The US dollar shows a slight decline against the Japanese yen in Asian trading, holding close to the local lows of April 27 and testing the level of 127.5 for a breakdown. The US currency is under pressure again, reacting to optimistic macroeconomic publications from Europe and Japan.

Friday's statistics, reflecting the growth of Japan's National Consumer Price Index from 1.2% to 2.5% and the National CPI excluding Fresh Food from 0.8% to 2.1%, increases the skepticism of market participants regarding the actions of the Bank of Japan to maintain ultra-soft monetary policy, especially given the pressure on households amid rising spending without a significant increase in wages. However, regulator representatives believe that the indicator is unlikely to consolidate above the target level of 2% and, according to forecasts, core inflation will correct to 1% by 2024. In turn, Minister of State for Financial Services Shunichi Suzuki called the rapid weakening of the national currency an extremely undesirable phenomenon. According to him, consultations are being held with the financial authorities of the G7 member countries to take measures to curb excessive volatility and erratic actions of the regulator, which could have a negative impact on the economy.

The pressure on the dollar quotes intensified at the beginning of the week after the "hawkish" speech of the head of the European Central Bank (ECB) Christine Lagarde, who actually announced the start of measures to tighten monetary policy in July. As previously expected, the regulator will first complete the quantitative easing program, after which it will start raising interest rates, the pace of which is likely to coincide with the US Federal Reserve, that is, the correction will go in increments of 50 basis points.

Support for the yen today is provided by a relatively optimistic macroeconomic statistics on business activity. Jibun Bank Manufacturing PMI in May fell from 53.5 to 53.2 points, which, however, turned out to be better than negative forecasts of a decline to 52 points. Jibun Bank Services PMI over the same period strengthened from 50.7 to 51.7 points, while experts expected the figure to correct down to 50.6 points.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range expands from below, making way for new local lows for the "bears". MACD is going down, keeping a fairly stable sell signal (located below the signal line). Stochastic, having approached the level of "20", reversed into a horizontal plane. At the same time, the current readings of the indicator still indicate the growing risks of the US dollar being oversold in the ultra-short term.

Resistance levels: 128, 128.62, 129.39, 130 | Support levels: 127.5, 127, 126.3, 125.6

The European currency shows a slight decrease against the US dollar during the Asian session, correcting after the "bullish" start of the week, which led to the renewal of local highs for the instrument from April 25. Quotes are still supported by the moderate weakness of the dollar, which reacts negatively to the publication of mixed macroeconomic statistics. In addition, investors positively assessed the rhetoric of the President of the European Central Bank (ECB) Christine Lagarde, who actually announced the imminent completion of the quantitative easing program and a possible increase in interest rates by 50 basis points in July.

Traders also assess the statement of the President of the European Commission, Ursula von der Leyen, who announced a number of steps to reduce the EU's dependence on Russian energy resources. The authorities intend to accelerate the transition to "green" energy, increasing the current target values from 9% to 13% by 2030. In particular, the construction of solar roofs in new buildings is proposed. About 300 billion euros will be needed for energy reforms, of which about 72 billion euros will be grants and 225 billion can be obtained in the form of loans. Up to 2 billion euros will be needed for oil infrastructure, taking into account the cessation of shipments of Russian oil.

Meanwhile, macroeconomic statistics from the euro area, released the day before, turned out to be negative. Markit Services PMI fell from 57.7 to 56.3 points, which turned out to be worse than market expectations for a reduction to 57.5 points. Composite PMI fell from 55.8 to 54.9 points, which also turned out to be weaker than market forecasts at the level of 55.3 points.

Bollinger Bands in D1 chart show moderate growth. The price range is expanding but it fails to conform to the surge of "bullish" activity at the moment. MACD grows, preserving a stable buy signal (located above the signal line). The indicator is trying to consolidate above the zero level. Stochastic, having reached its highs, reversed into a horizontal plane, indicating overbought EUR in the ultra-short term.

Resistance levels: 1.0747, 1.08, 1.085, 1.09 | Support levels: 1.07, 1.064, 1.06, 1.05

After reaching the level of 1.004, USDCHF corrected to 0.958 and continues to trade near it amid the depreciation of the US dollar, which is losing value against all major competitors. The sale is caused by the desire of investors to get better prices for entering long positions of the asset before the US Federal Reserve raises the interest rate at a meeting on June 15. It is expected that the regulator will adjust the value by 50 basis points to 1.50%. If the forecast is justified, the US currency will continue its strengthening, which began a year ago.

