Headlines:

• The pressure is on for the dollar with CPI in focus
• Bond yields feeling heavy ahead of key US data later
• ECB’s Müller: A June rate cut is very probable
• ECB’s Rehn: Rates can be cut if confidence on inflation progress continues to strengthen
• France April final CPI +2.2% vs +2.2% y/y prelim
• Eurozone Q1 GDP second estimate +0.3% vs +0.3% q/q prelim
• Eurozone March industrial production +0.6% vs +0.5% m/m expected
• US MBA mortgage applications w.e. 10 May +0.5% vs +2.6% prior

Markets:

• JPY leads, USD lags on the day
• European equities slightly higher; S&P 500 futures flat
• US 10-year yields down 3.1 bps to 4.413%
• Gold up 0.2% to $2,363.02
• WTI crude down 0.7% to $77.50
• Bitcoin up 1.3% to $62,445

It was a quieter session as markets are prepping for the US CPI showdown later in the day. Alongside that release, we will also get US retail sales so it is going to be a blockbuster event on the data front in US trading.

For now though, the dollar is taking on a more defensive positioning with yields also trending lower. As 10-year yields are down by over 3 bps to 4.413%, that is dragging the greenback lower across the board as well.

USD/JPY in particular fell off from 156.20 to 155.60 and is holding thereabouts now, down 0.5% on the day. European currencies are just mildly higher against the dollar but the antipodeans are keeping gains since Asia trading. AUD/USD is up 0.2% to 0.6640 and NZD/USD up 0.4% to 0.6060 currently.

In the equities space, European indices are keeping the optimism even as US futures are feeling rather muted. That’s a sign risk trades are not perking up just yet, but we’ll see what the main event later will bring.

We’re about 30 minutes away now. Strap yourselves in. It’s going to be an action-packed one in the session ahead.

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

Yesterday, the USD
weakened across the board following the US
PPI release where the data came in line with expectations. The reaction
showed that the market is eager to buy risk assets and that even little signs of better
inflation figures can trigger a positive risk sentiment.

This will be
important to remember in light of today’s US CPI report where in line or soft
figures will likely lead to more USD selling and strong risk-on sentiment.
Conversely, hot readings might have the opposite effect with the USD bid across
the board.

On the daily chart, we can see that USDCAD fell back to the key support zone around the 1.36 handle where we can find the confluence of the trendline and the 61.8% fibonacci retracement level. This is where the buyers have been piling in to position for a rally back into the cycle highs. The sellers will need a break to the downside supported by the fundamentals to reverse the trend and start targeting the 1.34 handle. The US CPI report today will likely set the trend for the next few weeks.

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

• Prior +2.6%
• Market index 198.1 vs 197.1 prior
• Purchase index 141.7 vs 144.2 prior
• Refinance index 499.9 vs 477.5 prior
• 30-year mortgage rate 7.08% vs 7.18% prior

Mortgage applications were at the margin higher in the past week, owing much to a jump in refinancing activity. That was offset by a fall in purchases activity, as the rate of the most popular US home loan eases slightly by 10 bps.

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

Different asset
classes respond in different ways to various fundamental developments. For example,
you can have short-term government bonds selling off because the central bank
is tightening monetary policy or an FX pair in an uptrend because the central
bank of the currency that is appreciating is raising interest rates while the
central bank of the currency that is depreciating is cutting rates. You can
also have different equity sectors performing differently depending on the
economic cycle.

When you build your
trading theses you should find a market where your idea can be expressed in the
best possible way giving you good asymmetric bets. This process will also keep you
disciplined as you will only look for the highest conviction trades and refrain
from taking positions just out of boredom. Remember your job is not to trade
but to make money.

For example, let’s
say that you have two central banks beginning to tighten their monetary policy.
You may have the relative FX pair just ranging and not giving you any clear
trade. What you can do though is trading the short-term government bonds as an
increase in interest rates will cause a sell-off in those securities. In this
way you reduce your risk and increase your overall chances of success.

With more
experience you’ll start to notice that when you have a high conviction in your
trade because you clearly see the reasons for taking a position, your
psychological pressure will be much lower compared to the times when you force
trades trying to outsmart the market. As the saying goes “when in doubt, stay
out”.

As you can see,
risk management can also come in the form of asset class selection. Even if you
only trade the FX market, you can still apply this concept by trading only the
pairs where you have lots of odds stacked in your favour by reducing the margin
of error.

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

BTCUSD Technical Analysis: Key Bullish Breakout Signals

Bitcoin (BTCUSD) recently demonstrated a notable bullish breakout after defending the crtical price level of the anchored VWAP – purple line shown in the below chart.

Technical setup

1. Bull Flag Pattern: The chart shows a well-defined yellow bull flag pattern. This continuation pattern indicates a pause in the prevailing uptrend, often leading to a breakout in the same direction.

2. Triple Bottom Formation: On March 20th, a triple bottom was identified, establishing a strong support level. This pattern further solidifies the bullish sentiment.

3. Breakout Confirmation: The breakout from the bull flag was confirmed as prices surged above the pattern, accompanied by increased volume. This breakout is a strong indicator of the continuation of the uptrend.

4. Anchored VWAP: The Anchored Volume Weighted Average Price (VWAP) was set at $61241, which has acted as a crucial support level post-breakout.

5. VWAP 1st Upper Standard Deviation: Watch $63388. where profit takers may sell some at the 1st upper deviation of that anchored VWAP.

Key Levels to Watch

• Support Levels: The immediate support lies at the anchored VWAP of $61241, followed by the triple bottom support level around $60711
• Resistance Levels: The breakout has set new short-term resistance at the recent highs around $62713 and $63388 after that. A sustained move above this level could pave the way for further gains.

Market Sentiment and Performance

• Volume and Trading Activity: The volume has shown a marked increase during the breakout, reinforcing the validity of the move. Monitoring the trading volume is crucial for confirming future price movements.
• Performance Metrics: Bitcoin has shown a notable recovery with a daily increase of 1.91%, and the year-to-date performance stands at an impressive 128.06%.

The recent technical rebound in BTCUSD suggests a bullish continuation pattern, supported by the bull flag breakout and triple bottom formation. Traders should keep an eye on key support and resistance levels and monitor the anchored VWAP for potential entry and exit points. With a robust performance and increasing volume, Bitcoin remains an attractive asset for both traders and investors looking to capitalize on its upward momentum.

Stay updated with ForexLive.com for more in-depth analysis and trading insights on Bitcoin and other cryptocurrencies. TRADE BITCOIN AT YOUR RISK ONLY.

This article was written by Itai Levitan at www.forexlive.com.