USD/JPY: dollar at its 20-year high versus Japanese yen

Pressure on the yen has returned. On Wednesday morning, USD bulls pushed the pair to the psychological level of 130.

The greenback is getting stronger versus the Japanese yen amid the difference in the monetary policies of their central banks as well as strong divergence between Japanese and US bond yields.

Earlier today, the dollar surged to its 20-year high against the yen. Eventually, USD/JPY skyrocketed to 129.43 and then bounced to 128.615.analytics625fb5aacbbf4.jpg

The dollar swelled on hawkish comments by a Fed official, hinting at even more aggressive moves by the US regulator.

The ongoing lockdown in China aimed at curbing the spread of COVID-19 is believed to only make things worse when it comes to global supply chains. Against such a backdrop, inflation will accelerate and the Fed will have to resort to emergency measures to tame it.

In this light, the US Treasury yield has extended the rally. During the Asian session, yields hit the high of 2.981% that was previously recorded in December 2018.

Unlike its American counterpart, the Bank of Japan still sticks to its dovish monetary policy stance. On Wednesday, the regulator offered to buy an unlimited amount of 10-year bonds at 0.25% to defend the yield target.

The Bank of Japan is committed to maintaining yields at around zero percent, which is the main driver for USD/JPY. The pair is now on track for its second monthly rally in a row. USD/JPY grew by 5.8% in March and advanced by more than 5% in April.

Geopolitical uncertainty and the escalation of the Russia-Ukraine conflict are playing on the side of the greenback with demand for the safe haven being on the rise.

Earlier today, USDX increased to 101.01 and then fell to 100.76 versus the basket of 6 major currencies.

The greenback has received additional support from the dovish People's Bank of China. On Wednesday, the Chinese central bank announced it would maintain its benchmark interest rates for corporate and household loans unchanged. In this light, the Chinese yuan dropped against the dollar to its October 2021 low of 6.4115.

Gold to resume growth in near term

Gold closes this week with losses despite a great start. On Monday, the price shortly exceeded $2,000. Will gold develop an impressive rally again?

Since the beginning of the week, the precious metal has depreciated by 1.4%. Now it is on its way to the first weekly drop in 3 weeks.

The main factors that sent gold down from a 5-day high reached on Monday are the strengthening of the US dollar and the rise in US Treasury yield.

Both USD and Treasury yields advanced this week on expectations of a more aggressive approach from the Fed.

There have been some very tough comments by the Fed officials in recent days, and especially the recent statement made by the Fed Chair.

Speaking at a meeting of the International Monetary Fund, Jerome Powell made it clear that the regulator is set to raise interest rates by 50 basis points in May.

"Inflation is now much higher and the interest rate is more flexible. It is appropriate in my view to be moving a little more quickly," he said.

The hawkish tone of the Fed Chair weighed on the gold quotes. The precious metal closed yesterday's trading down by 0.4%, or $7.40, at $1,948.20. This is the lowest value in 2 weeks.

Silver futures for May also declined by 2.6%, or 65 cents, compared to the previous close. So, the price of silver fell to $24,621.

The precious metals market was also affected by the comments about the ECB policy made by EU officials.

In particular, Bundesbank President Joachim Nagel said that the regulator could raise interest rates as early as the beginning of the third quarter.

Now markets expect a rate hike by 20 basis points by July and by more than 70 basis points by the end of the year. If such a scenario comes true, the benchmark interest rate will be above zero for the first time since 2013. This will serve as a catalyst for the euro.

The tightening of the monetary policy of major central banks is a key negative factor for gold.

In addition, the geopolitical crisis is another driver for the value of gold. The aggravation of tensions between Russia and Ukraine allowed the asset to go slightly higher today.

At the time of writing, gold was up by 0.2% and was trading at $1,952.00.

On Wednesday, Moscow sent a draft peace agreement to Kyiv. However, there is no talk of an early ceasefire.

