The UK housing market has a noticeable impact on investor sentiment towards the Pound, and reversals of the former to growth have been closely associated with a rebound in GBP.
Earlier in March, the GBPUSD successfully defended the bullish uptrend for a second time, holding above the 200-day moving average and quickly returning to territory above $1.2000. Before that, the pair experienced a similar pullback in December.
In addition to the unexpected upturn in mortgage activity, investors should also look for a sustained rise in inflation. These reports pressure the Bank of England to tighten monetary policy. And this is good news for the British Pound, where interest rates and bond yields are lower than in the US.
Earlier in March, the GBPUSD successfully defended the bullish uptrend for a second time, holding above the 200-day moving average and quickly returning to territory above $1.2000. Before that, the pair experienced a similar pullback in December.
In addition to the unexpected upturn in mortgage activity, investors should also look for a sustained rise in inflation. These reports pressure the Bank of England to tighten monetary policy. And this is good news for the British Pound, where interest rates and bond yields are lower than in the US.
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For most of modern history, UK government bond yields have been higher than their US counterparts. This has changed in the zero-rate era. Last year appears to have ended that era, so it would not be surprising to see a return to the historical norm again. Inflation and housing market data so far support this idea.
If we are right, such a reassessment should return interest in the Pound in the foreign exchange market. GBPUSD is now trading at 1.2325, near the year's highs and in line with the cyclical lows of 2016-2020.
If the Pound resurfaces above this former support, a direct route to 1.35-1.40 will open up for it before the end of the year.
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If we are right, such a reassessment should return interest in the Pound in the foreign exchange market. GBPUSD is now trading at 1.2325, near the year's highs and in line with the cyclical lows of 2016-2020.
If the Pound resurfaces above this former support, a direct route to 1.35-1.40 will open up for it before the end of the year.
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#WaveAnalysis
#CADJPY broke key resistance 97.20
• Likely to rise to resistance level 98.60
CADJPY continues to rise sharply after the earlier breakout of the key resistance 97.20 (which stopped the previous minor correction (iv) in March).
The breakout of the key resistance 97.20 accelerated the active short-term upward correction 2, which belongs to the higher order impulse wave (C) from the end of February.
CADJPY can be expected to rise further toward the next resistance level 98.60 (which reversed the price earlier this month).
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#CADJPY broke key resistance 97.20
• Likely to rise to resistance level 98.60
CADJPY continues to rise sharply after the earlier breakout of the key resistance 97.20 (which stopped the previous minor correction (iv) in March).
The breakout of the key resistance 97.20 accelerated the active short-term upward correction 2, which belongs to the higher order impulse wave (C) from the end of February.
CADJPY can be expected to rise further toward the next resistance level 98.60 (which reversed the price earlier this month).
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#WaveAnalysis
#EUR50 broke pivotal resistance level 4200.00
• Likely to rise to resistance level 4300.00
EUR50 index under the bullish pressure after the price broke the pivotal resistance level 4200.00 (former strong support from February).
The breakout of the resistance level 4200.00 accelerated the active short-term upward impulse wave (iii), which belongs to the sharp impulse wave C from December.
Given the strong uptrend, EUR50 index can then be expected to rise further toward the next resistance level 4300.00 (which reversed the two of the previous impulse waves (iii) and (v)).
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#EUR50 broke pivotal resistance level 4200.00
• Likely to rise to resistance level 4300.00
EUR50 index under the bullish pressure after the price broke the pivotal resistance level 4200.00 (former strong support from February).
The breakout of the resistance level 4200.00 accelerated the active short-term upward impulse wave (iii), which belongs to the sharp impulse wave C from December.
Given the strong uptrend, EUR50 index can then be expected to rise further toward the next resistance level 4300.00 (which reversed the two of the previous impulse waves (iii) and (v)).
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S&P500 futures are trading at a 3-week high. Returning to the territory above 4000 and exiting above the previous week's highs set up optimism. Since March 13, the S&P500 daily candlesticks have been showing an uptrend.
