2024-04-02 21:35

US DOLLAR OUTLOOK – EUR/USD, USD/JPY, USD/CAD U.S. dollar, via the DXY index, eases off multi-month highs as global yields soar The spotlight this week will be the release of the March U.S. jobs report This article explores the technical outlook for EUR/USD, USD/JPY and USD/CAD Most Read: US Dollar Rallies, EUR/USD Slumps, Gold Continues to Push Ever Higher The U.S. dollar, as measured by the DXY index, fell on Tuesday (-0.2% to 104.75), stepping back from a 5-month peak established in the overnight session. While government rates were mostly higher on the day, the greenback was unable to capitalize from this trend, as global yields, such as those from Germany and the UK, moved up more vigorously, playing catch-up with recent Treasury market dynamics. Source:TradingView Consensus estimates suggests U.S. employers added 200,000 workers to their ranks last month, a figure anticipated to keep the jobless rate steady at 3.9%. However, given that job growth has consistently outperformed forecasts recently, traders should prepare for the the possibility of another upside surprise in the NFP headline print. If hiring activity outpaces projections by a wide margin, traders are likely to temper bets of the Fed delivering 75 basis points of easing in 2024, further reducing the odds that the first rate cut of the cycle will arrive at the June FOMC meeting, which currently stands at 61.6%. This scenario could contribute to increased upward pressure on U.S. yields, boosting the U.S. dollar in the process. Source: CME Group On the other hand, a disappointing NFP report, particularly one marked by a notable deficit in job creation relative to what’s priced in, could strengthen the case for earlier Fed rate cuts. Such a turn of events could weigh on yields, paving the way for a bearish reversal in the U.S. dollar. A headline NFP reading near or below 100,000 could catalyze this response. Want to know where the U.S. dollar is headed over the coming months? Explore all the insights available in our second-quarter forecast. Request your complimentary guide today! EUR/USD FORECAST - TECHNICAL ANALYSIS Following a sharp pullback in recent days, EUR/USD rebounded on Tuesday from a key support near 1.0725. Should this upward movement gain traction in the days ahead, resistance looms at 1.0800, followed by 1.0835, where the 50-day and 200-day simple moving averages converge. On the contrary, if sellers regain control and push prices lower, the first critical support to watch is positioned at 1.0800. Bulls must vigorously protect this area to prevent sentiment towards the euro from deteriorating further; a failure to do so could spark a decline towards 1.0700 and 1.0640 thereafter. EUR/USD PRICE ACTION CHART EUR/USD Chart Created Using TradingView Wondering about the yen's prospects – will it continue to weaken or mount a bullish comeback? Discover all the details in our Q2 forecast. Don't miss out – request your complimentary guide today! USD/JPY FORECAST - TECHNICAL ANALYSIS USD/JPY traded within a confined range on Tuesday, hovering below overhead resistance at 152.00. This technical ceiling demands careful monitoring, as a breakout may trigger intervention from the Japanese government to prop up the yen. In such scenario, a swift reversal below 150.90 could ensue, followed by a slump towards the 50-day simple moving average at 149.75. In the event that USD/JPY breaches the 152.00 mark and Tokyo refrains from intervening, choosing instead to let markets self-adjust, buyers may feel emboldened to initiate a bullish assault on 153.85, a key barrier created by an ascending trendline tracing back to December of the previous year. USD/JPY PRICE ACTION CHART USD/JPY Chart Created Using TradingView USD/CAD FORECAST - TECHNICAL ANALYSIS USD/CAD remained steady on Tuesday, failing to extend its rebound from the prior session. Despite market indecisiveness, prices maintain their position above key moving averages and a trendline dating back to December, signaling a bullish outlook. With that in mind, if the pair resumes its upward bounce, horizontal resistance can be spotted at 1.3600. Beyond this point, attention will shift towards 1.3695. On the other hand, if USD/CAD encounters a setback and changes direction downwards, technical support stretches from 1.3510 to 1.3495, followed by 1.3480. Continued losses beyond this juncture would draw focus to 1.3420. USD/CAD PRICE ACTION CHART USD/CAD Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-stumbles-before-key-jobs-data-setups-on-eur-usd-usd-jpy-usd-cad-20240402.html

