2024-04-15 08:11

AUD/USD Analysis Aussie dollar posts massive weekly decline ahead of Chinese GDP and AUS jobs data AUD/USD finds momentary support in a crucial week for risk assets Get your hands on the Aussie dollar Q2 outlook today for exclusive insights into key market catalysts that should be on every trader's radar: Aussie Dollar Posts Massive Weekly Decline Ahead of Chinese GDP and AUS Jobs Data The Aussie dollar is commonly known to trade in a similar fashion to the S&P 500 index, rising during the good times and falling during economic downturns. The ‘high beta’ currency has actually exhibited a disconnect from the longer-term, positive correlation with the S&P 500 as Chinese economic prospects have worsened. Australia is highly dependent of China’s appetite for its largest import, iron ore, but a flailing property sector and uncertain external environment has forced China to be more selective with its imports – a drag on AUD. Last week, the Aussie dollar posted a massive decline, erasing the early April gains. This week traders will need to monitor the uncertain geopolitical environment in the Middle East as it impacts risk appetite, as well as Australian jobs data and Chinese GDP for the first quarter. AUD/USD Daily Chart and SPX Overlay Source: TradingView, prepared by Richard Snow AUD/USD Finds Momentary Support in a Crucial Week for Risk Assets AUD/USD posted a positive start to the week after appearing to find momentary support at 0.6460 – the 31st of May 2023 swing low. Last week’s sharp decline provides the backdrop for a potential ‘death cross’ at the start of the week. If Chinese GDP proves lackluster, AUD may come under pressure until the Aussie jobs data on Thursday. Keep in mind a potential retaliation from Israel for the barrage of Iranian drones fired at Israel over the weekend, as this could send the pair lower, towards 0.6365 as the RSI is not yet near oversold territory. However, if Israel heeds the strong calls from US President Joe Biden and the UN, a moment of relative calm may prevail but that alone is unlikely all it will take to see AUD/USD fully reclaim recent losses. AUD/USD Daily Chart Source: TradingView, prepared by Richard Snow FX pairs have their own idiosyncrasies that all traders should be aware of. Discover what moves AUD/USD via our comprehensive guide below: AUD/USD: Retail trader data shows 83.80% of traders are net-long with the ratio of traders long to short at 5.17 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed AUD/USD trading outlook. See how to read and apply IG client sentiment data to your trading process via the dedicated guide below: https://www.dailyfx.com/news/aussie-dollar-plummets-amid-conflict-escalations-and-chinese-gdp-20240415.html

2024-04-14 17:00

Markets Week Ahead: Gold Spikes, Dollar Soars, EUR/USD and GBP/USD Slump US Inflation Jumps, Rate Cut Expectations Pared Back Sharply US interest rate cut expectations continue to be pushed back into Q3 after the latest US CPI report showed inflation refusing to move lower. A rate cut at the June FOMC meeting looks highly unlikely, while a move at the July meeting is only partially priced in. Markets are also predicting just two 25-basis point rate cuts this year. This re-pricing has seen the US dollar rally sharply, while US Treasury yields hit multi-month highs. Navigating Volatile Markets: Strategies and Tools for Traders US Dollar Index Daily Chart Despite this higher-for-longer US rate backdrop, gold continued to print new all-time highs before a sharp, intra-day sell-off late Friday. Gold posted a new ATH at $2,431/oz. before giving back around $90/oz. to end the week at $2,343/oz. Silver also had a very volatile session Friday, making a high of $29.79/oz. before ending the session at $27.84/oz. Silver Daily Price Chart Learn How to Trade Gold with our Complimentary Gold Trading Guide The US dollar’s renewed strength was seen across many USD pairs, with both EUR/USD and GBP/USD hitting five-month lows on Friday (See the Euro and British Pound Weekly forecasts for further commentary and outlooks). Chart of the Week – Apple Apple turned sharply higher Thursday after closing in on the late-October low, after news hit the screens that the company said that it would update its Mac Book line with the new M3 chip. Apple is now closing back in on an old area of support turned resistance around $179. All Charts using TradingView Technical and Fundamental Forecasts – w/c April 15th US Dollar Forecast: USD to Remain Supported via Fed, ECB Policy Divergence Strong growth, inflation and jobs data keeps US rates on hold, while disinflation and stagnant growth in the EU tees up a June rate cut. The likely policy divergence favours USD British Pound Forecast – Will UK Data Help Stem the Latest GBP/USD Sell-Off? UK jobs and inflation data released next week may give cable a reprieve after a resurgent US dollar sent GBP/USD tumbling to a multi-month low. Euro’s Outlook Darkens on Dovish ECB, Geopolitical Risks – EUR/USD, EUR/GBP The Euro suffered a major setback this week, primarily against the U.S. dollar. The European Central Bank's dovish guidance laid the groundwork for the common currency's downturn, but rising geopolitical risks in the Middle East also weighed. Gold Price Outlook: Bulls in Control but Bearish Risks Grow on Stretched Markets Gold climbed this week, setting a new all-time high near $2,430. However, prices eventually backed off those levels, closing near $2,345 on Friday. https://www.dailyfx.com/news/markets-week-ahead-gold-spikes-dollar-soars-eur-usd-and-gbp-usd-slump-20240414.html

