2024-05-19 06:00

Most Read: USD/JPY Trade Setup: Awaiting Support Breakdown to Validate Bearish Outlook The U.S. dollar, as measured by the DXY index, dropped nearly 0.8% this past week. This weakness was primarily driven by a pullback in U.S. Treasury yields, triggered by weaker-than-projected U.S. consumer price index data. For context, headline CPI rose 0.3% on a seasonally adjusted basis in April, falling short of the 0.4% forecast and bringing the annual rate down to 3.4% from 3.5% previously. The subdued CPI print sparked renewed optimism that the disinflationary trend, which began in late 2023 but stalled earlier this year, had resumed. This led traders to believe that a Federal Reserve could start dialing back on policy restraint in the fall, resulting in downward pressure on the greenback, with sellers taking advantage of the situation to ramp up bearish wagers. Later in the week, cautious remarks from several Fed officials about the potential timing of rate cuts sparked a modest rebound in the U.S. dollar. However, this uptick was insufficient to offset the bulk of the currency's earlier losses. Looking ahead, the prospect of Fed easing in the second half of the year, combined with increasing signs of economic fragility, suggests that U.S. bond yields will have a hard time extending higher. This removes an important tailwind that previously supported the dollar's strength in Q1, indicating potential for further downside in the short term. EUR/USD FORECAST - TECHNICAL ANALYSIS EUR/USD remained subdued late in the week, unable to sustain its upward momentum after Wednesday’s bullish breakout, with the exchange rate seesawing but holding steady above 1.0865. Bulls need to keep prices above this area to prevent a resurgence of sellers; failure to do so could result in a pullback toward 1.0810/1.0800. On the other hand, if buying momentum resurfaces and the pair moves higher again, overhead resistance can be spotted near 1.0980, a key technical barrier defined by the March swing high. Should the pair continue to strengthen beyond this point, buyers might gain confidence and target 1.1020, a dynamic trend line extending from the 2023 peak. EUR/USD PRICE ACTION CHART EUR/USD Chart Created Using TradingView GBP/USD FORECAST - TECHNICAL ANALYSIS GBP/USD accelerated to the upside this past week, briefly reaching its highest level in nearly two months at one point before the weekend. If the rally continues and gains momentum in the coming sessions, resistance is likely to appear at 1.2720, the 61.8% Fibonacci retracement of the 2023 decline. Further strength could then direct focus toward the 1.2800 mark. On the flip side, if the upward impetus fades and sellers regain control of the market, confluence support extending from 1.2615 to 1.2585 could offer stability in case of a pullback. If tested, traders should watch closely for price reaction, keeping in mind that a breakdown could give way to a move towards the 200-day simple moving average hovering around 1.2540. GBP/USD PRICE ACTION CHART GBP/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-forecast-quiet-week-may-signal-deeper-slide-ahead-eur-usd-gbp-usd-20240519.html

2024-05-17 09:00

US Dollar Technical Analysis (DXY, AUD/USD, USD/JPY) High impact economic data subsides next week, allowing room for the dollar to regain its composure AUD/USD eases after bullish breakout attempt USD/JPY edges higher, testing Japanese officials once more The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library ‘High Impact’ Economic Data Takes a Step Back, Allowing Room for the Dollar to Regain Composure The dollar sold-off notably after US CPI but has attempted to recoup those losses. Markets welcomed a lower headline and core CPI print with monthly measures cooling as well. As such, the focus has returned to rate cuts for the Fed, although greater confidence that inflation is falling towards the 2% target is still required within the Fed’s ranks. Markets now price two 25 basis point cuts into year end, looking like September and December will be the meetings to look out for but market expectations can change very quickly if incoming data deviates substantially from the consensus. US Dollar Partially Claws Back Losses The broad measure of dollar performance, the US Dollar Basket (DXY), has partially recovered from the recent decline, finding support around the intersection of the 200-day simple moving average (SMA) and the 38.2% Fibonacci retracement of the late 2023 advance ending in April of this year. US Dollar Index (DXY) Source: TradingView, prepared by Richard Snow AUD/USD Eases after Bullish Breakout Attempt The Aussie dollar attempted a breakout post-CPI but the momentum has already looked shaky. The prudent approach to analysing breakouts is to look for a retest of prior resistance, now support. The level in question is 0.6644 (blue dotted line). AUD bulls will be searching for a bounce, followed by improved momentum to keep the bullish bias constructive. A break and close below 0.6644 ought to prompt a rethink of the bullish bias over the shorter-term with the next level of support at 0.6580. AUD/USD Daily Chart Source: TradingView, prepared by Richard Snow USD/JPY Edges Higher, Testing Japanese Officials Once More USD/JPY reversed higher, before a test of the 50 SMA and now trades comfortably above 155.00. The 155.00 level was previously thought to be the line in the sand that would attract a direct response by Japanese authorities which wasn’t to be the case. The volatile conditions in the lead up to the 160.00 marker proved the final straw that broke the camels back. The recent bullish move continues at the carry trade remains alluring to FX traders and is likely to continue to do so as long as the interest rate differential between the two nations fails to narrow in a material manner. Yen pairs are fraught with risk and prudent risk management techniques ought to be applied accordingly. The next level of resistance appears at the recent swing high of 156.78 with immediate support at 155.00. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow Learn the ins and outs of trading USD/JPY - a pair crucial to international trade and a well-known facilitator of the carry trade https://www.dailyfx.com/news/us-dollar-technical-analysis-usd-looks-to-recover-losses-20240517.html

