2023-10-24 03:21

Euro, EUR/USD, US Dollar, Treasury Yields, Trend Break - Talking Points Euro appears to be re-asserting itself against the US Dollar Treasury yields have pulled back from recent peaks with a changing mood If the macro picture remains supportive, will technicals boost EUR/USD? The Euro has managed to rally to start this week after a volatile trading session through the US time zone. Most notably, Treasury yields climbed higher overnight before retreating lower after famed investors, Bill Ackman and Bill Gross Tweeted some bullish dynamics for US government debt. Ackman said that his organisation had covered its short bond position due to concerns about the outlook for the US economy. Not long after, Bill Gross, a fixed-income specialist, made public his preference for buying the Treasury inverted yield curve in the 2s 10s and 2s 5s. He is expressing a view of buying the short-end bonds and selling the long-end bonds on the basis that the Federal Reserve mantra of ‘higher for longer is yesterday’s news’. He also sees problems ahead for the US economy and is buying near-term interest rate futures outright that will settle in 2025. The context for EUR/USD is the possibility that Treasury yields might have peaked, particularly for the benchmark 10-year note. Time will tell if the ‘Bills’ are correct or otherwise. EUR/USD AND 10-YEAR TREASURY YIELDS – AN INVERSE RELATIONSHIP AT TIMES Chart Created in TradingView EUR/USD TECHNICAL ANALYSIS UPDATE EUR/USD cleanly broke through the topside of a descending trend channel last Thursday and continued higher before pausing at minor resistance levels near 1.0680 today. To learn more about breakout trading, click on the banner below. The next resistance levels could be at the breakpoints and previous highs near 1.0740, 1.0770, 1.0835 and 1.0945 ahead of a cluster zone of potential resistance in the 1.1075 – 1.1100 area. The 100- and 200-day simple moving averages (SMA) are both near 1.0825 and may offer resistance. On the downside, nearby support might lie near the breakpoint at 1.0617 which also has the 34-day SMA just below, potentially lending support. Further down, a series of breakpoints and prior lows in the 1.0480 – 1.0495 area might provide a support zone. Below there, the lows of early 2023, which were tested at the start of this month, may provide support near 1.0440 levels of note. EUR/USD DAILY CHART Chart Created in TradingView https://www.dailyfx.com/news/euro-jumps-on-treasury-yield-slide-and-a-technical-break-higher-eur-usd-20231024.html

