2024-02-19 19:30

EUR/USD Analysis and Charts EUR/USD inched lower in the European session. The overall downtrend in place all year remains dominant. Germany’s PMI data later this week could bring some movement. Learn how to trade EUR/USD with our complimentary guide The Euro lost a little ground against the United States Dollar on Monday but, as the latter’s home market is going to be largely shut down for the Presidents’ Day break, the real trading action will probably come later in the week when the data releases start to trickle out. The first big one will be on the Dollar side, with the release of minutes from the Federal Reserve’s last monetary policy meeting due on Wednesday. These might now look even more historic than usual given that robust economic numbers out of the US since the meeting have seen rate-cut expectations pushed out to June, but the nuances of Fed discussion usually manage to move markets, if not always durably. The Euro may struggle a bit on Thursday if the closely watched February Purchasing Managers Index snapshot out of Germany can’t beat gloomy expectations. The manufacturing sector is expected to have continued to contact, if at a slower pace than in the previous month. A reading of 46.1 is expected, after January’s 45.5. Anything below 50 signifies a contraction for the sector, and this gauge has been below that since early 2022. As-expected figures will hardly suggest that the German economy needs the current, record-high interest rates it’s stuck with, but the European Central Bank will want to be sure that inflation has been stopped before it offers any relief there and rate cuts aren’t expected to come anytime soon. Indeed, some economists think we could be well into next year before inflation returns to its 2% target. The Euro has been weakening against its US rival all year and there seems little on this week’s schedule likely to halt that process. EUR/USD Technical Analysis EUR/USD Daily Chart Compiled Using TradingView The downtrend channel from December 28’s closing high has been remarkably well respected since, with its current top of 1.07853 now likely to see rejection. The slide since late January has also seen the back in a broad trading range last seen in early December, between 1.08495 and 1.07247. The single currency did nudge below the range base last week, but it wasn’t there for long and it traded back into the band very quickly, suggesting that Euro bulls are prepared to show some resolve at those levels. Keep an eye on the 200-day moving average for this pair now. It slipped below the line on February 2 and hasn’t been able to get back to it since. The average is now some way above the market at 1.08625. IG’s sentiment data finds traders balanced finely between bullishness and bearishness over EUR/USD, perhaps suggesting that this is a market in need of a new catalyst. See how IG Retail Sentiment can help you make a more informed decision. --By David Cottle for DailyFX https://www.dailyfx.com/news/euro-slips-in-holiday-thinned-market-looks-nervously-to-german-pmi-20240219.html

2024-02-19 17:42

Japanese Yen (USD/JPY) Analysis Markets look-ahead to April for possible rate hike despite economic contraction CoT report shows sharp rise in yen shorts despite FX intervention warnings USD/JPY tentatively hovers around the 150 mark The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Markets Still Eye April for Potential Rate Hike Markets have not been deterred by the fact that Japan has entered into a recession, still indicating a high probability that the Bank of Japan will vote to hike interest rates by 0.1% to exit its long-standing negative interest rate policy. Source: Refinitiv The Bank’s preconditions for the historic hike involve a “virtuous relationship” between wages and prices. Inflation remains above the 2% target for well over a year now but has dropped in the last two prints, questioning whether price pressures will be able to remain above the 2% target in a sustainable manner. Wage negotiations are currently underway, with the process supposedly coming to an end in mid-March. This forms the basis of why markets are looking ahead to the April meeting for that all important hike. CoT Report Shows Sharp Rise in Yen Shorts Despite FX Intervention Warning The latest CoT data reveals an accumulation of yen short positions which goes against the warnings communicated last week by Japan’s top currency official Kanda and the Deputy Governor of the Bank of Japan, Shun’ichi Suzuki. Both officials expressed their displeasure in sharp volatile FX moves (yen depreciation) with Mr Kanda going as far as to even mention FX intervention as a possible solution. Positioning via Commitment of Traders Report (includes data up to 13 Feb) Source: TradingView, prepared by Richard Snow USD/JPY Tentatively Hovers Around the 150 Mark USD/JPY hangs on to the 150 handle despite the FX intervention warnings. In fact, price action is forming a pennant-like shape which suggests a bullish continuation under typical market conditions. It can be argued that with the potential threat of intervention, moves to the upside attract a poor risk to reward ratio as previous instances of FX intervention have moved the yen around 500 pips – with the majority of that being to the downside. If bulls are able to move prices towards 146.50 – this could potentially draw the attention from the finance ministry, leading to an enquiry of FX quotes from banks. This has been the case in the past, right before selling dollars and buying yen in large quantities. Support is at 146.50 while resistance appears at the recent swing high of 150.88 followed by 146.50. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow Understand the nuances of the Japanese yen and US dollar and how this informs USD/JPY movement: https://www.dailyfx.com/news/historic-rate-rise-on-track-despite-recession-usd-jpy-contained-20240219.html

