• The dollar’s resilience should not be understated
• EUR/USD hovers near key support with large expiries in play today
• USD/JPY flirts with key resistance region, 140 being eyed next?
• AUD/USD looks resigned to test the March and April lows again
• DAX closes in on record highs again as equities maintain the optimism
• ECB’s de Guindos: There is still scope to keep raising rates
• BOE’s Bailey: I do not envisage balance sheet returning to pre-financial crisis level

Markets:

• USD leads, GBP lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields up 1.9 bps to 3.600%
• Gold down 0.3% to $1,975.66
• WTI crude down 0.2% to $72.67
• Bitcoin up 0.1% to $27,365

It was a quiet session with not many headlines, as some parts of Europe are on holiday and with there being no major economic releases whatsoever.

That did not stop the dollar though, as it continues its grind higher and to test key levels in EUR/USD and USD/JPY.

The former is closing in on key support near 1.0800, although there are large option expiries limiting the downside push for now. Meanwhile, the latter is also running up against recent highs around 137.77-91 at the moment as buyers look for a breakout towards 140.00.

This comes despite equities continuing to show much optimism, with European indices rallying hard after the Wall Street gains yesterday. US futures are also slightly higher, so that is helping with the mood. Of note, the DAX is just inches away from fresh record highs set last year at 16,285-90.

As the dollar holds more resilient again, GBP/USD is seen down 0.4% to 1.2440 as the retreat this week continues while AUD/USD is down 0.3% to 0.6640 as the aussie is dragged down by softer jobs data earlier.

It’s a rare sight to see the dollar move higher in a time where stocks are also performing well, but it is what it is at the moment in markets.

Traders have been quick to price in relatively dovish Fed expectations since the regional banking crisis but perhaps that is now backfiring as high inflation is keeping the Fed on course to hold rates higher for longer, alongside economic conditions that are holding up in the US.

This article was written by Justin Low at www.forexlive.com.

The crypto
market capitalisation rose 0.55% over the past 24 hours to 1.134 trillion. Late
Wednesday afternoon, another attempt was made to break above 1.14 trillion,
following the US stock market rally on the government debt ceiling news.
However, it has so far failed to stay in this territory.

Bitcoin is
up 0.7% at $27.2K, staying within the recovery trend that has been in place
since the 12th. However, this recovery is painfully slow, and local resistance
at $27.5K, which has been supporting since late March, remains in place.

According to
Santiment, large Bitcoin holders continue accumulating BTC – over the past five
weeks, cryptocurrency holdings have increased by nearly 85,000 BTC ($2.3
billion). Santiment believes Bitcoin is now in a consolidation phase before a
new surge.

News background

The stock
and cryptocurrency markets will collapse if the US defaults, says Mike McGlone,
senior strategist at Bloomberg Intelligence. He is bearish on cryptocurrencies
but bullish on gold.

Lightning
Labs, the developer of the Lightning Network, announced the release of Taproot
Assets Protocol v 0.2, which avoids potential delays in transaction processing
due to congestion on the Bitcoin network.

The UK
Parliament has proposed regulating cryptocurrencies as gambling. Crypto assets
can potentially be used for fraud and money laundering, posing a high risk to
consumers and the economy.

Tether’s
issuance team has decided to invest up to 15% of its net profits in Bitcoin
monthly to diversify its reserves. It has already invested $1.5 billion in BTC.
The bulk of USDT’s collateral is still in short-term US Treasuries.

According to
a Bloomberg survey, only 31 of the top 60 cryptocurrency companies have
successfully undergone external financial audits or confirmed reserves. Many
auditors are reluctant to work with cryptocurrency companies or need more
expertise.

This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.

This article was written by FxPro FXPro at www.forexlive.com.

On the daily chart below for the S&P
500, we can see that the price action remains rangebound just beneath the 4175
level. This has been a really strong resistance and we can expect some quick
rally once the price breaks out decisively with buyers jumping in aggressively
and sellers folding fast.

Overall, the market hasn’t done
much since April as we’ve just been bouncing up and down between the 4175
resistance and the 4061 support. This is the type of market that
chops out many traders that suffer from impatience. At the moment, it’s a
waiting game until we get a clear breakout supported by a fundamental catalyst.

In the 4
hour chart below, we can see that we have an even tighter range between the
4175 resistance and the 4120 support. Such compressions generally lead to big
moves once the market breaks out. The big spike yesterday was due to positive
news on the debt ceiling front, but it’s more likely that in case of a deal
we get a “sell the fact” reaction rather than a rally. The risk events to watch next are the US Jobless Claims
today and Fed Chair Powell speech tomorrow.

In the 1
hour chart below, we can see more closely the tight range we’ve been stuck into
since the start of May. A break above the 4175 level should lead to a quick
rally into the 4206 high. That will be the last line of defence for the sellers
as a break beyond that will lead to further upside into the 4300 area. On the
downside, the sellers may lean again on the 4175 resistance and target the 4120
support first, and 4061 support next. Keep close eye on these levels.