2023-10-24 03:19

US DOLLAR VS EURO, BRITISH POUND, JAPANESE YEN, AUSTRALIAN DOLLAR – PRICE SETUPS: The US dollar’s rally is showing signs of fatigue. Markets expect the Fed to keep interest rates on hold at next week’s meeting. What’s next for EUR/USD, GBP/USD, AUD/USD, and USD/JPY? The US dollar’s rally is showing signs of fatigue ahead of the Oct. 31-Nov.1 FOMC meeting. Markets are pricing in a 98% chance that the Fed will keep interest rates on hold after a number of Fed officials recently pointed out that the tightening in financial conditions as a result of the jump in yields has reduced the need for imminent tightening – a point echoed by Fed chair Powell last week. For more details, see “US Dollar Outlook After Powell: GBP/USD, AUD/USD, EUR/USD Price Action,” published October 20. Meanwhile, technical charts suggest that the greenback could be in the process of setting a short-term peak – a risk highlighted earlier this month. See “US Dollar Showing Tentative Signs of Fatigue: EUR/USD, GBP/USD, USD/JPY,” published October 5. DXY Index: Upward pressure could be easing a bit Chart Created by Manish Jaradi Using TradingView DXY Index: Interim peak in place? Market diversity, as measured by fractal dimensions, appears to be low as the DXY Index hit a multi-month high earlier this month. Fractal dimensions measure the distribution of diversity. When the measure hits the lower bound, typically 1.25-1.30 depending on the market, it indicates extremely low diversity as market participants bet in the same direction, raising the odds of at least a pause or even a price reversal. For the DXY Index, recently the 65-day fractal dimension fell below the threshold of 1.25, flashing a red flag, pointing to a consolidation/minor retreat at the very least. For more discussion, see “Has the US Dollar Rally Hit Limits? DXY Index Fractals, Price Action,” published October 17. EUR/USD Daily Chart Chart Created by Manish Jaradi Using TradingView EUR/USD: Breaks above minor resistance EUR/USD has broken above minor resistance at the October 11 high of 1.0635 suggesting that the immediate downward pressure has faded a bit. This follows a rebound from a strong cushion at the January low of 1.0480 - a break below would have posed a serious threat to the medium-term uptrend that started late last year. EUR/USD’s rebound could extend a bit further toward the 200-day moving average (now at about 1.0825), roughly coinciding with the 89-day moving average (now at about 1.0725). GBP/USD Weekly Chart Chart Created by Manish Jaradi Using TradingView GBPUSD: Slide pauses GBP/USD’s slide has paused as it approaches significant support at the March low of 1.1800. Given oversold conditions, and light positioning, a minor rebound wouldn’t be surprising. Any break above the initial resistance at the October 11 high of 1.2350 could open the way toward the 200-day moving average (now at about 1.2450). Zooming out, the retreat in July from the 200-week moving average and the subsequent sharp decline raises the odds that the retracement is the correction of the rally that started a year ago. For more discussion, see “Pound’s Resilience Masks Broader Fatigue: GBP/USD, EUR/GBP, GBP/JPY Setups,” published August 23. USD/JPY Daily Chart Chart Created by Manish Jaradi Using TradingView USD/JPY: Holds below the psychological 150 mark USD/JPY’s rally is showing signs of fatigue as it tests the psychological barrier at 150, not too far from the 2022 high of 152.00. There is a chance of a minor retreat, initially toward the Oct. 10 low of 148.25. Beyond that, a crack under the early-October low of 147.25 would be required to confirm that the multi-week upward pressure had faded. For more discussion, see “Japanese Yen After BOJ: What Has Changed in USD/JPY, EUR/JPY, AUD/JPY?” published September 25. AUD/USD Daily Chart Chart Created by Manish Jaradi Using TradingView AUD/USD: Attempting to set a low AUD/USD is attempting to form a low but lacks the required upward momentum yet. The pair has been holding above support on the lower edge of a declining channel since August, around minor support at the early-October low of 0.6285. AUD/USD would need to break above resistance at the end-August high of 0.6525 for the immediate downward pressure to dissipate. For more discussion, including fundamentals, see “Australian Dollar Jumps After China GDP Beat; What’s Next for AUD/USD?” published October 18. https://www.dailyfx.com/news/has-the-us-dollar-hit-an-inflection-point-gbp-usd-aud-usd-eur-usd-usd-jpy-20231024.html

