USDJPY: dollar is under pressure
The trading instrument USDJPY is showing no signs of losing ground, testing the level of 129.30, continuing the downward trend that started on Tuesday, January 24, where the American currency was holding close to the local highs of January 18. The pair is consolidating amid expectations for the macroeconomic bloc to be released later this week.
Meanwhile, consumer price data for January is scheduled for release tomorrow. According to preliminary estimates the consumer inflation rate in Tokyo and the region will rise to 4.4%, creating conditions for the financial authorities of the country to stop the course from soft monetary parameters in the foreseeable future. At the same time, Japan's Ministry of Finance said that economic indicators continue to decline rapidly due to the increasing intensity of hostilities in Russia's war against Ukraine and as a result of the costs of fighting the Covid-19 pandemic. According to comments made by Shunichi Suzuki, head of the Ministry of Finance, the authorities will support households and companies that are under pressure due to rising prices, which reached a 41-year record. Recall that for December the value added 4.0% in annual terms without taking into account food. The head of the government sees the solution in correcting wages to above inflation, paying subsidies to families with children, encouraging investors and reforming the areas of "green" and digital transformation.
- Resistance levels: 130.00, 131.00, 132.00, 133.00.
- Support levels: 129.00, 128.00, 127.00, 126.34.
NZDUSD: the pair is holding near the local high
The NZDUSD currency pair reflects a moderate strengthening, recovering losses incurred earlier when the instrument moved away from the local high of January 18. A moderate support for the instrument is waiting for the release of the block of macroeconomic data from the U.S. value of GDP (gross domestic product) for Q4 of the previous year. It is predicted that the active recession of the economic activity will accelerate the completion of the cyclical interest rate corrections by the U.S. Federal Reserve.
Additional support for the pair is the market participants' hope for the continuation of the positive dynamics of the Chinese economic indicators, which still failed to recover after the cancellation of the quarantine measures. Recall that in December 2022 the Chinese authorities stopped supporting the "zero tolerance" to the spread of COVID-19 infection, which will provide an incentive for the resumption of industrial activity and restoration of the trade balance.
- Resistance levels: 0.6500, 0.6535, 0.6600 and 0.6650.
- Support levels: 0.6450, 0.6400, 0.6350 and 0.6288.
GBPUSD: the bears continue to press on the economy
Weak macro data released on the previous day leaves no chance for the "bulls" to retake the initiative and therefore national economy keeps sliding, and GBPUSD reached 1.2400.
The manufacturing sector activity rose to 46.7 points from 45.3 points earlier, services sector declined to 48.0 points from 49.9 points, bringing the benchmark reading to 47.8 points from 49.0 points. Manufacturers recorded a 0.8% decline in December selling prices, adjusting the year-over-year increase to 14.7% from 17.5% last year, and a 1.1% decline in purchasing prices, slowing the year-over-year trend from 19.2% to 16.5%.
- Resistance levels: 1.2500, 1.2800.
- Support levels: 1.2280, 1.1900.
Silver prices
During morning trading, the precious metal reflects a mixed trend, sitting at 23.80.
Traders will abstain from new trades on the asset, wishing to wait for the release of key U.S. economic indicators, including dynamics of GDP (gross domestic product) for Q4, where economists forecast decline to 2.6% from the current 3.2%, and loss of initiative from the "hawks" in the U.S. Federal Reserve. Next week, the agency is likely to announce a strengthening of the key indicator by only 0.25%, and experts agree that the next phase of interest rate hikes of similar magnitude will be announced before the summer, followed by a break to assess the effect of the cumulative measures taken. The ECB (European Central Bank) and the Bank of England are showing more determination, so silver prices will react to possible interest rate increases. Moreover, the Japanese regulator, which for a considerable time had a "dovish" vector in monetary parameters, may switch to "hawkish" rhetoric in the short term.
- Resistance levels: 24.00, 24.20, 24.42, 24.67.
- Support levels: 23.60, 23.32, 23.00, 22.70.