2024-02-09 11:00

Euro Main Talking Points Germany CPI rate confirmed at a more-than two-year low However, it’s still above target and the economy is shaky EUR/USD is holding on above 1.07 The Euro was weaker but not far from its opening levels in European trade Friday, in a session with little to offer in the way of scheduled trading cues. The big one on the EUR side of EUR/USD has already passed. Headline German inflation was confirmed at its weakest level for two and a half years. The Consumer Price Index rose by an annualized 2.9% in December, below November’s 3.1% and continuing the downtrend seen since the peaks above 8% in early 2023. While inflation is heading in the right direction as far the European Central Bank is concerned, Germany presents a microcosm of European rate-setters’ problems. Prices may be weakening but they remain above target and vulnerable to resurgence thanks to any number of factors, from domestic wage bargaining to supply chain shocks thanks to conflict in Gaza and Ukraine. And this comes against a backdrop of shaky economic growth. Global markets may be only too well aware that the Federal Reserve wants to wait until it has a clear inflation picture before cutting rates. The ECB’s position is if anything trickier. Growth is weaker, inflation stronger. Still, for now markets seem content to believe that continued weak data will mean that record-high Eurozone rates will come down when next they move, and, although this may not happen soon, the prospect continues to keep the Euro in check. It lost a lot of ground to the Dollar last week, when the Fed caused a huge pushing back of US rate-cut expectations, and hasn’t made much of it back. However, as with other Dollar pairs, it is notable that recent trading ranges have been respected, which is likely to be the case at least until the monetary picture is more certain. The ECB won’t set rates again until March 21, which is probably going to seem like an even longer time in the markets than it is. Central bankers’ comments will likely rule the market until then. EUR/USD Technical Analysis EUR/USD Daily Chart Compiled Using Trading View The Euro is bubbling away just below resistance at its 100-day moving average. The pair plunged below this during last week’s savage bout of US Dollar strength and hasn’t managed to retake it since. It comes in at 1.07868 which is where the bulls were beaten back on Thursday and where they’ve already retreated again early in Friday’s session. While the broad downtrend from December remains in play the channel base hasn’t faced any serious test since early January. As such its validity as an indicator of substantial support may be fading out. However the trading band between December 5’s intraday high of 1.08594 and December 8’s low of 1.0752 would still seem to have some relevance as a possible directional indicator and , as it seems likely to face another downside test shortly, traders should keep an eye on it. --By David Cottle for DailyFX https://www.dailyfx.com/news/eurusd-ticks-lower-as-weaker-german-inflation-confirmed-ecb-still-in-a-bind-20240209.html

2024-02-09 09:30

Gold, Silver Analysis Gold settles into narrowing pattern as yields, USD edge higher Silver on track to end the week flat – major level considered The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Gold Settles into Narrowing Pattern as Yields, USD Edge Higher Gold entered into a narrowing pattern at the end of last year (with hindsight), seeing gold price rallies and selloffs relatively more contained. Prices rose at the end of 2023 but since then, have entered into more of a consolidatory phase, with prices broadly being contained between $2050 and $2010. Intra-day price ranges reveal the market is active but closing prices over the last two sessions, and potentially today, witness flat closing prices. Yesterday’s test and rejection of trendline support sees gold stabilizing around opening levels, as the yellow metal is on track to end the week flat or little changed. The safe haven demand for gold has waned as markets appear to have become desensitised to geopolitical tensions and conflicts currently ongoing. Gold has therefore, taken its cue from dollar and treasury markets. The blue line depicts the US 2-year Treasury yield which exhibits an inverse relationship with gold prices and the recent lift in yields may see a marginally lower close this week. Gold (XAU/USD) Daily Chart Source: TradingView, prepared by Richard Snow Something to keep an eye on at 13:30 GMT today is the Bureau of Labor Statistics’ annual update of seasonal adjustment factors for past CPI prints. This affects the month-on-month (MoM) rise/fall in inflation and leaves year-on-year (YoY) measures unchanged. Higher MoM CPI revisions may see the dollar strengthen as rate cut bets continue to be pared back, while lower revisions could weigh on yields and the dollar as the disinflation trend would appear to be moving in the right direction. Silver Prices on Track for a Flat Week Silver sees a move higher into the end of the week, reclaiming lost ground off the back of last Friday’s NFP blowout. The move does appear unconvincing unless we see a close above $22.70 - the prior low right at the start of the year. In addition, silver prices have shown little regard for the significant level of $22.35 which previously kept bears at bay, supporting prices and providing a pivot point on more than one occasion. The level pertains to the 38.2% Fibonacci retracement of the major 2021 to 2022 decline. The Fib level does present us with a potential support level in the short-term, with the swing low at $21.33 thereafter. Silver (XAG/USD) Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/gold-silver-watching-seasonal-cpi-adjustments-on-friday-20240209.html

