Headlines:

• Dollar on edge as we look to the new week
• What changed after the US NFP report?
• Central banks are still on the agenda this week
• ECB’s Vujčić says rates will be gradually lowered over time
• ECB’s Šimkus: Last week’s data were as expected
• Eurozone May Sentix investor confidence -3.6 vs -4.9 expected
• Eurozone April Final Services PMI 53.3 vs. 52.9 expected
• Eurozone March PPI -0.4% vs -0.4% m/m expected
• SNB total sight deposits w.e. 3 May CHF 473.2 bn vs CHF 475.7 bn prior
• Russia says it is to hold tactical nuclear weapons drill

Markets:

• AUD leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.3%
• US 10-year yields down 1.9 bps to 4.481%
• Gold up 0.8% to $2,319.44
• WTI crude up 1.0% to $78.87
• Bitcoin up 1.8% to $64,067

It was a slower session with London out on holiday and that saw light changes among major currencies.

The dollar is marginally softer at the balance, keeping more mixed amid a jump in USD/JPY during Asia trading. The pair moved up to near 154.00 earlier and has been holding around 153.70-80 levels mostly during the session.

Besides that, the dollar is mildly softer against the likes of the euro, pound and loonie. EUR/USD is sitting within a 20 pips range around 1.0770 while GBP/USD is up 0.2% to 1.2575 as buyers look to take the next step higher. AUD/USD is up 0.3% to 0.6628 amid a better risk mood on the day so far.

Equities are seen keeping up the gains from last week, with S&P 500 futures up nearly 0.4% while European indices are also posting modest gains today.

The minor drag in the dollar comes as yields stay on the backfoot with 10-year Treasury yields just under 4.50%. The retreat in yields is continuing after the softer data on Friday, prompting traders to step up Fed rate cut bets.

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

• GDP and inflation data were as expected; haven’t changed thinking
• Can afford to reduce restriction
• Expects other rate cuts beyond June
• Sees three rate cuts for this year

It just reinforces the point that June is a done deal and that they’re not going to pre-commit to anything after just yet.

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

The USD weakened
across the board last week due to a more dovish than expected FOMC decision
where the Fed decided to signal a bigger QT taper beginning in June and the Fed
Chair Powell pushed back repeatedly against rate hike expectations. Moreover,
the data on Friday showed that the Fed might indeed just keep rates
higher for longer as job and wage growth soften.

The JPY, on the other
hand, doesn’t have much fundamental support as the BoJ might not be able to
lift interest rates again given the easing inflation rates, although there
might be some short-term support from hawkish messages around the reduction of
the QE programme. All else being equal, the USDJPY pair should remain in an
uptrend both from the Fed’s higher for longer stance and global growth
expectations.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart,
we can see that USDJPY bounced on the strong support
zone around the 152.00 handle where we had the confluence
of the trendline
and the 61.8% Fibonacci
retracement level. The buyers stepped in and bought the dip offered by the
miss in the US NFP report as that didn’t change much for the bigger picture.
The sellers will need the price to break below the trendline to change the bias
and start looking for new lows with the 146.00 handle as the first target.

USDJPY
Technical Analysis – 1 hour Timeframe

On the 1 hour
chart, we can see that we now have a strong resistance around the 155.00 handle
where we can also find the downward trendline defining the current short-term bearish
trend. That’s where we can expect the sellers to step in with a defined risk
above the trendline and position for a break below the 152.00 support with a
better risk to reward setup. The buyers, on the other hand, will want to see
the price breaking higher to increase the bullish bets into the 160.00 handle.

Upcoming
Catalysts

This week is pretty bare on the data front with just the Japanese
wage data and the US Jobless Claims on Thursday and the University of Michigan
Consumer Sentiment survey on Friday being the only notable releases. It’s
unlikely that they will change the market’s expectations that much, so the
price action might remain tentative heading into the US CPI next week, although
the bias should remain bullish.

See the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The gains may be gradual but it is slowly shaping up to be a decent showing for equities now in European morning trade. S&P 500 futures are up 0.4% with Nasdaq futures up 0.3%, from being little changed in Asia. This is also helping the mood with European indices, as the DAX is up nearly 1% and CAC 40 up 0.8% currently.

This is mostly a continuation from the mood since last week, as traders shore up bets for a Fed rate cut sooner rather than later. The US data on Friday only served to compound that sentiment. There won’t be much on the agenda this week to shake things up. So if anything else, do look out for Fedspeak to perhaps influence things.

Otherwise, we’ll have to wait on the US CPI data on 15 May to change the pace settings in markets.

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

• Incoming data has been consistent with projections
• Expects loosening of policy stance but to still stay in restrictive territory

Nothing new there from the ECB for the time being. A June rate cut is all but confirmed but they’re not pre-committing to anything after just yet. It all depends on the data in the next few months. The good news for them is that at least the euro area economy is holding up decently to start the year.

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