2024-02-07 12:30

Japanese Yen Major Talking Points: USD/JPY hovers around its opening level Tuesday Market focus us on Japanese wage settlements, with annual negotiations under way The medium-term range is holding, any break is likely to be instructive The Japanese Yen hovered around its opening level against the United States Dollar through Wednesday’s European session, having recovered somewhat in the previous day. USD/JPY had been boosted like most currency pairs by last week’s astonishingly strong US labor market report, and the subsequent pricing out of any early interest-rate increases from the Federal Reserve. However, the Japanese currency enjoys some underlying support from market suspicions that the Bank of Japan could tighten its own ultra-loose monetary policy this year. To put that in perspective, interest rates in Japan haven’t risen since 2007. The BoJ is waiting to see whether domestic demand and inflation have risen durably enough to permit any policy moves. Crucial to this will be wage growth, and there the picture remains maddeningly mixed. Japanese workers’ real wages fell for the 21st straight month in December, according to official data released on Tuesday. However, they did so at a slower pace than that seen in November. Annual wage negotiations are now under way in Japan and their outcome could be the single biggest pointer to what the BoJ is likely to do this year. While the thesis that rates could yet rise, the Yen will likely continue to enjoy some support, even though it will continue to offer comparatively meager yields for a long time to come. The currency also benefits from a degree of haven demand, as Japanese investors tend to repatriate offshore investment cash in times of geopolitical stress. Sadly, you don’t have to look too far for that right now which is probably one more reason why USD/JPY didn’t break its established trading range during last week-s Dollar surge. USD/JPY is looking at a quiet couple of days for trading cues, with Thursday’s economy watchers’ survey out off Japan the next data release to watch. While it might move the Yen in a quiet session, it’s unlikely to present more than short-term trading opportunity. USD/JPY Technical Analysis USD/JPY Daily Chart Compiled Using TradingView The Dollar has bounced at both the top and bottom of its prior trading range in the last four days, confirming that the range retains relevance despite being derived from levels last seen in late November last year. A break is likely to be key for near-term direction at least, with the range top providing resistance at 148.69 and its base offering support at 146.60. The latter level is also the first Fibonacci retracement of the long rise to last November’s significant highs from the lows of March. The market is clearly in no mood to spend a lot of time below that level for the moment, but steeper falls could be seen if it does. The next retracement level is at 143.43, a support level which hasn’t been seen since early January. --By David Cottle for DailYFX https://www.dailyfx.com/news/usd-jpy-steadies-after-last-week-s-gains-as-market-mulls-boj-path-20240207.html

2024-02-07 11:00

Global Indices Update: FTSE 100 rallies on better-than-expected BP earnings CAC 40 resumes its ascent The Nikkei 225 skips back to 36,000 zone FTSE 100 rallies on better-than-expected BP earnings The FTSE 100 broke out of its 7,690 to 7,600 sideways trading range and did so to the upside on better-than-expected BP earnings and as the oil giant plans to repurchase $3.5 billion of shares. The index has so far risen to 7,710 in out-of-hours trading and is gunning for the July and September highs at 7,723 to 7,747. Minor support below 7,690 lies between the 1 and 5 February highs at 7,674 to 7,669 ahead of the 26 January high at 7,653. FTSE 100 Daily Chart Source: IG, ProRealTime, Prepared by Axel Rudolph CAC 40 resumes its ascent The French CAC 40 stock index resumed its ascent on Tuesday amid solid earnings and strong Chinese and US stock markets with the December peak at 7,653 being back in sight. If overcome, the index’s record high at 7,704 will be back in view as well. Minor support can be found around Monday’s 7,618 high and along the January-to-February uptrend line at 7,600. CAC 40 Daily Chart Source: IG, ProRealTime, Prepared by Axel Rudolph We examined thousands of trading accounts to discover what successful traders do right. Get the summary of our findings below: The Nikkei 225 skips back to 36,000 zone The Nikkei 225 looks to be in the process of forming at least an interim top with it having slid back to the 36,000 region, just like last week when it acted as support. Tuesday’s slip through this year’s uptrend line at 36,230 indicates that it is likely that the late January low at 35,686 is to be revisited. If so, it’ll probably give way as the past couple of weeks’ upward correction to last week’s 36,511 high represents an Elliott Wave abc zigzag correction which should be followed by another down leg. This could then take the Nikkei 225 to its mid-January low at 35,312, a daily chart close below which would confirm a top being formed. This bearish view will remain in play while last week’s high at 36,511 isn’t overcome on a daily chart closing basis. If so, the January record high at 37,003 would be back in focus. Minor resistance can be seen along the breached 2024 uptrend line, now because of inverse polarity a resistance line, at 36,230. Nikkei 225 Daily Chart Source: IG, ProRealTime, Prepared by Axel Rudolph https://www.dailyfx.com/news/ftse-100-cac-40-resume-their-ascents-but-nikkei-225-stays-subdued-20240207.html