2024-02-08 18:30

JAPANESE YEN OUTLOOK – USD/JPY, EUR/JPY, GBP/JPY The yen (JPY) weakens across the board following dovish comments from a key Bank of Japan official. Indications that the BoJ will not hike aggressively when it exits negative rates should be bearish for the Japanese currency This article discusses the near-term technical outlook for three yen pairs: USD/JPY, EUR/JPY and GBP/JPY Most Read: Gold Price Forecast - US Inflation Data to Guide Trend; XAU/USD Levels Ahead The Japanese yen (JPY) weakened across the board on Thursday following cautious remarks by Bank of Japan’s Executive Director Seiichi Shimizu. Addressing the lower house budget committee in parliament, Mr. Shimizu indicated that the BoJ would maintain an accommodative stance for an extended period, even after abandoning negative borrowing costs, which have been in place since 2016. The dovish statements suggest that the BoJ’s exit from its ultra-loose position will not likely result in multiple rate hikes, as seen in other key economies recently, but rather only a few scattered ones. In theory, this could limit the yen's recovery potential in the coming months, making it less attractive in terms of its yield differential versus its major peers. Leaving fundamental analysis aside for now, the remainder of this article will focus on the technical outlook for three important Japanese yen pairs: USD/JPY, EUR/JPY and GBP/JPY. We'll also assess key price thresholds that should be on every currency trader’s radar, discussing their potential roles as support or resistance levels in the upcoming trading sessions. Curious about where the Japanese yen is headed? Explore all the insights in our Q1 trading forecast. Request your complimentary copy today! USD/JPY FORECAST – TECHNICAL ANALYSIS USD/JPY rallied strongly on Thursday, breaking above a key ceiling at 148.90 and reaching its best mark since November last year. If upward momentum continues in the coming days, resistance looms near the psychological 150.00 level. On further strength, all eyes will be on the 152.00 area. On the flip side, if sellers return unexpectedly and spark a pullback, 148.90 should be the first line of defense against a bearish attack. Further losses beyond this technical floor could draw attention first to 147.40, and then to 146.00 if weakness persists for long. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView Want to understand how retail positioning may influence EUR/JPY’s near-term direction? Our sentiment guide holds all the answers. Don't hesitate, get your guide now! EUR/JPY FORECAST – TECHNICAL ANALYSIS EUR/JPY soared on Thursday, breaching short-term trendline resistance at 160.00 and approaching another key barrier stretching from 161.15 to 161.75. Bears must fiercely defend this ceiling; a failure to do so could trigger a rally toward last year's highs near the 164.00 handle. In the event of a bearish reversal, support emerges at 159.70. Below this point, the 100-day simple moving average becomes the next potential technical floor for the market, succeeded by the 50-day simple moving average at 158.30. Further down, the focus shifts to 157.50. EUR/JPY TECHNICAL CHART EUR/JPY Chart Created Using TradingView Feeling discouraged by trading losses? Take control and improve your strategy with our guide, "Traits of Successful Traders." Access invaluable insights to help you avoid common trading pitfalls and costly errors. GBP/JPY FORECAST – TECHNICAL ANALYSIS After a moderate pullback in late January, GBP/JPY has mounted a strong comeback in recent days, steadily approaching its multi-year highs set around 189.00. Bulls are likely to encounter stiff resistance around these levels, yet a breakout could propel the pair towards 190.50. On the other hand, if the bullish impetus fades and prices turn lower, initial support is positioned at 185.50. While GBP/JPY may stabilize upon testing this region ahead of a possible rebound, a breakdown could prompt a retracement towards 184.20, close to the 100-day and 50-day simple moving averages. GBP/JPY TECHNICAL CHART GBP/JPY Chart Created Using TradingView https://www.dailyfx.com/news/forex-japanese-yen-forecast-bearish-signs-build-setups-on-usd-jpy-eur-jpy-gbp-jpy-20240208.html

