2024-05-23 11:00

Crude Oil (WTI) Main Talking Points and Analysis: Prices have revived after three days of falls May’s range looks safe enough Friday will offer a few tradeable data cues but OPEC dominates Are you new to commodities trading? The team at DailyFX has produced a comprehensive guide to help you understand the key fundamentals of the oil market and accelerate your learning: Crude Oil Prices rose a little on Thursday, recovering from their Federal-Reserve- induced slide in the previous session, but the market remains rangebound and looks likely to stay that way before June’s meeting of key producers. The Organization of Petroleum Exporting Countries and its allies is scheduled to get together in early June. This could prove supportive for prices if current voluntary production cuts are extended, but the market understandably perhaps wants to wait to see what the group does. This may explain why oil prices have failed to match the recent vigor of both natural gas and industrial metals. Energy demand overall remains very much linked to monetary policy expectations, and especially those in the United States. While the market still thinks it will get at least one rate cut out of the Fed this year, Wednesday’s release of minutes from the last monetary policy meeting found rate setters prepared to raise borrowing costs further should inflation prove sticker than expected. Now on one level this is obvious, and merely a reiteration of the Fed’s mandate. However, in a market so attuned to any policy cues, any hint that rates might remain ‘higher for longer’ was enough to knock the market. Energy Information Association data showed a 1.8-million-barrel increase in US crude stockpiles last week, compared with a 2.5-million-barrel drawdown the week before. This also weighed on a market that has long fretted the possibility of strong supply meeting indifferent demand. Friday will bring a number of key scheduled data points including US durable goods orders, the University of Michigan consumer sentiment snapshot and German economic growth. Closer to the oil market will be the US operating rig count from Baker Hughes. Crude Oil Prices Technical Analysis West Texas Intermediate Daily Chart Created Using TradingView Learn about the nuances of trading oil by developing an in-depth understanding of the effects of geopolitical tensions, demand and supply, as well as the state of the global economy: Prices have clearly been rangebound since the start of this month when they broke below the previously dominant uptrend channel from the lows of mid-December. The medium-term downtrend from June 2022 continues to cap the market, but it is getting closer to current levels and now provides resistance at $79.73. The 20-day moving average also provides near-term resistance at $79.11. Retracement support at $77.69 still looks important. The market has been below that mark this month but has shown no inclination to remain there for long on a daily-closing basis. The current range lies between $80.09 and $76.89. This seems very likely to hold at least into the OPEC meeting next month and perhaps beyond. IG’s own data finds the market overwhelmingly long at present, but that may simply be accounted for by the fact that prices are closer to the bottom of that range. --By David Cottle for DailyFX https://www.dailyfx.com/news/us-crude-oil-bounces-back-but-looks-rangebound-before-opec-s-june-meet-20240523.html

2024-05-22 23:15

GOLD PRICE FORECAST – TECHNICAL ANALYSIS Gold (XAU/USD) dropped sharply on Wednesday, but managed to hold above support at $2,375. Bulls need to defend this technical floor tenaciously to avoid a deeper retrenchment; failure to do so could lead to a move towards $2,360. If weakness persists, the focus will shift to $2,335, the 38.2% Fibonacci retracement of the 2024 rally. In the event of a bullish reversal from current levels, buyers may feel emboldened to initiate a push towards $2,420. On further strength, attention is likely to gravitate towards $2,430. Overcoming this barrier may be challenging, but a breakout could potentially usher in a rally toward the all-time high located in the vicinity of $2,450. GOLD PRICE TECHNICAL CHART Gold Price Chart Created Using TradingView EUR/USD FORECAST - TECHNICAL ANALYSIS EUR/USD continued to decline on Wednesday, approaching a key support zone at 1.0810. To sustain a bullish outlook against the U.S. dollar, the euro must stay above this threshold; loss of this floor could trigger a retreat towards the 200-day simple moving average at 1.0790. Further weakness would then put the spotlight on 1.0725. In the scenario of a bullish turnaround, the first major resistance worth watching emerges at 1.0865, where a crucial trendline intersects with the 50% Fibonacci retracement of the 2023 decline. Overcoming this technical obstacle won't be easy, but a successful breakout could see bulls targeting 1.0980, the March swing high. EUR/USD PRICE ACTION CHART EUR/USD Chart Created Using TradingView USD/JPY FORECAST – TECHNICAL ANALYSIS USD/JPY pushed higher on Wednesday, closing in on horizontal resistance at 156.80. Bears must defend this barrier diligently; failure could pave the way for a climb to 158.00 and eventually 160.00. Any advance to these levels should be approached with caution due to the risk of intervention by Japanese authorities to bolster the yen, which could cause a sharp downward reversal. Conversely, if sellers mount a comeback and spark a bearish swing, initial support looms at 154.65. While the pair is expected to stabilize around these levels during a pullback, a breach might lead to a swift descent toward the 50-day simple moving average at 153.75. Further losses from there could expose trendline support just above the 153.00 mark. USD/JPY PRICE ACTION CHART USD/JPY Chart Created Using TradingView https://www.dailyfx.com/news/xau-usd-gold-eur-usd-usd-jpy-price-action-analysis-technical-outlook-20240522.html

