RBNZ holds, UK inflation, Fed Minutes ahead

Next 24 hours: Pound and New Zealand Dollar stand out

Today’s report: RBNZ holds, UK inflation, Fed Minutes ahead

We expect activity will be picking up today with some major first tier calendar risk on the docket. At the moment, we’re seeing very tight ranges this week as currencies consolidate recent gains against the US Dollar and US equities consolidate just off record high levels.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.0900 – Figure – Medium
  • R1 1.0896 - 16 May high – Medium
  • S1 1.0836 - 17 May low– Medium
  • S2 1.0724 – 9 May low – Strong

EURUSD – fundamental overview

The Euro wasn't able to do much on Tuesday after taking in a German producer prices miss and a Eurozone trade surplus number that fell short of expectation. Key standouts on Wednesday’s calendar come from UK inflation, an ECB Lagarde speech, US existing home sales, and the Fed Minutes.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The latest push to a fresh 2024 high beyond 1.2830 confirms the outlook and opens the door for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should now be well supported ahead of 1.2000.

  • R2 1.2804 – 21 March high – Medium
  • R1 1.2726 – 20 May high – Medium
  • S1 1.2578 – 15 May low – Medium
  • S2 1.2446 – 9 May low – Strong

GBPUSD – fundamental overview

Activity is expected to pick up on Wednesday as the market takes in the latest round of inflation data in the UK. There has been a little more attention around today's numbers with the BOE expecting the data to show headline CPI has already fallen near objective on account of a drop in regulated energy prices. Other key standouts on today's calendar include an ECB Lagarde speech, US existing home sales, and the Fed Minutes.

USDJPY – technical overview

The market remains confined to a strong uptrend, most recently extending to a multi-year high through 160.00. Key support comes in at 151.95, with only a weekly close below to delay the constructive outlook.

  • R2 157.99 – 1 May high – Medium
  • R1 156.78 – 14 May high – Medium
  • S1 153.60 – 16 May low – Medium
  • S2 151.86 – 3 May low – Strong

USDJPY – fundamental overview

Japan trade data was out earlier today and overall, produced a deeper than expected deficit. As far as price action goes, it's been more of the same Yen selling in the absence of any fresh jawboning from the Ministry of Finance or Bank of Japan. Key standouts on Wednesday’s calendar come from UK inflation, an ECB Lagarde speech, US existing home sales, and the Fed Minutes.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.6800– Figure – Medium
  • R2 0.6715 – 16 May high – Medium
  • S1 0.6620– 15 May low – Medium
  • S2 0.6558 – 8 May low – Strong

AUDUSD – fundamental overview

The Australian Dollar hasn't done much in a quiet Wednesday session lacking in first tier data. The tight ranges in markets have also kept things quiet for the Australian Dollar. We did however see some mild demand on the back of the more hawkish than expected RBNZ decision. Key standouts on Wednesday’s calendar come from UK inflation, an ECB Lagarde speech, US existing home sales, and the Fed Minutes.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3847 – 16 April/2024 high – Strong
  • R1 1.3785 – 30 April high – Medium
  • S1 1.3586 – 10 May low – Medium
  • S2 1.3547 – 9 April low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been an underperformer of late and got another dose of this on Tuesday after Canada inflation data came in softer than expected. Market odds for a June Bank of Canada rate cut have risen well back above 50% after sitting down near 40% a week ago. Key standouts on Wednesday’s calendar come from UK inflation, an ECB Lagarde speech, US existing home sales, and the Fed Minutes.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

  • R2 0.6200 – Figure – Medium
  • R1 0.6153 – 22 May high– Medium
  • S1 0.6031 – 15 May low – Medium
  • S2 0.5981 – 8 May low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been better bid on Wednesday after the RBNZ left rates on hold but delivered a more hawkish leaning communication than expected. The door was even left open to the possibility of rate hikes, with the central bank still not as comfortable with inflation coming back down on the schedule it would have liked to have seen. Key standouts on Wednesday’s calendar come from UK inflation, an ECB Lagarde speech, US existing home sales, and the Fed Minutes.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended, begging for a deeper correction ahead. At the same time, the latest bullish breakout to a fresh record high beyond the 2024 high opens the door for the next measured move upside extension targeting the 5650 area. Key support comes in at 4928.

  • R2 5400 – Round Number – Strong
  • R1 5332 – 22 May/Record high – Medium
  • S1 5196 – 14 May low – Medium
  • S2 5132 – 6 May low – Medium

US SPX 500 – fundamental overview

Though we have seen a healthy adjustment of investor expectations towards the amount of rate cuts in 2024, the market still hopes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid into dips and consistently pushing record highs.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2000 on a monthly close basis.

  • R2 2500 – Psychological – Strong
  • R1 2451 – 20 May Record high – Medium
  • S1 2371 – 16 May low – Medium
  • S2 2332– 13 May low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an end.

Peformance chart: 30-Day Performance vs. US dollar (%)

Suggested reading

Daily Reports Global FX Insights   joelkruger  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.