The index is trading above levels reached as a first reaction to the Fed's comments last Wednesday. The subsequent selloff at the end of last week drew more buyers into the stock.
The positive momentum is supported by the stabilisation of the financial sector (no new bankruptcies) and growing expectations that the Fed has finished raising rates along with solid macroeconomic data.
On the technical side, the bulls managed to keep the S&P500 above the 200-day moving average last week. As a result of trading on Wednesday, the index closed above the 50-day, which failed last Wednesday.
Entering territory above this curve triggered relatively deep selloffs in March, so cautious traders may prefer to wait until Thursday or Friday's close (the last trading day of the month and quarter).
The index is trading above levels reached as a first reaction to the Fed's comments last Wednesday. The subsequent selloff at the end of last week drew more buyers into the stock.
The positive momentum is supported by the stabilisation of the financial sector (no new bankruptcies) and growing expectations that the Fed has finished raising rates along with solid macroeconomic data.
On the technical side, the bulls managed to keep the S&P500 above the 200-day moving average last week. As a result of trading on Wednesday, the index closed above the 50-day, which failed last Wednesday.
Entering territory above this curve triggered relatively deep selloffs in March, so cautious traders may prefer to wait until Thursday or Friday's close (the last trading day of the month and quarter).
However, we are optimistic this time, as the S&P500 has been actively buying back on dips below the 200-day average earlier this month, and the curve has been upward-looking since last week.
On the weekly timeframes, we note that this year's rally has pushed the market above the downtrend line that formed last year's downtrend. The March decline was an attempt to return to this trend, but it did not work out - the S&P500 was redeemed on touching this line.
In addition, the bulls managed to stretch out last week, closing it above the 50-week average. To a large extent, the buying strength this week is supported by the confidence of long-term investors that the market has not fallen into a tailspin.
We are now in the early stages of a bull market, the low point of which nicely coincided with the touch of the 200-week average and 50% correction from the post-COVID growth.
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On the weekly timeframes, we note that this year's rally has pushed the market above the downtrend line that formed last year's downtrend. The March decline was an attempt to return to this trend, but it did not work out - the S&P500 was redeemed on touching this line.
In addition, the bulls managed to stretch out last week, closing it above the 50-week average. To a large extent, the buying strength this week is supported by the confidence of long-term investors that the market has not fallen into a tailspin.
We are now in the early stages of a bull market, the low point of which nicely coincided with the touch of the 200-week average and 50% correction from the post-COVID growth.
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Preliminary estimates for Germany indicated an increase in consumer prices in March by 0.8% m/m and 7.4% y/y, which is higher than the average growth forecasts of 0.7% m/m and 7.3% y/y.
It would be a mistake to celebrate victory over inflation in the eurozone. Germany's monthly price growth remains inconsistent with the ECB's 2% annual growth target. The average monthly price growth rate over the past six months is 0.52%, resulting in a yearly increase of 6.2%, and over the past three months, it has added by an average of 0.9%, consistent with annual rate 10.4%.
The acceleration of inflation over the past three months is striking, and it is due to a tight labour market pushing up service prices and the inflation carryover from the euro's weakening earlier last year.
The ECB may try to overcome these hurdles through monetary tightening, which will simultaneously constrain business activity in the region and strengthen the euro. We should expect a further decisive tightening from the European Central Bank.
It would be a mistake to celebrate victory over inflation in the eurozone. Germany's monthly price growth remains inconsistent with the ECB's 2% annual growth target. The average monthly price growth rate over the past six months is 0.52%, resulting in a yearly increase of 6.2%, and over the past three months, it has added by an average of 0.9%, consistent with annual rate 10.4%.
The acceleration of inflation over the past three months is striking, and it is due to a tight labour market pushing up service prices and the inflation carryover from the euro's weakening earlier last year.
The ECB may try to overcome these hurdles through monetary tightening, which will simultaneously constrain business activity in the region and strengthen the euro. We should expect a further decisive tightening from the European Central Bank.