2024-04-13 18:00

Most Read: Euro’s Outlook Darkens on Dovish ECB, Geopolitical Risks – EUR/USD, EUR/GBP Gold advanced this week, but ended the five-day period off its best levels established briefly on Friday during the New York session, when it touched $2,430, a fresh record. Considering recent performance, the precious metal has increased in seven of the last eight weeks, rallying more than 17% since mid-February and shrugging off extremely overbought conditions. These gains have occurred despite the strength of the U.S. dollar and the hawkish repricing of U.S. interest rate expectations in light of resilient economic activity and sticky CPI readings. In the process, the typical negative relationship between bullion and U.S. real yields has broken down, as shown in the chart below, puzzling fundamental traders. Source: TradingView Geopolitical frictions in the Middle East have further bolstered gold, although these risks have intensified only recently and haven't been a predominant theme for an extended period. To add context, investors have been nervous about Iran's potential retaliation against Israel following the bombing of its embassy in Syria. Such action could escalate tensions in the region and spill over into a wider conflict. Deeper Look into Current Market Drivers There are several other reasons that could explain why gold has done so well this year. Here are some possible explanations for its ascent: The Momentum Trap: Gold's relentless rise could be fueled by a self-fulfilling speculative frenzy. This trend-following behavior can create vertical rallies that are often unsustainable over the long term. Should this dynamic be at play right now, a sharp downward correction could unfold once sentiment shifts and valuations reset. Hard landing: Some market participants may be hedging an economic downturn caused by the aggressive monetary policy tightening from 2022-2023 and the fact that policymakers could keep interest rates higher for longer in response to stalling progress on disinflation. Inflation comeback: Gold bulls could be taking a strategic long-term approach, betting that the Fed will cut rates no matter what as insurance policy to prevent adverse developments in an election year. Cutting rates while consumer prices remain well above the 2% target risks triggering a new inflationary wave that would ultimately benefit precious metals. While all scenarios are plausible, the momentum-driven explanation feels most compelling. Throughout history, we've witnessed numerous occasions where popular assets have succumbed to speculative fervor, driving prices to unsustainable levels detached from fundamental before an eventual reversal once sentiment finally shifts. This fate may await gold, though the timing remains uncertain. GOLD PRICE TECHNICAL ANALYSIS Gold climbed this week, setting a new all-time high near $2,430. However, prices eventually backed off those levels, closing at $2,344 on Friday. If the reversal extends in the coming trading sessions, support appears at $2,305, followed by $2,260. On further weakness, all eyes will be on $2,225. On the flip side, if XAU/USD pivots higher and charges upward again, the $2,430 record high will be the first line of defense against further advances. With markets stretched and in overbought territory, gold may struggle to clear this barrier, but in the event of a breakout, we could see a move towards $2,500. GOLD PRICE TECHNICAL CHART Gold Price Chart Created Using TradingView https://www.dailyfx.com/news/xau-usd-gold-price-outlook-bulls-in-control-but-bearish-risks-grow-on-stretched-markets-20240413.html