2023-10-23 03:48

WTI OIL PRICE, CHARTS AND ANALYSIS: WTI TECHNICAL OUTLOOK: NEUTRAL WTI Finished Higher for a Second Successive Week with Technicals Hinting at Further Upside. Middle East Conflict to Remain a Critical Driver as it Continues to Underpin Oil Prices. US-Venezuela Deal Unlikely to Have Any Material Impact WTI OIL WEEK IN REVIEW Crude Oil is on course for another bullish week despite a sluggish Friday that saw Oil prices fluctuate between gains and losses. Geopolitical developments continue to overshadow the usual fundamentals such inventories data and comments from OPEC officials. Earlier in the week the deal between Venezuela and the United States regarding the lifting of sanctions and a temporary license of 6 months was seen as a potential positive. Market participants had hoped this would inject a fresh glut of supply to markets and thus helping lower oil prices. However, experts warned that most probably will not be the case given the conditions of the Oil fields and infrastructure due to underinvestment and sanctions. OPEC for its part sung a similar tune stating that they do not see the lifting of sanctions as having any major impact in the short-term. All of the above hinting at time before the return of pre-sanctions output by Venezuela. Source: Refinitiv The comments by experts and OPEC could not have come at a worse time as it was compounded by the start of a ground offensive by Israel into Gaza and fresh attacks at Israel and US bases in Lebanon and Iraq respectively. Although this was not the work of any country but rather various rebel and terror groups in the region the fear of contagion grew and helped Oil prices regain the $90 a barrel even if it proved temporary. Heading into the weekend and major developments on the Geopolitical front could see oil prices gap up or down when markets open Sunday evening. RISK EVENTS FOR THE WEEK AHEAD Next week sees a return of a jam-packed calendar with a host of high impact data events from a host of countries. The US GDP will be key as well as interest rate decisions from the Bank of Canada (BoC) and some inflation data from among others Australia. A positive GDP reading from the US should keep Oil bulls interested. Market participants had feared a global slowdown in Q4 this year and in the US as well which could have seen demand fears rise and thus pushing oil prices lower. So far there are signs that certain countries are experiencing a slowdown but that hasn’t been enough to deter Oil bulls as the extension of the OPEC production cuts were also extended. Now toward the end of last week we heard the US Government hopes to buy 6 million barrels of Oil for the strategic petroleum reserve by January, according to the US Department of Energy. According to the reports the department hopes to sign agreements to purchase Oil at $79 a barrel. Any news regarding this could also lead to some short-term volatility. Another area is Venezuela now that US sanctions on oil have been lifted. Despite reports that not much will change in the short-term by OPEC and analysts alike should Venezuela spring any sort of surprise this could stoke volatility and push oil prices lower. Lastly the Middle East tensions are likely to remain front and center as tensions escalate. There are many risks posed by an escalation which could include an Oil embargo, blocking of the Hormuz Straight or other supply chain issues. In short though, no concrete events that I could point to as the main risk driver next week. Rather a lot of ifs/buts when it come to the geopolitical and fundamental risks heading into the week ahead. TECHNICAL OUTLOOK WTI Crude Oil Weekly Chart – October 20, 2023 Source: TradingView The weekly chart for WTI shows a strong uptrend with a potential higher high looking more likely given that the weekly candle looks set to close as a hammer. If we look at the technical picture from an elliot wave perspective, we are potentially beginning wave 5 which would mean one more rally and a fresh high before a pullback. This would bring first resistance around 92.42 come into focus before recent high around the 95.00 mark. This does seem to tie in with the Fundamentals at play as a ceasefire in the Israel-Palestine situation at this stage does not seem likely. A ceasefire would significantly alter the outlook and could see the technicals take a backseat to a deeper retracement first. WTI Crude Oil Daily Chart – October 20, 2023 Source: TradingView The daily timeframe gives us more of a mixed picture as Fridays daily candle just turned red at the time of writing. There is immediate support just below the current price though with the 20-day MA resting at 87.58. A break lower here will have to navigate support at 85.96 before the recent lows around 83.00 mark comes into focus. Key Levels to Keep an Eye Out For Resistance levels: $90.00 $92.42 $95.00 Key support levels: $87.58 $85.96 $83.00 https://www.dailyfx.com/news/oil-weekly-forecast-technicals-hint-at-further-upside-but-geopolitics-holds-the-key-20231021.html