2024-04-02 13:49

Brent, WTI Crude Oil News and Analysis Drone strike hits Russian oil infrastructure and Israel hits Iranian targets in Syria OPEC’s JMMC meeting unlikely to result in any changes Oil prices rise, testing levels of support in oversold territory See what our analysts foresee for oil prices in the second quarter via our Q2 oil outlook below: Drone Strike Hits Major Russian Oil Refinery and Israel Attack Iranian Embassy in Syria Iran has vowed to take revenge against Israel for its targeted strike in Damascus that killed two of Iran’s generals and five military advisers. The attack threatens to broaden the conflict in the Middle East after more than five months of the Israel-Hamas conflict in Gaza. In addition, Ukraine has gone on the counter-offensive, attacking Russia’s main source of funding for the war – its oil infrastructure. The attack took place 1,300 kms from the front lines and is not said to have inflicted significant damage. Ukraine has been targeting various oil infrastructure in Russia in an attempt to cut off the main funding vehicle of Russia’s war on Ukraine. OPEC’s JMMC Meeting Unlikely to Result in any Changes OPEC’s Joint Ministerial Monitoring Committee (JMMC) is scheduled to take place online tomorrow but according to numerous sources, quoted by Reuters, there aren’t likely to be any changes in output. OPEC+ members led by Saudi Arabia and Russia met last month and decided to maintain voluntary output cuts of 2.2 million barrel per day (bpd) in an attempt to support the oil market. Oil prices now test $90 after a Ukrainian drone struck one of Russia’s major oil refineries The oil market is heavily reliant on fundamental factors like demand and supply, find out what else oil traders ought to know about this unique market: Oil prices rise, testing levels of support in oversold territory Brent crude oi continues the four day lift after finding support at $85 and recently tagged the $89 mark. In addition, ascending resistance also highlights an interesting intersection between the horizontal level and the trendline (highlighted in orange). However, the oil market may be due a pullback as it comes perilously close to overbought territory and the intraday price action already reveals a slight step back from the $89 mark. Brent Crude Oil Daily Chart Source: TradingView, prepared by Richard Snow WTI oil has also put in a test of the ascending resistance below the long-term level of resistance of $85.90/$86.00. Support emerges all the way back at $79.77 as the RSI appears moments away from oversold territory. WTI Oil Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/brent-wti-reach-yearly-high-amid-escalations-in-russia-and-middle-east-20240402.html

2024-04-02 12:11

British Pound (GBP/USD) Analysis and Charts GBP/USD edged back into the green Tuesday The UK’s March PMI saw upward revision, signaling the first growth in twenty months The rest of the week’s trading cues will be heavily US-centric The British Pound clawed back a little ground against the United States Dollar on Monday as some surprise strength in domestic manufacturing shadowed that seen across the Atlantic. However, Sterling remains below last week’s trading range against its big brother, having been knocked below it on Monday by some surprisingly strong economic data from the world’s biggest economy. The heavyweight Institute for Supply Management manufacturing index rose to 50.3 in March, from February’s 47.8. This was not only above market expectations but also the first print above the key 50 level since September 2022. It takes an over-50 reading to signify overall expansion in the sector. The US Dollar gained generally from this, with its performance against the Pound no exception. However, Tuesday’s GBP/USD bounce came after the broadly equivalent UK Purchasing Managers Index was also found to have topped 50, in this case for the first time in twenty months. The Dollar remains firmly in control this week, with most of the week’s major scheduled trading cues likely from that side of the pair. Chair Jerome Powell heads a well-padded list of speakers from the Federal Reserve. Markets know the US central bank is in no hurry to start cutting interest rates but will want to know whether recent signs of economic strength might slow the process even further. The Dollar is likely to find broad support at least until markets have an answer. The week will end with the US nonfarm payrolls release. March is expected to have seen 200,000 new jobs created, keeping the unemployment rate at 3.9%. GBP/USD Technical Analysis GBP/USD Daily Chart Compiled Using TradgingView The very broad trading range seen since late November is starting to look more like a plateau on the path lower, even if, of course, that is far from confirmed so far. The downtrend channel from the highs of March 8 looks far more solid, at least in terms of its lower bound and, if Sterling bulls can’t keep prices above that, a test of important retracement support at 1.2510 looks likely in the coming weeks. A durable break below that will take GBP/USD back into territory not seen since the end of last year and is likely to signal heavier falls. For now, near-term resistance comes in at March 25’s opening low of 1.25894, with some pause in the downtrend likely of bulls can force the pace above this level. Channel support lies at 1.25090. IG’s sentiment index finds traders heavily net long at current levels, to the turn of some 65%. This might well argue for a bearish, contrarian play. --By David Cottle for DailyFX https://www.dailyfx.com/news/british-pound-bounces-as-manufacturing-scrapes-back-into-growth-20240402.html