The US and its allies continue to supply Ukraine with weapons, including heavy artillery, so that its forces can repel Russian advances in the eastern part of the country.

The latest reports from the UK Defense Ministry suggest that Russia will try to conduct a quick and decisive fight in Ukraine before Victory Day.

Russia is seeking to demonstrate significant progress in Ukraine ahead of May 9, an important date for Moscow.

According to forecasts, a serious escalation of the conflict in this period may lead to additional sanctions against the Kremlin.

The next anti-Russian sanctions are likely to raise inflationary expectations, which will be a positive factor for gold.

Gold is expected to develop an uptrend ahead of Victory Day in Russia.

Tips for beginner traders in EUR/USD and GBP/USD on April 27, 2022

Economic calendar for April 27

Today is a rather boring day in terms of macroeconomic statistics due to the lack of statistical data significant for the market. The only thing that will be published is the index of pending sales in the United States real estate market, where fluctuations in the negative zone are predicted.

Trading plan for EUR/USD on April 27

The downward trend is considered the main movement in the market, there are prospects for a further decline. In order for a signal to appear for the subsequent growth of the volume of short positions, the quote must be kept below the level of 1.0636 in the daily period. Until then, the risk of a price rebound remains in the market, which will be justified by the oversold status of the euro.

Trading plan for GBP/USD on April 27

Despite the colossal oversold level of the pound, there is still a downward interest in the market. It is caused by the inertia-speculative behavior of traders who ignore the oversold status. Sooner or later, there will be a technical pullback or a full-size correction in the market. This movement will not break the integrity of the downward trend. The values 1.2500, 1.2250, and 1.2000 are considered variable pivot points.

Tips for beginner traders in EUR/USD and GBP/USD on April 29, 2022

Economic calendar for April 29
Today, the publication of the first estimate of Eurozone GDP for the first quarter is expected, where the data are slightly exaggerated. An acceleration in economic growth from 4.6% to 5.0% was predicted, despite the fact that the situation in the world and Europe does not favor GDP growth. Thus, there is an assumption that the data will come out worse than expected, which will negatively affect the euro exchange rate.

At the same time, data on inflation in the EU will be published, where further growth is expected from 7.4% to 7.5%. This is a negative factor for the economy, which will also put pressure on the European currency.

Time targeting

Eurozone GDP - 09:00 UTC

Eurozone Inflation - 09:00 UTC

Trading plan for EUR/USD on April 29
The technical pullback is only a temporary manifestation of the price, the downward mood persists in the market. In order for a new round of the downward cycle to occur, the quote needs to be stable below the 1.0500 level. This will lead to an increase in the volume of short positions and a movement towards the low of 1.0350. Until then, there will be a pullback in the market, which serves as a regrouping of trading forces.

Trading plan for GBP/USD on April 29
There is currently a technical pullback in the market that serves as a regrouping of trading forces. Over time, the overheating of short positions will subside. This will lead to the subsequent weakening of the pound sterling, which is in line with the main trend.

Market participants consider the psychological level of 1.2000 as a reference point for a downward trend.

Tips for beginner traders in EUR/USD and GBP/USD on May 5, 2022

Economic calendar for May 5

Today, the focus is on the meeting of the Bank of England, where they expect the fourth consecutive increase in interest rates by 25 basis points. Annual inflation in the UK reached a 30-year high of 7% in March, so the regulator has no choice but to continue tightening monetary policy.

Will the pound sterling react to the news about the rate hike? Possible, but in a local form, in view of the fact that the event is expected in the market.

During the American trading session, data on jobless claims in the United States will be published, where figures are expected to remain unchanged. Thus, if the forecasts are confirmed, then no one will pay attention to the data on applications.

Time targeting

BoE meeting result - 11:00 UTC

US Jobless claims - 12:30 UTC

Trading plan for EUR/USD on May 5

The slowdown of the upward cycle around the value of 1.0636 led to the formation of a consolidation of versatile Doji-type candles. This threatens with new speculative manipulations in the market. For this reason, two possible scenarios should be considered at once.