This article was written by ForexLive at www.forexlive.com.

On the daily chart below for
EURUSD, we can see that the market has finally turned around and the trend has
now changed. The multiple failures to break above the 1.1033 high were
significant and once the price fell below the red long period moving
average, the sellers started to pile in aggressively, eventually pushing the
price much lower.

The moving averages have now
crossed to the downside in a further confirmation that we are in a downtrend.
We could also have a major double
top pattern
with the neckline at 1.0533. The first support for the buyers should be at the
1.0750 level, where we may see the first deeper pullback after such a quick
selloff.

EURUSD
technical analysis

On the 4 hour chart below, we can
see that the market was trading within a rising channel diverging with the MACD. This is generally a sign of
weakening momentum and it’s often followed by pullbacks or reversals. The
divergent rally into the 1.1033 high was in fact meaningful as the rally
stalled there and started to range until we eventually got a breakdown. The
moving averages are acting as resistance for the current downtrend and the
sellers should keep on leaning on them until the 1.0750 support.

On the 1 hour chart below, we can
see that the price has recently pulled back into the 1.0845 resistance before
falling again towards the 1.0810 low. The sellers should pile in more heavily
once the price breaks below the low, targeting the 1.0750 support. It’s worth
noticing that the price has started to diverge with the MACD, and we are
getting closer to the key support.

This may be a sign that we are
about to see a deeper pullback to the upside before the next selloff. The
buyers, on the other hand, should be waiting at that 1.0750 support to target a
rally towards the 1.09 handle or wait for the price to break above the
trendline before piling in.

This article was written by ForexLive at www.forexlive.com.

• Dollar starting to benefit from that discarded tailwind?
• EUR/USD staggers towards key technical test as dollar holds firmer
• USD/JPY inches closer towards key resistance point
• BOE’s Bailey: Things are looking a bit brighter than they did a couple of months ago
• UK’s Hunt: The overwhelming priority has to be lowering inflation
• Eurozone April final CPI +7.0% vs +7.0% y/y prelim
• US MBA mortgage applications w.e. 12 May -5.7% vs +6.3% prior

Markets:

• NZD leads, JPY lags on the day
• European equities mixed; S&P 500 futures up 0.3%
• US 10-yeaar yields down 3 bps to 3.518%
• Gold down 0.1% to $1,986.53
• WTI crude up 0.5% to $71.23
• Bitcoin down 1.1% to $26,675

It was a quiet session in terms of headlines but there were some decent and light moves during the session at least.

The handover from Asia saw major currencies stuck in very narrow ranges but that extended in European morning trade, as the dollar gathered a bit of poise – particularly against the euro, pound and yen.

EUR/USD fell from 1.0860 to 1.0820 while GBP/USD declined from 1.2480 to 1.2425 before a light bounce after as dollar gains ease up. It can be seen as price action stretching its muscles, awaiting further conviction by traders. However, mixed markets are not really helping.

USD/JPY also moved up to a high of 137.17 but is keeping just below the 137.00 mark now alongside its 200-day moving average.

That comes despite bond yields looking a tad softer but equities are keeping marginally positive as US futures are higher while European indices are little changed mostly.

The mood in stocks is at least helping to see the antipodeans hold up with AUD/USD up 0.1% to 0.6660 after hitting a low of 0.6630 earlier while NZD/USD is up 0.5% to 0.6260 as price moves back just above its own 100-hour moving average.

It’s one of those days where traders are still largely sorting out their feet, awaiting some form of headline to really firm up any convictions out there.

This article was written by Justin Low at www.forexlive.com.

• Prior +6.3%
• Market index 214.9 vs 227.8 prior
• Purchase index 165.4 vs 173.7 prior
• Refinance index 468.2 vs 507.1 prior
• 30-year mortgage rate 6.57% vs 6.48% prior

A rise in rates in the past week led to a notable decline in mortgage activity with both purchases and refinancing also falling. This just continues to rebuff the narrative that housing conditions remain rather challenging and troubled, with mortgages in particular suffering amid tighter financial conditions brought about by the Fed.

This article was written by Justin Low at www.forexlive.com.

On the daily chart below, we can
see that after tapping into the record high at 2076, Gold started to fall as
better than expected economic data lifted treasury yields and boosted the US
Dollar. The price yesterday broke below a key trendline which is the base of an expanding
wedge pattern.

We should now see the price
falling towards the 1930 level where we can also find the 50% Fibonacci
retracement level and the major trendline. That support zone is expected to be really strong,
and the buyers are likely to pile in there with defined risk below the
trendline. The sellers, on the other hand, will want to see the price breaking
below the support zone before piling in more aggressively and extend the
selloff towards the 1800 level.

XAUUSD
technical analysis

On the 4 hour chart below, we can
see the breakout that happened yesterday after the better than expected US
Retail Sales data. The sellers are now clearly in control and
barring any negative news like a big miss in Jobless
Claims tomorrow or Fed Chair Powell being dovish on Friday, gold should
continue to fall towards the 1930 level.