In turn, the Swiss National Bank will decide on the interest rate a day later, on June 16. Over the past few years, the regulator has kept the indicator at a record low level of –0.75%, and if the rhetoric of officials changes this time, the franc may react with an increase in the exchange rate against the dollar, but Swiss monetary tightening is unlikely to be as aggressive as in the USA. In this regard, one can assume a further increase in USD/CHF in the long term.

The long-term trend remains upward. At the moment, a correction is developing in the asset, within which market participants tested the support level of 0.958. If this level is kept, the growth will continue with the nearest target around 0.9757. If 0.958 is broken down, the correction will continue with the target at 0.945.

The mid-term trend is downward. This week the traders reached the target zone 4 (0.9615–0.9605), in case of a breakdown of which the decline will continue with the target in the area of the target zone 5 (0.9509–0.9499). Otherwise, a correction will start with the target at the trend line 0.9691–0.9681.

Resistance levels: 0.9757, 1.004 | Support levels: 0.958, 0.9450, 0.9363

This week, the EURUSD pair continued to grow and tested the 1.0742 mark (Murray [4/8]), but could not break higher. Currently, the price movement is determined by the rhetoric of the monetary authorities of the EU and the USA, pushing macro statistics into the background.

During the week, the euro was supported by statements by the head of the European Central Bank (ECB) Christine Lagarde, who allowed the probability of an increase in deposit rates from -0.5% to a positive level by September, that is, twice in the next four months. The beginning of the tightening cycle pushes the euro up against its main competitors.

On the other hand, the US currency is under pressure due to fears of an impending recession of the national economy, although experts disagree on the impact of the upcoming crisis. The publication of the minutes of the last meeting of the US Fed's Open Market Committee (FOMC) did not clarify the situation for investors. As expected, officials confirmed the need for several more rate hikes by 50 basis points, but there were no hints of a sharper increase. At the same time, the members of the regulator did not rule out the possibility of abandoning the neutrality of the rate, which means continuing to correct the indicator after its level reaches 2.50%-2.75%. This will become necessary if the final aim of weakening to the target level of 2.0% is not achieved.

Today, the market expects new statistics on US GDP in Q1 2022. It is predicted that the US economy will shrink by 1.3%, which may contribute to a new growth of the EURUSD pair.

The key for the "bulls" remains the level of 1.0742, consolidation above which will allow the quotes to continue the upward movement to the levels of 1.0864 (Murray [5/8]), 1.0986 (Murray [6/8]). If the level of 1.0550 breaks down (the middle line of the Bollinger Bands), the decline can resume, and the price will return to 1.0376 (Murray [1/8], the lower line of the Bollinger Bands), 1.0253 (Murray [0/8]). Technical indicators do not give a single signal: the Bollinger Bands reverse upwards, the Stochastic reverses downwards in the overbought zone, the MACD histogram decreases in the negative zone.

Resistance levels: 1.0742, 1.0864, 1.0986 | Support levels: 1.0550, 1.0376, 1.0253

The New Zealand dollar shows moderate growth during the morning session, updating local highs from May 5. NZDUSD is testing 0.655 for a breakout.

The US dollar is still under pressure from macroeconomic statistics, which indicates a gradual slowdown in the national economy. At the same time, the US Federal Reserve signaled earlier that after raising the rate in June and July, a pause will be taken in the monetary policy tightening cycle to assess the balance of inflationary risks and pressure on the economy due to high rates. The Reserve Bank of New Zealand (RBNZ) raised its rate last week, which, in general, coincided with most forecasts of market experts. The next meeting of the regulator will take place on July 13. The macroeconomic statistics released on Friday in New Zealand put moderate pressure on the positions of the instrument. ANZ Consumer Confidence in May fell from 84.4 to 82.3 points, which turned out to be worse than the average analysts' forecasts.

New Zealand authorities will open their borders to foreigners on July 31, lifting travel restrictions two months ahead of schedule. Prime Minister Jacinda Ardern said the country will only accept vaccinated tourists, who will still need to be tested. Prior to the start of the COVID-19 pandemic in 2020, tourism was one of the most highly developed industries in New Zealand, providing at least 10% of the country's total income.

Bollinger Bands on the daily chart show a steady increase. The price range expands, freeing a path to new local highs for the "bulls". MACD grows, preserving a stable buy signal (located above the signal line). The indicator is about to test the zero level for a breakout. Stochastic, having approached its highs, shows mixed dynamics, indicating the risks of a strongly overbought New Zealand dollar in the ultra-short term.

Resistance levels: 0.6567, 0.66, 0.665, 0.67 | Support levels: 0.65, 0.645, 0.64, 0.63

During the Asian session, the USDJPY pair shows ambiguous dynamics, consolidating near 127. Last week, the US dollar showed predominantly downwards trading dynamics, resulting in which the asset has renewed its local lows of April 18.