#WaveAnalysis
#Gold reversed from key support level 1950
• Likely to rise to resistance level 2000
Gold recently reversed up from the key support level 1950 (former strong resistance from January and February).
The upward reversal from the support level 1950 forms the 3rd consecutive upward reversal pattern Piercing Line – pointing toward the higher probability of further gains.
Given the clear uptrend Gold can then be expected to rise further toward the next round resistance level 2000 – from where the price is likely to correct down.
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#Gold reversed from key support level 1950
• Likely to rise to resistance level 2000
Gold recently reversed up from the key support level 1950 (former strong resistance from January and February).
The upward reversal from the support level 1950 forms the 3rd consecutive upward reversal pattern Piercing Line – pointing toward the higher probability of further gains.
Given the clear uptrend Gold can then be expected to rise further toward the next round resistance level 2000 – from where the price is likely to correct down.
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#WaveAnalysis
#USDCAD under bearish pressure
• Likely to fall to support level 1.3400
USDCAD currency pair under the bearish pressure after the price broke the key support level 1.3560 (low of the previous correction (iv)) intersecting with the 50% Fibonacci correction of the sharp upward impulse from February.
The breakout of the support level 1.3560 accelerated the active short-term upward impulse wave (c), which belongs to the ABC correction 2 from the start of this month.
USDCAD currency pair can then be expected to fall further toward the next support level 1.3400 (target price for the completion of the active impulse wave (c)).
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#USDCAD under bearish pressure
• Likely to fall to support level 1.3400
USDCAD currency pair under the bearish pressure after the price broke the key support level 1.3560 (low of the previous correction (iv)) intersecting with the 50% Fibonacci correction of the sharp upward impulse from February.
The breakout of the support level 1.3560 accelerated the active short-term upward impulse wave (c), which belongs to the ABC correction 2 from the start of this month.
USDCAD currency pair can then be expected to fall further toward the next support level 1.3400 (target price for the completion of the active impulse wave (c)).
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#WaveAnalysis
#GBPUSD broke resistance level 1.22664
• Likely to rise to resistance level 1.2440
GBPUSD rising after the pair broke above the resistance level 1.22664 (top of the previous correction 2 from the middle of February).
The breakout of the resistance level 1.22664 continues the active short-term impulse wave C, which belongs to the intermediate ABC correction (2) from the start of March.
Given the strong uptrend and the widespread dollar sales, GBPUSD currency pair can then be expected to rise further toward the next resistance level 1.2440 (monthly high from December and January and the target price for the completion of the active impulse wave C).
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#GBPUSD broke resistance level 1.22664
• Likely to rise to resistance level 1.2440
GBPUSD rising after the pair broke above the resistance level 1.22664 (top of the previous correction 2 from the middle of February).
The breakout of the resistance level 1.22664 continues the active short-term impulse wave C, which belongs to the intermediate ABC correction (2) from the start of March.
Given the strong uptrend and the widespread dollar sales, GBPUSD currency pair can then be expected to rise further toward the next resistance level 1.2440 (monthly high from December and January and the target price for the completion of the active impulse wave C).
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Bitcoin Adjusting First Quarter Gains
The crypto market's capitalisation fell by 1.1% over the past day to 1.17 trillion, which resembles profit-taking after 50% of market growth in the first quarter of this year.
Bitcoin underwent an even more active sell-off the night before, losing about 2% in 24 hours, but holding near $ 28K, bringing the result of the first quarter to 70%. A full correction from these levels involves a pullback to $ 26K or even $ 25K.
The fact that the stock market has maintained a positive bias over the past day, and the dollar has been declining, additionally supports the idea of a local shake-up of crypto portfolios, but not the return of pessimism. If this happens, anxiety will kick in when the decline is under $ 25K.
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The crypto market's capitalisation fell by 1.1% over the past day to 1.17 trillion, which resembles profit-taking after 50% of market growth in the first quarter of this year.
