Coca-Cola on wave of strong demand and higher prices

Like other companies in the industry, the Coca-Cola Company has increased the prices of its products, but this has not affected consumer demand. In recent years, as pandemic-related restrictions have disappeared, the company has seen an increase in productivity. This is mainly due to consumers being willing to pay more for drinks in public places such as restaurants, stadiums and concerts.

Current premarket trading on Wall Street indicates that Coca-Cola (KO.US) shares have broken above the important resistance set by the local peaks of December 2022.

BTC

Recently, many events have overlapped and influenced the prevailing sentiment on the cryptocurrency market.

On the one hand, we observe weakening bulls on the broader financial market after high index results in the first quarter of this year. Investors are trying to price in new quarterly reports published by the largest technology companies in the US and deteriorating macroeconomic data, which are starting to forecast the upcoming recession on the financial markets.

On the other hand, a lot has happened in the crypto market space. The recent hearing of SEC chairman Gary Gancler did not bring any new news. The SEC chairman continued his narrative without any explanation that all cryptocurrencies except BTC should be considered security - despite many questions from Congress Representatives.

Another wave of declines came today after the news about Coinbase suing the SEC. According to the information provided, Coinbase has taken legal action in a US federal court to force the country's securities regulator to give a definitive response to a petition it submitted in July. The petition sought clearer regulatory guidelines for the cryptocurrency industry in the US.

On the 4-hour timeframe, the BTC price continued to consolidate below $28,000, with the largest cryptocurrency by market capitalization trading at around $27,240, down 0.55% in the past 24 hours. BTC has already dropped by 13% from its recent highs of $31000. The price broke through the key support level around $28,600, indicating a bearish trend in the short term. Currently, the price is at the equilibrium level of the last consolidation range, indicating that the market is in a state of indecision. However, further price action downwards is expected, with the next resistance level likely to be at $26,650. This level acted as a support in the past. Overall, the short-term trend for Bitcoin appears bearish and traders should exercise caution when taking long positions. It is essential to keep an eye on any major news events or developments in the cryptocurrency space that may impact the price of Bitcoin.

USD dips after US survey, new home sales data

A pack of US data was released at 3:00 pm BST today. While both soft and hard data was released, the market was more focused on the former, especially Conference Board consumer confidence reading for April. CB reading turned out to be a disappointment with headline index dropping from 104.2 to 101.3 (exp. 104.0). Lower reading was driven by a drop in expectations subindex. Other data released simultaneously to CB reading turned out to be mixed - new home sales increased 9.6% MoM in March and beat expectations while Richmond Fed index came in lower than expected.

US data released at 3:00 pm BST today

Conference Board Consumer Confidence for April:101.3 vs 104.0 expected (104.2 previously)
Present situation: 151.1 vs 151.1 previously
Expectations: 68.1 vs 73.0 previously
Richmond Fed manufacturing index for April: -10.0 vs -8.0 expected (-5.0 previously)
New home sales for March: 683k vs 630k expected (640k previously)

Markets barely saw any reaction to the release of US data. USD ticked lower with EURUSD attempting to halt a decline in the 1.10 area while US index futures moved slightly higher following the release.

EURUSD attempts to bounce off the 1.1000 area after release of US survey and housing market data.

AUDUSD

Investors' morning attention in the FX market turned towards Australia, where we learned the latest inflation data. Australia's headline CPI came in at 1.4% k/k in Q1 2023 (versus the expected 1.3%). However, the AUDUSD pair saw declines, dictated by a lower core inflation reading (1.2% quarter-on-quarter versus expectations of 1.4%). By weight, it is core inflation that is the more important factor creating predictions for future RBA policy.

The Reserve Bank of Australia has forecast and continues to forecast a slowdown in inflation in the near future. The bank's rhetoric comments relatively bluntly that changes in monetary policy have a lagged effect on economic activity and its indicators. The combination of these two factors persuaded the RBA to hold the cash rate steady at its April meeting, and today's decline in core inflation will add to the case for another pause at the RBA's next meeting on 2 May. At the moment, the swap market is pricing in a near 80% probability of holding rates at 3.6%.

Looking at the technical situation of the AUDUSD currency pair, we can see that the AUD is weakening against the US dollar and is currently descending into the support area defined by the March 2023 lows and the 61.8% Fibo retracement of the upward wave initiated in October 2022. The nearest region of resistance is the confluence of the 50-, 100- and 200-day exponential moving averages marked on the chart.

Gold

Risky assets, like equities or commodity currencies, dipped shortly before the Wall Street cash session opened following a report from CNBC on First Republic Bank. According to the media piece, the US government is currently unwilling to intervene to save First Republic Bank. First Republic Bank is on watch after Q1 earnings release highlighted the bank was close to collapse during recent US banking turmoil and that this risk has not waned yet.

S&P 500 futures (US500) dropped around 0.2% on the news. Interestingly, we also saw a move lower in USD with GBPUSD jumping above 1.25 mark and EURUSD moving closer to 1.11 handle. Safe haven flows as well as weaker USD provided fuel for around-0.5% jump on gold market, with precious metal climbing above the $2,000 mark.

GOLD jumped above the 200-hour moving average and $2,000 mark following CNBC report on First Republic Bank.

USDJPY

USDJPY is one of the FX pairs that may see elevated volatility until the end of the week. This is because of a number of top-tier releases and events from the United States and Japan, scheduled for the final two days of the week. Traders will be offered a flash release of Q1 GDP report from the United States today at 1:30 pm BST and PCE inflation data for March tomorrow at 1:30 pm BST. In between those two releases, the Bank of Japan will announce its monetary policy decision.

