How long will the U.S. dollar’s downward correction last? Get all the answers in our first-quarter forecast!

US Treasury yields plummeted in the last three months of 2023 on expectations that the Federal Reserve would significantly reduce borrowing costs over the medium term, sending the U.S. dollar reeling to its lowest level in five months. Against this backdrop, EUR/USD and GBP/USD soared, hitting multi-month highs in late December.

The pullback in U.S. bond yields triggered a huge rally in the equity space, enabling the main stock market indexes to climb to new records. Gold prices also advanced, ending 2023 above the psychological $2,000 level but slightly off its all-time high– a bullish development for the precious metal which is likely to benefit from the Fed’s pivot.

With U.S. yields skewed to the downside and risk-on sentiment in full swing on Wall Street, the U.S. dollar may extend losses over the coming months. This potential scenario could reinforce upward momentum for gold, EUR/USD, GBP/USD and stocks in Q1, but caution is warranted, with certain markets approaching overbought conditions.

Different market dynamics are poised to unfold in the near term, potentially bringing about increased volatility and enticing trading setups for major assets. For an in-depth analysis of the variables and drivers that may influence currencies, commodities (gold, silver, oil) and cryptocurrencies in early 2024, explore the Q1 technical and fundamental forecasts put together by DailyFX's team of experts.

Q1 TRADING FORECASTS

British Pound Q1 Forecast: Can the BoE Temper UK Rate Cut Expectations?

This article delves into the fundamental outlook of the British pound, offering an exhaustive analysis of its medium-term prospects. The piece also discusses crucial risk factors that could steer sterling’s trend in the first quarter of 2024.

Australian Dollar Technical Forecast: AUD/USD Enters Q1 at Key Resistance

This article presents an in-depth analysis of the Australian dollar’s outlook for the first quarter, providing valuable insights into price action dynamics and market sentiment.

Bitcoin Q1 Fundamental Outlook – Positive Tailwinds on the Horizon

Bitcoin goes into the first quarter of 2024 with two specific events set to determine price action in Q1 – a spot Bitcoin Exchange Traded Fund (ETF) and the run-up into the latest Bitcoin ‘halving’ event.

Euro Q1 Technical Forecast: A Mixed Picture

EUR/USD closed out 2023 on a positive note, recovering a sizeable chunk of the decline witnessed in the second half of the year. The medium-term trend appears bullish but yield differentials will struggle to motivate a prolonged period of upside potential.

Crude Oil Q1 Fundamental Forecast: US Rate Cut Hopes Offer Support Amid Demand Worries

Oil prices hit their highest level of 2023 in September but have declined very sharply since, with shaky economic data keeping markets fretting about the demand outlook.

USD/JPY Q1 Technical Forecast: Will the US Dollar Downtrend Endure?

USD/JPY Q1 Technical Forecast: Will the US Dollar Downtrend Endure? The preceding quarter saw USD/JPY power up to highs not previously seen since mid-1990, thanks largely to those fundamental, interest-rate differentials.

Gold, Silver Q1 Forecast: Fundamental Drivers Align but Real Rates Pose a Threat

The article focuses on the fundamental outlook for precious metals in the first quarter, focusing specifically on gold and silver prices, taking into account interest rate dynamics, as well as the U.S. dollar’s broader trend.

US Equities Q1 Technical Outlook: Stocks in Overbought Territory. Can It Continue?

The technical picture is a little hard to read for the S&P 500 heading into the first quarter of 2024, with immediate resistance resting near the record high around the 4,817 level.

US Dollar Q1 Fundamental Outlook: A Tale of Two Halves – Weak Start, Strong Finish

The Fed’s unexpected dovish pivot is a clear signal that officials want to shift policy in time to engineer a soft landing; in other words, they are prioritizing growth over inflation.

For a complete overview of the euro’s technical and fundamental outlook in the coming months, make sure to grab your complimentary Q1 trading forecast now!

Q1 TOP TRADE OPPORTUNITIES

Q1 Top Trade: Bullish Russell 2000 as Soft-Landing Scenario Gets Traction

This article analyzes the technical and fundamental outlook for the Russell 2000 for the first quarter of 2024, examining the main variables that could determine its medium-term prospects.

Bullish Gold: Top Trade Q1 2024

There are several factors influencing gold’s price that appear to be pulling in the same direction ahead of Q1 of 2024. These help to form the trading thesis and are outlined in the rest of this article along with technical considerations.

Short USD/JPY - Rising Rate Cut Expectations and FX Intervention by the BoJ

USD/JPY held the high ground for the first half of Q4 2023 before finally declining from near the 2022 highs. The selloff gained traction following growing chatter toward the end of November regarding a policy shift from the BoJ.

Coinbase (COIN) – Growing Tailwinds as Cryptocurrency Interest Swells?

Coinbase, the largest cryptocurrency exchange in the US, has seen its shares perform strongly in the second half of this year, rallying from around $46 in early June to a current level of $150.

Short GBP/USD - Going Against the Grain: Top Trade Q1, 2024

The British pound enters 2024 on a relatively strong footing against the USD after markets reacted ‘dovishly’ to the Federal Reserve’s more accommodative messaging in the last FOMC announcement.

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