2024-02-07 10:03

GBP/USD Analysis Economic calendar quiet but scattered with central bank speakers GBP/USD tests prior zone of support after temporarily trading below the 200 SMA Elevate your trading skills and gain a competitive edge. Get your hands on the Pound Sterling Q1 outlook today for exclusive insights into key market catalysts that should be on every trader's radar: This continues to be a quiet week from a scheduled risk perspective but we are still to hear from a number of prominent Fed officials and potentially hear why the Bank of England’s lone dove, Swati Dhingra voted for a cut in the January meeting. Thus far, Fed speak this week made reference to the positive signs shown on the inflation front, the possibility of a challenge in getting inflation to that 2% marker from current levels, and a combined feeling that no one on the committee feel hurried into delivering the first interest rate cut as the US economy marches on. Interest Rate Cuts Derived from Market Expectations Source: Refinitiv, prepared by Richard Snow GBP/USD Back Within Familiar Territory for Now GBP/USD has managed to reclaim some of the lost ground yesterday and this morning. The prior NFP-inspired drop appears to have lost momentum after Monday’s close, resulting in a partial recovery. Such a move is not surprising given the magnitude of the sell-off over such a short period of time, especially when considering the smaller daily range exhibited in the sessions prior. The 200 SMA remains a key level for a bearish continuation, but first, a daily close below 1.2585 (channel support) is required. Fundamentally, the US economy is streets ahead of the UK which is pushing back the anticipated start of rate cuts in the US. US GDP is moderating but surprised to the upside in Q4, the labour market is growing despite news of retrenchments nearly every week, and services PMI data revealed a number of forward-looking indicators have shown significant improvement – lifting sentiment even further. Resistance appears at the December swing high of 1.2736 followed by channel resistance at 1.2800. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/cable-gbp-usd-attempts-recovery-as-the-dollar-takes-a-breather-20240207.html

2024-02-06 18:00

USD/JPY FORECAST – TECHNICAL ANALYSIS After a strong rally over the last couple of sessions, USD/JPY reversed to the downside on Tuesday following an unsuccessful attempt at breaking through resistance at 148.90, with the bearish move reinforced by falling U.S. bond yields. If losses accelerate, support is seen at 147.40, followed by 146.00. On the flip side, if the bulls regain control, which seems a highly likely scenario given the improved outlook for the U.S. dollar in light of the Fed's reluctance to cut rates prematurely, the first technical ceiling to watch appears at 148.90 and 150.00 thereafter. On further strength, the focus will be on 152.00. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView Want to know what lies ahead for the Japanese yen? Find all the insights in our Q1 trading forecast. Request your free copy now! EUR/JPY FORECAST – TECHNICAL ANALYSIS EUR/JPY has fallen over the past two weeks, guided lower by a bearish downtrend line extended off January’s highs. Following this move, the pair is stalking its 100-day SMA at 159.00. Bulls must firmly defend this floor; failure to do so may bring 158.30 into play, and maybe even trendline support at 157.00. In the event of a bullish turnaround, trendline resistance at 160.00 will be the first barrier against an upward climb. While overcoming this technical barrier could prove difficult, a decisive breakout could open the door to a rally towards 161.00. Looking higher, all eyes will be on 161.60 and 164.00 thereafter. EUR/JPY TECHNICAL CHART EUR/JPY Chart Created Using TradingView GBP/JPY FORECAST – TECHNICAL ANALYSIS After reaching its best level in over 8 years near 189.00 last month, GBP/JPY has lost some ground, but has managed to establish a base in the vicinity of 185.50. If the pair holds above this area, buying interest could start gathering strength, paving the way for a possible retest of January’s multi-year high. Conversely, if sellers unexpectedly return and push prices below 185.50, bearish pressure could intensify, creating the right conditions for a pullback towards 184.20, right around the 100-day and 50-day simple moving average. Below this zone, trendline support at 181.85 becomes the next critical floor to monitor. GBP/JPY TECHNICAL CHART GBP/JPY Chart Created Using TradingView https://www.dailyfx.com/news/forex-japanese-yen-forecast-technical-trade-setups-on-usd-jpy-eur-jpy-and-gbp-jpy-20240206.html

