2024-02-06 12:30

Pound Sterling News and Analysis: Repriced Fed bets have taken GBP/USD down to one-month lows An important technical retracement point has stopped the bears so far Can it continue to do so? The British Pound staged a modest comeback against the United States Dollar on Tuesday but it came after two bruising days for Sterling and the Greenback remains in control of this pair as all others. The almost complete pricing out of a March interest rate cut by the Federal Reserve after last week’s storming labor market report is behind the Dollar’s strength. The Pound’s side isn’t helped by the fact that the Bank of England is unusually split on what happens next in London. Last week rates were left on hold, but two Monetary Policy Committee members wanted them to rise, five wanted to leave them alone and one wanted a cut. That was the first three-way voting split since 2016. The rest of this week is very light on probably market-moving data which will leave GBP/USD at the mercy of whatever various Fed speakers have to say. There are four on the near-term slate. Cleveland Fed President Loretta Mester and Boston’s Sally Collins are on tap Tuesday, with Governors Adriana Kugler and Michelle Bowman going on Wednesday, when Collins also speaks again. The extent to which this crowd reinforces the markets’ current take that a rate cut is likely in May will probably be crucial. If that prospect solidifies the Dollar could retrace some of its more extreme recent gains as markets see lower rates merely postponed rather than pushed much further out. There’s no heavyweight UK economic data due until February 13, when official employment numbers for December will be released. GBP/USD Technical Analysis GBP/USD Daily Chart Compiled Using TradingView Sterling has been pushed pretty unceremoniously out of the broad, elevated trading range which had previously dominated the action since December. However, that range retains some relevance because its lower bound was the first, Fibonacci retracement of the rise to December 28’s peak from the lows of October 5 and GBP/USD has clearly bounced at the second retracement. That comes in at 1.25180, Monday’s precise intraday low. This region was also where the market bounced in mid-December and it still looks likely to offer substantial support. Monday also saw the Pound slip below its 200-day moving average when it abandoned 1.25643. This might be an indication that weakness has gone too far, and bulls will be keen to retake this level. The 1.2600 psychological resistance point is also likely to be key, along with December 7’s closing high of 1.25927 offering likely resistance just below it. However, the bulls’ near-term order of business will probably be to keep Sterling above that important retracement level on a daily and weekly closing basis. Cable (GBP/USD) is one of the three most liquid forex pairs, providing plenty of opportunity to FX traders. Find out more below: --By David Cottle for DailyFX https://www.dailyfx.com/news/british-pound-bounces-at-key-support-fed-speakers-likely-to-dominate-trade-20240206.html

2024-02-06 11:00

Major Indices Latest: Dow drifts back from high Nasdaq 100 sits at record Hang Seng surges in promises of state support Dow Drifts Back from High Friday’s record high gave way to some modest downside on Monday, though it can hardly be said that there was much selling momentum. Short-term trendline support from mid-January was tested on Monday. A close below this line would mark a short-term bearish development, and potentially open the way to the 50-day simple moving average (SMA). Before this, the price will test the previous high from late December and early January at 37,815. Dow Daily Chart Source: IG, ProRealTime, Prepared by Christopher Beauchamp Nasdaq 100 Sits at Record The index shrugged off some slight weakness on Monday to push higher, moving back to its record high. For the time being buyers continue to support the price, after a bounce last week from 17,168. A close below this might open the way to the late December high at 16,978, and then down to the 50-day SMA. Nasdaq 100 Daily Chart Source: IG, ProRealTime, Prepared by Christopher Beauchamp Hang Seng Surges on Promises of More State Support The index enjoyed an impressive rebound overnight, rallying back towards the late January high, as Chinese markets were bolstered by news of more state support. The area around 16,285 has been a battleground since December, with recent strength fading as it entered the key zone of price action. A close above 16,400 in coming days could point the way to more gains, in the direction of 17,000 and the late December high. A close back below 16,000 would indicate that the sellers have regained control, putting the 15,000 area in play once again. Hang Seng Daily Chart Source: IG, ProRealTime, Prepared by Christopher Beauchamp https://www.dailyfx.com/news/dow-edges-lower-and-nasdaq-100-holds-up-while-hang-seng-surges-20240206.html