The first scenario comes from the tactic of a rebound from the level of 1.0636, where holding the price below 1.0600 can restart the sellers' positions. This will cause the price to return to the support level of 1.0500.

The second scenario considers the formation of a full-length correction, where holding the price above 1.0655 can lead to a move towards 1.0700-1.0800.

Trading plan for GBP/USD on May 5

At the moment, most of the recent impulse has been won back, the quote has returned to the boundaries of the earlier amplitude movement. In order for the downward move to get a new round of activity, the quote needs to stay below 1.2450. In this case, the medium-term downward trend will again be prolonged to new price levels. Otherwise, another turbulence is possible within the values of 1.2460/1.2600, which may be facilitated by the results of the Bank of England meeting.

Tips for beginner traders in EUR/USD and GBP/USD on May 11, 2022

Economic calendar for May 11
US inflation data is expected to be published. The consumer price index is expected to decline for the first time since the summer of 2021. This is a positive signal for the US economy, and will also indicate confirmation of the Fed's action in tightening monetary policy.

How will this news play on the market?

In the beginning, it can play on the dollar exchange rate in terms of its local strengthening. After that, the US dollar may come under pressure if the Fed softens the requirements for tightening monetary policy. In simple words, the Fed's subsequent comments with the gradual normalization of inflation may already be more restrained. From the rhetoric, the statement about the interest rate hike by 0.75% will disappear at first. After that, they can lower the bar for a one-time increase from 0.5% to 0.25%. In this case, the above text is just a reflection of possible scenarios for reducing inflation. The prospect is medium-term.

Time targeting

US inflation - 12:30 UTC (prev. 8.5% ---> forecast 8.1%)

Trading plan for EUR/USD on May 11
The stagnation stage will end soon, the existing amplitude in the values of 1.0500/1.0600 will play the role of a lever for speculators. In this case, the optimal trading strategy is considered to be a breakdown of one or another stagnation border.

We concretize the above into trading signals:

Buy positions on the currency pair are taken into account after holding the price above the value of 1.0636 in a four-hour period.

Sell positions should be considered after holding the price below 1.0470 in a four-hour period due to the repeated storming of the 1.0500 border.

Trading plan for GBP/USD on May 11
Price movement within the framework of stagnation is a local manifestation of the market. In this situation, the key values are considered to be: 1.2250 (support level) and the peak of the recent eye at 1.2405. Holding the price outside one or another control value may well indicate a subsequent quote path.

Tips for beginner traders in EUR/USD and GBP/USD on May 13, 2022

Economic calendar for May 13

Today the macroeconomic calendar is practically empty. The only thing you can pay attention to is industrial production in the EU, where a decline is predicted.

Time targeting

The volume of industrial production in the EU - 09:00 UTC

Trading plan for EUR/USD on May 13

In this situation, the convergence of prices with the local bottom of 2016 may well lead to a slowdown in the downward cycle. This will lead to a slowdown or a full-length pullback.

An alternative development scenario considers the continuation of the inertial course in the market, where the signals about the oversold euro will be ignored by traders. In this case, holding the price below 1.0325 in a four-hour period will restart short positions.

Trading plan for GBP/USD on May 13

If the current stagnation serves as a regrouping of trade forces, then a local acceleration may soon occur. In this case, the optimal trading tactic is an outgoing momentum relative to the boundaries of stagnation.

Hot forecast for GBP/USD on 18/05/2022

The correction that began on Monday ended quite quickly. It was supposed that at best, Federal Reserve Chairman Jerome Powell's words would stop it, but in fact, it happened long before that. Namely, at the very opening of the US trading session. The fact is that US macroeconomic reports suddenly turned out to be noticeably better than forecasts. And instead of slowing down the main indicators, they accelerated each other.