2024-05-16 16:00

EUR/USD FORECAST - TECHNICAL ANALYSIS EUR/USD was subdued on Thursday, failing to follow through to the upside after the previous session’s bullish breakout, with the exchange rate retreating modestly but holding steady above 1.0865. Bulls must ensure prices stay above this threshold to fend off potential seller resurgence; failure to do so could trigger a pullback toward 1.0810/1.0800. On the flip side, if buying momentum resumes and the pair pivots upwards, overhead resistance may materialize near 1.0980, an important technical barrier defined by the March swing high. On further strength, buyers could be emboldened and initiate an attack on 1.1020 in short order, a dynamic trend line extended from the 2023 peak. EUR/USD PRICE ACTION CHART EUR/USD Chart Created Using TradingView GBP/USD FORECAST - TECHNICAL ANALYSIS GBP/USD ticked lower on Thursday following a robust performance earlier in the week, with buyers pausing for a breather to evaluate the outlook in the wake of the recent rally. If bullish momentum resumes, resistance awaits at 1.2720, marked by the 61.8% Fibonacci retracement of the 2023 sell-off. Beyond this, the 1.2800 handle could come into focus. Conversely, if upward pressure fizzles out and leads to a meaningful bearish reversal, confluence support stretching from 1.2615 to 1.2590 could provide stability and prevent a deeper retrenchment. In the event of a breakdown, however, attention will shift towards the 200-day simple moving average, positioned around 1.2540. Further losses below this point could usher in a move towards 1.2515. GBP/USD PRICE ACTION CHART GBP/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-eur-usd-fails-to-sustain-bullish-momentum-gbp-usd-pauses-after-breakout-20240516.html

2024-05-16 12:30

Major Indices Talking Points Dow reaches fresh new high Nasdaq 100 surges to new peak Nikkei continues to make gains Discover the main considerations when trading major indices in Q2: Dow at new high The index touched a new record high yesterday, faltering just shy of the 40,000 level. Yesterday’s US inflation print provided the catalyst for a fresh surge, which allowed the index to build on the gains made over the past month since the lows of April. Expectations of two Fed rate cuts have been revived now that US inflation is showing signs of slowing once more. Further gains will quickly take the index above the psychological 40,000 mark, and then from there new record highs come into view. Short-term weakness would likely require a close back below the previous highs around 39,287. Dow Jones Daily Chart source: ProRealTime, prepared by Chris Beauchamp Nasdaq 100 shoots to new peak This index also witnessed a surge on Wednesday following the inflation data, and this carried the price to a new record high, smashing through the 21 March record high of 18,466. From here the 19,000 level comes into play, as fresh flows drive the price higher. Having established a higher low in mid-April, the index remains firmly in an uptrend. Short-term weakness would need a close back below 18,200, which suggest at least some consolidation is likely. Nasdaq 100 Daily Chart source: ProRealTime, prepared by Chris Beauchamp Nikkei 225 gains continue Japanese shares also made headway despite a strengthening yen, and the Nikkei 225 finds itself at the 50-day simple moving average (SMA). The steady rebound from the lows of April remains in place. A close above the 50-day SMA helps to support the bullish view. Further gains target trendline resistance form the late March record high, and then the area around 39,800, which marked the highs in early April. A close below 38,300 would signal a break of trendline support from the mid-April lows. Nikkei Daily Chart source: ProRealTime, prepared by Chris Beauchamp https://www.dailyfx.com/news/dow-and-nasdaq-100-at-new-highs-and-nikkei-225-makes-gains-20240516.html