2024-02-06 09:09

RBA, AUD/USD Update RBA maintains interest rate at 4.35%, warns rate hikes are an option AUD/USD broadly higher after hawkish guidance on inflation The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library RBA Maintains Interest Rate at 4.35%, Warns Rate Hikes Are an Option The Reserve Bank of Australia (RBA) voted to keep interest rates unchanged at 4.35% at its meeting earlier this morning, in line with consensus. The Board pointed to progress in goods inflation helping to lower price pressures, but services inflation has eased only slightly – contributing to potential upside risk. The Board also signalled that demand outpaces supply which adds to existing inflation concerns but admitted that the dynamic is approaching a more sustainable balance. The RBA therefore, is intent on keeping all options on the table, including another rate hike, to address threats to the 2-3% inflation target. The RBA increased interest rates as recently as November 2023 as Australia has found it difficult to contain the general rise in price pressures at a time when other major central banks are considering when to cut their respective benchmark interest rates. AUD/USD Broadly Higher after Hawkish Guidance on Inflation The Australian dollar lifted on Tuesday after a perceived hawkish meeting from the RBA but it may take more than that to arrest the broader decline. AUD/USD dropped sharply at the start of the year – mainly as a result of US markets stepping back from prior expectations of aggressive rate cuts to materialize sooner than the Fed had indicated. More recently the pair consolidated within a bear flag pattern before witnessing a bearish continuation with follow through – breaking below notable levels/zones of support; including the confluence zone around 0.6580 and the 200-day simple moving average, as well as the prior zone of resistance (currently being tested) around 0.6520. Bearish continuation remains constructive if bulls are unable to close above the 0.6520 level. In the absence of the close above 0.6520, further levels of support emerge at 0.6460 and 0.6365. Expect recent Chinese woes to weigh on potential AUD upside as the world's second largest economy faces major challenges. Chinese regulators have restricted the borrowing of shares in an effort to clamp down on short selling in the latest attempt to halt plummeting stock indices. China continues to struggle with an ailing real estate sector which contributes around 25% - 30% of Chinese GDP while trying to fight off deflation risks. AUD/USD Daily Chart Source: TradingView, prepared by Richard Snow AUD/USD: Retail trader data shows 71.57% of traders are net-long with the ratio of traders long to short at 2.52 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USDprices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed AUD/USD trading bias. https://www.dailyfx.com/news/rba-holds-rates-issues-hawkish-guidance-in-response-to-inflation-risks-20240206.html

2024-02-05 18:00

Most Read: US Dollar Forecast - Bulls Return as Bears Bail; Setups on EUR/USD, USD/JPY, AUD/USD The U.S. dollar, as measured by the DXY index, extended its gains and was sharply higher on Monday, bolstered by surging U.S. Treasury yields in the wake of strong economic numbers and hawkish Federal Reserve rhetoric in recent trading sessions. The 2-year note, in particular, surged past 4.45%, marking its highest level since the beginning of the year. Last Friday, the U.S. nonfarm payrolls report set a positive tone for the U.S. currency by revealing that U.S. employers had added 353,000 jobs in January, nearly double the consensus estimates. Today, the string of favorable data continued with the January ISM services PMI accelerating to 53.4 from the previous 50.5, handily beating the expected 52.00. The greenback also found support in the remarks made by FOMC Chairman Jerome Powell over the weekend. In a televised interview aired on Sunday, Powell indicated that the central bank was unlikely to have the confidence to reduce borrowing costs in March, as acting too soon could potentially allow inflation to settle above the 2.0% target. With the U.S. economy showing remarkable resilience and inflationary pressures displaying stickiness, policymakers may delay the start of the easing cycle and deliver fewer rate cuts than anticipated by the market when the process gets underway. Against this backdrop, yields could rise further in the near term before pivoting to the downside later in the year, a constructive backdrop for the U.S. dollar now. USD/JPY TECHNICAL ANALYSIS USD/JPY pushed higher on Monday, clearing trendline resistance at 148.35 and approaching a key ceiling at 148.90. With the bulls firmly in control, it seems likely that this barrier could soon be breached. In such a scenario, we could witness a rally towards 150.00, and perhaps even 152.00. Conversely, if sellers regain the upper hand and initiate a pullback, support emerges at 148.35, followed closely by 147.40, which roughly corresponds to the 100-day simple moving average. While this price zone may provide some stabilization during a slump, a breakdown could result in a drop towards 146.00. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView Want to know more about euro’s outlook? Find all the insights in our Q1 trading forecast. Request a free copy now! EUR/USD TECHNICAL ANALYSIS EUR/USD plummeted on Monday, breaking below the 100-day simple moving average and trendline support near 1.0780. To prevent a deeper pullback, the bulls must defend 1.0720 at all costs; failure to do so could spark a retracement towards 1.0650. On further weakness, all eyes will be on 1.0525. In the event of a bullish reversal from the pair’s current position, resistance looms at 1.0780. Moving beyond this technical ceiling, traders are likely to shift their attention on the 200-day simple moving average located near 1.0840. Above this area, the crosshairs will squarely fall on the 1.0900 handle. EUR/USD TECHNICAL ANALYSIS CHART EUR/USD Chart Created Using TradingView Interested in learning how FX retail positioning can offer clues about GBP/USD’s near-term trajectory? Our sentiment guide has valuable insights about the subject. Get it now! GBP/USD TECHNICAL ANALYSIS GBP/USD has been consolidating inside a symmetrical triangle recently. This continuation pattern resolved to the downside on Monday, triggering a sharp move below the 200-day simple moving average at 1.2560. If losses intensify later this week, support lies at 1.2455, followed by 1.2340. On the flip side, if sentiment improves and the pound manages to stage a comeback against the U.S. dollar, resistance is seen at 1.2560. Should the rebound gather strength and extend beyond this level, the focus will likely shift to the 1.2600 handle and 1.2680 thereafter. GBP/USD TECHNICAL CHART GBP/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-forecast-usd-jpy-attacks-resistance-as-eur-usd-gbp-usd-break-down-20240205.html