On the 1 hour chart below, we can
see more closely the recent price action. The sellers should keep on piling in
at the break of the swing low at 1985. If the breakout fails, the likely
pullback should run towards the 2000 resistance where we can also find the
38.2% Fibonacci retracement level. The sellers will be waiting there with
defined risk just above the resistance zone and the 1930 level as target. The
buyers, on the other hand, will need a break above the trendline to regain some
control and target the 2076 high.

This article was written by ForexLive at www.forexlive.com.

• We expected a shallow, long recession back in November
• Now we are forecasting modest, but positive growth
• There has been greater resilience in the economy than expected
• But inflation has also come in higher than expected
• However, we have good reasons to expect inflation to fall sharply in the coming months
• That should begin with the April number, to be released on 24 May
• Risks to inflation are skewed significantly to the upside
• Our commitment to 2% inflation is unwavering
• Full speech

These aren’t anything that we don’t already know. However, he is putting a good deal of emphasis on the upcoming CPI data later this month. That will be one to watch and while base effects are something to watch out for, we will see if the BOE can rely on price pressures to fall in the months ahead to head to the sidelines.

This article was written by Justin Low at www.forexlive.com.

On the
daily chart below for USDJPY, we can see that the price found support at the trendline and the 133.77 level. The moving
averages remain crossed to the upside which keeps the uptrend intact. We can
also notice that the market is forming an ascending
triangle, which is generally followed by big moves once the price breaks out on
either side.

The
culprit for this USD/JPY rally is the rise in the Treasury yields due to the
recent better than expected data and rising long term inflation expectations in
the University
of Michigan report. Fed Chair Powell once mentioned that they are
looking at those expectations for their policy decision, so the bond market
reacted accordingly.

USDJPY
technical analysis

On the 4
hour chart below, we can see that after breaking above the 135.09 resistance, the price extended the rally
towards the 136 handle. Yesterday, US
Retail Sales beat expectations and gave the USD another boost
for a run towards the 137 level. The moving averages will act as resistance now
and we should see new higher highs unless the Jobless Claims tomorrow show a big miss to the
expectations or Fed Chair Powell on Friday sounds dovish.

On the 1
hour chart below, we can see that we have a trendline supporting this rally and
that the price bounced from a resistance-turned-support during the APAC
session. We can also see that we have a divergence with the MACD which is generally a signal for
weakening momentum and it’s often followed by pullbacks or reversals.

If we do
get a pullback, the buyers should lean to the support zone at 136.25 where they
will also find the trendline and the red long period moving average for further
confluence. The sellers, on the other hand,
will want to see the price breaking below that support zone to pile in and push
the price towards the 135 handle.

This article was written by ForexLive at www.forexlive.com.

• The market mood remains fairly mixed so far today
• There is a barrage of 7 Federal Reserve speakers due Tuesday, NY’s Williams among them
• Central banks have lost a degree of trust, says ECB’s Makhlouf
• UK April payrolls change -135k vs 31k prior
• Germany May ZEW survey current conditions -34.8 vs -37.0 expected
• Eurozone Q1 GDP second estimate +0.1% vs +0.1% q/q prelim
• IEA warns latest oil price drop is running against backdrop of a supply crunch in 2H 2023

Markets:

• CHF leads, AUD lags on the day
• European equities little changed; S&P 500 futures down 0.1%
• US 10-year yields down 2.9 bps to 3.479%
• Gold down 0.7% to $2,005.98
• WTI crude down 0.3% to $70.92
• Bitcoin down 1.0% to $27,088

It was sideways session as markets are looking fairly tentative after the slightly optimistic start to the new week yesterday.

There wasn’t much meaningful headlines but we did get a bit of a red flag from the UK jobs data, where payrolls declined for the first time since February 2021 as unemployment claims also ticked higher. That might be a sign that the economic weariness is starting to weigh on labour market conditions.

The pound dropped initially on that with GBP/USD falling from 1.2510 to 1.2465 as the dollar also gained some ground amid a more cautious risk mood. But the pair bounced as the dollar surrendered gains, rising back up to 1.2530 currently – little changed on the day.

The greenback saw gains evaporate as equities pared early losses as well during the session. But the overall mood remains more pensive with US futures also marginally lower at the moment.

EUR/USD nudged a little higher from 1.0870 to 1.0900 briefly before settling just below that. Meanwhile, AUD/USD is staying pressured and down 0.4% to 0.6670 after a brief rebound to 0.6690 earlier in the session.

The moves in markets are rather mixed with commodities all mostly lower, with oil moving down after a positive start to the day and precious metals lagging. WTI crude fell to $70.55 before paring some losses back to $70.90 levels now while gold is trailing down by 0.7% to near $2,006 and silver also down 1.4% to $23.77 currently.

It’s now over to US retail sales and Fedspeak to see if the mood music will change in North America trading.

This article was written by Justin Low at www.forexlive.com.