2024-05-16 11:00

USD/JPY remains under pressure from this week’s US inflation figures despite worrying weakness in Japanese growth USD/JPY slipped to two-week lows before bouncing back Markets still hope for US rate cuts this year Whether they’ll see any Japanese rate rises is much more doubtful 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 made sharp gains on the United States Dollar in Asia on Thursday but has already returned some of them as investors digest fascinating economic numbers from both sides of the USD/JPY pair. Wednesday’s official snapshot of April US consumer price inflation showed it relaxing to 3.4%. This was as expected. But, after the shock strength in factory gate prices revealed earlier this week, there was clearly some relief that hopes for continued deceleration, and lower interest rates, were alive. These data knocked the Dollar across the board, cutting Treasury yields and boosting stocks. However, on Thursday came news that Japan’s economy remains stuck in the doldrums. First quarter Gross Domestic Product fell by an annualized 2%. That was much worse than the 1.5% expected. It was also bad news for the monetary authorities in Tokyo who’d dearly like to move away from the ultra-low interest rates that have characterized Japan for decades. They won’t have liked evidence of weak personal consumption in the GDP figures either. Of course this is only one set of data. But it’s a massive set. And it hardly shows an economy crying out for monetary tightening. Still, for now the ‘weak Dollar’ story seems to be winning out, with USD/JPY having fallen by nearly three full yen at times in the past two days. But pending more data the jury must be seen as out on higher Japanese interest rates. This is likely to leave the Yen vulnerable to the better returns available across developed market currencies. USD/JPY Technical Analysis USD/JPY Daily Chart Compiled Using TradingView The Dollar was recovering quite rapidly from the bout of intervention-selling by the Japanese authorities which knocked it back so sharply earlier this month. However, the latest fundamental data have seen it slide once again, although the uptrend channel from March 19 still appears to offer some support. That comes in now at 154.630, which at the time of writing (0910 GMT on Thursday) is just about where the market it. Breaks below that are likely to be held at the 50-day moving average, which is where the market bounced on its last big foray lower. That now offers support at 152.60, with further channel support below that at 152.086. Bulls will need to retake and hold the 156.00 region to force near-term progress. Right now t this looks like a big ask but, if they can defend the current uptrend, they might be able to get there. Of course, the market will remain wary of further intervention. Retail traders seem quite sure that USD/JPY is headed lower, with 70% bearish according to IG data. --By David Cottle for DailyFX https://www.dailyfx.com/news/japanese-yen-rises-on-inflation-focused-dollar-despite-feeble-japanese-gdp-print-20240516.html

2024-05-16 08:20

Gold (XAU/USD) Analysis CPI, USD and yields drive gold prices higher Gold breakout attempt – bullish continuation in focus Current levels of gold volatility may be insufficient to extend gold gains Gold market trading involves a thorough understanding of the fundamental factors that determine gold prices like demand and supply, as well as the effect of geopolitical tensions and war. Find out how to trade the safe haven metal by reading our comprehensive guide: CPI, the Dollar, and US Yields Drive Gold Prices Higher US CPI always has the power to propel markets given the amount of media attention and recent struggles as price pressures have accelerated over the past two months. It was, therefore, a relief to many when monthly CPI dropped form a prior 0.4% to 0.3% and both headline and core measures printed lower (but in line with estimates) too. The dollar – measured by the US dollar basket (DXY) – immediately sold off, allowing gold to rise in the aftermath. The precious metal is viewed more favourably when interest rates are expected to come down as it means the opportunity cost of holding the non-interest bearing asset is lowered. US Treasury yields were seen sharply lower, adding to the positive catalyst for gold US Dollar Basket (DXY) 2-Hour Chart Source: TradingView, prepared by Richard Snow Gold Breakout Attempt – Bullish Continuation Plays in Focus Gold prices appear likely to test the all-time high should the current bullish impetus evolve into a more sustained push higher. Gold received a boost from softer CPI data and a more dovish adjustment in interest rate expectations as the market prices in two full rate cuts by year end. The precious metal had broadly been seen easing – trading within a bearish channel – until CPI proved the catalyst for potential bullish continuation. Yesterday’s daily candle managed to close above trendline resistance (upper bound of the channel) in a move that signals a reinvigoration of the longer-term bull trend. Key observations from here include a potential retest of the prior resistance, now support, as this is so often the case with breakouts. Such an approach also provides a prudent way to handle breakouts while avoiding a false breakout which can trap unsuspecting traders. Look for the $2360 mark to hold (the 1.618% Fibonacci extension of the 2020 – 2022 major decline). This represents a level of confluence resistance as it coincides roughly with the prior resistance trendline. Gold (XAU/USD) Daily Chart Source: TradingView, prepared by Richard Snow Understand how to setup for impactful events or data releases with this easy-to-implement approach: Gold Volatility Lifts but More is Required for an Extended Move in the Metal Gold prices tend to rise in volatile environments more often than not and can be influenced by nervousness or a general risk off environment. Therefore, the mere prospect of lower interest rates, while supportive of higher prices, can prove insufficient to produce a long-lasting push higher. Of course any material weakness in the US economy or jobs market may lead to more aggressive rate cut expectations but as things stand now, longer-lasting bullish momentum remains to be seen. Gold Volatility Index (GVZ) Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/gold-price-outlook-axu-usd-prices-rise-on-renewed-rate-cut-hopes-20240516.html