trend is bearish we expect sellers to appear at the blue box for 3 waves pull back at least. Once pull back reaches 50 Fibs against the ((b)) black low, we will make short position risk free ( put SL at BE) and take partial profits.

NZDUSD H1 Elliott Wave Analysis 05.12.2022

The pair found sellers at the blue box area: 0.63552-0.64021 and made turn lower from there. As a result , members who took short trades made positions risk free ( Put SL at BE) and took partial profits. We got a break toward new lows which makes the pair bearish against the 0.63802 peak in first degree. At this stage we see wave 2 red completed at the 0.6380 high. While mentioned pivot holds, the pair can keep finding intraday sellers in 3,7,11 swings for a further extension down.

Keep in mind market is dynamic and presented view could have changed in the mean time. You can check most recent charts in the membership area of the site. Best instruments to trade are those having incomplete bullish or bearish swings sequences.We put them in Sequence Report and best among them are shown in the Live Trading Room.

The pound continues to lose ground and is trading at its lowest level since May 2020. GBP/USD fell below the 1.22 level earlier and hasn’t had a daily winning session since May 4^th.

Negative growth raises alarm bells

The UK economy is struggling, a grim fact which was brought home by the Q1 GDP report earlier today. On a quarterly basis, GDP came in at 0.8%, down from 1.3% in Q4 of 2020 and shy of the 1.0% estimate. Even worse, the economy contracted in March by 0.1%, after a 0.1% gain in February. This missed the forecast of 0.0%.

The negative growth reading was a result of the crushing inflation that has gripped the UK. CPI hit 7% in March and the markets are braced for a reading of around 9% from week’s April CPI release. The cost of living crisis has dampened consumer spending, a key reason for the negative reading for March GDP. The BoE has raised rates to 1.0%, a 13-year high, but it’s clear that the BoE has fallen behind the inflation curve and is playing catch-up. At last week’s policy meeting, the central bank warned that inflation could top 10% and there was the danger of a recession. The pound tumbled over 2% in response, even though the BoE increased rates by 0.25%.

The BoE finds itself between a rock and a hard place. It needs to raise rates in order to curb soaring inflation, but weak growth means that the higher rates could tip the economy into recession. The grim economic outlook does not bode well for the pound, which has tumbled 7.1% since May 1^st.

US inflation eases, a bit

US inflation weakened in April, but not as much as the markets had expected. CPI dropped from 8.5% to 8.3%, higher than the consensus of 8.1%. This slowdown was not enough for the markets to price in “peak-US inflation”, and the dollar managed to hold its own against the major currencies. There had been talk of an “inflation peak”, but the inflation data indicates that even if inflation is falling, the pace could be much slower than the markets would like.

GBP/USD Technical

• GBP has breached support at 1.2199 for the first time since May 2020. Below, there is support at 1.2056
• GBP/USD faces resistance at 1.2272 and 1.2418

The Euro fell to new five-year low in European trading on Thursday, following eventual break of previous low at 1.0471, above which the pair was consolidating in past two weeks.

Persisting risk aversion on growing economic and political uncertainty, sent global stocks sharply lower and further lifted the dollar, added to strong pressure on Euro.

Fresh weakness signals continuation of larger downtrend after a brief pause and bring 2017 low at 1.0340 in focus, with extension towards 1.0069 (Fibo 76.4% of 0.8225/1.6039) and a parity level, not ruled out on stronger bearish acceleration.

Close below 1.0471 would confirm fresh negative signal, with former support to revert to solid resistance.

Res: 1.0471; 1.0500; 1.0531; 1.0577
Sup: 1.0405; 1.0365; 1.0340; 1.0300

Cable extends steep fall of past four weeks and probed below 1.22 handle to hit new 2022 low.

Weak UK GDP data, released today, added to negative sentiment, fueled by risk aversion that continues to inflate the US dollar.

Negative fundamentals dominate and so far counter signals from strongly oversold daily and weekly studies, however, some price adjustment should be anticipated in the coming sessions, in response to oversold conditions.

Upticks are expected to be limited and capped under 1.2400 zone (May 11 spike high / falling daily Tenkan-sen) to keep bears intact and offer better levels to re-enter strong bearish market.

Bears see no significant obstacles en-route to next targets at 1.2080/00 (Fibo 76.4% of 1.1409/1.4249 rally / psychological), with risk of deeper fall on violation of 1.20 pivot, remaining in play.

Res: 1.2250; 1.2300; 1.2375; 1.2400
Sup: 1.2165; 1.2100; 1.2080; 1.2000

Silver’s long-term neutral outlook is at risk of a downgrade as the bears keep challenging the floor around 21.40 despite yesterday’s poor upturn.

The RSI and the Stochastics reflect oversold conditions, though neither of those indicators seem determined to change direction to the upside. Therefore, the base scenario is for sellers to dominate in the short term, although the case for a rebound will remain on the cards.

A close lower may initiate a sharper decline towards 20.20, where the key 200-weekly simple moving average (SMA) is positioned. The 19.50 level, which blocked the 2019 rally and delayed bullish corrections in mid-2020, may next attempt to save the market from further depreciation. However, if it proves fragile too, the sell-off could exacerbate to 18.70.

The way higher could be a tough job, as several obstacles may ruin any progress. The area around 22.00 will come first into view, whilst the constraining red Tenkan-sen line could add more pressure, preventing an acceleration to May’s resistance of 23.00. Further up, the 200-day simple moving average (SMA) currently at 23.65 could gain exclusive attention.

Overall, silver looks to be trading at a make-or-break point. A clear bounce above 21.40 would allow for more improvement, whereas a decisive close below it could push a group of traders out of the market.