The growth rate of retail sales increased from 7.3% to 8.2%, although they expected a decrease from 6.9% to 4.2%. That is, not only did the new data turn out to be significantly higher than the forecast, but also the previous ones were revised up. Unlike industrial production, whose previous results were revised from 5.5% to 5.4%. But its growth rate accelerated to 6.4%, instead of slowing down to 2.0%. And judging by these data, the American economy is doing just great. Especially when you consider that the data were published for April.

Retail Sales (United States):

But if macroeconomic statistics have completed the corrective movement, then Powell's words indicate the resumption of the trend for the strengthening of the dollar. Despite the recent slowdown in inflation, Powell did not say a word about the possibility of any revision of plans to raise interest rates. Powell once again stated that the central bank will raise the refinancing rate until inflation falls to target levels. That is, up to 2.0%. Given that it is now above 8.0%, then at least until the end of this year, during each meeting of the Federal Open Market Committee, the refinancing rate will be raised by at least 0.25%. So by the end of the year, it is likely to be above 2.00%. But in general, there is nothing new in this, and Powell only confirmed the previously announced plans, regarding the implementation of which there were some doubts. Powell dispelled them.

But if Powell's words were not enough to immediately start the process of strengthening the dollar, then British inflation coped with this task perfectly, which rose from 7.0% to 9.0%. And this is the biggest value in more than forty years. But the Bank of England has recently assured everyone that in April, and the data were published for this month, inflation will peak, after which it will gradually decline. That's just according to the forecasts of the British central bank, it should have reached the level of 7.2%. But the reality turned out to be noticeably worse. And there is no doubt that such a high level of inflation will have an extremely negative impact on the economy of the United Kingdom. Yes, it already does. As a result, after a small local rebound, the market returned to the long-familiar trend of strengthening the US dollar.

The GBPUSD currency pair formed a correction by more than 300 points, eventually returning the quote to the level of 1.2500. The subsequent price slowdown indicates an overheating of long positions.

The RSI H4 technical instrument entered the overbought zone during the acceleration. This signal confirms the overheating of long positions in the short term.

The moving MA lines on the Alligator H4 indicator are directed upwards, which corresponds to a corrective move in the market. The Alligator D1 indicator still signals a downward trend in the medium term. The moving MA lines are directed down.

Expectations and prospects:

Price stagnation within the level of 1.2500 signals the process of accumulation of trading forces. It will end soon and lead to subsequent price spikes.

If we assume that the correction is coming to an end, then keeping the price below the 1.2420 mark will lead to a full-fledged rebound of the price from the 1.2500 level. This step, in turn, will restart short positions.

An alternative scenario sees the current slump as an opportunity for a realignment of trading forces that would remove the overbought status from the pound. In this case, keeping the price above 1.2520 in a four-hour period allows for the subsequent formation of a corrective move.

Complex indicator analysis has a buy signal in the short-term and intraday periods due to the correction. Indicators in the medium term give a sell signal due to the main trend.

US stocks closed lower, Dow Jones down 0.75%

At the close of the New York Stock Exchange, the Dow Jones fell 0.75% to hit a 52-week low, the S&P 500 fell 0.58% and the NASDAQ Composite index shed 0.26%.

UnitedHealth Group Incorporated was the top performer in the Dow Jones Index today, up 7.17 points or 1.52% to close at 478.55. Boeing Co rose 1.62 points (1.29%) to close at 127.14. Home Depot Inc rose 0.90% or 2.58 points to close at 287.76.

The losers were shares of Cisco Systems Inc, which lost 6.64 points or 13.73% to end the session at 41.72. The Travelers Companies Inc was up 2.88% or 5.02 points to close at 169.30 while Walmart Inc was down 2.74% or 3.36 points to close at 119. .07.

