• ECB’s de Guindos: Appropriate to loosen restrictive policy if inflation conditions are met
• BOJ’s Noguchi: Some big firms are benefiting from a weaker yen
• PBOC deputy governor says will keep yuan exchange rate basically stable
• PBOC cautions against ‚one-sided‘ pursuit of credit expansion
• Switzerland March trade balance CHF 3.54 billion vs CHF 3.66 billion prior
• Eurozone February current account balance €29.5 billion vs €39.4 billion prior
• German economy likely expanded in Q1 – Bundesbank
• Dollar’s dominant status as world’s reserve currency set to endure – Morgan Stanley

Markets:

• GBP leads, JPY lags on the day
• European equities a little higher; S&P 500 futures up 0.3%
• US 10-year yields down 0.6 bps to 4.579%
• Gold up 0.9% to $2,382.41
• WTI crude down 0.9% to $81.95
• Bitcoin up 3.3% to $62,857

Major currencies were relatively muted during the session, as the dollar kept steadier for the most part. The greenback fell in trading yesterday but it hasn’t really amounted to much in the grand scheme of things.

EUR/USD is flat on the day at 1.0671, holding within a 25 pips range, while USD/JPY is also little changed at around 154.45 currently. The pound is a little higher at 1.2473 but remains in a consolidation phase just under 1.2500.

Meanwhile, commodity currencies are also lightly changed with USD/CAD down just 0.1% to 1.3756 and AUD/USD up 0.1% to 0.6441 on the day.

In the equities space, we are seeing a light bounce in the risk mood. However, it is still early in the day and we’ll see if Wall Street will want to carry on with that appetite.

It’s a bit of a slower week in general as there isn’t any major economic data releases. And that seems to be how markets are taking to things in general as of late. On weeks when there is big data, we do get some notable moves across the board. But on weeks like this, it can be quite the slugfest at times.

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

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

GBP

• The BoE left interest rates unchanged as expected but with Haskel and
  Mann this time voting for a hold instead of a hike.
• The employment report missed expectations with a big jump
  in the unemployment rate although the wage growth increased.
• The UK CPI beat expectations with Services inflation
  remaining sticky, which continues to support the BoE’s patient stance.
• The latest UK PMIs showed the Services PMI missing expectations
  slightly and the Manufacturing PMI beating.
• The market expects the first rate
  cut in August.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD is
pulling back into some key resistance levels
with even a possible break and retest pattern around the 1.25 handle. In fact,
we can see that the sellers will have two short opportunities:

• The first one around the 1.25 handle where they
  will also find the confluence of the
  38.2% Fibonacci retracement level
  and the blue 8 moving average.
• The second one around the 1.26 handle where they
  will find the confluence of the trendline, the
  61.8% Fibonacci retracement level and the red 21 moving average.

The buyers, on the other hand, will need to break
above the trendline to turn the trend around and start targeting a new cycle
high.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more clearly the
bearish setups around the 1.25 and the 1.26 handles. If the price were to break
above the 1.25 resistance zone, we can expect the buyers to increase the
bullish bets into the trendline targeting a break above it. There’s not much
else to glean from this chart, so we need to zoom in to see some more
details.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with
the MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the ultimate target for the pullback should be the
base of the divergent formation around the 1.26 handle with a break above it
confirming a reversal. In case, we get a rejection from the 1.25 resistance,
the buyers might lean on the black counter-trendline to position for a rally
into the major trendline. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into new lows.

Upcoming Events

Today we get the latest US Jobless Claims figures,
while tomorrow we conclude the week with the UK Retail Sales.

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

Morgan Stanley says that the dollar’s dominant status as the world’s reserve currency is set to persist. That is in part due to its credible challengers, such as the Chinese yuan, being rather lacking at the moment.

While there have been some concerns about the dollar’s reign at the top recently, Morgan Stanley argues that the greenback can still hold its own. That despite worries about US debt levels and some signs of reserve managers diversifying away from the dollar.

„We expect USD’s dominant reserve currency status to endure despite ongoing challenges from an increasingly multipolar world. This supports our current preference for USD and should provide long-term support, though periods of weakness are to be expected on cyclical conditions and valuations.“

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