2024-02-06 16:08

USD, (DXY) News and Analysis Economic data and Fed speakers to provide tailwind for the dollar Fed speakers with the power to prolong USD move - key resistance assessed The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Economic Data and Fed Speakers to Provides Tailwind for the Dollar The dollar is slightly softer at the time of writing but is coming off a massive two-day advance after Friday’s non-farm payroll report revealed a significant beat to the upside. The labour market not only looks robust but appears to be in the ascendancy after the December figure received a massive revision higher. Further evidence of a resilient economy, despite restrictive monetary policy, appeared via the ISM services PMI readings below. The headline reading beat the forecast of 52 as well as the prior 50.5, continuing the expansion in the services sector for 13 straight months now. Some of the more interesting stats appear within the sub-sections of the report like ‘new orders’, ‘prices’ and ‘imports’ which all saw notable improvements. New orders is often used as a proxy for future economic conditions and the increase in prices suggests increased costs of shipping in the Red Sea is being passed down to the consumer. Imports posted the largest month on month percentage change of all the categories and suggests consumption and spending are strong. In addition, a lesser observed report called the Senior Loan Officer Survey (SLOOS) revealed that credit providers are less reluctant to extend credit (greater supply) while demand for credit made marginal progress. The report was a main focus around the time of the regional banking instability and has come back onto the radar again after New York Community Bancorp had to cut its dividend – sending other regional bank shares lower with it. The above data is not consistent with an economy that ought to be constrained by elevated interest rates – suggesting that the start of rate cuts may need to be pushed back even further. As such, US yields and the dollar have risen in recent sessions. Fed Speakers with the Power to Prolong USD Move - Key Resistance Assessed The dollar basket (DXY) is viewed as a benchmark of broader dollar performance and witnessed massive gains on Friday which continued into Monday. Today however, prices have eased back a tad, ahead of the 104.70 level which has acted as support in September and November 2023. The Fed’s very own Neel Kashkari seemed surprised at the US economy’s strength, suggesting that the current level of interest rates is not having as much of an impact as would typically be the case if the neutral rate hadn’t been shifted higher. The neutral rate is a theoretical rate that is neither restrictive of supportive to the economy and is said to be higher in the post-Covid period. Price action remains above the 200-day simple moving average and could continue with the help of additional Fed speakers who are lined up today to provide their thoughts on monetary policy and interest rates. Further talk about the impressive economic data and the need to move cautiously before deciding to cut rates could add to the recent USD advance. US Dollar Basket (DXY) Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/us-dollar-propelled-higher-on-string-of-strong-data-fed-speakers-next-20240206.html

2024-02-06 14:00

Gold (XAU/USD) News and Analysis: Gold prices are in the green Tuesday after two days of big falls Last week’s news of US labor market strength continues to weigh However falls have been more limited than other assets’ Gold prices have managed some modest gains on Tuesday after a punishing few sessions courtesy of the United States labor market and the Federal Reserve. Last week’s news of astonishing job creation has seen interest-rate-cut bets taken off for March, although a May move remains very much in play, hugely to the Dollar’s benefit. The prospect of US borrowing costs remaining higher for longer has taken a clear, obvious toll on gold, in a double whammy for the metal. It suffers once by virtue of being non-yielding and then again thanks to the fact that so many gold products are priced in US Dollars, so more expensive for everyone trying to pay for them with other currencies. It’s notable, however, that gold has suffered rather less from last week’s play than some other assets (such as Sterling). The current broad market scene still offers perceived haven assets like the precious metals complex plenty of support. After all investors are fretting the prospect of a tougher battle against inflation and a broad spectrum of geopolitical risk from Gaza, the Red Sea, Ukraine, the South China Sea and so on. China’s economic underperformance is also simmering away. Given all of that, it’s perhaps not too surprising that prices have remained above the important $2000/ounce level even as the Dollar’s strength has brought that level rather closer to the market. We’re heading into a rather quieter period of scheduled economic data, which will leave gold prices in thrall to general market risk appetite and, in all likelihood, whatever coming individual Fed speakers have for the market. Gold Prices Technical Analysis Gold Daily Chart Compiled Using TradingView Prices are once again testing the bottom of their wide, dominant uptrend channel from mid-November, itself an extension of the gains made since early October’s lows. The tell-tale higher highs and higher lows of a ‘pennant’ formation are also visible on the daily chart. As a continuation pattern this ought perhaps to indicate that prices will begin to rise again once it plays out, as they did before but there’s obviously no guarantee they will. For now the uptrend channel offers support at $2030.25 level, with January 17’s intraday low of 1972.88 lying in wait should that give way. A conclusive break of the uptrend, however, might mean a deeper retracement. Near-term resistance is at February 2’s top of $2056.96 ahead of trendline resistance at $2063.84. IG’s own sentiment data on gold is mixed, but, with 64% of traders coming to the metal from the bullish side, enough to suggest that the market is looking for modest gains at current levels. --By David Cottle for DailyFX https://www.dailyfx.com/news/gold-prices-inch-back-from-fed-inspired-battering-hold-above-2000-20240206.html