2024-02-08 11:00

Major Indices Update: Dax stumbles S&P 500 on the edge of breaking 5000 Nasdaq 100 hits new peak Dax stumbles Further gains here continue to be stemmed by the 17,000 area though the broader uptrend is still in place. January witnessed a bounce from the 50-day simple moving average (SMA), that was followed up by a push to new record highs. The index has consolidated over the past two weeks, but the downside has been limited during that time. A close back below the 50-day SMA might spark a pullback towards 16,500, or the January low at 16,346. DAX Daily Chart Source: IG, ProRealTime - Prepared by Christopher Beauchamp S&P 500 on the edge of breaking 5000 The index came within a whisker of 5000 yesterday, building on its strong run so far in January. Record highs continue to be the norm in US indices, and the S&P 500 is no exception. There has been no sign of any extended weakness, and from a macro standpoint, the index’s continued gains despite diminished expectations around a Fed rate cut indicate that this rally is not driven just by what the market expects the Fed will do. Trendline support from the October low comes into focus around 4940, with a deeper pullback targeting the 50-day SMA, which has not been tested since early November. S&P 500 Daily Chart Source: IG, ProRealTime - Prepared by Christopher Beauchamp At DailyFX, we analysed thousands of live accounts to discover what successful traders get right. Find out more by reading our summarised findings below: Nasdaq 100 hits new peak A new record high was recorded in this index too yesterday, maintaining the bullish run. As with the S&P 500, the Nasdaq 100 has shrugged off the Fed’s restatement of its cautious view, and backed by strong earnings, has continued to gain. In the short-term, a pullback could find support around last week’s lows at 17,120, or the previous record high from December at 16,978. Nasdaq 100 Daily Chart Source: IG, ProRealTime - Prepared by Christopher Beauchamp https://www.dailyfx.com/news/dax-edges-down-but-s-p-500-eyes-5000-and-nasdaq-100-hits-new-record-high-20240208.html

2024-02-08 09:21

USD/JPY News and Analysis Senior BoJ officials reaffirm cautious approach in the lead up to normalisation USD/JPY inches higher – 150 back in sight The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Senior BoJ Official Reaffirms Cautious Approach in the Lead up to Normalisation Comments from the Bank of Japan’s Deputy Governor Shinichi Uchida has softened the yen on Thursday morning as the senior official issued a glimpse into the thinking of the policy setting committee. Uchida essentially confirmed that the Bank would revise its stimulus measures if the price goal of 2% is met sustainably and remains stable – one of the two thresholds that need to be met before officials can think about raising interest rates. He went on to clarify that even once the Bank adjusts the interest rate to zero or into positive territory, additional hikes may not be forthcoming. Since markets are already pricing in an exit from negative interest rates, the focus now shifts to the timing and magnitude of interest rate hikes. Uchida’s comments are followed closely as he has been known for providing key policy hints in the past. However, not all support is expected to stop. Uchida intimated that the BoJ will not stop its bond buying even after bringing yield curve control to an end. The idea here is to retain control on borrowing rates to stop a scenario where rising interest rates weighs on economic activity. The yen continues its broad decline from yesterday as can be seen by the constructed Japanese Yen Index below. The index is an equal-weighted average of four popular Yen pairs and helps provide an indication for the value of the yen. Japanese Yen Equal Weighted Index (USD/JPY, GBP/JPY, EUR/JPY, AUD/JPY) Source: TradingView, prepared by Richard Snow USD/JPY Inches Higher – 150 Back in Sight USD/JPY makes progress towards potentially testing the psychological 150 mark, and a notable pick up in economic data in the US adds to the recent upside potential, although, it must be noted that the dollar has eased this week. The pair trades well above the 200-day simple moving average (SMA) and currently tests the recent swing high set in January. Fed speak this week has remained fairly neutral in that there is still an expectation of multiple rate cuts this year despite the resilient US economy. One hint that interest rates may not drop as low as markets anticipate came via the Minneapolis Fed President, Neel Kashkari as he suggested current interest rates may not be all that restrictive if you consider the neutral rate is higher than before. The neutral rate is a theoretical level of interest rates that is neither stimulatory or restrictive in nature. The bullish move will need to be monitored but as the year progresses, momentum is likely to favour downside setups, particularly in the lead up to the March and April BoJ meeting which are being monitored for that all important rate increase. The BoJ are taking a long run up, communicating their intentions well in advance of withdrawing from negative rates in the hopes of maintaining stable market conditions when the Bank does eventually enter non-negative territory. Support remains at 146.50, followed by the swing low at 145.89. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/yen-softens-as-boj-official-favour-a-cautious-exit-from-negative-rates-20240208.html

