2024-01-16 16:07

Japanese Yen (USD/JPY) Analysis Japanese yen fails to appreciate ahead of crucial CPI data and wage negotiations USD/JPY advances ahead of US retail sales, Japan CPI The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Japanese Yen Fails to Appreciate Ahead of Crucial CPI Data and Wage Negotiations The Japanese Yen has eased once more, as the urgency for a policy pivot from the Bank of Japan (BoJ) wanes. A Tokyo based CPI report earlier this month pointed towards inflation rising at a slower rate for data collected in December – a sign that the country wide measure may also show signs of cooling. Japanese CPI is due late on Thursday evening (23:30 UK time) The constructed proxy for Japanese Yen performance (equal-weighted average of selected currencies) created below, reveals the recent struggles behind the yen’s lack of bullish impetus. Japanese Index (GBP/JPY, USD/JPY, EUR/JPY, AUD/JPY) Source: TradingView, prepared by Richard Snow USD/JPY Advances Ahead of US Retail Sales, Japanese CPI USD/JPY diverges from the US-Japan yield spread as can be seen below. The two had previously trended together but recent JPY dynamics have seen the pair trade higher despite the yield spread remaining at suppressed levels. US retail sales could boost the greenback’s attractiveness if spending in the festive December period brought with it increased activity. USD/JPY Shown Alongside US-Japan 2-Year Yield Spreads Source: TradingView, prepared by Richard Snow USD/JPY now tests resistance at 146.50 after surpassing the 50-day simple moving average (SMA). The 50 SMA acted as dynamic support when the pair was trending higher and has now come into play once again after the pullback. 150 stands as the major level of resistance, a level many would have thought was left in the rearview mirror in the latter stages of last year. A stronger dollar is rather unusual at a time when markets expect rate cuts as soon as March and inflation is falling at an acceptable pace. However, with the conflict around the Red Sea, the dollar may be benefitting from a safe haven bid – something that has been visible in gold lately (safe haven asset). Nevertheless, it is still imaginable that after Japanese wage negotiation shave concluded around mid-March, the BoJ may be persuaded to withdraw from negative interest rates. The country’s largest business lobby Keidanren called for wage hikes in excess of inflation this year. Keep in mind that inflation is the other piece to the puzzle, with the bank needing to be convinced that price pressures will exceed the 2% mark consistently and in a stable manner. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/usd-jpy-advances-ahead-of-japanese-cpi-and-us-retail-sales-data-20240116.html

2024-01-16 14:00

Gold Price Analysis and Charts CME rate probabilities are now showing a potential seven rate cuts next year. Gold remains stuck below resistance for now. Most Read: Gold Price weekly Forecast: Gold Rallies on US Rates, Geopolitical Worries The latest look at the CME FedWatch Tool shows market expectations of seven, quarter-point interest rate cuts next year, starting at the March 20th meeting. While the December cut is looking like a coin toss, the fact that markets continue to price an aggressive loosening of US monetary policy, despite various Fed members pushing back against these forecasts, suggests that markets feel that the Fed is behind the curve. The ongoing geopolitical tensions in and around the Red Sea and the war in Ukraine continue to weigh on risk sentiment. While US equity markets continue to test multi-year highs and are being held up by the Magnificent Seven, in Europe the FTSE 100 and the DAX 40 are both under short-term pressure. US earnings season is now upon us and any misses by the likes of Microsoft, Apple, and Nvidia for example, may send the currently buoyant US indices space weaken. The technical outlook for gold remains positive despite today’s underperformance. Support from the 50-day simple moving average at $2,020/oz. and a prior swing high at $2,009/oz. should hold any further sell-off, at least in the short term. A push higher by the precious metal will see resistance at $2,043/oz. ahead of $2,070/oz. Gold Daily Price Chart Chart via TradingView Retail trader data shows 56.23% of traders are net-long with the ratio of traders long to short at 1.28 to 1.The number of traders net-long is 1.26% higher than yesterday and 0.89% higher than last week, while the number of traders net-short is 6.14% higher than yesterday and 11.66% higher than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. See how changes in IG Retail Trader data can affect sentiment and price action. What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/gold-price-xau-usd-slipping-lower-but-support-should-hold-for-now-20240116.html

2024-01-16 12:30

Talking Points: Dow consolidation continues Nasdaq 100 on the back foot Hang Seng hits 14-month low Download our brand new Q1 equities forecast below: Dow Consolidation Goes on The index continues to consolidate, with no sign yet of a fresh break to the upside. Futures were muted in Monday’s limited trading, but there is also little indication that a more substantial pullback is at hand. If one does develop it may target the rising 50-day simple moving average (SMA). It would take only a small bounce for the index to push to a new all-time high. Wall Street (Dow Jones) Daily Chart Source: ProRealTime, IG - compiled by Chris Beauchamp Nasdaq on the back foot After last week’s recovery, upside progress has stalled, but the index remains within easy distance of fresh record highs. Last week saw a brief dip towards 16,630, with buyers emerging to defend this level. Thus a close back below this may provide some short-term bearishness, towards the 50-day SMA. Conversely, a close back above 16,980 would leave the index in fresh record territory. US Tech 100 Daily Chart Source: ProRealTime, IG - compiled by Chris Beauchamp Hang Seng hits 14-month low The index continues to tiptoe towards new lows in its current downtrend. Further downside seems likely, with the break below 16,000 to a fourteen-month low bolstering the bearish view. Now it continues to eat into the gains made in November 2023, in the direction of the 2022 low around 14,620. A close back above 16,450 is needed to suggest a fresh short-term rebound may have begun. HS50 (Hang Seng) Daily Chart Source: ProRealTime, IG - compiled by Chris Beauchamp https://www.dailyfx.com/news/dow-nasdaq-100-edge-lower-while-hang-seng-hits-new-14-month-low-20240116.html

