• Higher yields provide some comfort to the dollar for now
• How has Fed pricing changed after the events on Friday?
• ECB’s Kazaks: May option is 25 bps or 50 bps move
• SNB total sight deposits w.e. 14 April CHF 544.1 bn vs CHF 532.2 bn prior

Markets:

• USD leads, EUR lags on the day
• European equities mixed; S&P 500 futures up 0.1%
• US 10-year yields up 2.1 bps to 3.543%
• Gold up 0.2% to $2,007.91
• WTI crude down 0.5% to $82.12
• Bitcoin down 2.2% to $29,802

There aren’t any major headlines to start the new week, with there being a lack of any key economic releases in Europe today as well.

As such, markets are left to their own devices with the dollar holding steadier for the most part after the Friday rebound. There was a slight bid at the start of the session but overall, the greenback is sitting lightly changed at the moment.

EUR/USD is keeping below the 1.1000 mark around 1.0970-80 levels while GBP/USD fell back below 1.2400 to 1.2375 before holding around 1.2410 at the moment.

USD/JPY gradually nudged higher back towards 134.00 as bond yields held higher, with Fed funds futures seeing a less dovish path to the rates curve as compared to before the events on Friday.

Elsewhere, European equities opened with some cautious optimism but are now sitting more mixed with some marginal losses on the board. That’s not indicative of any firm narrative as we get the week underway.

With the data set this week not being as crucial as last week, Fed speakers may be what markets will look to for clues on how to proceed next – all before the FOMC blackout period that will begin on 22 April.

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

On the daily chart below for the Nasdaq, we can
see that the price action is tentative trading into the key resistance at 12274. The sellers are likely
waiting there, ready to defend the level with little risk above and big reward
in case the market resumes the main bearish trend.

The moving
averages are acting as support for the buyers at the moment and keep the bullish
trend intact. The breakout of the bullish
flag might ultimately lead to an extension to the 13186 resistance but the
buyers need to break with conviction above the 12274 level first.

Nasdaq technical analysis

On the 4 hour chart below, we can
see that the moving averages have converged as the price action has become
rangebound. Last Friday the buyers haven’t got any help from the economic data
as retail
sales missed across the board, Fed’s
Waller delivered hawkish comments and the 1
year inflation expectations in the University of Michigan survey showed a big
jump to the upside.

On the 1 hour chart below, we can
see more closely the current range created just below the key resistance. In
such instances, it’s best to just stay out and wait for the price to break on
either side supported by a fundamental catalyst and go with the flow. But one
can also “play the range” selling at resistance and buying at support. The next
economic data to watch are the US Jobless
Claims on Thursday and US PMIs on Friday.

1

This article was written by ForexLive at www.forexlive.com.

That seems to be on the cards, with Deutsche seeing headline annual inflation slowing to 9.73% in March while core annual inflation is estimated to slip to 5.85%. For some context, the economist estimates for both are seen at 9.8% and 6.0% respectively.

That said, the firm says that the risks to their forecasts this week are tilted to the upside. They mention that there is still a big question mark on the persistence of services inflation and that is likely to remain resilient in the months ahead.

However, they do expect the price momentum for core goods to soften with supply chains normalising further and food inflation also likely to slow from the summer onwards. The latter though is still anticipated to remain more robust than normal for much of the year.

Some commentary on the big picture outlook:

„Overall, we remain optimistic that prices will slow this year with CPI getting back
to target around Q3-24. Risks to our forecast remain to the downside, particularly
on headline inflation. But we do see some upside risks to core inflation. Corporate
pricing power remains strong. Inflation expectations remain unanchored, relative
to the BoE’s target. And wage gains remain inconsistent with the Bank’s 2%
mandate. This is a key reason why we see the Bank of England’s terminal rate
landing zone as 4.25% to 4.75% — explicitly pointing to upside risks to our Bank
Rate projections. We will be looking more closely at corporate pricing power in
forthcoming pieces, which will be key in assessing the monetary policy outlook.“

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

On the daily chart below for the S&P 500, we can
see that the price is again struggling hard at the key 4175 resistance. This level has been holding
since September 2022 and as soon as the price gets there, it gets rejected. The
sellers are likely to lean on this level again with a low risk in case the
price breaks above and a huge reward in case the market turns, and we get
another big bearish move.

Last Friday the buyers haven’t
even got any help from the economic data as retail
sales missed across the board and the 1
year inflation expectations in the University of Michigan survey showed a big
jump to the upside.

S&P 500 Technical Analysis

In the 4
hour chart below, we can see that the price has been diverging with the MACD rallying into the key
resistance. This should be a sign of a weakening momentum and it generally
leads to a pullback or reversal. The market may correct towards the trendline where the buyers are likely to
lean onto. This is also where they should find support from the daily red long
period moving
average.

In the 1
hour chart below, we can see how the spike above the key resistance was
immediately followed by a big reversal. There are strong sellers here that keep
defending this level. The first target for the sellers should be the support
zone at 4100.

The
buyers may need a bullish fundamental catalyst to gather enough momentum to
break above the resistance and start a rally towards the next resistance at
4300. Unfortunately, there’s no tier one economic data release until Thursday and
Friday when we will get the US Jobless Claims and the US PMIs.

This article was written by ForexLive at www.forexlive.com.

Higher Treasury yields and less dovish Fed pricing has certainly helped with the pair’s recovery since Friday, with price now climbing back above 134.00 to its highest levels since 15 March last month.

Of note, the pair is hoping to crack through resistance from the 50.0 Fib retracement level of the swing lower in March, seen at 133.77, after the break above the 100-day moving average (red line) again at the end of last week.

That tees up a potential push towards 135.00 next, before buyers might reassess for any move back towards the 200-day moving average (blue line) – now seen at 137.12. The latter is a key level which helped to stop gains last month, all before the banking turmoil engulfed the market landscape.

All eyes will stay on the bond market though and for now, it doesn’t look like 10-year yields in the US are going to threaten a break lower under the key threshold near 3.30%. The banking crisis has ebbed and if traders start to come around to the idea that the Fed is indeed going to hold rates higher for longer, that’s an upside boon for USD/JPY.

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