The euro has fallen close to the 1.04 level, which has held since January 2017. In the European session, EUR/USD is trading at 1.0429, down 0.81% on the day.

ECB hints at a rate hike in Q3

After years of monetary easing which was fueled by low inflation levels, the ECB is slowly but surely switching gears and talking openly about a rate hike. It wasn’t long ago that ECB President Christine Lagarde was dismissing high CPI numbers as “transitory” and saying that the ECB would remain out of sync with the Fed and its tighter policy. Lagarde has been forced to change her tune, however, as eurozone inflation has soared, hitting 7.5%. Germany’s inflation rate, released today, rose to 7.4%, an all-time high for a second successive month (7.3% prior).

Eurozone inflation is being driven by high energy and food prices, both of which are largely due to the war in Ukraine. With no end to the conflict on the horizon, inflation could climb even higher, putting pressure on the ECB to start tightening policy.

Lagarde said on Wednesday that the ECB will end asset purchases in Q3 and follow with a rate hike “some time later”. Other ECB members have been less vague and are calling for a rate hike in July. There is a debate within the ECB whether to raise rates by 0.50%, which would bring the deposit rate to zero, or deliver a modest 0.25% increase. The ECB meeting in June should give the markets a better idea as to whether the July meeting will be live.

US inflation dips, but less than expected

US inflation slowed in April, but still came in stronger than expected. CPI dropped from 8.5% to 8.3%, higher than the consensus of 8.1%. This slowdown was not enough for the markets to price in “peak-US inflation”, and the dollar managed to hold its own against the major currencies. The Fed’s hawkish stance appears justified after the inflation release, as the markets are digesting the fact that if US inflation is easing, it will be at a slow pace.

EUR/USD Technical

• 1.0557 remains a weak resistance line, followed by resistance at 1.0632
• There is support at 1.0473 and 1.0398

BoE Deputy Governor Governor Dave Ramsden told Bloomberg that stronger than expected job market could push inflation further higher from current 7% to 10% before year end. "Given what we know about the UK labor market, I wouldn't be surprised if it turned out to be a bit tighter," he said. "I think there are upside risks on inflation the medium term."

"Certainly on the basis of my current assessment of prospects, we're not there yet in terms of how far monetary policy has to tighten," he said. "I'm still very, very supportive of the forward guidance that there may well need to be further tightening in the coming months."

June "will be a chance to take stock -- in this extraordinary period we really are learning things everyday," he said. "I don't think we've gone far enough yet on bank rate, but I do think that what we've already done is having an impact."

AUDUSD has pierced beneath the 0.6900 border and is eyeing the lower Bollinger band, located within the key 0.6776-0.6840 support boundary that stretches back to mid-June 2020. While the longer-term 100- and 200-day simple moving averages (SMAs) have capped advances, the rolling over of the 50-day SMA is endorsing a continuation of the more than one-month decline from the bullish spike of 0.7661.

Meanwhile, the short-term oscillators are transmitting conflicting messages in directional momentum. The MACD is suggesting additional selling in the pair, while the softer slide in the RSI is implying weakness in bearish impetus. Moreover, the stochastic oscillators’ negative charge is looking dubious as, south of the 20 mark, the upturn in the stochastic %K line has nudged above the %D line.

If the downward trajectory endures, preliminary support could occur around the fortified 0.6776-0.6840 support section shaped by the lows over the second half of June 2020, a zone which also contains the lower Bollinger band. Successfully diving underneath this crucial border may reinforce the negative outlook, with sellers aiming to weigh on the 0.6685 inside swing high recorded in the early stages of March 2020. If sellers retain control, they could then seek out the 0.6505 low around the end of May 2020.

On the flipside, if buyers re-emerge and drive the price back above the 0.6900 hurdle, they may be confronted with nearby upside constraints starting with the tough 0.6963-0.6994 resistance band, shaped by multiple troughs extending back to mid-July 2020. Secondly, not much higher, the 0.7029-0.7053 barrier could then come into focus. Should buyers overrun these congested barricades, they may then tackle the falling mid-Bollinger band at 0.7148 before pursuing a significant section of resistance existing from the 100-day SMA at 0.7245 until the 0.7342 inside swing low.

Summarizing, AUDUSD is sustaining a broader bearish bias below the 0.6963-0.6994 support foundation and the 0.7245-0.7342 resistance region, which includes the May high. That said, for optimism to begin to grow, the bulls would need to propel the price north of the 0.7029-0.7053 obstacle.

NZDUSD switched to a bearish mood again on Thursday after a neutral session, stretching its downtrend to a fresh two-year low of 0.6235.

In technical indicators, the MACD remains negatively charged below its red signal line, while the RSI and the Stochastics have no intention of exiting the oversold territory, though they keep a foothold around their previous lows, signaling a cautiously bearish bias.

The next opportunity for a rebound could be nearby at 0.6160. This is where market actions faced limitations during the first half of 2020; therefore any step lower may see a continuation towards the 0.6000 psychological mark. Marginally lower, the support of 0.5920 will be on the radar as well. However, if the bears dominate below 0.5842 too, the way will clear towards the important barrier of 0.5658 from March 2020.

On the upside, traders will keep a close eye on the red Tenkan-sen line at 0.6400, which has been rejecting bullish attempts since the start of April. A successful close above that line could give the green light to the 20-day simple moving average (SMA), and more importantly, bring the 0.6540 monthly bar into scope. Additional gains from here would raise confidence that the bullish wave might be something more than temporary.

Summarizing, the bearish outlook continues to worsen in the NZDUSD market, with the focus turning now to the 0.6160 barricade. In case the bulls come into play, traders will look for immediate resistance around 0.6400.