2024-02-19 14:30

British Pound (GBP) Outlook, Charts, and Analysis GBP/USD didn’t lose much when US PPI saw rate-cut expectations pushed back again It has risen a little further in Monday’s European session, but bulls look cautious Trendline support from 2022 is getting close The British Pound has managed modest gains against the United States Dollar as a new trading week kicks off in Europe on Monday. There’s a lack of important economic data points at either side of GBP/USD this week, a fact which may just play out in Sterling’s favor. To be sure the Dollar got an across-board lift from numbers released late last week showing stubborn strength in US factory-gate prices. That was just the latest perky inflation print, adding to the markets’ growing impression that the Federal Reserve won’t be hurrying to cut borrowing costs. The Chicago Mercantile Exchange’s highly popular ‘Fedwatch’ tool finds no reduction fully priced until June now. Recall that a March move was thought possible as recently as the start of this year, so that’s quite a pushback. Still, the Pound has its own interest-rate support, with the Bank of England also in no hurry to move. GBP/USD has clawed its way back above the $1.26 line which looks likely to be key to this week’s action. There’s no first-tier UK data on tap this week, and the BoE doesn’t meet to set monetary policy again until February 1, so there’s a bit of a vacuum for the next few trading sessions. It’s likely to be filled by technical factors and broad Dollar moves, but, with Sterling hanging on at relatively elevated levels, that needn’t be bad news for GBP/USD bulls. GBP/USD Technical Analysis GBP/USD Daily Chart Compiled Using TradingView The pair remains confined to a trading band that has been in place since late November, between December 28’s high of 1.28197 and important retracement support at 1.24927. Within that band, Sterling bulls are defending the 1.26 psychological level with some vigor as they attempt to reclaim the sharp falls seen in early February. February 5’s top of 1.2640 provides near-term support and the recent peak of 1.27689 will beckon if the markets can manage to sustainably top that level. To the downside, that retracement looks solid enough but it’s worth bearing in mind that trendline support from all the way back to September 2022 is now coming back into view. It’s below the market at 1.24569 at the moment, but it is getting closer with time. It’s hard to say what a test of that line might mean, but the market did bounce there quite significantly in late October, paving the way for the climb to December’s highs. --By David Cottle for DailyFX https://www.dailyfx.com/news/british-pound-holds-on-above-1-26-but-watch-that-level-closely-20240219.html

2024-02-19 12:35

AUD, China Analysis Minutes to suggest the RBA requires greater conviction around inflation AUD/USD builds on recent recovery – stern resistance in sight Chinese markets reopen higher – no changes to medium-term lending rates The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Minutes to Suggest the RBA Requires Greater Conviction on Inflation Minutes relating to the Reserve Bank of Australia’s February 6th meeting will be released in the early hours of Tuesday morning and will likely acknowledge broad progress on the inflation front. The RBA statement revealed a more balanced picture in terms of the risks to the inflation outlook now that the general level of prices has moderated but expect a line or two in the minutes pointing to the concerning level of inflation despite recent progress. The last time the RBA hiked rates is still fresh in the memory after a spate of rising inflation in Q3 prompted RBA officials to raise the policy rate by 25 basis points (bps). Price pressures in Australia have not declined in a more linear fashion as observed in other developed economies, keeping the RBA on their toes. Australia Monthly (Inflation) Indicator Source: Tradingeconomics, prepared by Richard Snow Demand still outstrips supply but higher interest rates are expected to guide this dynamic towards equilibrium and a fall in goods inflation is likely to continue to weigh on the overall CPI figure. The latest forecast from the Bank sees no change in the policy rate until the second half of the year where policy setters have factored in two 25 bps cuts while not ruling out the possibility of further rate hikes. Expect the minutes to show a need for greater conviction in the downward path of inflation and some easing in the labour market toward the more sustainable long run average. AUD/USD Builds on Recent Recovery – Stern Resistance in Sight The Australian dollar has attempted to halt the longer-term decline that ensued at the end of 2023, on track for a fourth consecutive daily gain. The Aussie dollar appears to be benefitting from an improvement in China after recent supportive measures has helped revers the sharp declines in equities. After more then a week of holidays around the Lunar Ney Year, Chinese equity markets opened up in the green and held onto those gains into the end of the day. Sizeable state-linked investment houses have been propping up equity markets with large stock and ETF purchases – which has reversed the selloff so far. AUD/USD has turned higher since testing support at 0.6460, now approaching a zone of resistance comprised of the 200-day simple moving average (SMA) and the 0.6580 level from April 2020. 0.6580 has also been a prominent level throughout Q2 and Q3 of 2023, acting as support on multiple occasions. Shorter-term bullish momentum is likely to be tested this week with few AUD drivers outside of the Chinese effect . AUD/USD Daily Chart Source: TradingView, prepared by Richard Snow Chinese Markets Reopen Higher – No Changes to Benchmark lending Rates Chinese authorities left the 1-year medium term lending facility unchanged at 2.5% as financial support has take on more of a direct approach judging by recent measures. The focus now shifts to the 5 and 1 year loan prime rates which are both expected to ease slightly. The SSE Composite Index has achieved four straight days of advances, although there has been a considerable time between today’s green candle and the previous one due to the - extended holiday. Chinese equities sold off at the end of last year as pessimism around the Chinese economy gained traction. The negative sentiment accelerated at the end of January with the liquidation order of a major property developer, Evergrande, sending the index to levels not seen since the Covid lows. The recent bounce is set for its first test at the October low of 2910 – a level that bulls failed to breach last time around. SSE Composite Index Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/aud-usd-outlook-aud-lifted-as-chinese-trade-resumes-rba-minutes-next-20240219.html

