As a whole for this year, traders are now looking at 40 bps worth of rate cuts. That is a step up from earlier this week, where it was roughly 31 bps. As for the timing of the first rate cut, a 25 bps move is now fully priced in for November at least. The odds of a move in September are at ~78% currently and that will be the one to watch.

The US jobs report will be the first key hurdle today followed by the ISM services PMI. Those will be two key drivers that will influence the Fed pricing above.

A move in June and July can be safely ruled out at this stage. So, all eyes will be on whether the Fed will have enough to work with to start acting in September. And if not, we’ll have to see if they might act in November instead.

In the bigger picture, I still think it’s too early to be moving on the data we’re getting today. It’s only May and what matters more will be the next few inflation data releases.

But Powell did say that they are watching for any weakness in the labour market closely. As such, the unemployment rate and the wages numbers might be the more crucial points to focus on later.

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

The S&P 500 has been consolidating around the 5000-5100 range for more than two weeks now with the market awaiting the key US data as it’s getting more and more wary of the inflation risk that could lead to more tightening. The more dovish than expected Fed’s decision and Powell’s press conference led to a short term spike that got faded soon after as the focus shifted towards the US data.

Now, the big rally in Q1 was supported by rate cuts expectations and a reacceleration in economic activity that led to positive risk sentiment all around. These expectations started to collide with inflation risks after the third consecutive hot US CPI report and a hawkish repricing in interest rates expectations.

The market might keep on going up as long as the Fed remains unwilling to tighten further, but that will need to be supported by benign economic data and less inflationary risks. The first test will come today with the release of the US NFP report and the ISM Services PMI. The next will come in two weeks with the release of the US CPI on May 15th.

S&P 500 E-mini Futures Technical Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500 topped more or less with the latest US CPI release and corrected into the 5000 level with geopolitical events exacerbating the selloff. We have a good support zone around the 4835 level where we can also find the confluence of the 38.2% Fibonacci retracement level. If the market falls into that zone, it would effectively erase the entire Q1 rally. That’s also where the buyers will start to pile in more aggressively, while the sellers will look for a further break lower to target the trendline around the 4600 level.

S&P 500 E-mini Futures Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see the rangebound price action of the last two weeks. We have a strong resistance around the 5120 level and a short term support around the 5040 level. The data today will likely trigger a breakout on either side, so buckle up!

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

The
recent decision by the Federal Open Market Committee (FOMC) to keep interest
rates steady has ignited a wave of speculation in financial markets.

Federal Reserve Chair, Jay Powell, provided insights into the current state of
the US economy and its trajectory. However, market reactions have been
characterized by initial unease, followed by fluctuating sentiments, reflecting
ongoing uncertainty regarding the implications of the Fed’s stance.

The
decision to maintain rates at 5.5% was accompanied by a cautionary note from
Fed policymakers, highlighting the persistent challenge of inflation. Despite
efforts to curb price growth, the Fed acknowledged limited progress in recent
months. Consequently, the central bank intends to closely monitor economic data
to determine future policy adjustments, including the possibility of rate cuts
or maintaining the current elevated levels.

In
response to the news DXY tumbled early on Thursday, diving below
106.00 to a session low of 105.44, though it’s been making solid progress
across the forex board this week, exerting pressure on rival currencies such as
the euro and the Japanese yen.

Meanwhile,
Bitcoin
experienced a notable decline following Powell’s remarks. The
cryptocurrency depreciated by 7% within a single trading session, illustrating
its sensitivity to market sentiment and policy developments. Nonetheless,
Bitcoin has shown signs of recovery, hovering around $59,000 per coin at this
writing.

Similarly,
gold prices faced downward pressure. Spot gold fell 0.9% at $2,297.39 per
ounce.

As a
non-yielding asset, gold’s appeal diminishes in a high-interest-rate
environment, contrasting with the income-generating nature of the US dollar.
Consequently, investors may reassess their asset allocation strategies,
favoring dollar-denominated assets over gold.

The
decline in gold prices follows a period of heightened volatility, during which
the precious metal surged to record highs in April. Factors such as geopolitical tensions and inflation concerns
propelled gold’s ascent. However, the recent pullback reflects shifting market
dynamics and evolving investor preferences.

Looking
ahead, market participants eagerly anticipate the release of the US non-farm payrolls report for further
insights into the US economy health. The outcome of this report is poised to
influence market sentiment and shape future decisions by policymakers.

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

If you go and ask any successful trader or investor what’s the most important thing in trading, he/she will tell you that it’s capital preservation. In fact, the hardest part in the markets is not making money, it’s being able to keep it, and over the long term increase it.

How many times have you made profits just to give them back to the market the next day, week or month? That can be very frustrating and lead to even more mistakes that eventually end in blowouts.

Now, there’s no secret formula that will give you the ability to keep the money you make and never give it back because losses are a natural part of trading. There are some advices that can help though.

One of the most important thing is to select only the trades where you have a very high conviction. Those trades where you can see almost everything stacked in your favour. When you find those opportunities, you won’t feel any fear of pulling the trigger or even risking more money. You won’t even feel the pressure of taking the trade off if the price starts to pull back.

How many times you had a trade going and at the first pullback you took the trade off leaving money on the table? That happens a lot, and even if it’s natural, most of the time it’s caused by inexperience and emotion-led mistakes.

That’s why conviction is important. The best traders/investors in the world don’t risk the same amount of money on any given trade. They size their trades based on their conviction in a particular idea.

Can you find those trades with technical analysis only? The answer is no. Technical analysis is just a risk management tool. It just shows you what happened in the past, not what might happen in the future. And the markets move based on future expectations.

You should know what moves the asset you are trading, the economic cycle you are in, the risk sentiment regime and so on. But when you really see the ball, go for it.

Will you find those opportunities often? Hell no, and that’s why you should maximise your returns when you find them. You might be thinking „that looks boring“. Yes, it is. Good trading is not fun. There is a trick though to maintain the discipline to wait for good trading opportunities while also increase the number of them: trading different asset classes.

This way not only you will find more opportunities, but you will also have a broad fundamental picture which might give you even more conviction in some ideas.

Lastly, keep learning, keep reading, keep increasing your experience. Don’t fear mistakes or failures, because they will be the best lessons. People study for years to become lawyers, doctors and so on. Trading is no different. You are joining an arena full of smart and experience poeple, so be prepared for it.

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