Bitcoin underwent an even more active sell-off the night before, losing about 2% in 24 hours, but holding near $ 28K, bringing the result of the first quarter to 70%. A full correction from these levels involves a pullback to $ 26K or even $ 25K.
The fact that the stock market has maintained a positive bias over the past day, and the dollar has been declining, additionally supports the idea of a local shake-up of crypto portfolios, but not the return of pessimism. If this happens, anxiety will kick in when the decline is under $ 25K.
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Dollar preparing to stare into the abyss
The dollar index is ending with a decline for the fourth of the last five weeks, almost completely erasing the gains from February's rise. Although it cannot be ruled out that the quarterly portfolio shakeout will create traction in the Dollar, it is still more likely that the US currency will fall further in the coming quarters.
We consider the sharp reversal of the Dollar from rising to falling at the end of September a turning point. Before that, the DXY had been gaining following an increasingly tight monetary policy stance by the Fed. But after last September's meeting, hopes of an imminent end to tightening loomed on the horizon for financial markets.
The dollar index is ending with a decline for the fourth of the last five weeks, almost completely erasing the gains from February's rise. Although it cannot be ruled out that the quarterly portfolio shakeout will create traction in the Dollar, it is still more likely that the US currency will fall further in the coming quarters.
We consider the sharp reversal of the Dollar from rising to falling at the end of September a turning point. Before that, the DXY had been gaining following an increasingly tight monetary policy stance by the Fed. But after last September's meeting, hopes of an imminent end to tightening loomed on the horizon for financial markets.
The link between the Dollar and Fed policy expectations has become even closer this year. In January, the Dollar was accelerating its fall as markets were banking on a rate cut even before the end of the year. There was a sharp reversal in February when high inflation put a 50-point hike back on the FOMC agenda for March. In March, these expectations melted away with the banks.
The banks' problems are tightening financial conditions as rates do, according to Powell at a press conference on 22 March. This was a hint that further rate rises are not guaranteed.
In contrast, other regions may need to continue their crusade for inflation, thereby reducing the spreads of debt securities yields.
This is a typical story in the currency market, with the Fed at the forefront of the monetary cycle, which initially forms 12-18 months of dollar growth on rate hikes, but then triggers a move in the opposite direction. In the last six months, we have seen the quite typical and understandable reversal of the Dollar.
Last year, the rise in the Dollar also helped with inflation, bringing the expected policy reversal closer to easing. However, now it is the turn of other developed country currencies, where central banks will try to tighten financial conditions to suppress inflation.
The banks' problems are tightening financial conditions as rates do, according to Powell at a press conference on 22 March. This was a hint that further rate rises are not guaranteed.
In contrast, other regions may need to continue their crusade for inflation, thereby reducing the spreads of debt securities yields.
This is a typical story in the currency market, with the Fed at the forefront of the monetary cycle, which initially forms 12-18 months of dollar growth on rate hikes, but then triggers a move in the opposite direction. In the last six months, we have seen the quite typical and understandable reversal of the Dollar.
Last year, the rise in the Dollar also helped with inflation, bringing the expected policy reversal closer to easing. However, now it is the turn of other developed country currencies, where central banks will try to tighten financial conditions to suppress inflation.
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We also see the beauty of the technical picture in the Dollar. Thanks to the rise in February, the oversold nature of the Dollar has been removed.
That said, on the weekly timeframes, the DXY rebound in March lost strength on the approach to the 50-week average, leaving it within a long-term bearish trend.
If we are right, the immediate downside target looks to be the area of the year's low at 100.7 on the DXY against the current 102.
A consolidation below that level would cause the Dollar to stare into the abyss, where there is only minor technical support in the area of the 90.00 level.
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That said, on the weekly timeframes, the DXY rebound in March lost strength on the approach to the 50-week average, leaving it within a long-term bearish trend.
If we are right, the immediate downside target looks to be the area of the year's low at 100.7 on the DXY against the current 102.