Leading gainers among the S&P 500 index components in today's trading were Synopsys Inc, which rose 10.25% to 300.52, MarketAxess Holdings Inc, which gained 7.10% to close at 267.94, and shares of General Holdings Inc, which rose 6.62% to end the session at 223.69.

The biggest losers were Under Armor Inc C, which shed 15.76% to close at 8.18.

Leading gainers among the components of the NASDAQ Composite in today's trading were NeuroMetrix Inc, which rose 76.28% to hit 5.50, VivoPower International PLC, which gained 47.64% to close at 1.58, and shares of Neuroone Medical Technologies Corp, which rose 29.57% to end the session at 0.79.

The biggest losers were Bright Green Corp, which shed 67.35% to close at 15.70. Shares of Visionary Education Technology Holdings Group Inc lost 39.00% and ended the session at 3.05. Quotes of Molecular Data Inc decreased in price by 27.50% to 0.10.

On the New York Stock Exchange, the number of securities that rose in price (1645) exceeded the number of those that closed in the red (1538), while quotes of 108 shares remained virtually unchanged. On the NASDAQ stock exchange, 2069 companies rose in price, 1679 fell, and 235 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 5.20% to 29.35.

Gold futures for June delivery added 1.29%, or 23.46, to hit $1.00 a troy ounce. In other commodities, WTI July futures rose 1.78%, or 1.90, to $108.94 a barrel. Brent futures for July delivery rose 1.94%, or 2.12, to $111.23 a barrel.

Meanwhile, in the Forex market, EUR/USD rose 1.14% to 1.06, while USD/JPY shed 0.35% to hit 127.78.

Futures on the USD index fell 0.93% to 102.89.

Aussie and Kiwi skyrocket. Commodity currencies rise and US dollar tumbles

Commodity currencies grow sharply at the beginning of the week. The Australian and New Zealand dollars were supported by a surge in risk appetite.

In anticipation of the end of the lockdown in China's largest financial center, Shanghai, the demand for stocks rose.

Quarantine restrictions have been in effect in the city of 25 million people since the end of March. Most of them are expected to be lifted by June 1.

At the same time, optimism about global economic growth triggered a surge in high-risk commodity currencies. For example, the Australian and New Zealand dollars rose to their highest levels in weeks.

The Aussie jumped by 0.7% this morning to 70.92 cents.

Meanwhile, the New Zealand dollar soared 1.1% to its highest since May 5 at 64.62 cents.

The Australian and New Zealand dollars managed to recoup some of the losses suffered this quarter. Both currencies have had the worst performance among the Group of Ten since April.

The Aussie and Kiwi have been under pressure from the strong US dollar over the past few weeks. Amid aggressive rate hikes in the US, the greenback index rose to a new 20-year high of 105,010 this month.

However, at the beginning of the new working week, the US currency is trading at 2% below the record level amid the return of appetite for risky assets.On Monday morning, its rate fell by 0.1% from Friday's close to 102.790 points.

By the end of last week, the US dollar showed the first decrease in 7 weeks. The weakness of the greenback allowed the Aussie to make its first weekly rise since the end of March.

Since the beginning of the week, the Aussie has received a little boost from the center-left Labor Party's victory in Australia's federal election on Saturday.

The good news for the Australian currency is that this is the first change of government in almost 10 years. The bad news is that the new government is unlikely to change the pace of interest rate hikes in Australia.

A fresh comment from Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent adds to the pessimism about monetary policy.

On Monday morning, the official hinted at a gradual reduction in the Australian Central Bank's balance sheet for this and the coming year:

– This year's asset reduction plan calls for only $4 billion in bond redemptions, and we expect the figure to rise to $13 billion in 2023.

This abundance of funding indicates that the target money rates will remain low for a few years.

As for the monetary policy of the Reserve Bank of New Zealand, the base interest rate may rise as early as this week.

Markets are now expecting the RBNZ to raise the rate on Wednesday by 50 bps to 2%. The regulator's hawkish scenario adds momentum to the NZD/USD pair, which is now at a 3-week peak.