2024-04-02 08:09

US Dollar, EUR/USD, Gold - Prices and Analysis The US dollar is trading at a multi-month high after data showed that inflation in the US is creeping higher. Despite higher US Treasury yields, gold continues to eye a fresh record high. US dollar strength is visible across a range of FX pairs. Gold prints a fresh high. For all major central bank meeting dates, see the DailyFX Central Bank Calendar The US dollar is moving ever higher in early European turnover after data yesterday showed that inflation in the US may be nudging higher. Last Friday’s PCE data came in as expected, but Monday’s ISM data showed that price pressures in the US may increase. The latest S&P Global US Manufacturing PMI showed that US manufacturing expanding further but the Prices Paid index also showed output price inflation quickening for the fourth month running. According to Chris Williamson, chief business economist at S&P Global Market Intelligence, ‘“The final reading of the S&P Global Manufacturing PMI signalled a further encouraging improvement in business conditions in March, adding to signs that the US economy looks to have expanded at a solid pace again in the first quarter…..“The upturn is, however, being accompanied by some strengthening of pricing power. Average selling prices charged by producers rose at the fastest rate for 11 months in March as factories passed higher costs on to customers, with the rate of inflation running well above the average recorded prior to the pandemic. Most notable was an especially steep rise in prices charged for consumer goods, which rose at a pace not seen for 16 months, underscoring the likely bumpy path in bringing inflation down to the Fed's 2% target.” US S&P Global Manufacturing PMI The US dollar index pushed higher after the data’s release, touching levels not seen since mid-November last year. The next resistance area is seen around the 105.45 area, which may need a fresh driver to be broken convincingly. See our latest Q2 technical and fundamental analysis here US Dollar Index Daily Price Chart Short-dated US Treasury yields moved higher yesterday but need to break above the 200-day simple moving average – currently at 4.75% - if they are to test higher levels. US 2-Yr Bond Yields US dollar strength can be seen across various FX pairs, especially EUR/USD. While the USD is strong, the Euro remains weak with markets talking about potential back-to-back ECB rate cuts in June and July to boost tepid growth. EUR/USD Daily Price Chart Gold has posted fresh record highs over the last few days, ignoring the stronger US dollar and the higher US rate backdrop. The precious metal made a bullish technical flag set up recently and broke higher mid-last week after probing upside resistance. The recent move is starting to look overbought, using the CCI indicator, and for the precious metal to continue higher a period of consolidation is needed. Gold Daily Price Chart All Charts via TradingView Retail trader data shows 45.82% of traders are net-long Gold with the ratio of traders short to long at 1.18 to 1.The number of traders net-long is 6.86% higher than yesterday and 4.66% lower than last week, while the number of traders net-short is 2.76% lower than yesterday and 9.38% higher from 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 – 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/us-dollar-rallies-eur-usd-slumps-gold-continues-to-push-ever-higher-20240402.html

2024-04-01 17:30

Most Read: SPY and QQQ Seem Overbought but RSP Looks Attractive Market psychology can be a powerful force, often leading the retail crowd to follow the herd. However, experienced traders recognize the potential for profitable opportunities by going against the grain: doing the opposite of what most people are currently doing. Contrarian indicators, like IG client sentiment, offer insights into the market's mood. Spotting moments of extreme bullishness or bearishness can signal potential turning points. It's important to remember that contrarian indicators are not infallible. For the highest probability trades, it's crucial to integrate them into a broader trading strategy. By combining these insights with careful technical analysis and awareness of underlying fundamentals, traders can uncover hidden market forces and make more informed decisions. Let's delve deeper by using IG client sentiment to illuminate the potential path for gold prices, AUD/USD, and NZD/USD. GOLD PRICE FORECAST – MARKET SENTIMENT IG client data shows the retail crowd is betting against gold. Currently, 55.46% of traders hold net-short positions, resulting in a 1.25 to 1 short-to-long ratio. While this bearish positioning has remained largely unchanged since yesterday, it has increased by 6.15% from last week. Conversely, net-long positions have ticked up 4.14% since yesterday, even with a week-over-week decrease of 9.23%. We often adopt a contrarian view of market sentiment. The predominantly bearish positioning could portend additional gains for the precious metal, meaning another all-time high could be in the cards before seeing any type of meaningful pullback. Key Takeaway: When market sentiment leans heavily in one direction, contrarian cues can offer valuable insights. However, it's crucial to integrate these signals with thorough technical and fundamental analysis when formulating any trading strategy. NZD/USD FORECAST – MARKET SENTIMENT IG client data reveals a substantial 72.74% of traders hold net-long positions on NZD/USD, resulting in a long-to-short ratio of 2.67 to 1. The bullish conviction is on the rise, with net-long positions climbing 3.75% since yesterday and 2.78% compared to last week. However, short positions have also surged, increasing 10.67% from yesterday and a notable 28.68% from last week. Our approach often diverges from prevailing market sentiment. The overwhelming optimism surrounding NZD/USD might imply that the recent pullback has not fully played out yet, hinting at further weakness ahead. This pessimistic stance is bolstered by the increasing prevalence of long positions among the retail crowd – a condition that’s reinforcing our bearish outlook on the pair. Key Takeaway: When market sentiment is extremely one-sided, contrarian cues offer valuable insights. However, a well-rounded trading strategy always integrates these signals with thorough technical and fundamental analysis. Unsure about the Australian dollar’s longer-term trend? Gain clarity with our Q2 trading guide. Request the free forecast now! AUD/USD FORECAST – MARKET SENTIMENT IG client data indicates a prevailing optimism among traders regarding AUD/USD’s prospects, with 75.92% holding bullish positions, resulting in a long-to-short ratio of 3.15 to 1. Interestingly, this bullish conviction has increased sharply with a 7.25% jump in net-long positions since yesterday, despite a minor 2.06% dip from last week. Meanwhile, net-short positions show a small decline since yesterday (3.72%) and negligible change week-over-week. Our contrarian viewpoint towards market sentiment implies that the prevailing bullishness may hint at further declines for AUD/USD in the near term. That said, with the vast majority of traders anticipating an upward movement, we cannot rule out more pain on the horizon for the Australian dollar, heightening the likelihood of a move towards fresh multi-month lows below 0.6440. Key Takeaway: When market sentiment leans heavily in one direction, it's worth considering the opposite scenario. While contrarian signals are valuable, it's always crucial to use them alongside in-depth technical and fundamental analysis for a comprehensive trading approach. https://www.dailyfx.com/news/market-sentiment-gold-s-bullish-outlook-intact-aud-usd-nzd-usd-biased-lower-20240401.html