The demand for the yen is gradually increasing since the Japan Bank previously announced the first possible steps on the path to tightening monetary policy. The regulator is not going to increase the rate yet. Officials have only stated the possibility of reducing the quantitative softening program, but inflation in the country is approaching target levels, which will probably require decisive measures from financial authorities. Nevertheless, the tendency of investors to risk and news from China, signaling the further decrease in activity due to quarantine restrictions, help the yen to keep traders’ interest as a shelter asset.

The data from Japan published on Friday indicated the acceleration of the Tokyo consumer price index without taking into account food prices and energy for May from 0.8%to 0.9%, while analysts counted on a sharp deceleration of up to 0.4%. The indicator increased by 1.9% YoY, repeating the dynamics of the previous month. Tomorrow, investors expect an extensive block of macroeconomic statistics from Japan. In particular, information about unemployment will appear (it is predicted that the indicator will remain around 2.6%), the dynamics of retail sales and industrial production for April. According to preliminary estimates, sales will decrease again, from 0.7% to 2.6, which can support the national currency.

On the daily chart, the Bollinger bands are moderately reduced: the price range narrows, reflecting the emergence of ambiguous trading dynamics in the super-short term. The MACD indicator decreases, maintaining a relatively strong sell signal (the histogram is below the signal line), and tries to consolidate below the zero line. Stochastic, having attempted corrective growth last week, reverses horizontally. It is better to wait until the signals from the technical indicators are clear.

Resistance levels: 127.5, 128, 128.62, 129.39 | Support levels: 127, 126.34, 125.60, 125.09

The Australian dollar shows an uncertain decline, correcting after two sessions of fairly active growth, as a result of which AUDUSD updated local highs from May 5. The US dollar is trying to recover its positions, but so far the further decline of the instrument is limited by restrained optimism from China.

Tomorrow restrictions on the work of enterprises will be lifted in Shanghai, which will mean the end of the quarantine caused by another wave of coronavirus, which had an extremely negative impact on the supply of a number of high-tech products to world markets. The Beijing authorities are also partially easing the restrictions and gradually allowing the operation of some public transport and retail facilities. Optimism about the Chinese economy was also confirmed by macroeconomic publications from China. Non-Manufacturing PMI in May rose from 41.9 to 47.8 points, which, however, turned out to be worse than optimistic forecasts of an increase to 50.7 points. NBS Manufacturing PMI strengthened in May from 47.4 to 49.6 points, which coincided with the average market forecasts. In addition, investors reacted positively to the growth in Private Sector Credit in Australia in April from 0.4% to 0.8%, as well as the increase in Company Gross Operating Profits from 2% to 10.2% in Q1 2022.

Bollinger Bands on the daily chart show a steady increase. The price range is narrowed, being spacious enough for the current activity level in the market. MACD is growing, maintaining a strong buy signal (the histogram is above the signal line and is consolidating above the zero level). Stochastic reached its highs, which points to the risks of overbought Australian dollar in the ultra-short term.

Resistance levels: 0.7202, 0.725, 0.73, 0.7341 | Support levels: 0.715, 0.71, 0.705, 0.7

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During the Asian session, the USDCAD pair is growing moderately, retreating from the local lows of April 22, renewed yesterday, and is testing 1.2670 for a breakout, supported by positive US macroeconomic statistics and renewed growth in US Treasury yields.

Markets are still worried about the prospects for tighter monetary policy by the US Federal Reserve. Earlier, the regulator spoke in favor of raising the rate by 50 basis points in June and July, after which some pause will be taken to assess the effectiveness of the measures taken and develop a new vector of movement. Currently, inflation has slightly decreased relative to the April peak, but prices remain close to record levels, and the near-term forecasts are rather vague.

On the daily chart, Bollinger Bands are steadily declining: the price range is narrowing, reflecting the emergence of ambiguous trading dynamics in the ultra-short-term. The MACD indicator is going down, keeping a fairly strong sell signal (the histogram is below the signal line). Stochastic, still near its lows, is trying to reverse upwards, indicating that the USD is oversold in the ultra-short term.

Resistance levels: 1.2700, 1.2750, 1.2800, 1.2850 | Support levels: 1.2650, 1.2600, 1.2538, 1.2500

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The European currency shows mixed trading dynamics against the US dollar, consolidating near 1.0650 after two sessions of decline, which led to the renewal of local lows from May 23.