2024-05-22 14:36

Euro (EUR/USD, EUR/GBP) Analysis ECB’s Lagarde “really confident” euro zone inflation is under control EUR/USD succumbs to the grind lower during the quieter week EUR/GBP sinks after hot UK CPI data unravels prior UK rate cut bets EUR/USD is one of the most liquid currency pairs in the world, offering short-term trades with a cost effective and convenient market to trade. Discover the real benefits of trading liquid pairs and which pairs qualify: ECB Chief Expresses Confidence in the Fight Against Inflation The European Central Bank (ECB) President Christine Lagarde communicated yesterday that she is “really confident” that euro zone inflation is under control. Lagarde’s words convey certainty and confidence – something that the Fed and Bank of England (BoE) appear to be moving further away from. Lagarde’s words contrast the most recent ECB statement that mentioned, ‘domestic price pressures are strong and are keeping services price inflation high’, putting up little resistance to a general decline in the euro. Tomorrow’s German manufacturing PMI figure is unlikely to produce a massive market response as the manufacturing sector in Germany remains extremely subdued. ECB officials have been out in their droves talking up the likelihood of a rate cut in June but many have cautioned restraint in getting ahead of things thereafter. June may prove to be a ‘hawkish cut’ or a cut followed by a clear desire to implement a slow and steady approach to future rate cuts. Markets still price in two 25 basis point cuts with a decent chance of a third towards the end of the year (63 basis points in total). Implied ECB Rate Cut Probabilities Source: Refinitiv, prepared by Richard Snow As we head closer to the ECB rate cut, the monetary policy divergence between the ECB and other major central banks is becoming more apparent. The Fed only recently snapped a multi-month trend of hotter-than-expected inflation and earlier this morning an inflation surprise in the UK for the month of April unraveled prior rate cut bets. Diverging expectations are continuing to have a negative effect on the Euro and this can also be seen but the most recent CoT data whereby long positioning has dropped while shorts have increased. Commitment of Traders Report (CoT) Euro Speculative Non-Commercial Positioning Source: Refinitiv, prepared by Richard Snow EUR/USD succumbs to the grind lower during the quieter week EUR/USD has pulled back from last week’s high and simultaneous touch of channel resistance as the quieter week naturally favoured a dollar recovery. The US dollar dropped notably after the lower CPI print and clawed back almost all of the loss this week with Thursday and Friday’s price action still to come. The pair now tests channel support as the nearest obstacle to the shorter-term bearish move. The ascending channel remains intact, maintaining the broader EUR/USD uptrend. In the event, the dollar recovers and EUR/USD falls further, the 1.0800 level and the 200-day simple moving average come into focus. However, a continuation of the broader uptrend sees 1.0900 emerge as the level of resistance. German manufacturing PMI and the University of Michigan Consumer Sentiment report appear as potential market movers for the pair into the end of the week. EUR/USD Daily Chart Source: TradingView, prepared by Richard Snow Learn the ins and outs of trading the most widely traded currency pair in the world: EUR/GBP sinks after hot UK CPI data unravels prior UK rate cut bets EUR/GBP has mad an impressive move lower on the back of UK CPI data this morning. Prices rose by less than expected and services inflation exceeded even the most pessimistic expectations, sounding the alarm and significantly trimming back rate cut bets. EUR/GBP broke beneath trendline support but has pulled higher from the intra-day low to trade at the 0.8515 level. The 0.8515 level propped up prices in June and August 2023 and for the most part of 2024 as well. A daily close below 0.8500 would suggest the bearish momentum could extend to create a new yearly low. Resistance rests at the prior trendline support, now resistance. The RSI is fast approaching oversold territory, meaning bears may find it difficult to build momentum in the absence of a pullback. EUR/GBP Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/euro-price-outlook-euro-heads-lower-as-ecb-june-meeting-nears-20240522.html