2024-02-08 17:00

Oil (WTI, Brent Crude) News and Analysis EIA storage data reveals minor drop but extends run of successive drawdowns Oil Responding Positively to Improvements in the Battered Chinese Equity Space (Brent crude) WTI oil nears significant zone of resistance The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library EIA Storage Data Reveals Minor Drop but Extends Run of Successive Drawdowns The Energy Information Agency (EIA) reported another storage drawdown in Cushing Oklahoma but the latest drop was minor. Nevertheless, it extends the run of drawdowns to 5 successive prints but has struggled to meaningfully propel oil prices higher. Drawdowns imply that demand for oil remains strong, and in some cases may be increasing. This is typically positive for oil prices. Oil Responding Positively to Improvements in the Battered Chinese Equity Space Oil markets have struggled to advance in 2024 thus far -weighed down by concerns around the worsening global economic outlook. Europe has dodged a technical recession by the narrowest of margins and China struggles to fend off widespread deflation and a beleaguered property sector. However, recent action from Chinese officials suggests a step up in urgency to right the ship, with the most recent decision to replace the head of the securities regulator seeing early gains in Chinese indices early in the Asian session. State-linked investors are said to be propping up the equity market, in an attempt to halt the decline, and this has seen a partial recovery which mimics the recent fortunes of the oil market. The chart below depicts Brent crude oil prices falling and then picking up again – in similar fashion to the Chinese SSE Composite (highlighted in purple). Greater urgency from Chinese officials to support the economy appears to be helping sentiment in the oil market but the positive correlation, admittedly, is over a very short time frame. Brent crude tests the 200-day simple moving average (SMA) before the $82 mark and potentially even $83.50 but a stronger US dollar may begin to weigh on upside potential, especially is incoming US fundamental data continues to outperform. Support appears at $77. UK Oil (Brent Crude) Daily Chart Source: TradingView, prepared by Richard Snow WTI Nears Zone of Resistance WTI prices attempt to trade back around the confluence zone of the long-term $77.40 level and the 200 SMA. Oil prices continue to trade within the ascending channel (blue) which has encapsulated the majority of price action since late 2023. Support appears at the intersection of the $72.50 mark and channel support. US Oil (WTI) Daily Chart Source: TradingView, prepared by Richard Snow Recent Shifts in Positioning Complicate Guidance from a Contrarian Indicator Oil- US Crude:Retail trader data shows 75.36% of traders are net-long with the ratio of traders long to short at 3.06 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggestsOil- US Crude prices may continue to fall. However, changes in recent positioning complicates the analysis and plays a big role in arriving at the eventual bias for oil provided in the next paragraph. Learn how to analyse client sentiment data below: The combination of current sentiment and recent changes gives us a further mixed Oil - US Crude trading outlook. https://www.dailyfx.com/news/oil-attempts-recovery-with-key-level-in-sight-20240208.html

