EUR/USD: GDP of Eurozone grew by 0.4% in the first quarter
The EUR/USD currency pair shows a corrective movement, holding at 1.0881, thanks to recently published macroeconomic data.
In the first quarter, eurozone GDP grew from -0.1% to 0.3%, in line with forecasts and reaching an annual growth of 0.4% against the previous 0.1%. This trend is supported by an increase in the March industrial production index, which increased by 0.6% month-on-month, exceeding expectations set at 0.5%, and reducing the annual decline from -6.3% to -1.0%. On Friday, the market's attention will be focused on consumer inflation data: it is assumed that in April the consumer price index will maintain the level of 0.6% monthly and 2.4% per annum. The day before, Claes Noth, head of the Dutch Central Bank, expressed the opinion that price pressures in the eurozone are changing, which increases the chances of achieving the inflation target next year. In turn, Pierre Wunsch, the head of the Central Bank of Belgium, indicated that the European Central Bank is considering a two-fold reduction in interest rates.
- Resistance levels: 1.0920, 1.1010.
- Support levels: 1.0840, 1.0710.
USD/JPY: economic slowdown in Japan continues
The USD/JPY currency pair continues to follow the downward trend set a day earlier, with quotes near the 153.82 mark and an update of the minimum values since May 6.
Analysts attribute the strengthening of the yen to possible currency interventions by the Bank of Japan against the background of weak macroeconomic indicators of the country: GDP for the first quarter decreased by 0.5%, which turned out to be worse than analysts' expectations, which predicted a decrease of 0.3% and stagnation at 0.0%. The annual GDP index fell by 2.0% compared to the previous indicator of 0.0%. The main factor in the deterioration of economic dynamics was the decline in consumer spending, which deepened from -0.4% to -0.7% in the first quarter. Nevertheless, in March, industrial production showed an increase from 3.8% to 4.4% month-on-month and a decrease in the annual decline from -6.7% to -6.2%. A report from the Bank of Japan is expected to be published next week, which will provide additional information on the extent of possible currency interventions.
- Support levels: 153.00, 150.80.
- Resistance levels: 154.80, 156.80.
Silver market overview
The price of silver has moved away from the peak values of February 2021, reached at the beginning of the trading session on Thursday, and has now stabilized around the 29.44 mark.
Silver quotes received support from the latest US inflation data for April, which met analysts' expectations and increased the likelihood of an early rate cut by the US Federal Reserve. The annual consumer price index decreased from 3.5% to 3.4%, remaining above the target level of 2.0%. The monthly rate slowed from 0.4% to 0.3%. Excluding food and energy resources, the base index also decreased from 3.8% to 3.6% per annum and from 0.4% to 0.3% monthly. In addition, the market noted an additional decrease in the index of business activity in the manufacturing sector of the Federal Reserve Bank of New York in May from -14.3 to -15.6 points, while forecasts were -10.0 points. US retail sales stagnated in April after rising 0.6% in the previous month, although an increase of 0.4% was expected.
- Resistance levels: 29.84, 30.15, 30.50, 30.75.
- Support levels: 29.35, 29.00, 28.80, 28.52.
Oil market overview
Last week, WTI crude oil prices tested the level of 77.75 and ended the day above this mark yesterday, supported by a reduction in hydrocarbon reserves and a slowdown in inflation in the United States.
According to a report by the Energy Information Administration of the U.S. Department of Energy (EIA), over the week, the volume of strategic oil reserves in the United States decreased by 2.508 million barrels, which significantly exceeded analysts' expectations of a decrease of 0.400 million barrels, and previous data showed a decrease of 1.362 million barrels, which contributed to the growth of quotations. Oil prices are also supported by the weakening of the US dollar, due to a decrease in inflationary pressure: in April, the consumer price index fell from 0.4% to 0.3%, falling below the expected level of 0.4%, and the base index was 0.3% instead of the expected 0.4%. If the inflation rate continues to slow down, the officials of the Federal Reserve System may take a softer position, which will entail pressure on the national currency and further strengthen energy prices.
- Resistance levels: 81.93, 84.53, 87.47.
- Support levels: 77.75, 75.60, 72.11.