2024-02-19 08:50

Gold (XAU/USD) Analysis and Chart Gold continues its technical correction. Trading activity will pick up later in the week. Most Read: Gold Picking Up a Small Bid as Oversold Conditions Begin to Clear US equity and bond markets are closed for the day – US Presidents’ Day holiday – and this will weigh on market activity across a range of asset classes. Activity over the rest of the week should pick up with FOMC minutes, the release of the February PMIs, and chip-giant Nvidia’s earnings all worthy of attention. In addition, a handful of Fed speakers will give their latest thoughts on the economy, and maybe a steer on the future path of US interest rates. The precious metal is continuing last week’s move despite hotter-than-expected US CPI and PPI data. Market rate-cut expectations continue to be pared back with the first cut now seen at the June meeting with a total of 90 basis points of cuts priced in for this year. In late December, the market forecast the first cut at the March meeting and expected a total of 175 basis points of cuts. Markets Week Ahead: US Indices, Gold Recover Losses After US Inflation Fears We noted last week that gold was heavily oversold using the CCI indicator – see the story at the top of this article – and this weakness is currently being reversed. A move higher will find initial resistance from the 20-dsma at $2,023/oz. and ta prior level of horizontal resistance, and the 50-dsma around $2,033/oz. Initial support at $2,000/oz. ahead of $1,987/oz. Gold Daily Price Chart Retail trader data shows 65.66% of traders are net-long with the ratio of traders long to short at 1.91 to 1. The number of traders net-long is 0.33% higher than yesterday and 3.79% lower than last week, while the number of traders net-short is unchanged than yesterday and 3.01% lower from last week. What is your view on Gold – 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/gold-xau-usd-nudges-higher-in-early-trade-resistance-levels-near-20240219.html

2024-02-18 18:00

Markets Week Ahead: US Indices, Gold Recover Losses After US Inflation Fears Inflation in the US remains sticky at both producer and consumer level but US indices are seemingly ignoring these price pressures and remain near recent multi-year highs. US inflation releases this week helped push US Treasury yields, and the greenback, higher this week as financial markets continue to re-price US rate cut expectations. Both US CPI and PPI data came in above forecast, pushing the US dollar higher, while US indices took a hit early in the week. The moves were mostly reversed later in the week to leave most markets little changed at the close on Friday. US Dollar Index Daily Chart The mid-week volatility can be clearly seen in the daily VIX chart with a sharp post-US CPI rally on Tuesday. Again this move was reversed during the rest of the week. VIX Daily Chart While US indices remain at, or near to, recent multi-year highs, one index that has underperformed global rivals, the FTSE 100, had a very strong week on the back of supportive UK economic data. The UK 100 also benefitted from the slightly stronger US dollar with around 70% of company earnings made overseas. UK Recession Confirmed by Dismal Q4 GDP Data UK Retail Sales Soar in January to Erase December Slump British Pound Update – UK Inflation Unchanged in January, Rate Cut Expectations Trimmed FTSE 100 Daily Chart Gold also trimmed losses this week, helped in part by the precious metal being heavily oversold, according to one technical indicator. Gold (XAU/USD) Picking Up a Small Bid as Oversold Conditions Begin to Clear Technical and Fundamental Forecasts – w/c February 19th British Pound Weekly Forecast: Data-Drought Could See Further GBP/USD Slips The Pound has been quite resilient through some conflicting UK economic news but there’s much less on the coming week’s slate. Euro Weekly Outlook: EUR/USD, EUR/GBP and EUR/JPY – Analysts and Forecasts The ECB is looking increasingly likely to be the first major central bank to start cutting interest rates, and this will affect the value of the single currency. Gold, Silver Forecast: Metals Challenged by Stronger USD, Delayed Rate Cuts Hotter-than-expected PPI figures on Friday added to stubborn CPI data on Tuesday, setting up the dollar for a positive week. Weekly and daily charts conflict for gold and silver. US Dollar Forecast: Bullish Bias Prevails, Setups on EUR/USD, USD/JPY, USD/CAD This article scrutinizes the technical outlook for three major U.S. dollar pairs: EUR/USD, USD/JPY, and USD/CAD. Within the piece, we assess market sentiment and examine essential price levels that traders should have on their radar in the upcoming days. https://www.dailyfx.com/news/markets-week-ahead-us-indices-gold-recover-losses-after-us-inflation-fears-20240218.html