2024-02-05 16:10

Gold (XAU/USD) Analysis Bumper non-farm payrolls for January sees rate cut odds pushed back US yields continue to rise after NFP and Powell’s confirmation that March is not the base case for first rate cut Gold prices drop, weighed down by tapered rate cut bets and stronger USD The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library NFP Data Builds on December Momentum – Easing Rate Cut Odds Non farm payroll data for January surprise to the upside causing a spike in volatility heading into the weekend. Employment data showed that 353k new jobs were created in January compared to the 180k anticipated. Not only that, but I substantial upward revision of the December data revealed that January was not an isolated phenomenon and that the labor market is not only robust but is strong. In addition, the unemployment rate remained at 3.7% in contrast to forecasts of 3.8. The labour market is the one data point that markets are watching intensely as restrictive monetary policy appears to have had little effect on the jobs market in the fight to bring inflation back down to 2%. US Yields Rise in Response to NFP Data, Powell’s March Pushback U.S. government yields towards the shorter end of the curve I've risen sharply since Friday, providing A headwind for gold. Gold typically responds in an inverse manner towards US yields and The US dollar. The chart below shows gold price action overlaid with the US two year bond yield (in blue). The inverse relationship can be seen along with the recent sharp rise into your yields which has contributed to gold's decline. Gold vs US 2-Year Yields (Inverse relationship) Source: TradingView, prepared by Richard Snow In addition, Jerome Powell had an interview with CBS in which he confirmed the Fed plan on delivering three rate cuts in 2024 and played down the potential for March as the month of the first cut. The Federal Reserve Chairman also provided some guidance around incoming inflation data which requires little improvement to convince the Fed that cutting rates in the coming months will be appropriate. Gold Prices Drop, Weighed Down by Dollar Strength Gold prices fell on Friday, failing to close above the psychological level of $2,050 which set up a continuation of the short-term bearish momentum into the start of the week. On Monday the early test was always going to be whether or not gold prices can push further to breach the 50 day simple moving average (SMA) which it has done on an intraday basis towards the end of the London session. Gold prices are a function of many variables which all astute traders are aware of. Find out what these are and how to use approach gold trading via our dedicated trading guide: The stronger dollar weighs on the dollar priced commodity and higher US yields makes the non-interest-bearing metal less attractive. Gold now looks to test the $2,010 level with $1,985 secondary level of support. Gold (XAU/USD) Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/gold-prices-fall-in-response-to-rising-yields-usd-post-fomc-20240205.html

2024-02-05 14:30

EUR/USD Main Talking Points: EUR/USD starts the week with more falls The pair has already slid for four straight weeks Dollar strength looks set to dominate trade for some time The Euro made a new low against the United States Dollar for this young year to date on Monday as the unwinding of early interest-rate cut bets continues to boost the greenback. The markets’ response to last week’s astonishing strength in US job creation is reverberating around global asset classes once more, with any chance of a reduction in borrowing costs from the Federal Reserve in March all-but ruled out. In European action this has seen both the Euro and Sterling hit multi-week lows against the Dollar and, in a week that’s comparatively light for likely market moving data, the Dollar-strength theme is likely to stick. Find out how to plan for major market moving news and economic data releases in this strategic guide: Germany’s trade numbers were released earlier on Monday and probably added to the Euro’s problems. While the overall trade balance did improve in December, both imports and exports fell more than economists expected. Exports were down 4.6% on the month, much worse than the 2% fall predicted. Imports slid by nearly 7%. The eurozone’s traditional powerhouse economy endured a rocky start to 2024, with farmers’ protests and train drivers’ strikes underlining workers’ discontent. The trade numbers will do little to reassure those worried that recession is closing in. Data such as this will only shore up suspicions that the European Central Bank can’t be far from cutting its own interest rates, with market focus now on a reduction in April, assuming inflation’s grip continues to relax. EUR/USD Technical Analysis EUR/USD Daily Chart Compiled Using TradingView EUR/USD has now chalked up four successive weeks of falls with both the technical and fundamental pictures combining to weigh on the single currency. The Euro is now back within a trading band last seen between December 1 and 13. It is bounded at the top by December 5’s intraday high of 1.08490 and December 8’s low of 1.07207. The latter level now offers near term support, with November 14’s intraday low of 1.06916 beckoning should it break, and guarding the way lower to October 3’s one-year lows. Still, while things clearly aren’t looking great for battered Euro bulls, there may be some hope of respite if only in the speed of recent declines. The pair’s 200-day moving average gave way on February 2 and the market remains below that level as of Monday. The pair’s Relative Strength Index is unsurprisingly closing in on oversold levels. It now stands at 33.1, not far from the important 30 level which suggests that overselling has become severe. The pair remains within a quite well-respected downtrend channel from the peaks of December 28. That channel offers resistance quite well above the market at 1.08521 and support much closer to hand at 1.06931. --By David Cottle for DailyFX https://www.dailyfx.com/news/eurusd-wilts-again-on-stronger-dollar-german-trade-misses-don-t-help-20240205.html