2024-04-01 13:00

After a blazing start to 2024, led by AI-fueled tech enthusiasm and the Fed's dovish pivot, U.S. stocks might have further room to run. However, high valuations demand that traders and investors alike become more selective. For equity index traders, this means looking beyond the S&P 500 (SPY) and Nasdaq 100 (QQQ), which are dominated by big tech, for attractive values with strong long-term potential. One possible idea would be S&P 500 Equal Weight Index, as proxied by the exchange-traded fund RSP (Invesco S&P 500 Equal Weight ETF). While the SPY and QQQ have rallied 67% and 36% respectively since 2023, RSP is up less than 18%, suggesting room for catch-up. RSP's equal weighting methodology also mitigates the dominance of mega-cap names, allowing for diversified exposure to a broader spectrum of companies in the U.S. market. SPY, QQQ & RSP Weekly Chart Source: TradingView, Prepared by Diego Colman Several factors could propel RSP higher in the second quarter. U.S. economic conditions appear to be stabilizing, with recession fears lessening. This bodes well for risk assets, especially some of the smaller or previously lagging companies that have greater representation within an equal-weight index. The fact that the Fed will soon transition to a looser stance should also be seen as a positive catalyst. At its March meeting, the U.S. central bank indicated that it remains on track for three rate cuts this year despite slowing progress on disinflation. This signals that policymakers may now be prioritizing economic growth, even if that means tolerating somewhat higher inflation for a while. The RSP ETF offers a way for investors to gain exposure to the broader S&P 500, potentially uncovering undervalued opportunities. As the economy stabilizes and the Fed’s easing cycle approaches, RSP could be well-positioned for a solid second quarter. If you're looking for an in-depth analysis of U.S. equity indices, our Q2 stock market trading forecast is packed with great fundamental and technical insights. Request a free copy now! How to Play the Bullish Strategy? RSP breached its record set in January 2022 this quarter, briefly climbing to a new all-time high above 168.00. An approach to capitalize on this recent breakout could involve awaiting a pullback. If the previous peak near 165.00, which once acted as resistance can be confirmed as support, that could indicate that prices have established a short-term floor from which to initiate the next leg higher. In this scenario, a rally towards 168.00 could be on the horizon. On further strength, all eyes will be on 178.00, the upper boundary of an ascending channel in play since October 2023. On the flip side, if 165.00 fails to provide support on a retest and prices dip below it decisively, the bullish thesis would be compromised but not entirely invalidated. Under such circumstances, a retracement towards the 50-day simple moving average around 161.10 could potentially unfold before RSP regains a foothold and mounts a comeback. However, if this technical area is also taken out, sellers could stage a resurgence, invalidating the near-term constructive outlook. RSP Weekly Chart Source: TradingView, Prepared by Diego Colman https://www.dailyfx.com/news/spy-and-qqq-seem-overbought-but-rsp-looks-attractive-20240401.html