2024-02-07 22:00

GOLD PRICE OUTLOOK – XAU/USD TECHNICAL ANALYSIS Gold prices have lacked directional conviction this year, with bullion seemingly in a consolidation phase awaiting fresh catalysts Next week's U.S. inflation data may be a source of market volatility and could help guide precious metals in the near term This article examines XAU/USD’s technical outlook, analyzing key price thresholds to monitor over the coming trading sessions Most Read: US Dollar Forecast - Seeking New Drivers; Setups on EUR/USD, USD/CAD, AUD/USD Gold (XAU/USD) has lacked directional conviction since the beginning of 2024, with prices oscillating between technical resistance at ~$2,065 and horizontal support at ~$2,005. Although bullion’s prospects seemed more positive a month ago, the bullish thesis appears to be on hold for now, especially after the Federal Reserve indicated that it is in no hurry to start lowering borrowing costs. If rates remain at elevated levels or even rise further, precious metals, which do not pay dividends or offer yields, will struggle to follow an upward trajectory. With the interest rate outlook front and center these days, the FOMC’s monetary policy path will perhaps be the most important catalyst driving market dynamics in the near term. Burned by false dawns before and fearful of complicating efforts to restore price stability, the U.S. central bank has resisted pressure to start cutting rates imminently. This pushback could be validated if the upcoming consumer price index report, due for release next week, reveals limited progress toward disinflation. In terms of Wall Street projections, January headline CPI is forecast to have moderated to 3.1% y-o-y from 3.4% y-o-y in December. In contrast, the core gauge—a measure of long-term and underlying price trends in the economy—is seen cooling in a more gradual fashion, easing only to 3.8% y-o-y from 3.9% y-o-y previously. Focusing on potential outcomes, any upside surprise in the official CPI numbers relative to consensus estimates, particularly in the core metrics, should be bearish for gold. This scenario is likely to induce traders to scale back dovish interest rate expectations, which currently envision 110 basis points of easing through year’s end, boosting yields and the U.S. dollar in the process. FED FUNDS FUTURES CONTRACTS – IMPLIED YIELDS Meanwhile, lower-than-forecast inflation readings should be positive for the yellow metal. A large enough miss could even motivate markets to increase bets that the first rate-cut will come at the March meeting. In this case, U.S. Treasury yields, along with the U.S. dollar, may head lower while risk assets could experience a favorable turn. Wondering how retail positioning can shape gold prices? Our sentiment guide provides the answers you are looking for—don't miss out, get the guide now! GOLD PRICE TECHNICAL ANALYSIS Gold prices (XAU/USD) were somewhat subdued on Wednesday, moving aimlessly and consolidating around the 50-day simple moving average at $2,035, perhaps in quest of fresh market catalysts. The ongoing consolidation phase is not likely to end until prices either clear resistance at $2,065 or take out support at $2,005 decisively. In the event of a resistance breakout, the focus will be squarely on $2,085. From there, further gains may lead to renewed interest in the all-time high in the vicinity of $2,150. Meanwhile, a breach of support could spark a pullback towards $1,990. Additional losses past this threshold could bring attention to the 200-day simple moving average near $1,995. GOLD PRICE (XAU/USD) TECHNICAL CHART Gold Price Chart Created Using TradingView https://www.dailyfx.com/news/gold-price-forecast-us-inflation-data-to-guide-trend-xau-usd-levels-ahead-20240207.html

