Market Update by Solidecn.com

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US100

Taking a look at US100 chart at H1 interval, we can see that the index has been trading in a triangle pattern for some time with a 13,000 pts area serving as the lower limit of the pattern. This is a continuation pattern so traders should be aware of a potential for a downside breakout, especially as price has reached a lower limit recently. In case of a break below 13,000 pts, textbook range of breakout from the pattern suggests possibility of an around 350-points drop, to 12,650 pts area.

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JPY Recovers losses ahead of upcoming BOJ meeting

Japanese central bankers will meet this week to decide on monetary policy (Friday). This will be the first meeting under new Bank of Japan governor Ueda. There was some hope in the markets that change at BoJ helm will result in change in BoJ policy. However, Ueda so far has been hinting at continuation of the ultra-loose policy of his predecessor, at least for now. On the other hand, Sankei reports that the central bank may review and assess the past 10 years of monetary policy. One cannot rule out that even in spite of lack of change in policy or statement, assessment alone may offer some guidance. JPY is recovering some of its recent losses as the meeting draws closer.



USDJPY is trading higher today, due to USD strength, but has lost some ground after the Sankei news report. USDJPY continues to trade in an uptrend started at the end of March but has run into resistance in the 135.00 area.

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Oil

• Indices from Asia-Pacific traded lower at the beginning of a new week. Nikkei, S&P/ASX 200 and Nifty 50 traded flat, Kospi dropped 0.9% and indices from China traded 0.3-1.3% lower
• DAX futures and S&P 500 futures trade slightly lower
• Russia warned that it will terminate Black Sea grain deal if G7 moves to impose a total ban on exports
• BoJ Governor Ueda said that inflation forecasts strong and close to 2% for bank to consider changing its yield curve control mechanism
• Financial Times reports that United States asked South Korea not to increase chip sales to China if chips of US company Micron get banned as part of Chinese investigation
• Cryptocurrencies traded mostly sideways over the weekend. Small gains can be seen today - Bitcoin gains 0.8%, Ethereum adds 0.3% and Dogecoin jumps 1.2%
• USD and CHF are the best performing major currencies while AUD and JPY lag the most
• Precious metals pull back amid USD strengthening. Gold drops 0.2%, silver trades 0.7% lower and platinum plunges 2.3%
• Energy commodities trade lower as well - oil drops 1.2% while US natural gas prices decline 0.5%

Brent (OIL) is inches away from closing a bearish price gap triggered by an unexpected OPEC+ output cut.

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Chart of the Day - EURUSD

EURUSD is pulling back this morning. The move lower is driven mostly by strengthening of the US dollar. The main currency pair tried to recover some losses after the release of mixed PMIs for France and Germany that showed major improvement in the services sector and significant deterioration in manufacturing. While flash PMIs failed to trigger a strong recovery move, they seem to have been enough to halt declines.



Taking a look at EURUSD at the H1 interval, we can see that the pair dropped to the 1.0940 area, where the short-term upward trendline can be found. Bulls managed to defend this price zone and now we can see the pair trying to climb back above 1.0950. From a technical point of view, this is a bullish development but whether this translates into a large upward impulse will depend on whether bulls manage to break above the 1.0980 resistance zone that has been limiting upward moves this week. Should such a break occur, EUR bulls may target recent highs in the 1.1070 area next.

The pair may see some volatility around 2:45 pm BST when flash PMIs from the United States for April are released. Market expects a small deterioration in both manufacturing and services.

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Palladium pulls back from 2-months high and drops below $1,600


PALLADIUM is the worst performing precious metal today, dropping around 2.5% at press time and moving further away from a recent 2-month high. Palladium is a clear outlier among precious metals today as USD weakening allows gold to rise 0.6% and platinum to add 0.2%. Silver is trading flat. While gold and silver, and to a lesser extent platinum, are driven primarily by the investment demand, palladium is more reactive to industrial developments. Today's drop may be to some extent driven by poor performance of EV stocks, especially Tesla as it slumps 10% following a lackluster Q1 2023 earnings report.





