Market Analysis Review

USDJPY drop: Suspected BOJ intervention, Eurozone CPI figures lower than expected, Crude oil price retreated, U.S. stocks remain at high levels amid FOMC

| 30 April, 2024 at 15:15 GMT

Previous Trading Day’s Events (29.04.2024)

Japanese authorities haven’t confirmed that they had stepped into the currency market in support of the yen, but markets remain on heightened intervention alert ahead of the Federal Reserve’s monetary policy review this week.

The Japanese currency still sits lower than it was before the Bank of Japan’s (BOJ) policy announcement last week. It has also suffered its largest monthly decline since January.

“Facing that (the rates divergence) with forex intervention typically does not end well,” said Garvey Padhraic, regional head of research Americas at ING.

The Fed begins its two-day monetary policy meeting on Tuesday, where it’s expected to hold rates at 5.25%-5.5%, with U.S. inflation proving to be sticky. A rate cut in September was looking like a close call at just 44%, according to CME Group’s FedWatch tool.

Other major central banks such as the European Central Bank (ECB) and the Bank of England (BoE) may begin to cut rates in the near future, even if the policy path is more uncertain after recent developments.

Source:

https://www.reuters.com/markets/currencies/yen-clings-sharp-gains-after-suspected-intervention-fed-focus-2024-04-30/

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Winners vs Losers

USDCAD reached the top of the week’s gainers list with 0.33% gains so far. It seems that the dollar remained stable yesterday. The yen jumped against the dollar on Monday after a possible BOJ intervention. JPY pairs recovered and returned to the 30-period MA but still remain the top losers for the week.

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News Reports Monitor – Previous Trading Day (29.04.2024)

Server Time / Timezone EEST (UTC+03:00)

1. Midnight – Night Session (Asian)

Japanese banks were closed in observance of Showa Day. The yen was collapsing and suddenly strengthened heavily after 7:00 in the morning. Possible intervention from BOJ. Near 50 pips drop of the USDJPY.

Source: https://www.straitstimes.com/business/yen-drops-past-160-against-the-us-dollar-to-fresh-34-year-low

2. Morning – Day Session (European and N. American Session)

The reported preliminary monthly CPI change figure for Germany was reported lower than expected. The EUR has not gained against the U.S. dollar yesterday despite some intraday sharp drops.

The estimated annual inflation of the CPI in April 2024 was reported at 3.3%, according to the flash indicator prepared by the NSI. At the time of the release, 10:00, the EUR was slightly affected by depreciation but the effect faded soon.

General Verdict:

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FOREX MARKETS MONITOR

EURUSD (29.04.2024) 15m Chart Summary

Server Time / Timezone EEST (UTC+03:00)

Price Movement

EURUSD was moving to the upside early and found resistance at near 1.07330 before reversing to the downside and continuing a volatile sideways path around the 30-period MA. Occasional drops happened due to the market activity having a significant effect on the dollar (possible BOJ intervention and activity), causing sudden strengthening after the start of the European session but with retracements following up keeping the pair near the MA. Eventually, the dollar depreciated overall causing the pair to remain above the MA closing the trading day higher. 

USDJPY (29.04.2024) 15m Chart Summary

Server Time / Timezone EEST (UTC+03:00)

Price Movement

At around 7:00 the USDJPY dropped sharply, surprising the market. In the media, there was a lot of discussion in regards to BOJ’s possible intervention in order to justify the fact that the drop was relatively great with U.S. dollar volume sold and JPY strengthening heavily. The first support was at the 155 level which acted as the 100 Fibo level and retracement took place soon after reaching the 61.8 Fibo at 157.30. Later we see another drop reaching the final intraday support at 154.50 before another retracement to the 30-period MA took place. 

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CRYPTO  MARKETS MONITOR

BTCUSD (Bitcoin) Chart Summary 1H

Server Time / Timezone EEST (UTC+03:00)

Price Movement

A triangle formation was breached on the 29th of April to the downside causing further Bitcoin price decline. The price reached the support near 61,700 USD before reversing fully to the upside. Moving to the next day, the 30th of April, the price crossed the MA on its way up and moved aggressively to the resistance at near 64,700, signalling the end of the downtrend, before retracing to the 30-period MA again. The mean for now seems to be the 63K USD level.

Crypto sorted by Highest Market Cap:

The crypto market does not see improvement. Bitcoin remains stable. For a 7-day period, we see losses and nothing important happening in regards to volume.

Source: https://www.investing.com/crypto/currencies

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EQUITY MARKETS MONITOR

S&P500 (SPX500) 4-Day Chart Summary

Server Time / Timezone EEST (UTC+03:00)

Price Movement

On the 25th of April, the market experienced a sudden plunge causing the index to drop to the support near 4,990 USD before eventually reversing heavily to the upside. It crossed the 30-period MA on its way up and reached remarkably back to the 5,100 USD level. On the 26th of April, stocks moved higher but the rapid movement to the upside seems to slow down. The RSI is actually pointing at a potential bearish divergence. 5,080 could be a potential support level that could be reached after the FOMC event. U.S. dollar appreciation is expected and confirmation from the Fed of borrowing costs to remain high for longer could cause stocks to plunge again.

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COMMODITIES MARKETS MONITOR

USOIL (WTI) 4-Day Chart Summary

Server Time / Timezone EEST (UTC+03:00)

Price Movement

On the 25th of April, the resistance of 83.5 USD was broken and the price reached higher. On the 26th of April, this breakout even helped the price reach near 84 USD/b. Now an upward channel is apparent indicating the highly volatile market conditions that Crude oil is facing at the moment. The price was moving around the 30-period MA with deviations from the MA up to nearly 1 dollar. On the 29th of April, the price moved to the downside with a channel breakout and reached the 82 USD/b level as mentioned in our previous analysis. Retracement followed back to the MA. 

XAUUSD (Gold) 4-Day Chart Summary

Server Time / Timezone EEST (UTC+03:00)

Price Movement

On the 24th of April, the price remained stable. An apparent upward channel was formed with 15-20 dollar deviations from the 30-period MA taking place. The proposed range is 2,300-2,340 USD/oz. It would be unlikely to see a jump to 2,400 USD/oz. For that to take place we should see an unusual increase in demand for metals. A breakout of the channel to the downside occurred today causing the price to gain momentum and potentially reaching the first support at near 2,312 USD/oz.

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News Reports Monitor – Today Trading Day (29 April 2024)

Server Time / Timezone EEST (UTC+03:00)

1. Midnight – Night Session (Asian)

Australian retail sales are growing at the weakest pace on record outside one-off economic shocks. The PMIs for China came out relatively soft affecting the CNH negatively and causing also AUD depreciation. The AUD/USD suffered a bearish blow causing it to drop near 50 pips so far.

2. Morning – Day Session (European and N. American Session)

The Eurozone CPI flash estimate figures will be released at 12:00 giving important information that will determine if eventually the ECB will continue with the current narrative of potentially reducing borrowing costs soon. EUR is not expected to be affected greatly. The market will wait until the FOMC event takes place.

Canada’s monthly GDP figure release takes place at 15:30 and the CAD pairs are expected to be affected greatly. It is estimated that Canada’s GDP growth will be reported lower. That is likely the case, considering the decline in employment and retail sales for March. Unemployment has been rising as well.

CB Consumer Confidence at 17:00 will shed some light on what consumers are expecting for the near future now that inflation is showing an upward trend. Lately, it is declining as per the figures suggest. USD will probably be affected during that time as volatility levels could rise upon the release. Recent data suggest that U.S. consumers’ assessment of the present situation improved in March, but they became more pessimistic about the future.

General Verdict:

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