2024-04-13 06:00

Most Read: Euro’s Outlook Turns Bearish After ECB Decision, Setups on EUR/USD, EUR/GBP The euro suffered a major setback this week, primarily against the U.S. dollar, though it also lost some ground against the British pound. The European Central Bank's dovish stance during its April meeting laid the groundwork for the common currency's downturn, which was further exacerbated by heightened geopolitical tensions in the Middle East leading into the weekend. ECB Turns Dovish At its latest policy meeting, the ECB opted to leave interest rates unchanged but left no doubt about its intention to transition towards a looser position imminently amid increased confidence in the inflation outlook. This guidance prompted traders to ramp up wagers that the institution led by Christine Lagarde would launch its easing campaign at its next monetary policy meeting in June. Frustrated by trading setbacks? Take charge and elevate your strategy with our guide, "Traits of Successful Traders." Unlock essential insights to steer clear of frequent pitfalls and costly missteps. Monetary Policy Divergence The prospect of the ECB moving ahead of the Fed in terms of easing is poised to be detrimental to EUR/USD in the short run. Just a few weeks ago, there were indications that the FOMC could also act in June, but a series of hotter-than-expected U.S. CPI readings and labor market data have derailed this scenario, triggering a hawkish repricing of rate expectations that has been a boon for the U.S. dollar. Monetary policy divergence could present challenges for the euro against the British pound as well. Although the Bank of England is also seen removing policy restraint in 2024, market pricing suggests that the first cut may not materialize until August. Moreover, traders are only discounting 50 basis points easing from the BoE, whereas they anticipate about 75 basis points in cumulative cuts from the ECB this year. Geopolitical Tensions on the Rise Geopolitical tensions in the Middle East are set to keep the euro on tenterhooks in the short term, though any negative impact should be more visible against the U.S. dollar, traditionally considered a safe-haven asset. Concerns about potential retaliatory actions from Iran following an attack on its Syrian embassy by Israel could escalate tensions in the region, unsettling markets and weighing on high-beta currencies. EUR/USD FORECAST - TECHNICAL ANALYSIS EUR/USD has dropped sharply in recent days, breaching multiple technical floors in the process. The latest leg lower has brought the pair to its lowest point since early November of the previous year, nearing a crucial support at 1.0635. To prevent a deeper downturn, euro bulls will need to staunchly protect this zone; failure to do so may prompt a retreat towards the 2023 lows. On the other hand, should selling pressure ease and prices begin to rebound from their current position, initial resistance emerges at 1.0695 and 1.0725 subsequently. Beyond these two thresholds, attention shifts to the 50-day and 200-day simple moving averages in the vicinity of 1.0825. On further strength, the focus will be on 1.0865, the 50% Fib retracement of the 2023 slump. EUR/USD PRICE ACTION CHART EUR/USD Chart Created Using TradingView Interested in learning how retail positioning can offer clues about EUR/GBP’s directional bias? Our sentiment guide contains valuable insights into market psychology as a trend indicator. Get it now! EUR/GBP FORECAST - TECHNICAL ANALYSIS EUR/GBP dropped moderately this week, but downside momentum faded heading into the weekend as the pair found support at 0.8525 and began to move higher off its weekly lows. If the nascent recovery continues over the next few days, resistance appears at 0.8550 near the 50-day simple moving average. Looking higher, the spotlight will be on trendline resistance at 0.8575, followed by 0.8600. Alternatively, if bears mount a comeback and EUR/GBP resumes its downward journey, support looms at 0.8525, which represents the late March swing lows. Bulls must strive to maintain prices above this technical area to prevent a breakdown; otherwise, sellers could seize the opportunity to launch a bearish assault on the 2023 lows. EUR/GBP PRICE ACTION CHART EUR/GBP Char Creating Using TradingView https://www.dailyfx.com/news/forex-euro-s-outlook-darkens-on-dovish-ecb-geopolitical-risks-eur-usd-eur-gbp-20240413.html