Thanks to the return of risk sentiment to the stock markets the AUD/USD pair is also showing great movements. It is firmly above the 21-day moving average this morning.

Bulls need to close above this level to continue the uptrend in the AUD/USD pair because this level coincides with the resistance line of the downtrend.

If the Aussie dollar continues to be in demand in the near future, it might lead it to test the high of 0.7135 from May 6.

If the AUD/USD does not manage to keep above the 21-day moving average by the end of the day, bears will return to the market and pull the Aussie back to Friday's low of 0.7002.

Analysis and trading tips for GBP/USD on May 26

Analysis of transactions in the GBP / USD pair

GBP/USD reaching 1.2545 prompted a buy signal in the market, which led to a 10 pip increase as the MACD line was just starting to move above zero. However, the quote turned down immediately after and retested 1.2545, forming a sell signal. This time, it provoked a 25-pip decrease in the pair and reached 1.2518, where movement became limited as the MACD was already far from zero. In the afternoon, another sell signal appeared at 1.2545, resulting in another 20-pip decrease. Its fourth test then led to a buy signal, which prompted a 50-pip increase as the MACD was moving above zero.

GBP/USD reached new monthly highs after traders did not find anything new in the minutes of the Fed's May meeting. Contrary to what was expected, there were no hints that the central bank will raise rates again at the next meetings.

However, today, it is likely that the pound will turn down as there are no statistics scheduled to be released in the UK. In the afternoon, data on US jobless claims and second estimate of the 1st quarter GDP will support the dollar, while the report on pending home sales may strengthen the emerging trend in the pair provided that its value turns out better than expected.

For long positions:

Buy pound when the quote reaches 1.2575 (green line on the chart) and take profit at the price of 1.2610 (thicker green line on the chart). There is a chance for a rally today because there is no scheduled statistics to be released. However, note that when buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.2553, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2575 and 1.2610.

For short positions:

Sell pound when the quote reaches 1.2553 (red line on the chart) and take profit at the price of 1.2516. Pressure is likely to return if there is no bullish activity in the market before and after the release of the US GDP report for the 1st quarter. However, note that when selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.2575, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2553 and 1.2516.

Hot forecast for EUR/USD on 30/05/2022

Although the single European currency demonstrated good activity on Friday, showing a movement of fifty points, first up, then down, in fact, it was a stagnation. Which, in general, is not surprising, given that macroeconomic data was not published. And there were no serious news reports that could somehow affect the market either. The beginning of the new trading week will be much less active. And it's not just a completely empty macroeconomic calendar. After all, it is a holiday in the United States to honor Memorial Day. And in the absence of American traders, activity in the market is coming to naught. Like it or not, American investors control most of the capital circulating in financial markets. So the stagnation will become more pronounced, and the magnitude of the movement will be noticeably smaller than on Friday.

The EURUSD currency pair, despite the scale of the correction, adheres to an upward move. During this time, the euro exchange rate has strengthened by more than 400 points, which is considered a strong price change.

The RSI H4 technical instrument is moving in the upper area of the 50/70 indicator, which indicates an upward interest among traders. RSI D1 settled above the 50 line, this is a signal of an elongated correction.

Alligator H4 is signaling an upward trend, MA moving lines are directed upwards. The Alligator D1 indicator has changed direction from a downward cycle to an upward one. The moving MA lines are directed upwards.

Expectations and prospects:

There is a resistance area of 1.0800/1.0850 on the way, which can hold back the bulls. For this reason, the tactic of working on the rebound is considered as the most optimal strategy. In the future, this may lead to the completion of the corrective move.

An alternative scenario considers the prolongation of the correction. This signal will be relevant only if the price stays above 1.1850 in the daily period.

Complex indicator analysis has a buy signal in the short-term and intraday periods due to the correction. In the medium term, indicators changed to buy indicators due to a protracted correction.