Copper extended the rally
into new highs following some positive Chinese data. Moreover, the PBoC Governor Pan recently signalled more monetary
policy support to come which should be a tailwind for the market as long as the
global growth impulse of the last few months remains intact. The central banks
continue to support rate cuts this year although the timing got pushed back a
little after a series of higher-than-expected inflation prints. That could
raise the risk of a recession, so it will be something to watch out for in the
next few months.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Copper had an
incredible rally and it’s now pulling back. In fact, the price was very
overstretched at some point as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a key support around
the 4.03 level where we can also find the 38.2% Fibonacci retracement level
for confluence. This is
where we can expect the buyers to step in with a defined risk below the level
to position for a rally into new highs. The sellers, on the other hand, will
want to see the price breaking lower to invalidate the bullish setup and
position for a drop into the trendline.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
latest move higher has been diverging with
the MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we are getting a pullback into the base of the
divergent formation around the 4.03 level where the buyers will look for a
bounce and another rally. The sellers, on the other hand, will want to see the
price breaking lower to confirm the reversal and position for a drop into the
trendline.

Upcoming Events

Today we have the FOMC rate decision where the Fed
is expected to keep rates unchanged. Tomorrow, we conclude with the latest US
PMIs and Jobless Claims figures. Weak data is likely to weigh on Copper, while
strong figures should give it a boost.

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

A triple-top formation or a breakout to fresh highs since 1990? That is what awaits USD/JPY as we look towards the FOMC meeting decision later in the day.

The dollar is trading firmer across the board in European morning trade, as it seems like traders are positioning for a more hawkish hold by the Fed later. Are we that confident of a shift in the dot plots from 75 bps to 50 bps? And will that even matter at the end of the day? I shared some food for thoughts on that earlier here, alongside a list of previews.

But for now, the dollar continues to trade with more poise backed by the run higher in Treasury yields over the past week or so.

Going back to USD/JPY, we have to circle back to the first question. That’s the only thing that really matters now for the pair. The post-BOJ reaction hasn’t gone so well for yen bulls but if they are to step in, the top around 151.90-94 will be no better time to prove their mettle.

Otherwise, a break to the highest levels since 1990 will see little technical resistance on the way up. The April 1990 high stalled just above the 160.00 mark and that is plenty of breathing room from here up until there.

That being said, there is the prospect of intervention by Tokyo if we do see a major breakout to the topside. So, just be wary of that. However, it’s been surprising to see how quiet they have been over the last two days since the BOJ policy decision. Are Japanese officials perhaps weighing the prospects of imported inflation benefitting their agenda shift? That might be something to consider as well.

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

• We need to move further along the disinflationary path
• Average wage growth in 2024 fell from 4.4% from January meeting to 4.2% in March meeting
• Latest data suggests wages are growing in a way that is compatible with inflation reaching the ECB’s target
• Will get a clearer picture in the coming months
• Expect to have two important pieces of evidence to raise confidence level sufficiently for first policy move
• If the data shows sufficient alignment between inflation path and ECB projections, then can dial back on current policy cycle

It is what we already know for the most part. The negotiated wages data for Q1, which will be released in late May, is going to be a key one to watch in this regard. You can refer to the Q4 data here. The headline remark might be one that not just applies to the ECB, but for all major central banks at the moment.

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