2024-02-08 14:30

Pound Sterling (GBP/USD) Talking Points: GBP/USD has slipped back after two days of gains The prospect of higher US interest rates for longer continues to dominate Some as-expected US jobless claim data saw Sterling losses deepen The British Pound made initial gains against the United States Dollar in Thursday’s European session, but it pared them through the morning and was in the red as US markets wound up. Sterling was perhaps still boosted early by Wednesday’s news that UK house prices rose at the fastest pace since January last year in December, and also by a general improvement in risk appetite which has seen the Dollar pare gains against many major rivals. However, news that US initial and continuing jobless claims data had come in more or less as expected saw the greenback extend its lead. Initial claims totaled 218,000 in the week to February 3, just below the 220,000 economists expected. Continuing claims in the week of January 27 were 1,871,000, just below the 1,878,000 predicted. There was nothing here to suggest that US interest rates will be coming down any sooner than the May Federal Reserve policy meeting markets tentatively have in mind. There’s no first-tier economic data from either the US or UK left this week, which will probably leave GBP/USD at the mercy of the various central bank speakers remaining on the calendar. Richmond Fed President Tom Barkin will speak after the European close on Thursday. He has already said this week that it ‘makes sense’ to be patient in cutting interest rates, and to wait and be sure that inflation is tamed. In this he echoed Chair Jerome Powell’s comments of last week, which so supported the Dollar. GBP/USD Technical Analysis GBP/USD Daily Chart Compiled Using TradingView Trading is a discipline fraught with challenges that can take its toll after a while. Sometimes a bit of perspective and self-reflection is needed in order to regain your confidence: GBP/USD was hammered down into a lower trading range by last week’s Fed-inspired bout of wide Dollar strength. It’s now stuck between the first and second Fibonacci retracements of the rise from October’s low to the four-month peak of December 29. They are 1.284246 and 1.2570, respectively. A fall though that lower bound could presage deeper falls as Sterling would then be back to levels not seen since late November last year, and with November 14’s low of 1.21851 in focus. GBP/USD did fall briefly below its important 200-day moving average last week, the first time it’s been below there since November 21. However, it has recovered some composure above that level in the last couple of sessions. The average now offers support at 1.2557. IG’s own sentiment data finds traders very bearish on the Pound’s chances, with fully 75% coming at GBP/USD from the short side. This is quite extreme and might argue for a contrarian, bullish play. The uncommitted may want to wait and see whether the pair can remain within its current trading range into the week’s end, with the direction of any break likely instructive. --By David Cottle For DailyFX https://www.dailyfx.com/news/british-pound-falls-back-into-red-as-dollar-fights-back-central-bank-speakers-eyed-20240208.html

2024-02-08 12:30

EUR/USD Main Talking Points: EUR/USD’s Fed-inspired slide didn’t break its downtrend or trading range The Single currency is creeping back up within that range There are still plenty of European Central Bank speakers on tap this week The Euro continues its modest recovery against a United States Dollar still well-underpinned by the prospect of interest rates staying higher for longer. Last week’s commentary from Federal Reserve Chair Jerome Powell to the effect that the Fed will lack a complete-enough picture of the inflationary environment to contemplate a March rate cut sent the greenback soaring against just about everything else in the major-currency space. Other Fed speakers have backed Powell in the days since, with Cleveland Fed President Loretta Mester and Minneapolis’ Neel Kashkari singing broadly from the Chair’s hymn-sheet The message is clear enough; the next move, when it comes, will probably be a cut. But it’s not coming yet. On the ‘Euro’ side of EUR/USD, the European Central Bank is for its part offering a very similar message. Croatia’s central bank governor Boris Vujcic told Reuters that there’s no rush to bring record-high borrowing costs down and that it would be better to wait and see that inflation has been decisively beaten. Plenty more ECB leaders will be getting before a microphone in the coming days. If they repeat this message, the Euro can likely expect a little more support of its own. On the data front, German inflation is the week’s probable last gasp out of the Eurozone in terms of trading cues. The bloc’s powerhouse economy is reeling, with industrial production down for seven months straight. Inflation is predicted to have relaxed with economists looking for a final annualized rate of 2.9% in January. EUR/USD Technical Analysis EUR/USD Daily Chart Compiled Using TradingView The Dollar’s burst of strength between February 2 and 6 has been impressive but, perhaps surprisingly, has neither intensified EUR/USD’s dominant downtrend nor shifted it out of its medium-term trading range. That range remains valid, with its base at December 8’s intraday low of 1.07427 limiting declines on both February 5 and 6. The pair has spent the past three sessions climbing away from that base, but has yet to put in enough distance from it to make an immediate re-test unlikely. Should it give way, focus will be on psychological support at 1.07 ahead of the area around November 10’s intraday low of 1.06581. The current downtrend channel probably offers support at 1.06568, but that seems unlikely to face a near-term test. Bulls will have their eyes set on the 200-day moving average which has been above the market all this week so far. It comes in at 1.08298. A break above that would put the range top of 1.08478 back in upside focus. --By David Cottle for DailyFX https://www.dailyfx.com/news/eur-usd-edges-up-even-as-fed-speakers-echo-powell-german-inflation-eyed-20240208.html