Daily Market Analysis by Solid ECN | *Video*

EUR USD, the market is waiting for the decision of the US Federal Reserve on the interest rate

Today data on inflation in France will be published. According to analysts' forecasts, the consumer price index for May will rise by 0.6%, which will increase the rate by 5.2% YoY after 4.8% a month earlier. Yesterday, it became known that the same indicator in Germany reached a record 7.9%, adding 1.1% over the month. Sharp inflation is putting pressure on key sectors, and today's EU industrial output data will likely reflect continued negative momentum. According to experts' expectations, the value will decrease by 2.0% for April and by 1.1% YoY, which will increase pressure on the European currency.

Quotes of the American currency have consolidated after reaching the year's high, around 105.000 in the USD Index, and the market is waiting for the evening decision of the US Federal Reserve on interest rates. The consensus forecast of analysts suggests an increase in the indicator by the already familiar 50 basis points but after inflation in the United States rose to 8.6%, some experts spoke out for a sharper increase in the value by 75 basis points, which may be a completely justified action by the regulator to convince investors of the seriousness of their intentions. Also, to determine the rate for the current period, the agency will publish a monetary policy forecast for the near future.



The trading instrument moves within a narrow downward channel, approaching the support line. Technical indicators strengthen the sell signal: indicator Alligator's fast EMA oscillation range expands downwards, and the AO oscillator histogram formed a down bar after entering the sell zone.

Resistance levels: 1.0498, 1.0776 | Support levels: 1.0353, 1.01

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AUD USD - Technical analysis

H4
On the four-hour chart above the level of 0.6901 there is a "bullish" Engulfing Pattern, which signals a price reversal at the bottom, as well as a Bullish Belt Hold pattern, explaining that the buyers attempted to counterattack, but the "bears" seized the initiative, which became a driver for the decline in instrument quotes. At the moment, the most likely scenario is with an uptrend from the support level of 0.6841 to the resistance area of 0.7048, overcoming which will allow the "bulls" to move higher into the range of 0.7270?0.7581. An alternative scenario may be relevant if the buyers fail to hold the support level of 0.6841: then the price may fall down to the level of 0.6539.



D1
On the daily chart, there is a formation of a Double Bottom price pattern. An additional signal for a reversal may be the formation of a large Bullish Candle above the support level of 0.6841, which is also a Bullish Belt Hold pattern. Next is the formation of another Bullish Belt Hold pattern, which is similar to the Piercing Pattern of the reversal at the bottom. In the current situation, it is possible to retest the level of 0.6841, from where the instrument may bounce to the resistance level of 0.7048, with its subsequent overcoming and the price recovering to the zone of 0.7270?0.7581.



Support levels: 0.6841, 0.6693, 0.6539 | Resistance levels: 0.7048, 0.7270, 0.7581

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EURTRY: the strengthening of the euro may be temporary

Thus, the Central Bank of Turkey left the discount rate at 14.0% for the seventh month in a row, even despite the continuing increase in inflation in the country, which reached 78.62% and the change in the global trend towards tightening monetary parameters taken by the world financial institutions. At the same time, officials said that the price growth is caused by an increase in the cost of energy, geopolitical risks and non-economic reasons and hope for an improvement in the situation at the beginning of next year. The European Central Bank (ECB), on the contrary, began to take decisive steps in the fight against the unprecedented rise in consumer prices, which led to the strengthening of the position of the single currency. Officials raised rates for the first time in 11 years, and immediately by 50 basis points. The main interest rate is now 0.50%, the margin rate is 0.75%, and the deposit rate is 0.00%. ECB Head Christine Lagarde said that the adjustment of indicators is caused by the rapid pace of inflation, which affects more and more economic sectors, as well as forecasts of further preservation of indicators at high levels. The beginning of the rate hike cycle has strengthened the euro's position against its main competitors, but the positive dynamics may be short-lived, as the European economy continues to experience increased pressure from the Ukrainian crisis and interruptions in energy supplies.



The price is testing the 17.96, consolidation below which will allow quotes to continue moving to the levels of 17.5781 (the middle line of the Bollinger Bands) and 17.18. The key for the "bulls" is the mark of 18.3593, with a breakout of which growth will be able to resume to the area of 18.75, 19.14. Technical indicators do not give a single signal: the Bollinger Bands are reversing horizontally, the Stochastic is preparing to leave the overbought zone and form a sell signal, and the MACD histogram is increasing in the positive zone.

Resistance levels: 18.35, 18.75, 19.14 | Support levels: 17.96, 17.57, 17.18

The EURUSD pair faced negative pressure yesterday to attack 1.0580 level but it keeps its stability above it, and begins today with new bullish bias motivated by stochastic positivity, waiting to head towards our main expected target at 1.0745. Therefore, the bullish trend scenario will remain active as long as 1.0580 level remains intact.

The expected trading range for today is between 1.0550 support and 1.0710 resistance.

USDCAD - The price is in a correction and may grow.

On the daily chart, the upward fifth wave of the higher level 5 and the wave (3) of 5 develop. Now, the third wave of the lower level 3 of (3) has formed, a downward correction has ended as the fourth wave 4 of (3), and the wave 5 of (5) is developing, within which the wave i of 5 has formed, and the local correction ii of 5 has ended.

If the assumption is correct, after the end of the correction, the USDCAD pair will grow to the area of 1.3978 ? 1.45. In this scenario, critical stop loss level is 1.3466.

GBPUSD approaches the resistance

The GBPUSD pair provided temporary positive trades yesterday to approach the key resistance 1.2135, and bounced downwards quickly from there, to resume the correctional bearish track, waiting to test 1.1950 as a next main target. Therefore, we will keep our bearish overview unless breaching 1.2135 and holding with a daily close above it.



The expected trading range for today is between 1.1940 support and 1.2100 resistance.

EURUSD - Trading near the resistance line of the rising corridor

Yesterday, November data on borrowings in the EU countries were presented, which was poor: the volume of loans to enterprises grew by 8.4% instead of the expected 8.6%, and to the private sector ? by 4.1% instead of 4.3%. Today, investors will pay attention to the dynamics of the Spanish consumer price index in December, and, according to analysts' forecasts, the index, harmonized with EU standards, may slow down from 6.7% to 6.0%.



On the daily chart, the quotes of the EUR/USD pair show corrective growth and are confidently holding near the resistance line of the ascending corridor. Technical indicators point to continued growth.

Support levels: 1.0574, 1.0396 | Resistance levels: 1.0691, 1.0849