Headlines:ECB’s de Guindos: A rate hike is possible in July, will depend on dataECB’S Wunsch says policy rates could turn positive this yearECB’s Lagarde: Policy will depend on incoming dataBOJ Gov Kuroda says its desirable for forex rates to move stably, reflecting fundamentalsEurozone March final CPI +7.4% vs +7.5% y/y prelimFrance April business confidence 106 vs 107 priorChina commerce ministry says to roll out targeted measures to boost consumptionMarkets:EUR leads, NZD lags on the dayEuropean equities higher; S&P 500 futures up 0.9%US 10-year yields up 3.3 bps to 2.869%Gold down 0.8% to $1,941.50WTI up 1.0% to $103.21Bitcoin up 2.9% to $42,630The euro was the notable mover on the session as it got inspired by some added hawkish talk by ECB vice president Luis de Guindos, hinting at a potential rate hike in July.That saw EUR/USD move up from 1.0857 to 1.0936 before retreating to 1.0880 levels currently. There are large expiries at 1.0900-05 rolling off today helping to keep a lid on price action alongside key Fib levels pointed out here.The dollar is holding up decently, keeping above 128.00 against the yen while GBP/USD is down 0.2% to 1.3040. The aussie and kiwi are also slightly softer on the day but price movements in FX are still fairly narrow for the most part.The bond selling is continuing with Treasury yields keeping slightly higher across the curve. Meanwhile, equities are looking buoyed with US futures soaring after Tesla’s earnings was a blowout. The more positive mood is also buoying European indices on the day.Elsewhere, gold is seen struggling as it slumps to near two-week lows as price falls further after the rejection near $2,000 at the start of the week.

Inflation. Inflation. Inflation.That is number one topic in markets at the moment and we are not likely to see the focus shift before the next Fed policy meeting on 4 May.The bond market remains a key driver of trading sentiment, as evident with the somewhat parabolic rise in yen pairs since March trading. The price action there mimics the surge higher in bond yields during the period.All of this comes as inflation is rampaging higher and is putting central banks under the microscope.That said, there are certain quarters in the market that are coming around on the idea of ‚peak inflation‘. That may be something that could play out in the weeks/months ahead as central banks also adopt a similar view. If so, what comes next?It’s all about data at the end of the day and if inflation pressures are showing signs of slowing down, it could very well drive yields and the US dollar in the opposite direction. The greenback has benefited strongly from the market pricing in a rather aggressive Fed but the rates outlook may not be as bullish if ‚peak inflation‘ attaches a ceiling on policy action.Besides, can you say that the market isn’t quite prepared for 2.50% to 3.00% Fed funds rate now? Certainly not. Pretty much everyone is expecting such a trajectory in this cycle. As such, talk of ‚peak inflation‘ will present risks to that outlook and we could see some pushback to the recent market movements.But for now until 4 May, things aren’t likely to change. Central banks will dominate proceedings in the weeks ahead but let’s also not forget about month-end trading coming up next week.

Fibonacci retracements
levels are horizontal lines plotted on a chart using the corresponding tool
that display possible support and resistance levels. The levels are
based on the Fibonacci’s golden ratio, that is 1.618 and it can be used to
describe proportions of everything in nature, from atoms to complex patterns in
the universe like celestial bodies, therefore, many traders believe that these
numbers also have relevance in financial markets.

 

The
retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%. While not officially a
Fibonacci ratio, 50% is also used. The indicator is useful because it can be
drawn between two significant price points, such as a swing high and a swing
low to pinpoint a possible entry on a pullback. In an uptrend you draw it from
the swing low to the swing high, while in a downtrend from the swing high to
the swing low. The tool will then display the levels between those two points.

 

 

The thing
that makes Fibonacci quite effective is because lots of traders use them and so
everyone expects others to act from Fibonacci levels making it almost a
self-fulfilling prophecy. Many traders also draw more Fibonacci levels from
different swings when they are confusing to get confluence.

 

Look for the
most obvious swings when drawing Fibonacci levels and try to get some
confluence with other technical concepts like support and resistance,
trendlines, indicators and so on. Fibonacci helps you to plot levels where a
retracement from the overall trend may bounce back giving you a trading
opportunity to enter or re-enter the market.

 

 

This article
was written by Giuseppe Dellamotta.

Ample policy support remains in placeSees further inflation pressure from supply bottlenecksNot really giving much away here with these remarks but they also don’t really take away from the more hawkish comments from Kazaks and de Guindos so far this week. Just a heads up, Lagarde will be speaking later in the day alongside Powell in a panel discussion as Eamonn previewed earlier here.

Just a couple to take note of for the day, that being large ones for EUR/USD at 1.0900-05 and USD/CAD at 1.2500.I highlighted the significance of the former earlier here, after the euro got a bit of a boost to push above 1.0900 following more hawkish remarks by ECB vice president Luis de Guindos. That could keep euro price action more anchored alongside Fib levels @ 1.0921 and 1.0971 respectively as also pointed out in the linked post above.Meanwhile, the largish one for USD/CAD may help to keep a lid on any upside push alongside some light offers as the pair tests waters below the 1.2500 mark. Besides that, there isn’t anything else too significant.For more information on how to use this data, you may refer to this post here.