What are we looking at today:

  • USD corrective momentum eases slightly: Further corrective pressure yesterday has eased back this morning, with the EUR unwinding some of its recovery gains. However, the corrective move remains on track. 
  • NZD outperforming today: After the RBNZ rate hike also came with guidance that the OCR rate will need to move above neutral.
  • Indices finding support: After US futures rebounded into the close last night, early gains are forming today. There may be a shift in sentiment coming on Wall Street, where weakness is now being supported.
  • Crypto rebounds: The more positive sentiment on indices is coming with cryptocurrencies rebounding too.     
  • Data trading: Durable Goods Orders will generate some volatility early in the session, but data can be erratic and subsequently leads to a more moderate market reaction. The FOMC meeting minutes are also three weeks old now but should be watched.


Are we seeing a shift in sentiment on Wall Street? The volatile intraday moves continue, but just in the past few sessions, we are seeing weakness being bought. Whereas previously through recent weeks, the selling pressure has sustained and often surged, there is a sense that intraday selling pressure is finding willing buyers into the close. The bulls are starting to win the sessions. This could be positioning Wall Street for recovery. 

The Reserve Bank of New Zealand rate hike was +50 basis points as expected, but also came with a more hawkish forward guidance. This is driving NZD outperformance this morning. There has been a slight resurgence of the USD too, after several days of a corrective move. This is shown mainly through EUR/USD (moving lower) and USD/JPY (moving higher). However, for now, these moves are counter to the recent corrective trends for the USD.

For data traders, the focus will be on Durable Goods Orders on the economic calendar today. Core durables are expected to have seen monthly growth of +0.6% in April, which would still be decent growth despite being slightly lower than in March. The Fed minutes will also be watched later. The May meeting was three weeks ago, with several speeches by Fed chair Powell since then. Markets are also settled with the expectation of aggressive front-loading of rate hikes in the next couple of meetings. However, there is always room for market reaction to what the Fed says, so it is worth staying alert. 

Today's news

Market sentiment looking more positive: With a late rebound on Wall Street translating to early gains in European indices and US futures higher again today, there is a positive risk outlook forming today. Despite this, the USD is pulling back some recent losses against EUR and JPY.

Treasury yields are a shade higher: After strong moves lower yesterday, US Treasury yields are slightly higher this morning. The US 2yr yield is +4bps higher, and the US 10yr yield is +1bp

RBNZ hawkish hike: The OCR (Official Cash Rate) hike of +50 basis points to 2.00% (from 1.50%) was fully expected and came as no surprise. However, the OCR projections have been increased significantly (to 2.68% in Sep 2022 and to 3.95% by Sep 2023). The neutral rate is between 2% to 3% and they need rates above 3% to tackle inflation and restrain aggregate demand. This was all considered hawkish. 

FOMC’s Bostic wants hikes “without recklessness”: Whilst Bostic (2024 voter, hawkish) wants expeditious rate hikes, they need to be done “with intention and without recklessness”. 

US tech sector recovering after Snap losses: The macroeconomic outlook for Snapchat caused its shares to fall by -43% yesterday, but the tech sector spent the session trying to recover. NASDAQ is a mild outperformer this morning too. 

Cryptocurrencies ticking higher: Cryptocurrencies spent yesterday looking to recover initial losses, and this has turned into gains this morning. Bitcoin is just under +1% higher but remains below $30,000.

Economic Data:

  • US Durable Goods Orders (at 1330BST) Core durables (ex-transport) are expected to improve by +0.6% MoM in April (after +1.1% growth in March)
  • FOMC minutes (at 1900BST) 

Major markets outlook

Broad outlook: Sentiment is looking brighter for equities. A USD rebound is weighing on forex and precious metals.

Forex: USD has rebounded this morning after the recent corrective move. EUR and JPY are the main underperformers. NZD is the standout performer after the RBNZ decision. 

  • EUR/USD has broken sharply clear of 1.0640 in recent days which has opened a test of the resistance 1.0750/1.0800. However, this morning there is a pullback against this move as the USD has gained some lost ground. Initial support is at 1.0675 but the important breakout support band 1.0600/1.0640 will be the key test of the recovery.
  • GBP/USD was volatile yesterday on the PMI data for both UK and US, but the move higher is looking to build support again today. The concern for the recovery is that currently the resistance at 1.2600/1.2640 remains intact and momentum has merely unwound back to neutral and unless there is a break above 1.2640, this could simply be another chance to sell. Support is now at 1.2435/1.2470 initially. 


  • AUD/USD is on track in a recovery uptrend of the past nine days, where weakness is still seen as a chance to buy. However, with the daily RSI unwound to 50 and the rally just stalling this morning, the bulls cannot be complacent. Support at 0.7000/0.7055 is building in importance. Initial resistance is 0.7125 above which opens 0.7160 whilst 0.7265 is the key lower high. 

Commodities: Precious metals are easing back slightly in their recoveries. Oil continues to trade with a slight positive bias to test the resistance of the seven-week range.

  • Gold has closed decisively above $1858 and is building on a new recovery uptrend. Reaction to near term weakness will be important now and today’s early downside move is the first real test for the recovery. Support around $1850/$1858 will be watched as this is also around trend support too for the recovery. Initial resistance is $1870 this morning.
  • Silver closed with a strong bull candle yesterday but has just failed to break clear of the resistance at $22.10. This morning’s early pullback is a test of the recovery now.  The important support at $21.60 is key to the continuation of the recovery, being the first higher low. Initial resistance is at $22.20. 
  • Brent Crude oil reclaimed its positive bias late in yesterday’s session to once more put pressure on the resistance of a now eight-week trading range between $99/$116. A close above $116.15 would open a move towards the $120s and the next resistance is at $124.40. Initial support at $111.20/$111.90 protects another retreat to the mid-range pivot area between $105/$107.

Indices: Wall Street is looking more positive after another rebound into the close last night, but European indices are slipping back early today. 

  • S&P 500 futures recovered well from early selling pressure yesterday, however, the resistance is mounting around 3970/3982 as the rebound has just started to tail off as the European session has taken hold this morning. There is still a sense of uncertainty but the bulls will be encouraged by what they will have seen as buying into weakness in recent sessions. Despite this, a five-week downtrend is still a barrier to recovery. Support is at 3871 from yesterday’s low.   
  • German DAX once more following late buying yesterday, the DAX had been looking good for a test of the resistance at 14,260/14,320. However, there is another wave of initial selling today that has dragged the market back towards support around 13,845/13,900. A breakdown would be very disappointing for recovery prospects and open 13,675.
  • FTSE 100 strong recovery gains from yesterday and overnight are just easing back this morning as the European session has taken hold. Despite this, the recovery that has formed over the past three sessions remains on track whilst a higher low at 7427 remains intact. The concern is that the early high of 7562 becomes the latest of a series of lower highs in the past six weeks as the market fluctuated around neutral moving averages. 

Support and Resistance

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