A consolidation below that level would cause the Dollar to stare into the abyss, where there is only minor technical support in the area of the 90.00 level.
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#WaveAnalysis
#USDCAD under the bearish pressure
• Likely to fall to support level 1.3300
USDCAD under the bearish pressure after the price broke the key support level 1.3555 (which has been reversing the price from the middle of 2021, as can be seen below), intersecting with the 50% Fibonacci correction of the upward impulse from the start of February.
The price then broke the long-term support trendline from June – which accelerated the active ABC correction 2.
USDCAD can then be expected to fall further toward the next support level 1.3300 (base of the Morning Star from the middle of February).
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#USDCAD under the bearish pressure
• Likely to fall to support level 1.3300
USDCAD under the bearish pressure after the price broke the key support level 1.3555 (which has been reversing the price from the middle of 2021, as can be seen below), intersecting with the 50% Fibonacci correction of the upward impulse from the start of February.
The price then broke the long-term support trendline from June – which accelerated the active ABC correction 2.
USDCAD can then be expected to fall further toward the next support level 1.3300 (base of the Morning Star from the middle of February).
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#WaveAnalysis
#EURAUD reversed from resistance level 1.6235
• Likely to fall to support level 1.5880
EURAUD recently reversed down from the major resistance level 1.6235 (which has been reversing the price from the middle of 2021, as can be seen below)
The resistance level 1.6235 was strengthened by the upper weekly and the daily Bollinger Band.
Given the overbought weekly Stochastic indicator, EURAUD can then be expected to fall toward the next support level 1.5880 (former resistance from the end of 2022).
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#EURAUD reversed from resistance level 1.6235
• Likely to fall to support level 1.5880
EURAUD recently reversed down from the major resistance level 1.6235 (which has been reversing the price from the middle of 2021, as can be seen below)
The resistance level 1.6235 was strengthened by the upper weekly and the daily Bollinger Band.
Given the overbought weekly Stochastic indicator, EURAUD can then be expected to fall toward the next support level 1.5880 (former resistance from the end of 2022).
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Over the weekend, OPEC+ unexpectedly announced a production cut of 1.16 million bpd. Separately, Russia extended its voluntary cut by 0.5 million barrels from March to the end of the year.
The unexpected decision caused oil to jump at the week's opening, bringing the price back to the upper end of the trading range it had been in since December before breaking through its lower boundary.
The cartel presents the decision as an attempt to balance supply and demand in the market. And this is an interesting passage, given that the developed economies are actually performing noticeably better than expected of them a couple of quarters ago. The US has not increased production, and OPEC+ has changed its original plan to restore production.
It is more accurate to call the latest decision an attempt to support the price, which briefly moved below the $65/bbl WTI level last month, with Brent testing support at $70.
The unexpected decision caused oil to jump at the week's opening, bringing the price back to the upper end of the trading range it had been in since December before breaking through its lower boundary.
The cartel presents the decision as an attempt to balance supply and demand in the market. And this is an interesting passage, given that the developed economies are actually performing noticeably better than expected of them a couple of quarters ago. The US has not increased production, and OPEC+ has changed its original plan to restore production.
It is more accurate to call the latest decision an attempt to support the price, which briefly moved below the $65/bbl WTI level last month, with Brent testing support at $70.
Looking at the price dynamics from the side of tech analysis, it is worth being cautious about further purchases. The price stabilised at the upper boundary of the trading range, approaching the overbought area on the RSI on the daily charts. The 200-day moving average (now $83.58) also points into the same area. One dollar lower is the reversal area for oil from December.
Short-term selling strength should be expected in the $82.50-83.5 area. If that happens, you should be prepared for oil to close the gap at the start of this week.
In our view, traders should be prepared for the US trying to put pressure back on oil quotations, as it is an important tool to keep inflation and inflation expectations in check.
