April’s preliminary PMIs and Australia’s CPI rates

The USD remained relatively unchanged against its counterparts yesterday yet the release of the US GDP advance rate for Q1 is expected to increase volatility. On a fundamental level, we note that the sticky US inflation and the Fed’s relative intentions are expected to remain the main factor for USD’s direction, hence we highlight the release of the Core PCE price index for March on Friday and a possible failure of the rates to slow down could provide support for the greenback. On a deeper fundamental level, we note the easing of market worries for the Middle East, which tended to weaken gold’s price. As for US equities markets, we intend to focus on the tech sector and note the release of the earnings reports of Intel (#INTC), Microsoft (#MSFT), Google (#GOOG), Meta (#META), IBM (#IBM) and Amazon (#AMZN).

Back in the FX market the common currency is expected to be moved by the preliminary PMI figures for April with focus being on Germany’s manufacturing sector while ECB’s dovish predisposition for a possible rate cut in the June meeting tends to weigh on the EUR on a monetary level.

On a technical level, EUR/USD maintains a sideways motion just above the 1.0615 (S1) support line. Nevertheless we note that the pair moves in a wide downward channel, while at the same time the RSI indicator remains near the reading of 30 implying a residue of a bearish sentiment among market participants. Also please note that the 20 moving average (MA) and the 100 MA (green line) are pointing downwards implying the possibility of a continuance of the bearish movement. Yet for the bearish outlook to be verified we would require the pair to break the 1.0615 (S1) support line and aim for the 1.0450 (S2) support level. Should for any given reason, the bulls find a chance and take over the reins of the pair’s direction, we may see the pair reversing course and breaking the 1.0740 (R1) resistance line thus paving the way for the 1.0890 (R2) resistance level.    

Aussie traders on the other hand are expected to focus on the release of Australia’s  CPI rates for Q1 tomorrow and a possible slowdown could weigh on the Aussie as it could turn RBA more cautious.

AUD/USD unexpectedly edged higher yesterday breaking the 0.6445 (S1) resistance line, now turned to support. The pair’s price action has also broken the downward trendline that was guiding it, while the RSI indicator is rising from the reading of 30 nearing the reading of 50 and implying that the bearish sentiment of the market for the pair is fading away. Should the bears regain control over the pair’s direction, we may see AUD/USD breaking the 0.6445 (S1) line and aiming for the 0.6285 (S2) support level. Should on the other hand a full buying interest be expressed by the market we may see the pair aiming if not testing breaking the  0.6645 (R1) resistance line. 

We also note that JPY remains quite weak, with JPY traders focusing on BoJ’s interest rate decision, due out on Friday, while market expectations for the bank to maintain a relative dovish stance could weigh on the JPY ahead of the release. On the other hand, we note that BoJ Governor Ueda warned that the bank will not hesitate to hike rates if trend inflation accelerates. Also on a market intervention to the Yen’s rescue by the Japanese Government is possible and actually chances for such a scenario to materialise intensify, given the stark warning of Japanese Finance minister Suzuki. It should be mentioned that in a rare statement Japan, South Korea and the US have agreed to “consult closely” on foreign exchange markets, which could be perceived as a green light by the US for a market intervention. Yet the effect of such an intervention may prove to be temporary.         

Other highlights for the day:

Today we get the preliminary PMI figures for April of the UK and from the US we get the preliminary S&P global PMI figures for April, March’s New Home sales figure and Richmond Fed Composite Index for April while we also note the release of the weekly US API crude oil inventories figure for oil traders. On the monetary front, we note that ECB’s Fernandez Bollo, BoE’s Chief Economist Pill, ECB’s policymaker Nagel and Riksbank Governor Thedeen are scheduled to speak. In tomorrow’s Asian session, we get New Zealand’s trade data for March and we highlight the release of Australia’s CPI for Q1.          

EUR/USD Daily Chart

Support: 1.0615 (S1), 1.0450 (S2), 1.0295 (S3)

Resistance: 1.0740 (R1), 1.0890 (R2), 1.1010 (R3)

AUD/USD Daily Chart

Support: 0.6445 (S1), 0.6285 (S2), 0.6170 (S3)

Resistance: 0.6645 (R1), 0.6735 (R2), 0.6870 (R3)

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