The US GDP report is expected to show a slowdown in annualized growth rate from 2.6% in Q4 2022 to 2.0% in Q1 2023. PCE inflation for March is expected to show deceleration in core measure from 4.6 to 4.5% YoY. However, a rate decision from the Bank of Japan is potentially the biggest volatility event of the three. This will be the first BoJ meeting after Ueda took over as governor and because of that there are hopes that he may push for a change in BoJ's ultra-loose monetary policy. While it looks rather unlikely that any major policy change will be delivered tomorrow, one cannot rule out significant changes in an accompanying statement. Any hints at a hawkish shift could be a significant driver for USDJPY moves.

Taking a look at USDJPY chart at H4 interval, we can see that the pair has been trading in an upward channel since late-March. Advance was halted recently at 61.8% retracement of the downward move launched on March 8, 2023 (134.77 area) and the pair started to pull back. However, unless we see a break below the lower limit of the channel and below the lower limit of the Overbalance structure later on, technical picture continues to favor buyers.

3 markets to watch this week

First week of May looks busy, especially the second half of it, as investors will be offered top-tier macro data from North America as well as rate decisions from Fed and ECB. Stock markets will continue to react to earnings. Among top earnings releases next week one can find Apple, AMD and Qualcomm. Be sure to watch GOLD, USDCAD and US100.

GOLD
Investors will get rate decisions from two major central banks next week - Fed on Wednesday, 7:00 pm BST and ECB on Thursday, 12:45 pm BST. Both banks are expected to deliver 25 basis point rate hikes. Forward guidance will be crucial - hint that rate hike cycle is about to be paused, or nears its end, could be an important mover for GOLD which has recently struggled to climb back above $2,000 per ounce. On the other hand, hawkish guidance would be negative for precious metals and can add more fuel to recent pullback.

USDCAD

While central bank decisions will be the most closely watched events in the week ahead, investors will also be offered some top-tier macro releases. USDCAD may experience elevated volatility on Friday as jobs reports for April from the United States and Canada will be released at 1:30 pm BST. Apart from that, USD may also see some moves on the release of manufacturing ISM (Monday, 3:00 pm BST), ADP employment report (Wednesday, 1:15 pm BST) and services ISM (Wednesday, 3:00 pm BST).

US100

Solid earnings reports from Meta Platforms, Microsoft and Alphabet helped lift sentiment towards the tech sector this week. Apple, the final of the 5 US mega-tech companies, will report earnings next week on Thursday after the close of the Wall Street session. Earnings reports from two semiconductor companies - Advanced Micro Devices (Tuesday, after market close) and Qualcomm (Wednesday, after market close) - may provide additional fuel for moves on Nasdaq-100 index (US100).

EURUSD

EURUSD saw a fairly dramatic reversal late in 2022 when it turned out that the energy crisis in Europe was softer than feared. The pair was trading close to 0.95 at the end of September but has rallied all the way to 1.10 since then. Could it be primed for a larger correction?

When looking at the D1 interval one can spot a nearly completed 5- wave structure. The current wave runs along the upwards corridor and while we saw 2023 highs last week, the pair currently tests the lower limit of the channel. A breakout lower could therefore result not just in profit taking but possibly in a larger ABC corrective structure. One should be vigilant for a larger move amid reduced volatility during the Labour Day.

A breakout lower – should it occur – could be a warning signal for other markets as well as the EURUSD rally accompanied gains on other risk-on markets, especially European equities. With DE30 at the highest since January 2022 and not too far off ATH the stakes are high. Should the pair break lower out of the channel, a larger corrective structure could be initiated.

EURUSD in Breakout Mode

The EUR/USD continues to go sideways in a tight trading range holding above the moving average (blue line).

The market is still Always In Long. However, the past five trading days have had a lot of overlapping bars. This increases the risk of more trading range price action.

The bulls want the tight bull channel to continue up, and the bears want a downside breakout and test of prior lower highs, such as April 17th.

The bears need to get a close below the moving average. Without it, traders will continue to buy at the moving average, betting it will act as support.

At the moment, the odds are that the bull channel that began in March will convert into a trading range and test prior lower highs. However, without a downside breakout, the market will probably have to go sideways and develop more selling pressure.

GBPCHF All set to fall

GBPCHF is currently at 1.1198 in a range and looking for a breakout of slope support. We are in the start of a channel, and we are looking for a continuation to the 1.000 Fibo at 1.1149 with a further target the ATR target at the 1.1125 area.

Watch the USDX for direction. The average daily true range (ATR) for the pair is 69 pips per day and it’s 180 day average is 82 pips per day. USDX is currently moving up but at a range top-watch for it to short.

USDCAD

Despite natural gas price sideways fluctuation between 1.950 support and 2.500 resistance, the major indicators provide the negative momentum again, to increase the chances of renewing the negative attempts in the near term and medium term period.

Succeeding to break 1.950 support line will open the way to form new bearish waves to target the historical support at 1.4800 followed by reaching the psychological support at 1.

Gold - Chart of the Day

GOLD managed to break the key resistance at 2010.5$ during yesterday's session, and left the local consolidation, which was related to the rebound on EURUSD. Earlier, the price of this precious metal reacted several times to the support at $1972, which resulted from the lower limit of the 1:1 structure. According to the Overbalance methodology, the upward trend is in force, and breaking the aforementioned resistance at 2010.5$, may open the way for an attack on the recent highs at 2048$. This evening, due to the FOMC decision, volatility on the USD should be elevated, and consequently we should see bigger movements on gold as well.

The decision should not come as a surprise because the market has long been considering the scenario of a 25 basis point hike and keeping the option of another hike in June. Nevertheless, investors will focus on the Fed announcement and the further trajectory of monetary policy. The key question is whether any interest rate cuts are being considered this year.