EURUSD: markets expects the Eurozone hawks to weaken the rhetoric on monetary policy
EURUSD is trading at 1.1023 and waiting for the results of the meeting of the ECB officials on monetary parameters, announced at 14:15 GMT+2.
Market participants are in agreement that the European regulator will continue the hawkish vector, but the rate of the interest rate correction remains a subject for disagreement, because the forecast foresees a 0.25% increase in the cost of borrowing, which will be an obvious break for the agency, after the systemic rise of 0.50% in the past. Experts find confirmation of the forecasts in the data of the Eurozone Consumer Goods Price Index, published earlier. In spite of the increase of the index value in April to 7.0% from 6.9%, the core inflation rate, which does not include fuel and food group products, for the first time in the 10-month period, recorded a downward trend of 5.6% against 5.7% in the previous month, while energy prices showed a correction of 2.5% against a decrease of 0.9% in the previous month. Recall that at the end of last week, on April 28, consumer price data from Germany came in for publication, showing a slowdown to 7.6% from 7.8%, beating neutral estimates. Investors note a number of favorable factors provided by the backdrop of positive publications for the prospect of a lower interest rate correction step from the ECB, which will provide significant support for the European currency.
- Support levels: 1.0940, 1.0785.
- Resistance levels: 1.1070 and 1.1200.
GBPUSD: cost of food products continues to grow in the Kingdom
The currency pair GBPUSD is holding near the annual peak at 1.2489, however potential for further growth is exhausted.
A block of macroeconomic statistics interferes with the positive momentum for the greenback as the British Retail Consortium report confirmed that food prices rose by 15.7% YoY in April, the highest level since March 2005, since the start of the indicator publication. Coffee and prepared foods topped the cost increase, and food rose from 17.0% to 17.8% for March. In turn, business activity in the manufacturing sector for April was 47.8 points from 47.9 points last year.
- Resistance levels: 1.2570 and 1.2740.
- Support levels: 1.2370, 1.2180.
Gold analysis
The precious metal is quoted in an uptrend in the region of 2015.0.
Investors began to fix long-term positions, which caused the recent correction of the asset. Thus, the participants of trades opened positions on the low at the end of 2022, on which successfully realized a part of profit. The considerable share of traders opens transactions in gold only now, which is confirmed by statistics of the Chicago Mercantile Exchange, as well as by the U.S. Commodity Futures Trading Commission. According to the CME Group, the contracts have grown considerably, amounting to 329,87 thousand to 215,11 thousand last day, while options positions have risen to 64,79 thousand transactions to 32,13 thousand last day. Options attractiveness more than doubled in daily figure, which shows opening of large positions, and by the situation on the market it's obvious that most of them are "Call" options.
- Resistance levels: 2040.0, 2100.0.
- Support levels: 1980.0, 1920.0.
Crude Oil market analysis
"Black gold" continues to be under pressure amid weak macroeconomic statistics from China and a decline in the yield of banking institutions in the U.S., despite the reduction in production capacity by members of the OPEC+ cartel.
Earlier in the day the benchmark Brent crude fell in value by 5.0% due to the published data on business indices in China. Meanwhile, the manufacturing sector business activity eased to 49.2 points from 51.9, after three months of positive growth, while the service sector slid to 56.4 points from 58.2. China's economy is recovering at a slower pace than expected by the expert community, which may lead to a revision of the fuel volume forecasted the day before for the current year.
Additional pressure on the quotations of hydrocarbons creates a fall in the yield of shares of regional U.S. credit institutions a day earlier, a number of which lost more than 20.0% in a matter of minutes. Financial sphere continues to be in crisis, despite the positive news background of previous week, where it was announced about successful redemption of assets of First Republic Bank by conglomerate JPMorgan Chase & Co. which opened clients' access to their own deposit accounts. If the authorities refrain from the active support of the institutions in the conditions of uncertainty, the national economy may enter the large-scale recession, which is feared by investors, because the U.S. occupies the first place among the energy consumers.
- Resistance levels: 86.70, 88.95 and 94.00.
- Support levels: 75.75, 70.00, 64.85.