2024-02-07 18:00

US DOLLAR OUTLOOK: TECHNICAL ANALYSIS - EUR/USD, USD/CAD & AUD/USD The U.S. dollar (DXY index) lacks directional bias as traders await new catalysts The U.S. inflation report will be the next important source of market volatility This article focuses on the technical outlook for EUR/USD, USD/CAD & AUD/USD Most Read: US Dollar Technical Forecast: Setups on EUR/USD, USD/JPY, GBP/USD, USD/CAD The U.S. dollar, as measured by the DXY index, was largely flat, trading around the 104.11 level on Wednesday. This lack of directional bias came against a backdrop of mixed U.S. Treasury yields as markets awaited new catalysts in the form of fresh data that could provide clues about the Fed’s monetary policy path. US DOLLAR & YIELDS PERFORMANCE Source: TradingView There are no major U.S. economic releases scheduled for the next two days, but next week will bring the January inflation report. That said, annual headline CPI is expected to ease to 3.1% from 3.4% in December, while the core gauge is seen moderating to 3.8% from 3.9% previously. If progress on disinflation advances more favorably than anticipated, the greenback will struggle to continue its recovery. Conversely, if price pressures prove stickier than forecast, the currency’s rebound could be turbocharged by a hawkish repricing of interest rate expectations. Leaving fundamental analysis aside for now, this article will examine the technical outlook for three U.S. dollar FX pairs: EUR/USD, USD/CAD and AUD/USD, highlighting critical price levels that should be monitored in the coming sessions ahead of next week's U.S. CPI figures. Eager to discover what the future holds for the euro? Delve into our Q1 trading forecast for expert insights. Get your free copy now! EUR/USD TECHNICAL ANALYSIS EUR/USD inched higher on Wednesday, moving closer to cluster resistance at 1.0780. Should the bulls overcome this technical hurdle in the next few days, a rally toward the 200-day simple moving average and the trendline resistance around 1.0840 might be on the horizon. Alternatively, if sellers stage a comeback and push the pair beneath support at 1.0720, we may see an escalation in bearish momentum, setting the stage for a drop toward 1.0650. The pair may stabilize around these levels during a pullback, but in case of a breakdown, a move toward 1.0524 could follow. EUR/USD TECHNICAL ANALYSIS CHART EUR/USD Chart Created Using TradingView USD/CAD TECHNICAL ANALYSIS USD/CAD extended its retracement on Wednesday, threatening to break confluence support at 1.3535. If the pair closes below this floor decisively, sellers may launch an attack on the 50-day simple moving average near 1.3420. From this point, subsequent losses could bring attention squarely to 1.3380. On the other hand, if bearish pressure abates and prices pivot higher, resistance appears at 1.3535, a key area where several swing highs from this and last month align with a key Fibonacci level. Climbing further, the focus will then transition to 1.3575 and 1.3620 in the event of sustained strength. USD/CAD TECHNICAL ANALYSIS CHART USD/CAD Chart Created Using TradingView Delve into how crowd psychology influences FX trading patterns. Request our sentiment analysis guide to grasp the role of market positioning in predicting AUD/USD's direction. AUD/USD TECHNICAL ANALYSIS AUD/USD was subdued on Wednesday, with prices slightly lower after a failed attempt at clearing overhead resistance extending from 0.6525/0.6535. If the bearish rejection is confirmed with a negative close in the daily candle, we could soon see a pullback towards 0.6470 and possibly even 0.6395. On the flip side, if the Australian dollar mounts a comeback, the first hurdle on the road to recovery emerges at 0.6525/0.6535. The bulls may encounter stiff resistance around this range, but a successful breach could potentially lead to a rally towards the 200-day simple moving average near 0.6575. AUD/USD TECHNICAL ANALYSIS CHART AUD/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-forecast-seeking-new-drivers-setups-on-eur-usd-usd-cad-aud-usd-20240207.html