2024-05-22 11:00

USD/JPY Analysis: USD/JPY makes modest gains after Japanese data dump 157.00 remains elusive for Dollar bulls FOMC minutes are up next Learn the ins and outs of trading USD/JPY - a pair crucial to international trade and a well-known facilitator of the carry trade The Japanese Yen was weaker once again against the United States Dollar on Wednesday, a session which saw a raft of economic data releases from Japan, with weaker trade balance numbers taking the currency lower. The overall Y462.5 billion ($2.96 billion) trade gap for April was much wider than forecast, with Yen weakness boosting the value of imported goods. Exports were up by 8.3% on the year, handily beating the March increase but still much less than the 11% rise economists had hoped for. Bellwether machine orders rose, but official forecasts suggest that they may not continue to do so. The closely watched ‘Tankan’ business survey found sentiment in the manufacturing sector stable while optimism increased in the service sector. Still raw data have little chance of affecting USD/JPY trade that much at present, even though the currency did tick lower in Asia. Japan may have moved gingerly away from its long-held policy of ultra loose monetary policy, but Yen yields remain very low compared to other currencies.’ The Bank of Japan will move interest rates higher extremely gradually, giving the Dollar the monetary edge for the foreseeable future. The authorities in Tokyo remain ready to intervene should they consider Yen weakness to be ‘disorderly,’ but the monetary disparity between the two countries makes that a hard case to make, and USD/JPY’s uptrend remains entrenched. Markets remain convinced that the next move in US interest rates will be a cut, but they are resigned to seeing less action on this front than was hoped for at the start of this year. A September move is still thought likely, but it’s heavily dependent on the numbers released between now and then. There are plenty of them. In terms of trading cues, Wednesday still has the minutes of the Fed’s last rate-setting meet in store. However, we’ve heard plenty from the US central bank since then, and the minutes may be too historic to affect trade much. USD/JPY Technical Analysis USD/JPY Daily Chart Compiled Using TradingView USD/JPY remains within a rather better-respected and narrower uptrend channel within the overall range seen since the pair bounced back in January. This narrower band has held on a daily closing basis since mid-March, except for the surge higher at the start of May which was curbed by intervention from the authorities in Tokyo. It now offers support at 154.479 and resistance at 158.178, although the market is likely to be very wary of pushing that upper limit anytime soon, as that would probably post another intervention risk. The pair’s 20-day moving average offers near-term support at 155.38. --By David Cottle for DailyFX https://www.dailyfx.com/news/japanese-yen-slips-vs-usd-again-as-data-show-trade-gap-yawned-in-april-20240522.html