2023-10-23 03:46

GOLD, XAU/USD, SILVER, XAG/USD – OUTLOOK: Gold and silver have jumped on account of escalating geopolitical tensions. Both gold and silver are testing major resistance. What is the outlook and what are the key levels to watch in XAU/USD and XAG/USD? The sharp bounce in gold and silver recently has raised questions on whether it is time to reassess the bearish outlook. While this could indeed be a game changer, it might be worth waiting for a confirmation before concluding a trend reversal. XAU/USD has hit a 3-month high due largely to escalating tensions in the Middle East. The downshift in hawkish rhetoric from US Federal Reserve officials has kept a lid on the global USD, indirectly benefiting gold at the margin. If the jump in gold is largely explained by geopolitical concerns, it would be hard to argue for a case of a sustained rally in precious metals. From a fundamental perspective, the key drivers that have driven gold lower in recent months remain intact – solid US economy and rising US yields / real yields. Granted, quite a few US Federal Reserve officials have shifted to a less-hawkish tone given the recent jump in long-term yields. The tightening in financial conditions undoubtedly reduces the need for imminent tightening, but probably not a Fed pivot, which Fed Chair Powell seemed to indicate on Thursday. XAU/USD Weekly Chart Chart Created by Manish Jaradi Using TradingView Gold: Testing key hurdle On technical charts, gold is testing crucial resistance at the July high of 1987. A decisive break above would confirm that the multi-week downward pressure had faded. Such a break would warrant a reassessment of the bearish outlook. Furthermore, a crack above the May high of 2072 is turning the medium-term outlook to bullish. Deeply oversold conditions (RSI below 20) earlier this month triggered a rebound from strong converged support on the 200-week moving average, around the February low of 1805 and the lower edge of a rising pitchfork channel from 2011. XAG/USD Daily Chart Chart Created by Manish Jaradi Using TradingView Silver: Testing 200-DMA ceiling Silver is testing major converged resistance on the 200-day moving average, the late-September high of 23.75, and the upper edge of the Ichimoku cloud on the daily charts. XAG/USD needs to cross the 23.25-23.75 area for the immediate downward pressure to fade. From a slightly broader perspective, as highlighted in the Q4 outlook, XAG/USD needs to cross above 25.50-26.25 resistance for the outlook to turn constructive. See “Gold Q4 Fundamental Forecast: Weakness to Persist as Real Yields Rise Further,” published October 6, and “Gold/Silver Q4 Technical Forecast: Tide Remains Against XAU/USD & XAG/USD,” published October 1. https://www.dailyfx.com/news/gold-silver-weekly-forecast-a-dead-cat-bounce-or-game-changer-20231021.html

2023-10-23 03:44

US DOLLAR WEEKLY FORECAST: NEUTRAL US treasury yields continue higher, reaching key levels Are DXY bulls running out of momentum? Consolidation pattern emerges Risk events: US Q3 GDP and PCE data, Middle East conflict, Mega-cap earnings The ‘neutral’ stance adopted for the coming week was arrived at due to the following considerations: USD has not broken new ground despite a tendency for data to outperform consensus estimates (NFP, CPI, retail sales) Yields, which typically drive dollar valuations, continue to rise without much of an effect on the dollar. With safe-haven demand present in the gold market and the S&P 500 ‘fear gauge’ (VIX) picking up, there’s been little movement in the dollar – a typical safe haven. US TREASURY YIELDS CONTINUE HIGHER, REACHING KEY LEVELS One of the most widely followed benchmarks is the US 10-year yield, which hit the psychological 5% level yesterday after prominent Federal Reserve Bank officials continued to tow the line on the widely supported policy stance summed up as ‘higher for longer’. Yields typically influence the dollar and the fact that there hasn’t been a continuation of the prior uptrend suggests the dollar may be reaching a peak. If not, then it would require a massive catalyst to kickstart the upward momentum – perhaps to be provided by US Q3 GDP data on Thursday. US 10-Year Treasury Note Yield Source: TradingView, prepared by Richard Snow DXY BULLS RUNNING OUT OF MOMENTUM? The US dollar basket (DXY) struggled to build on the surge higher after the CPI print revealed lingering price pressures last Thursday. In fact, despite other fundamental drivers listed at the beginning of this forecast, the dollar has actually dipped and consolidates around lower levels. The inability for the dollar to make new highs does not mean it is primed for a reversal. However, the fact that price action has moved sideways despite strong fundamental backing is a sign of bullish fatigue. Immediate (intra-day) levels of support appear at 105.88 and 105.63 but a close on the daily chart below 104.70 needs to materialize before even entertaining the idea of a broader reversal. Resistance appears at the recent high followed by the 107.34 turning point. US Dollar Basket Daily Chart Source: TradingView, prepared by Richard Snow MAJOR RISK EVENTS OF THE WEEK Central banks re-emerge as the Bank of Canada and ECB provide updates on their respective monetary policies where the general consensus suggests no change on the interest rate front. Military activity has notched up in recent hours with more bombing in northern Gaza. As the conflict continues, market participants need to be aware if the ramifications in financial markets and the war will continue to play a major role in determining risk sentiment in the coming days/weeks. US data continues with the first look at US GDP for the third quarter which is anticipated to reveal a further economic expansion in the US as the nation appears unaffected by restrictive financial conditions. US PCE on Friday will also attract the attention of many after US CPI data revealed robust price pressures for the month of September. Keep in mind that third quarter earnings from mega-cap stocks Alphabet, Microsoft, Amazon and Meta are due next week potentially adding volatility. As always, markets will read into the forward guidance offered by the respective company heads about the current and future operating environment. https://www.dailyfx.com/news/us-dollar-forecast-the-fed-and-us-yields-sustain-usd-support-20231022.html