2024-01-16 10:37

Euro Analysis (EUR/USD, EUR/GBP) EUR/USD hints at a directional move after period of consolidation EUR/GBP lifts off support but bullish momentum yet to be tested The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library German inflation rose to 3.7% in December, up from the prior 3.2% in November. The HICP measure rose to 3.8%, up from 2.3% in November. The rise in the data was preceded by numerous warnings by prominent ECB officials that it is way too early to be talking about rate cuts and that interest rates are required to remain restrictive for as long as is necessary. EUR/USD Hints at a Directional Move after Period of Consolidation EUR/USD trades sharply lower this morning on what appears to be a response to a lift in US yields attempting to arrest the recent decline. US yields have been dropping day after day, providing EUR/USD bulls with support. However, momentum had waned and now that yields have turned positive (on the day this far), the pair trades sharply lower. US retail sales data for the Christmas period is due on Wednesday and could point further to strong US consumption led by a robust labour market. 1.0831 and the 200-day simple moving average are the next levels of potential support EUR/USD Daily Chart Source: TradingView, prepared by Richard Snow EUR/GBP Lifts off Support but Bullish Momentum Yet to be Tested EUR/GBP reveals a tendency to trade within what appears to be an asymmetrical triangle over the longer, weekly time frame. This week has seen a bounce off of trendline support but momentum remains a concern. Earlier this morning the UK revealed a drop in average earnings while the unemployment rate remained steady at 4.2%. The Bank of England has focused less on average earnings in recent months and more on services inflation as a whole. Markets still expect fewer rate cuts in the UK than in the US or EU due to lingering inflation concerns. Upside momentum will face its first test at the 0.8635 level, followed by the grouping of the 50 and 200 day simple moving average (viewable on the daily chart). Support remains at the trendline acting as support. Tomorrow UK inflation data will provide greater insight into the fight against inflation in the UK and remains a major piece of data for the week. EUR/GBP Weekly Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/eu-breaking-news-german-inflation-rises-while-sentiment-improves-20240116.html

2024-01-16 08:22

GBP/USD Analysis and Charts Falling UK wages will cheer the BoE. Cable is under pressure from the US dollar. Most Read: British Pound Weekly Forecast: Big UK Data Week May Not Mean Big Moves UK wage growth slowed in November, according to the latest Office for National Statistics (ONS) data, while the unemployment rate remained unchanged. While wage growth continues to fall, it remains too high for the Bank of England to consider any imminent UK rate cut. ONS Labour Market Overview The latest UK implied rates show the first UK Base Rate cut is seen in May with a total of 131 basis points of cuts predicted for next year. The US dollar has returned from a long weekend on the front foot and is pushing higher. The US dollar index is at a 10-day high, aided in part by slightly higher US Treasury bond yields and ongoing geopolitical worries in Ukraine and the Red Sea. This dollar strength is pushing cable into a support level around 1.2667, and if this is broken then the 38.2% Fibonacci level at 1.2628, a cluster of prior lows around 1.2610/15, and the 50-day simple moving average at 1.2608 will all come into play. A move higher would see 1.2742 act as resistance ahead of a cluster of recent highs up to just under 1.2800. GBP/USD Daily Price Chart Chart using TradingView Retail trader GBP/USD data show 49.18% of traders are net-long with the ratio of traders short to long at 1.03 to 1.The number of traders net-long is 20.81% higher than yesterday and 13.71% higher than last week, while the number of traders net-short is 6.02% lower than yesterday and 12.71% lower than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. What Does Changing Retail Sentiment Mean for GBP/USD Price Action? What is your view on the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/british-pound-update-gbp-usd-edges-lower-after-jobs-data-usd-strength-20240116.html

2024-01-15 18:30

Gold (XAU/USD) Analysis USD drifts higher while yields appear vulnerable to further downside Gold hints at bullish continuation but key psychological level keeps prices at bay The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library USD Drifts Higher While Yields Appear Vulnerable to Further Downside The US dollar started the week on the right foot, although, the early Monday rise was certainly nothing to brag about. The greenback has not only managed to remain supported but looks to build on Friday’s gains at the start of a holiday affected week. In observance of Martin Luther King Day, major US markets are offline and will only open tomorrow. Despite considerable headwinds, the US dollar defies all challenges to trade higher on Monday (at the time of writing). US yields head lower and markets bring forward expectations of the first US rate cut which could arrive as soon as March, potentially including 25 basis point cuts at every meeting until December. The chart below highlights the US 2-year Treasury yield as it appears vulnerable to further declines as rate cut projections gain traction. US 2-Year Treasury Yields Decline with Greater Momentum Source: TradingView, prepared by Richard Snow Gold Hints at Bullish Continuation but Key Psychological Level Keeps Prices at Bay Gold prices have recovered after steadily declining within the blue descending channel, now attempting to breakout of the channel but the $2050 level could keep a bullish continuation at bay for now. $2050 is a significant level as it provided weekly highs in August 2020 and April 2023 and obviously carries psychological significance too. That being said, gold has shown to be susceptible to large spikes to the upside by virtue of its safe haven appeal during a period of elevated geopolitical instability, which could render $2050 ineffective. The MACD indicator hints at a bullish crossover, suggesting upside momentum is building. In addition, the 50-day simple moving average also acts as dynamic support – propelling lower prices. The prior all-time high of $2081.80 is the next level of resistance. Gold (XAU/USD) Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/gold-price-outlook-xau-usd-eyes-prior-all-time-high-amid-elevated-tensions-20240115.html