Headlines:

• Japan looks to finally draw a line on the yen freefall
• Japan financial authorities reportedly intervened in the FX market
• Japan top currency diplomat says will take appropriate action against excessive FX moves
• Japan top currency diplomat says will not comment on intervention
• ECB’s Wunsch: July rate cut is not a done deal
• Bavaria April CPI +2.5% vs + 2.3% y/y prior
• Spain April preliminary CPI +3.3% vs +3.3% y/y expected
• Eurozone April final consumer confidence -14.7 vs -14.7 prelim

Markets:

• JPY leads, USD lags on the day
• European equities mixed; S&P 500 futures up 0.2%
• US 10-year yields down 4.5 bps to 4.624%
• Gold up 0.2% to $2,341.61
• WTI crude up 0.2% to $83.85
• Bitcoin down 2.5% to $62,308

It is all about the yen to start the new week, as Japan finally intervened to hammer down JPY pairs. It came roughly at 1pm Tokyo time with USD/JPY taking a tumble from 159.60 to 158.00 initially. The move then gathered pace in a drop to 157.20 before subsequently dropping all the way down to 155.05.

That invited volatile swings in the currency with USD/JPY itself running back up to 157.00 before being hammered down again to 154.50 on the day. The drop was a brief one though as the pair then settled around 155.70-90 levels mostly before running back up to 156.20 at the moment. USD/JPY itself is still down 1.3% on the day with the dollar being the laggard and is now down near 400 pips from the highs in Asia.

Other major currencies were seen higher against the dollar, pushing back after the greenback failed to impress following the US Q1 GDP and PCE price data last week. GBP/USD is up 0.3% to 1.2530, USD/CAD down 0.2% to 1.3645, and AUD/USD up 0.5% to 0.6560. The latter is keeping up a solid bounce over the last week, culminating in a test of its 100-day moving average at 0.6584 earlier.

In other markets, stocks are also keeping steadier for the most part. European indices are sitting more mixed though, consolidating after recouping some losses last week. Spanish stocks are lagging after PM Sanchez said that he won’t be stepping down. Meanwhile, US futures are sitting a little higher with month-end set to come into focus as well.

In the bond market, yields are down across the board with traders eyeing the Fed later this week. 10-year yields in the US are down near 5 bps to 4.62% but it keeps in the realms of what we saw since last week.

For the time being, all eyes will be on the yen. Now with US traders coming in and liquidity conditions picking up, will Japan be bold enough to quell any further dip buying on the day?

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

After coming off the boil in trading last week, gold is in a bit more of a consolidative mood now. Buyers are able to hold price above $2,300 and in search of a third straight day of gains. Still, this is only a bit part recovery from the drop from above $2,400 on 19 April. We’re seeing gold trade around $2,340 today but what is the chart saying?

At current levels, gold is seeing price trade in between the 100 (red line) and 200-hour (blue line) moving averages. That suggests the near-term bias is more neutral with traders looking like they are respecting the above technical boundaries.

The dollar itself is also in a state of flux as it did little to impress after the US Q1 GDP and PCE price data last week. So, the greenback is not really pushing much higher after the early gains in April. And for gold, the easing of geopolitical tensions is one factor contributing to the pullback last week. But also as buyers are seen cooling off, following a surging round of gains since March. I mean, in April itself gold is still up by nearly 5% so that says a lot.

But for now, we are seeing traders duke it out in the near-term. Break below the 100-hour moving average and sellers will regain control. However, they will need to firstly look for a stronger push under the $2,300 mark. A daily close below that will be much needed to reaffirm any further downside, at least in the short-term.

As for buyers, break above the 200-hour moving average and the near-term bias will shift to being more bullish again. And that could invite a retest of the $2,400 mark once more.

For trading this week, the key catalyst will be the upcoming FOMC meeting. It’s all about the Fed outlook and while this should be more or less a placeholder meeting, traders will scrutinise Powell’s words for any clues to work with.

As things stand, Fed funds futures are pricing in ~34% odds of a July move and ~78% odds of a September move. The total rate cuts priced in for the year is roughly 36 bps. How that changes will be the main driver for gold price action this week. All that before we get to the US jobs report on Friday.

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

Last Friday, the Nasdaq Composite finished the day
positive as the US PCE report
came mostly in line with expectations. The market has already priced out almost
all the rate cuts that were expected at the beginning of the year and it’s now
expecting just one in September or December. This means that we will need more
worrying data to start pricing in a rate hike and put more downward pressure on
the market. For now, the dip-buyers are again in control as we continue to
erase the losses from the beginning of the month.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite reached a key resistance zone
around the 15929 level where we can also find the confluence of the
50% Fibonacci retracement level
and the red 21 moving average. This is
where the sellers will likely step in with a defined risk above the moving
average to position for a drop into new lows. The buyers, on the other hand,
will want to see the price breaking higher to invalidate the bearish setup and
increase the bullish bets into a new all-time high.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that
the price got a bit overstretched 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. In this case, it
would also fit with the bearish setup as we might see at least a rejection from
the resistance zone.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price action into the resistance level might have formed a bearish flag, but
we will need to see the price breaking the bottom trendline to confirm it. In
case of a breakout to the downside, the measured target would stand around the
14700 level.

Upcoming
Events

Tomorrow, we have the US Q1 Employment Cost Index and
the Consumer Confidence report. On Wednesday, we get the US ADP, the ISM
Manufacturing PMI, the Job Openings and the FOMC rate decision. On Thursday, we
will see the latest US Jobless Claims figures. On Friday, we conclude the week
with the US NFP and ISM Services PMI.

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

As for the entirety of the year, Citi sees the Fed delivering 100 bps worth of rate cuts in total. For some context, Fed funds futures are showing the odds of a July rate cut to be at ~34% currently. And only ~36 bps worth of rate cuts priced in for 2024.

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