2024-02-07 17:00

S&P 500 Analysis Recent years have produced meagre returns for the S&P 500 in February Typical election year starts out poorly before surging higher – 60 Day Cop Market breadth appears to be pulling back slightly – catalyst needed to breach 5k mark on the S&P 500? The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Recent Years Have Seen Meagre Returns for the S&P 500 in February The quiet period after the festive Christmas period has, according to data going back to 2007, witnessed very modest returns for the S&P 500. In fact, over the same time horizon, it represents the third worst month for the index. With earnings reports for most of the ‘magnificent seven’ behind us, equities may be entering a period where upside momentum begins to slow – particularly ahead of the psychological 5000 level. S&P 500 Seasonality Chart Showing Average Monthly Returns from 2007 to Present Source: Refinitiv, prepared by Richard Snow Typical Election Year Starts out Poorly Before Surging Higher – 60 Day Chop In a typical election year, the first three months or 60 trading days have exhibited very choppy returns around the zero mark, according to data going back to 1950. However, after March fortunes have appeared much brighter, seeing significant improvement in the lead up and sometime after the actual vote to end up around 7% for the year. Market breadth appears to be pulling back – Catalyst needed to breach 5k mark? The US stock market and the underlying US economy is advancing at an encouraging pace. Non-farm payroll data saw positive markups on the December and January figures, GDP is moderating but still beating estimates and the services sector expands for the 13th straight month with forward-looking indicators like ‘new orders’ moving higher. In addition, earnings season has welcomed solid earnings reports for the majority of mega-cap stocks, pulling the rest of the index higher in the process as January appears to show a come down in market breadth since the end of last year. Mega-cap stocks continue to hold influence over the index as a whole and are more than capable of dragging the remaining 493 stocks to new index highs, but that will require some heavy lifting from the US heavyweights. Bullish momentum is easier to get behind when the majority of stocks are pulling in the same direction and may face difficulty if pockets/sectors begin to witness declines. Thus far it looks like stocks are consolidating or easing slightly after the broadly inclusive rally into year end. Percentage of S&P 500 Stocks above their 200 SMAs (Measure of Market Breadth) Source: barchart.com, prepared by Richard Snow S&P 500 Approaches the Psychological 5,000 Mark The S&P 500 is on the edge of hitting the 5,000 mark – a significant psychological level for the index outperforming many others at the moment. US stocks were said to come under pressure as interest rates rose above 5% but AI, cloud and tech stocks have shaken off those concerns with some reaching all-time highs. While history suggests February may slow the bull run, price action remains key. There has been little sign of a reversal in the index and each pullback has proven to offer more attractive levels to buy the tip. The bullish bias remains constructive unless signs to the contrary emerge. S&P 500 Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/s-p-500-why-us-stocks-may-not-feel-the-love-in-february-20240207.html

2024-02-07 14:30

Crude Oil Update: Energy markets have been worried about oversupply These worries have weakened somewhat, but haven’t disappeared Technically US crude’s uptrend remains in place Crude Oil Prices have been supported on Wednesday by news in the previous session of a smaller-than-expected rise in United States stockpiles, although a stronger Dollar still offers headwinds. Figures from the American Petroleum Institute showed a rise of 670,000 barrels in the week to February 2, much lower than the 1.9-million-barrel inventory build markets had been looking for before the figures. Moreover, the Energy Information Administration cut its outlook for US output growth this year by 120,000 Barrels Per Day, to 170,000, and forecast that last December’s output amazing 1.3 million BPD record wouldn’t be exceeded until February of 2025. There was clear support for the oil price in both these releases as one of the major worries for oil bulls has been the prospect of a market oversupplied by crude from producers outside the traditional Organization of Petroleum Exporting Countries bloc running into very uncertain demand from major importers, notably China. Reuters reported that Hamas has put forward a plan which would see a 135-day ceasefire in Gaza, with all Israeli hostages released if Israel’s forces withdraw from the territory. There was no immediate response from Tel Aviv but Israel has already said that it won’t leave Gaza until Hamas has been destroyed. Any sign of a workable truce might well see oil prices retreat, but for now geopolitics whether focused on Gaza, conflict in Ukraine or territorial disputes in the South China Sea, tend to keep energy prices elevated. Market focus tomorrow is likely to be on Chinese inflation numbers and the bearing they might have on chances of further economic stimulus by Beijing. Economists see deflation’s grip tightening, with annualized consumer price inflation tipped to fall by 0.5%. US Crude Oil Prices Technical Analysis WTI Crude Oil Daily Chart West Texas Intermediate Crude Oil Daily Chart Prices continue to respect the lower bound of the broad uptrend channel in place since mid-September. This has been confirmed by Monday’s close above support at $72.07 which was the channel base on that day. Near term resistance comes in at $76.79, the first retracement point of the rise from December’s lows to January’s peaks If this gives way, those peaks will be back in play. They currently offer resistance at $79.59. Above that a trading band from late October between $80.40 and $83.50 bars the way higher to last year’s peaks. There seems little immediate danger of prices getting back up there, although the psychological $80 handle looks reachable in the next month assuming the uptrend holds. IG’s own sentiment data finds traders bullish at current levels, to an extent (82%) which might well argue for a contrarian, bearish play. This balance should be watched as the week bows out to see how much conviction the bulls can muster. --By David Cottle for DailyFX https://www.dailyfx.com/news/crude-oil-prices-supported-by-us-inventory-levels-geopolitics-20240207.html