Traders are careful before the upcoming events in Europ
Volatility on the markets is growing amid fears connected with important events tomorrow among including the parliamentary elections in the UK and ECB meeting in Tallinn. The European common currency has shown a sharp decline amid the talks about a possible cut of inflation forecast by the ECB during tomorrow’s meeting. These rumors eliminate the possibility of a cut in the asset purchasing program in the Eurozone during the next months. We should also recall that additional pressure on the EUR/USD quotes came from the report on retail sales in Germany, the largest economy in Europe. The indicator declined by 2.1% in April, much worse than the anticipated drop of only 0.2%.
The British pound keeps consolidating within a narrow range of 1.2860-1.2940 in anticipation of tomorrow's elections in the UK. The prime minister Theresa May’s party is looking likely to win the race, but there is a significant chance that Conservative Party won’t be able to get the needed majority. Considering this fact, we expect sharp price movements tomorrow.
Confident growth today was observed in both the AUD/USD and NZD/USD. The reason for the optimism has come from strong data on Australian GDP growth by 0.3% in the first quarter. The growth came in 0.1% better than forecasted. This fact may support the bulls during the next couple days, but we do not exclude a short price correction, due to profit taking.
Traders are fixing positions on commodity markets after the recent strong upward moves in gold and oil quotes. The situation with Qatar isolation by a number of OPEC states keeps the tensions high in the oil-rich region, but we do not expect further escalation that would be able to significantly influence the level of oil supplies.
The common currency price, after testing the resistance line at 1.1280, started the decline and approached the important 1.1200 mark. As a result, the downward impulse was short lived and currently, quotes are trying to return within the limits of the ascending channel that it left earlier. Overcoming 1.1280 will become the basis for continuing growth to 1.1400, 1.1450 and 1.1500. On the other hand, the trend reversal to negative with a potential decline to 1.1160 and 1.1100, will be possible only after breaking through the support at 1.1200.
The NZD/USD price tried a couple of times to break the closest resistance level at 0.7200 but retreated down. Currently, the quotes for the kiwi are consolidating between the local inclined support line and an important 0.7200 mark. Reduction in the amplitude of fluctuations may result in strong movement in either direction. With growth, next targets will become 0.7235, 0.7300 and 0.7375. Breaking through the angled support may trigger the downward correction to 0.7150 and the lower limit of the rising channel.
The USD/JPY quotes rolled back from the local resistance line at 109.60 and may continue the movement within the descending channel with the first targets at 109.07 and 108.60. MACD histogram on the 15-minute chart is still in positive territory but is close to the 0 level, the fall below which will be an additional factor that may support the bears. The trend change to positive is possible in case of breaking through the upper limit of the descending channel and resistance line at 109.60. In this situation, the next targets may become 110.30, 111.60 and 112.00
The US oil benchmark WTI, sharply declined today after the release of inventories data in the US. The volume of stored crude oil has grown by 3.3 million barrels during the last week, against forecasted decline in inventories by 3.1 million barrels. As a result, the quotes have broken through the strong resistance near 47.00 which opens the way for the bears to pull down the price to the next targets at 44.25 and 42.20. We should mention that the RSI indicator on the 15-minute chart is far in the oversold zone, that may lead to a short-term correction with potential objectives at 46.30-46.50.
The gold price regained the support from the bulls after rebounding from the support at 1288. The MACD histogram is showing growth on the 15-minute chart and its signal line is about to break through the 0 level, which may become a sign for continued increases. The trigger for the bulls may be breaking through the strong resistance at 1295. In this case, the immediate targets will be at 1305, 1315 and 1330. On the opposite, the trend may change if the quotes will overcome the lower limit of the rising channel and the support at 1288. In such case, the price may reach 1280 and 1270.