2024-05-22 07:39

UK Inflation, GBP/USD Analysis UK CPI surprise unwinds rate cut bets GBP strengthened after hotter CPI, GBP/USD trades higher EUR/GBP extends declines after breaking support, one to watch ahead of June ECB meeting The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Inflation Proves Too Hot to Handle in April, Unravelling Rate Cut Bets The April print was identified as a potential hurdle for the Bank of England (BoE) after last year’s print marked the start of a reacceleration in inflation pressures that forced another rate hike from the BoE. It was hoped that lower headline inflation leading up to the April 2024 print would have a cooling effect on services inflation. That proved not to be the case. Monthly and yearly inflation measures for the services sector surpassed not just the average estimate but also the maximum estimate within the projection data. Headline CPI printed above expectations but has made significant headway within the overall disinflationary process. Core CPI (YoY) also moved lower but not by as much as the headline measure, from 4.2% to 3.9% (est. 3.6%) Source: Refinitiv Discover how to prepare for high impact economic data and events via an easy-to-implement approach: The incoming data has some meaningful ramifications for rate cut bets and the pound. Yesterday afternoon, the market expected a little over 50% chance that June would be appropriate for the first rate cut by the BoE. Now, that has dwindled to a lowly 14% and has shifted expectations of a rate cut from August to November. Additionally, expectations of two rate cuts this year have retreated to just one with the potential for a second. Rate Cut Expectations (in Basis Points, ‘Bps’) Source: Refinitiv GBP/USD Strengthened after Hot CPI Print GBP/USD naturally witnessed a move higher on the release of the hot CPI data, trading above the 1.2736 prior swing high (November 2023) but pulling back beneath it as the dust settles. GBP/USD 5-Minute Chart Source: TradingView, prepared by Richard Snow GBP/USD revealed hints of bullish fatigue in the lead up to the data print as the daily candle wicks became more pronounced ahead of the 1.2736 level and daily trading ranges contracted. However, the data surprise provided a bullish catalyst, sending the pair higher. 1.2800 becomes the next level of resistance with 1.2585 the next level of support – around the 50-day simple moving average (SMA). The pair now treads dangerously close to overbought territory on the RSI meaning resultant momentum will need to be closely monitored for the risk of a pullback. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow EUR/GBP Remains One to Watch Ahead of the June ECB Meeting The hot UK CPI data propelled the pair lower, with trendline support proving not to be an issue. EUR/GBP closed yesterday marginally below the trendline acting as support, but has broken through it with ease today thus far. The most imminent level of support becomes 0.8515 - the level that propped up the pair in July and August of 2023 and for most parts of 2024 too. The prior trendline support turns into trendline resistance, in the event of an immediate pullback. EUR/GBP Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/uk-inflation-proves-too-hot-to-handle-in-april-unravelling-rate-cut-bets-20240522.html

2024-05-21 11:00

UK Inflation, GBP/USD Analysed GBP/USD remains just above 1.2700 The UK’s April CPI numbers will dominate the ‘GBP’ side this week Gains have been impressive this month, have they gone too far? GBP/USD is currently trending but market conditions change over time. Discover the main market conditions and how to approach them from a trader's perspective: The British Pound held on near two-month highs against the United States Dollar on Tuesday ahead of important news on inflation in the former’s home country due in the next session. Official Consumer Price Index data for April comes up for release from the United Kingdom on Wednesday, and, if market expectations are met, it’s sure to be a market mover for the Pound. The headline rate is tipped to relax to an annualized 2.1%, from the 3.2% seen in March. The ‘core’ rate has the volatile effects of food and fuel prices stripped out, and is expected to come in at 3.6%, from the previous month’s 4.2%. Markets think UK rates could start to come down from their inflation-busting peaks quite soon, with a June move by no means off the table even if August is favorite. Expectation-matching numbers would probably keep that hope alive. The Bank of England will next set rates on June 20, and will see May’s inflation figures only a day before. Clearly any surprise price weakness on Wednesday could increase market certainty that June will be the month and might take some of the shine off Sterling. The day will also bring the release of minutes from the Federal Reserve’s May 1 policy meet. However, there’ve been plentiful chances to hear from Fed rate-setters since, and there are many more coming up this week, so the minutes may have been overtaken by events as far as any use as a trading cue goes. Sterling has gained on the Dollar steadily since April, thanks to some better news out of the UK economy and a general revival in risk appetite. Monetary policy comparisons still favor the greenback, however, with US borrowing costs likely to remain ‘higher for longer.’ It’s not a stretch to worry that Sterling might look a little overextended now. GBP/USD Technical Analysis GBP/USD Daily Chart Compiled Using TradingView Sterling has added nearly five US cents since it bounced back in late April. The previously dominant downtrend line from the peak of March 7 has been dealt with by Sterling bulls whose next hurdle is March 20’s peak of 1.27884. If they can consolidate around that then the psychological resistance of 1.28 will come into play. Given GBP/USD’s sharp recent rise, it is perhaps a little surprising that the pair’s Relative Strength Index doesn’t more forcibly suggest overbuying. But it’s actually quite a long way below the 70.00 level which would ring alarm bells. Still, the rally looks overextended nevertheless, and IG’s own data suggests most traders are bearish at current levels. This need not mean a new downtrend is coming, but it probably means that upside progress from current levels will be hard-won and subject to longer pauses for breath. --By David Cottle for DailyFX https://www.dailyfx.com/news/british-pound-holds-near-two-month-peaks-vs-usd-as-attention-grabbing-cpi-looms-20240521.html