After the US CPI data on Tuesday, the dollar ran hot and was strongly bid across the board as both stocks and bonds fell. But since then, there was no real follow through and not surprisingly so I would say. As mentioned here, the next leg higher for the dollar might be tougher to come by and the bond market needs to play ball as well.

And in the last two days, that hasn’t quite been the case. 10-year Treasury yields are now down to 4.226% as compared to the post-CPI high of 4.316%. That is inviting key questions on the dollar’s supposed break higher this week. Let’s take a look.

1. EUR/USD is now trading back to 1.0735, above its December low of 1.0723. Is the break lower on Tuesday a fake out?
2. USD/JPY jumped above 150.00 for the first time since November last year. However, it is struggling to keep at it as price now falls back to test the figure level today. Can buyers hold their ground?
3. USD/CAD looked like it shook off the January high of 1.3542 to break out of range. But it is now falling back towards that range alongside a failed push above its 100-day moving average, seen at 1.3556 currently. Are sellers going to seize more control from here on?
4. Gold fell back below the $2,000 mark for the first time in two months. However, buyers are holding on at the 100-day moving average seen at $1,990.86 currently. Are we setting up for a rebound or are dollar bulls going to try for another push lower?

Those are some juicy technical considerations and it all hinges on what the bond market does next too. 10-year yields broke above the range between 3.80% and 4.20% on the CPI data this week. But if we are to see yields fall back into that range after the slew of US data today, that will be a major setback for dollar bulls.

If so, expect that to provide a tailwind for risk trades – which have already started an early rebound in trading yesterday.

This article was written by Justin Low at www.forexlive.com.

USD

• The Fed left interest rates unchanged as
  expected while dropping the tightening bias in the statement but adding a
  slight pushback against a March rate
  cut.
• Fed Chair Powell stressed
  that they want to see more evidence of inflation falling back to target and
  that a rate cut in March is not their base case.
• The latest US GDP beat
  expectations by a big margin.
• The US CPI beat
  expectations for the second consecutive month with the disinflationary trend
  reversing.
• The US NFP report
  beat expectations across the board by a big margin.
• The ISM Manufacturing
  PMI
  surprised to the upside with the new orders index, which is considered a
  leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat
  expectations across the board with the employment sub-index erasing the prior
  drop and prices paid jumping above 60.
• The US Consumer
  Confidence report came in line with expectations but
  the labour market details improved considerably.
• The market now expects the first rate cut in June.

EUR

• The ECB left interest rates unchanged as
  expected maintaining the usual data dependent language.
• The recent Eurozone CPI came
  in line with expectations with the disinflationary process continuing steady.
• The labour market remains historically
  tight with the unemployment rate hovering at record lows.
• The Eurozone PMIs beat
  expectations on the Manufacturing side but missed on the Services one with both
  measures remaining in contraction.
• The ECB members recently have been pushing back
  against the aggressive rate cuts expectations placing more weight on wage
  growth and data dependency.
• The market expects the ECB to cut rates in April.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that EURUSD dropped
back into the key support around
the 1.07 handle following the hot US CPI report. The price bounced as the
buyers stepped in again to position for a rally into the trendline
targeting a break above it. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into the 1.05 handle
next.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the latest leg
lower diverged with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might signal a correction all the way back to the
trendline where we have the confluence with the
1.08 handle. That’s where the sellers will likely step in more aggressively
with a defined risk above the trendline to position for a breakout below the
1.07 support.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been consolidating inside the 1.0723 and 1.0736 range. Today we have
some key economic releases and a break on either side supported by the data
should trigger a more sustained move in the direction of the breakout, so watch
out for that.

Upcoming Events

Today we will see the latest US Jobless Claims
figures and the US Retail Sales data, while tomorrow we conclude the week with
the US PPI and the University of Michigan Consumer Sentiment survey.

This article was written by FL Contributors at www.forexlive.com.

The concept of „letting losses grow“ is a common
pitfall in both investing and personal finance management. It refers to the
tendency of individuals to hold onto losing investments or poorly performing assets with the hope that they will
rebound, rather than cutting their losses and moving on. This behavior is often
driven by emotional factors such as pride, fear, and the aversion to admitting
a mistake. Unfortunately, this mindset can lead to even greater losses and
missed opportunities for capitalizing on more profitable investments.

Understanding Emotional Attachment

A key factor in letting losses grow is emotional attachment.
Investors may
become attached to their initial analysis or the story behind the investment,
which makes it difficult to accept when things go wrong. The idea of selling at
a loss can be seen as an admission of failure, which is why many people end up
holding onto deteriorating investments, hoping for a turnaround that may never
come.

Tips to Overcome Emotional Attachment:

• Set Clear Investment Goals: Establish what you want to achieve with your
  investment and stick to these objectives.
• Use Stop-Loss Orders: Implementing stop-loss orders can help automate the
  process of cutting losses before they escalate.
• Practice Detachment: Remind yourself that investments are not reflections
  of your self-worth or intelligence.

The Role of Confirmation Bias

Confirmation bias plays a significant role in letting losses
grow. It occurs when investors seek out information that confirms their
existing beliefs or decisions, while ignoring contradictory evidence. This bias
can cause one to overlook negative aspects of an investment, reinforcing the
decision to hold onto it despite poor performance.

Tips to Avoid Confirmation Bias:

• Seek Diverse Opinions: Actively search for a range of perspectives,
  especially those that challenge your own.
• Regularly Review Investments: Periodically reassess your holdings objectively to
  ensure they still align with your goals.
• Be Open to Change: Be prepared to pivot your strategy if reliable data
  suggests that your current approach is flawed.