2024-04-12 12:24

Euro (EUR/USD) Analysis ECB Governing Council explicitly addresses the possibility of a rate cut Robust US data likely to keep the Fed on hold for longer EUR/USD plummets – on track for largest drop in 18 months Enhance your trading edge by getting your hands on the Euro Q2 outlook today for exclusive insights into key market catalysts that should be on every trader's radar: ECB Governing Council Explicitly Addresses the Possibility of a Rate Cut While the ECB stated that there will be no pre-commitment regarding the timing of the first interest rate cut, there was a sign that interest rate cuts could materialise soon. The ECB statement read as follows, ‘if the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction”. In addition, multiple ECB members have stated a preference for June with the latest statement providing some form of insurance against what looks like a miniscule chance of a reacceleration in prices. The ECB has been holding onto relatively hot wage growth data as justification of keeping interest rates so high for so long. Overall, stagnant economic growth and encouraging inflation data has brought the prospect of rate cuts closer, while the opposite can be said for the Fed. Robust US Data Likely to Keep the Fed on Hold for Longer The Atlanta Fed’s GDPNow forecast sees US GDP for the first quarter coming in at 2.4%, a notable way off the 4.9% figure in Q3 2023 and 3.4% in Q4 but it continues to show a resilience throughout the world’s largest economy. Additionally, the March NFP data posted a massive surprise with 303k jobs being added versus estimates of just 200k, proving that the labour market is not just robust but strong. US CPI earlier this week beat estimates across the board as inflationary pressures appear to be making a comeback. Markets trimmed expectations of Fed rate cuts this year to just under two – a massive change from six, even seven cuts initially anticipated at the end of 2023. US yields and the dollar have shot up at a time when the euro is likely to come under pressure as the ECB prepares to step in and lower interest rates. Market-Implied Basis Point Cuts Derived from Fed Funds Futures Source: Refinitiv prepared by Richard Snow EUR/USD Plummets, On Track for its Largest Weekly Drop in 18 Months EUR/USD dropped massively on Wednesday when US CPI data confirmed hotter, more stubborn inflation pressures. The shorter-term measures of inflation like the month-on-month comparisons revealed what appears to be hotter price pressures with added momentum. As such, the pair continues to plummet, gaining acceleration on Friday as the pair traded through 1.0700 with ease, now testing the 28.6% retracement of the 2023 decline at 1.0644. At this rate, there doesn’t appear to be much that could hold up the recent decline but the 1.0644 provides an imminent test before eying a potential full retracement of that broader 2023 decline. EUR/USD Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/eur-usd-plummets-eying-largest-weekly-loss-in-18-months-20240412.html

2024-04-12 07:42

US Dollar and Gold Analysis and Charts US dollar index hits a five-month high. Gold eyes $2,400/oz. and higher. For all major central bank meeting dates, see the DailyFX Central Bank Calendar US dollar strength is seen across a range of FX pairs in early European trade as the US dollar index breaks through old resistance levels with ease. This move is being helped by renewed Euro weakness after yesterday’s ECB meeting ramped up expectations for a June interest rate cut. With the US seemingly pushing a rate cut back towards later this year, the yield differential between the two currencies will narrow, forcing EUR/USD lower. The US dollar index is a measure of the value of the United States dollar relative to a basket of foreign currencies. The index is designed to provide a reference point for the strength or weakness of the US dollar. It is calculated by comparing the dollar's value to six major world currencies: the euro (57.6%), Japanese yen (13.6%), British pound (11.9%), Canadian dollar (9.1%), Swedish krona (4.2%), and Swiss franc (3.6%). The index has a base value of 100, with values above 100 indicating a stronger dollar and values below 100 signalling a weaker dollar compared to the basket of currencies. US Dollar Index Daily Chart Gold carries on moving higher despite the US dollar’s ongoing rally. Gold normally weakens in times of US dollar strength, but this correlation has broken over the past weeks as a strong safety bid, driven by increasing tensions in the Middle East, has pushed gold into record-high territory. Gold is testing $2,400/oz. and a confirmed break higher would see $2,500/oz. as the next level of resistance. Gold Daily Price Chart All Charts via TradingView Retail Sentiment data shows 46.76% of traders are net-long with the ratio of traders short to long at 1.14 to 1.The number of traders net-long is 2.56% higher than yesterday and 2.60% higher than last week, while the number of traders net-short is 5.47% higher than yesterday and 0.55% higher than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Gold prices may continue to rise. What are your views on the US Dollar and Gold – bullish or bearish?? You can let us know via the form at the end of this piece or contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/us-dollar-hits-a-fresh-multi-month-high-gold-surge-continues-towards-2-400-oz-20240412.html