Pressure on the euro has intensified since Tuesday after the release of inflation data for May in the eurozone. The Harmonised Index of Consumer Prices accelerated from 3.5% to 3.8%, which turned out to be higher than the market's neutral forecasts, and the Core Consumer Price Index in May updated a record at 8.1%, while analysts had expected only 7.7%. In addition, disappointing Retail Sales data in Germany were published yesterday: in April, in annual terms, the indicator fell by 0.4% after falling by 1.7% a month earlier, although preliminary market estimates assumed a positive dynamics at the level of 4.0%, and on a monthly basis, sales fell by 5.4% after rising by 0.9% in March.

In turn, some support for the single currency is provided by the expectations that the European Central Bank (ECB) will launch a cycle of raising interest rates. So far, the members of the regulator's board have not agreed on any specific timing for the start of tightening monetary policy, but it is clear that with the current price pressure, this will happen soon.

Bollinger Bands in D1 chart show moderate growth. The price range is narrowing, reflecting appearance of multi-directional dynamics in the short term. MACD is reversing downwards forming a new sell signal (the histogram consolidated below the signal line). Stochastic is showing similar dynamics; however, the indicator line is rapidly approaching its lows, indicating the risks of EUR being oversold in the ultra-short term.

Resistance levels: 1.0700, 1.0747, 1.0800, 1.0850 | Support levels: 1.0640, 1.0600, 1.0500, 1.0459

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Against the backdrop of the upward dynamics of the US dollar, the AUDUSD pair is correcting around 0.7190, despite the multidirectional reaction of investors to the incoming macroeconomic statistics.

Yesterday, Australia's Q1 GDP was published, and the indicator's growth slowed down to 0.8% from 3.6% QoQ but still was higher than the experts' forecast of 0.5%, which was taken into account by the participants trading in quotes. The value consolidates around 3.3% YoY, which is better than the preliminary market estimates of 2.9% but inferior to 4.4% in the previous quarter. Given the significant rise in fuel and food prices, we can say that the Australian economy is in a stable state. It is reflected in retail sales, which rose by 0.9%, in line with forecasts.

The American currency showed an active decline all last week, but now, the quotes have won back the losses and reached 102.500 in the USD Index against the backdrop of a positive report from the Institute of Supply Management (ISM), which said that Manufacturing PMI rose to 56.1 points from the April value of 55.4 points, surpassing analysts' expectations of 54.5 points. Meanwhile, according to JOLTS, the number of open vacancies in the labor market expectedly decreased and amounted to 11.400M for April, which is slightly inferior to 11.855M.

On the global chart, the asset moves within the Expanding formation pattern, rising within the fifth wave. Technical indicators reversed and gave a new buy signal: fast EMAs on the Alligator indicator crossed the signal line upwards, and the AO oscillator histogram formes upward bars in the buy zone.

Resistance levels: 0.7258, 0.7573 | Support levels: 0.7045, 0.6851

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Japan legalizes stablecoins
The US dollar shows a slight decrease in Asian trading, holding near 131 and local highs from May 9, having received a moderate upward impetus after the publication of a rather strong report on the US labor market for May last Friday. At the same time, statistics on business activity were slightly worse than market forecasts, as well as indicators of Average Wages and overall Unemployment. The data allow investors to hope for a continuation of the US Fed's "hawkish" policy of raising interest rates by 50 basis points at least during the June and July meetings.

The Bank of Japan, in turn, maintains a wait-and-see attitude, although issues of growing inflationary pressure are already affecting the national economy. An extensive block of macroeconomic statistics will be released this week, and the updated quarterly GDP statistics, which will be published on Wednesday, will take center stage in publications. The previous estimate indicates a contraction of the country's economy in Q1 2022 by 0.2% QoQ and 1.0% YoY.

Meanwhile, the Japanese government is stepping up regulation of the national crypto asset market. Last week, Parliament approved a bill according to which stablecoins can officially be considered digital money as early as 2023. Only licensed financial institutions and payment system operators, as well as trust companies, will be able to issue them. The tokens will be backed by the yen or other national currencies, at a ratio of 1:1, since their holders must have the right to redeem at face value. In addition, lawmakers plan to publish rules for stablecoin issuers in the near future. Thus, Japan became the first country to develop a phased legal framework for the circulation of digital assets, designed to protect crypto investors and maintain market stability.

Bollinger Bands in D1 chart show moderate growth. The price range is expanding but it fails to conform to the surge of "bullish" activity at the moment. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, having approached its highs, is also trying to reverse into a descending plane, indicating the risks of overbought USD in the ultra-short term.

Resistance levels: 131, 132, 133, 134 | Support levels: 130, 129.39, 128.62, 128

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