Nevertheless, a quicker development cannot be ruled out with another short squeeze in oil and a capitulation of the bears. After the price consolidates at the 200-day average, this scenario is worth considering, which would open a direct path to the $85-90 area.
Short-term selling strength should be expected in the $82.50-83.5 area. If that happens, you should be prepared for oil to close the gap at the start of this week.
In our view, traders should be prepared for the US trying to put pressure back on oil quotations, as it is an important tool to keep inflation and inflation expectations in check.
Nevertheless, a quicker development cannot be ruled out with another short squeeze in oil and a capitulation of the bears. After the price consolidates at the 200-day average, this scenario is worth considering, which would open a direct path to the $85-90 area.
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#WaveAnalysis
#GBPUSD under the bullish pressure
• Likely to rise to resistance level 1.2600
GBPUSD under the bullish pressure after the price broke the key resistance level 1.2440 (which has been reversing the price from the middle of 2022, as can be seen below).
The breakout of the resistance level 1.2440 accelerated the C-wave of the active ABC correction (2).
Given the strongly bullish sterling sentiment sent today, GBPUSD can then be expected to rise further toward the next resistance level 1.2600 (target for the completion of the active wave C).
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#GBPUSD under the bullish pressure
• Likely to rise to resistance level 1.2600
GBPUSD under the bullish pressure after the price broke the key resistance level 1.2440 (which has been reversing the price from the middle of 2022, as can be seen below).
The breakout of the resistance level 1.2440 accelerated the C-wave of the active ABC correction (2).
Given the strongly bullish sterling sentiment sent today, GBPUSD can then be expected to rise further toward the next resistance level 1.2600 (target for the completion of the active wave C).
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#WaveAnalysis
#Nasdaq100 broke resistance area
• Likely to rise to resistance level 13400.00
Nasdaq100 index recently broke the resistance area located between the resistance levels 12885.00 (which has been reversing the price from the start of February) and 13160.00
The breakout of this resistance area accelerated the active impulse wave 3 of the intermediate impulse wave (C) from last month.
Given the clear daily uptrend, Nasdaq-100 index can then be expected to rise further toward the next resistance level 13400.00 (target price for the completion of the active impulse wave 3).
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#Nasdaq100 broke resistance area
• Likely to rise to resistance level 13400.00
Nasdaq100 index recently broke the resistance area located between the resistance levels 12885.00 (which has been reversing the price from the start of February) and 13160.00
The breakout of this resistance area accelerated the active impulse wave 3 of the intermediate impulse wave (C) from last month.
Given the clear daily uptrend, Nasdaq-100 index can then be expected to rise further toward the next resistance level 13400.00 (target price for the completion of the active impulse wave 3).
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The cryptocurrency market has gained over 3% in the last 24 hours, reaching $1.21 trillion. Interestingly, #Bitcoin has not kept pace with the overall growth, adding 2.3% to $28.55K over the same period. #Ethereum, on the other hand, has risen by 5.5% to $1910.
The first cryptocurrency is stuck in local highs, above which it has been unable to consolidate since 19th March. This prolonged consolidation sets the stage for the next big move. The resolution of this consolidation is likely to be linked to the market's reaction to Friday's Non-Farm Payrolls. Technically, a pullback to the $27k level to correct the rally of the 10th of March is likely.
A more bullish scenario is offered by Ethereum, which broke through resistance in a sharp move yesterday and continues to gain traction, reaching an 8-month high. The dynamics within the Fibonacci theory suggest that a target near $2150 could be considered.
The first cryptocurrency is stuck in local highs, above which it has been unable to consolidate since 19th March. This prolonged consolidation sets the stage for the next big move. The resolution of this consolidation is likely to be linked to the market's reaction to Friday's Non-Farm Payrolls. Technically, a pullback to the $27k level to correct the rally of the 10th of March is likely.
A more bullish scenario is offered by Ethereum, which broke through resistance in a sharp move yesterday and continues to gain traction, reaching an 8-month high. The dynamics within the Fibonacci theory suggest that a target near $2150 could be considered.