2023-10-23 03:42

S&P 500 AND NASDAQ 100 OUTLOOK The Nasdaq 100 and S&P 500 finished the week lower ahead of key corporate earnings Rising U.S. Treasury yields and geopolitical tensions have contributed to negative equity market performance recently Attention now turns to next week's results from Alphabet, Microsoft and Amazon The Nasdaq 100 and S&P 500 sold off this past week, approaching multi-month lows on the back of soaring U.S. yields and rising conflicts in the Middle East. The ongoing earnings season that has just gotten underway has been mixed so far, with banks and technology companies posting decent results, but failing to push stocks higher. Focusing first on Treasuries, government yields have been on a bullish tear of late, reaching highs not seen since early 2000 in many maturities due to benign macro data. The remarkable resilience of the U.S. economy is likely to lead the Fed to maintain a restrictive stance for an extended period in pursuit of price stability, creating a challenging setting for risky assets. Geopolitical tensions have also ushered in a complex backdrop for the equity market. Israel was attacked by the militant group Hamas earlier this month, prompting Israeli Prime Minister Benjamin Netanyahu to greenlight a robust military response against the aggressors in the Gaza Strip. These chains of events have elevated the political temperature in the region, increasing global risk aversion. With yields on the rise and geopolitics weighing on confidence, the S&P 500 and Nasdaq 100 will face a formidable challenge in staying afloat. To foster improved sentiment and infuse confidence into the market, Corporate America will need to deliver strong results for the third quarter, surprising Wall Street expectations to the upside. Despite the recent correction, tech stocks have rallied and re-rated sharply this year. To justify premium valuations and sustain their performance, businesses will need to demonstrate earnings resilience and be able to expand margins while growing their top and bottom- lines, otherwise, they could be in for a rude awakening. Looking ahead to next week, the spotlight will be on financial reports from tech titans Alphabet (GOOG), Microsoft (MSFT), and Amazon (AMZN), three of the world's five largest companies. GOOG is forecast to post EPS of $1.45 on revenue of $75.98 billion while MSFT is projected to earn $2.65 per share on revenue of $54.53 billion. Amazon, for is part, is seen earning $0.58 per share on sales of $141.53 billion. Tuesday, October 24 Thursday, October 26 Considering the immense scale of these tech firms and their exceptional visibility/insights into the economy, it is crucial to pay close attention to their comments on business demand and consumer spending. Optimistic remarks could have a bullish impact on the market, while negative commentary may raise concerns about the broader outlook. NASDAQ 100 TECHNICAL ANALYSIS After the recent market pullback, the Nasdaq 100 has fallen toward an important support area located around 14,575. Safeguarding the integrity of this technical floor is crucial, as a breakdown could embolden sellers to mount an assault on 14,245. In the event of a deeper retrenchment, the attention pivots to the 200-day simple moving average near 13,950, which harmoniously aligns with the 38.2% Fibonacci retracement of the October 2022/July 2023 rally. On the flip side, if buyers make a comeback and trigger a bullish reversal from the index’s current position, the first resistance to consider appears at 14,875. Successfully clearing this key ceiling could rekindle upward pressure, setting the stage for a possible rally to 15,200, followed by 15,500. NASDAQ 100 TECHNICAL CHART Nasdaq 100 Chart Created Using TradingView https://www.dailyfx.com/news/forex-nasdaq-100-spx-weekly-forecast-alphabet-microsoft-and-amazon-earnings-eyed-20231022.html