Sunk Cost Fallacy

The sunk cost fallacy is another cognitive bias that
contributes to letting losses grow. It’s the idea that one should continue a
venture because of previously invested resources (time, money, effort), even if
future costs outweigh the benefits. This leads to throwing good money after bad
in an attempt to recover the original investment.

Tips to Avoid the Sunk Cost Fallacy:

• Focus on Future Costs and
  Benefits: Evaluate the potential future
  of the investment independently of past costs.
• Acknowledge Past Mistakes: Recognize that sunk costs are irrecoverable and should
  not factor into new investment decisions.
• Keep Emotions in Check: Make decisions based on rational analysis rather than
  emotional ties to past investments.

Fear of Missing Out (FOMO)

The fear of missing out on a potential recovery can also
cause investors to let losses grow. FOMO can make one hold onto a failing asset
due to the worry that as soon as it’s sold, its value will increase.

Tips to Combat FOMO:

• Adopt a Long-Term Perspective: Focus on the long-term growth potential of investments
  rather than short-term fluctuations.
• Diversify Your Portfolio: A well-diversified portfolio can reduce the pressure
  of any single investment’s performance.
• Stay Informed: Keep apprised of market trends and economic
  indicators, but don’t act impulsively based on this information alone.

In conclusion, letting losses grow is a common behavioral
finance issue rooted in psychological biases and emotional responses. By
recognizing and actively working to overcome these tendencies, investors can
make more disciplined and objective financial decisions, ultimately leading to
better investment outcomes.

This article was written by FL Contributors at www.forexlive.com.

Ichimoku Kinko Hyo, or Ichimoku for short, is a technical
analysis method that builds on candlestick
charting to improve the accuracy of forecast price movements. It was developed
by Goichi Hosoda, a Japanese journalist, and published in the late 1960s after
30 years of working on it. The term Ichimoku Kinko Hyo translates to „one
look equilibrium chart,“ which underscores the system’s ability to provide
a quick understanding of market sentiment, momentum, and strength at a glance.

Core Components

The Ichimoku chart is composed of five main lines, each
providing its insights into market trends:

1. Tenkan-sen
   (Conversion Line): This line is calculated as the
   average of the highest high and the lowest low over the last 9 periods. It
   signals the market trend and is faster moving than the Kijun-sen.
2. Kijun-sen
   (Base Line): Determined by averaging the
   highest high and the lowest low over the past 26 periods, this line also
   indicates trend direction but reacts slower than Tenkan-sen.
3. Senkou
   Span A (Leading Span A): This is the
   midpoint between the Tenkan-sen and Kijun-sen, plotted 26 periods ahead.
4. Senkou
   Span B (Leading Span B): Calculated
   as the average of the highest high and the lowest low over the past 52
   periods, then plotted 26 periods ahead.
5. Chikou
   Span (Lagging Span): This line represents the
   closing price plotted 26 periods behind.

These components combine to form what is known as the
„cloud,“ made up of Senkou Span A and B, which provides support and
resistance levels and can indicate potential trend reversals.

Reading the Ichimoku Chart

To interpret an Ichimoku chart, traders consider the
interaction between these elements:

• When the price is above the
  cloud, formed by Senkou Span A and Senkou Span B, it suggests an uptrend.
• Conversely, if the price is
  below the cloud, it indicates a downtrend.
• If the Tenkan-sen crosses above
  the Kijun-sen, it can be considered a bullish signal.
• A bearish signal is given when
  the Tenkan-sen crosses below the Kijun-sen.
• The Chikou Span’s position
  relative to the price can indicate bullishness if above the price, or
  bearishness if below.

Tips for Using Ichimoku Charts

1. Wait
   for Confirmation: Before acting on signals, wait
   for the price to move above or below the cloud for confirmation, as the
   cloud itself acts as a support or resistance zone.
2. Use
   Multiple Timeframes: Analyzing charts with
   different time frames can provide a more comprehensive view since signals
   might vary across short-term and long-term charts.
3. Consider
   the Cloud Thickness: A thicker cloud could mean
   stronger support or resistance, suggesting a potent trend when the price
   breaks through it.
4. Chikou
   Span Confirmation: Always check where the Chikou
   Span lies in relation to the price action for additional signs of the
   market’s direction.
5. Combine
   with Other Indicators: While the
   Ichimoku chart provides extensive information, corroborating its signals
   with other indicators can enhance decision-making.

By integrating all these aspects, the Ichimoku system offers
a dynamic tool for traders seeking to analyze markets with a holistic approach.
Its multifaceted nature allows for both rapid assessment and deeper analysis,
making it an indispensable instrument in the arsenal of many technical traders.

This article was written by FL Contributors at www.forexlive.com.

• 2024 GDP growth forecast seen at 0.8% (previously 1.2%)
• 2025 GDP growth forecast seen at 1.5%
• 2024 inflation forecast seen at 2.7%
• 2025 inflation forecast seen at 2.2%

In short, they are viewing softer growth and a further easing of inflation pressures. That being said, the 2025 forecast for inflation is still reflecting a projection above the ECB’s 2% target. On the growth projections, the main drag remains the German economy. The commission sees Europe’s largest economy only growing by 0.3% now compared to its previous 0.8% forecast in November last year.

This article was written by Justin Low at www.forexlive.com.