Taking a look at PALLADIUM at D1 interval, we can see that the price is pulling back after a failed attempt at breaking above the $1650 resistance zone. Downward move accelerated today with price dropping below the $1600 mark. The near-term support can be found ranging above the $1,500 mark and served as the upper limit of a previous short-term trading range.

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OIL.WTI is pulling back and looks to close bullish price gap


Oil prices are pulling back and are one their way to close the bullish price gap that was triggered by unexpected OPEC+ decision to cut output. Taking a look at WTI (OIL.WTI) at D1 interval, we can see that the recent price advance was halted near the $82 resistance zone, marked with the upper limit of the Overbalance structure. While prices have traded briefly above this hurdle, bulls failed to uphold momentum and a pullback was launched. Moreover, the price dropped below the 100-season moving average today, which further brightens the outlook for bears. While lower limit of the bullish price gap from April 3 is still more than 2% below current market price, it looks like closing it may be just a matter of time, given current market volatility.





Taking a look at the chart at lower interval (H1), we can see that WTI is trading in a short-term downtrend. Key resistance to watch in the near-term can be found in the $78.35 area. Unless we see a break above this level, bulls may struggle to launch a longer-lasting upward impulse.

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NZDUSD

The New Zealand dollar has been one of the worst performing major currencies today. The sell-off was primarily caused by the inflation report, which showed that price growth in the economy is slowing much faster than expected. The quarterly data showed that inflation on a QoQ basis came in at 1.2% against forecasts of 1.7% and an earlier reading of 1.4%. In YoY terms, inflation came in at 6.7% against expectations of 7.1% and an earlier reading of 7.2%.

The swap market is currently pricing in a near 78% chance of a 25 basis point interest rate hike at the next RBNZ meeting. As recently as this morning, those odds were close to 85%, so the surprise inflation reading has lowered the prediction for a further hike. The RBNZ had forecast Q1 inflation at an annualized rate of 7.3%, slowing to 6.6% in Q2. As such, today's reading of 6.7% for Q1 goes a long way to putting the brakes on further aggression in the tightening cycle.



Looking at the NZDUSD price chart, we can see that the pair has broken out below the support zone set by the April 17 low and is currently trading near the levels outlined by the 38.2% Fibo retracement of the upward wave started in October 2022. For the moment, the key support and resistance levels are: (support) the zone between the previously mentioned 38.2 retracement and the 50% Fibo measure; (resistance) the downward trendline initiated in February 2023.

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Bitcoin

The major cryptocurrency has once again been pushed off the $30,000 level signaling a possible backdrop for a larger correction of the huge upward movement. Should the declines deepen, the 23.6 Fibonacci retracement of the upward wave, which began in November 2022, at $27,400, and the SMA100 (black line), which may overlap with the 38.2 Fibo at the psychological zone of $25,000, may prove to be important levels.

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Gold falls back to early April levels!

Currently, the probability for a 25bp hike in May is rated at 88%, but on the other hand, the probability for a hike in June is rated at 29%, so adding up the probability, it is expected that a hike will happen anyway.

From the current market perspective, we are seeing a decidedly stronger dollar, which is gaining along with treasury yields, which are above 3.6% for 10-year treasury yields. In addition to this, the BoJ is hinting that there should be no change in the yield curve management program at its April meeting, which is also propping up the dollar. In response, gold is losing heavily and falling not only below $2,000 per ounce, but already below $1,980 per ounce. Silver, on the other hand, is below $25 per ounce and losing almost 2%.



Gold is falling to its lowest level since early April. The next important support near the 23.6 Fibo retracement at $1950 per ounce.

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Bitcoin Dips Below $30K

On Wednesday in morning trading hours Bitcoin and other cryptocurrencies plummeted below significant levels. Despite a strong decline in prices no fundamental information was released to the public. Drop occurred in 20 minutes and led to the liquidation of over $25 million worth of BTC futures long positions.

BTC fell below $30k level and ETH back below $2000. Long squeeze may be caused by investors digesting Gary Gensler Congressional Hearing, which took place yesterday.



BTC dips and is trading near support level marked with green zone. On MACD indicator a bearish divergence occurred which suggest that bullish momentum is weakening.