Headlines:

• FX traders have got their popcorn bags out
• USD/JPY but a whisker away from the pivotal 155 mark
• Japan senior lawmaker says yen slide towards 160 could prod action
• Aussie bounce runs into key level on the chart, what’s next?
• ECB’s Nagel: June rate cut not necessarily followed up by a series of rate cuts
• Germany April Ifo business climate index 89.4 vs 88.8 expected
• Switzerland April UBS investor sentiment 17.6 vs 11.5 prior
• UK April CBI trends total orders -23 vs -16 expected
• US MBA mortgage applications w.e. 19 April -2.7% vs +3.3% prior

Markets:

• AUD leads, CHF lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields up 3.7 bps to 4.635%
• Gold down 0.2% to $2,316.38
• WTI crude down 0.6% to $82.87
• Bitcoin up 0.3% to $66,545

The story of the session was pretty much having your eyes glued to the USD/JPY ticker to see if traders would take a run at the 155.00 mark. The high touched 154.96 but there was no further advance to really threaten the figure level as price hovered around 154.85-92 for the most part. Close but no cigar.

The rest of the major currencies bloc didn’t get up to much as traders got their popcorn bags out instead. EUR/USD and GBP/USD are down a touch but nothing too substantial. The former is down 0.15% to 1.0683 while the latter is down 0.14% to 1.2431 on the day.

The aussie was a decent mover early on but ran into a test of its 200-day moving average against the dollar near 0.6530. AUD/USD then backed off but is still up around 0.25% at 0.6500 currently.

In the equities space, US futures are slightly higher but there are some nerves showing as S&P 500 futures briefly pared gains during the session. European indices are keeping a slight advance, hoping to keep the win streak going this week.

In the bond market, yields are higher again and that is also in part helping to underpin USD/JPY in general on the day.

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

FBS, a
leading global broker that has recently launched an upgraded FBS app,
projects gold price surge to $2,800 per ounce by the close of 2024. FBS
financial market analysts have identified the pivotal factors driving the
bullish trend for gold and covered the potential strategies for CFD traders.

Gold is
among the assets characterized by stability and resilience in the financial
markets, making it an appealing instrument for investors. FBS analysts foresee
an upward trend for gold in Q2 and on until the end of the year. They associate
the bullish tendency with significant central bank buying, continued
inflationary pressures in the global economy, and increased demand for gold
from non-institutional investors.

Central
banks worldwide are actively fortifying their gold reserves, signaling a
strategic shift towards safer assets in the context of escalating geopolitical
tensions. FBS financial market analysts point out that hedging and
diversification of reserves has recently become typical of the People’s Bank of
China, the Monetary Authority of Singapore, the Reserve Bank of India, the
Central Bank of Turkey, and others.

Inflationary
pressures stemming from aftershocks of the global pandemic, military conflicts,
rising oil prices, and complications within prominent maritime trade routes
push gold prices further. According to FBS analysts, inflationary pressures are
increasing the attractiveness of gold as a hedge against currency devaluation
and declining purchasing power.

Non-institutional
investors are increasingly gravitating towards gold as a store of value and a
means of portfolio diversification. Total gold demand, including
over-the-counter markets, surged to historic highs in 2023, fueled by economic
uncertainty and evolving investment preferences, particularly in China.

Another
critical factor affecting the increased demand for gold is the interest of
non-institutional investors. Financial markets analysts from FBS indicate that
the total gold demand, including OTC markets, reached a new annual record in
2023 at approximately 4,899 tons. FBS analysts suggest taking a closer look at
China’s gold market, which is experiencing a noticeable surge in demand, to
understand the current trend better.

Looking
closely at the XAUUSD trajectory in the weekly timeframe, FBS analysts
underscore a bullish trend. Gold has updated its ATH, and the price is actively
testing the $2,400 resistance, corresponding to 161.8 Fibonacci. If XAUUSD
manages to break this level, investors can expect gold to rise further to
$2,800, which coincides with the 261.8 Fibonacci level. However, if there is a
correction, the price may fall to the support at $2,200 and then rush up to
$2,800.

Regarding
trading strategies, FBS’s experts stress the importance of prudent risk
management amidst bullish market conditions. Strategies such as controlling
position sizes, limiting trade deposits to 2-10% of the total portfolio, and
employing stop-loss orders are recommended to safeguard capital and encourage
diversification. These actions can be easily performed at the enhanced FBS app, which
allows traders to seize market opportunities on the go, anytime. Additionally,
FBS analysts recommend aligning with the prevailing market trend and utilizing
technical analysis tools like moving averages, RSI, and MACD.

Disclaimer:
This material does not constitute a call to trade, trading advice, or
recommendation and is intended for informational purposes only.

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

• Prior +3.3%
• Market index 196.7 vs 202.1 prior
• Purchase index 144.2 vs 145.6 prior
• Refinance index 472.7 vs 500.7 prior
• 30-year mortgage rate 7.24% vs 7.13% prior

Mortgage applications fell back in the past week, with refinancing activity leading most of the drop. It comes as the average interest rate of the most popular US home loan climbs by 11 bps to 7.24% – its highest since November last year.

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

GBP

• The BoE left interest rates unchanged as expected but with Haskel and
  Mann this time voting for a hold instead of a hike.
• The employment report missed expectations with a big jump
  in the unemployment rate although the wage growth increased.
• The UK CPI beat expectations with Services inflation
  remaining sticky, which continues to support the BoE’s patient stance.
• The latest UK PMIs showed the Services PMI beating expectations
  and the Manufacturing PMI missing forecasts and slipping back into contraction.
• The UK Retail Sales missed expectations across the
  board.
• The market expects the first rate
  cut in August.

JPY

• The BoJ finally exited the negative interest rates
  policy as expected
  at the last meeting raising interest rates by 10 bps bringing the rate to a
  target between 0.00-0.10%. Moreover, the central bank scrapped the yield curve
  control and the ETF purchases, while maintaining QE in place.
• The latest Unemployment Rate missed expectations although it
  continues to hover around cycle lows.
• The Japanese PMIs improved further for both the
  Manufacturing and Services measures although the former remains in
  contractionary territory.
• The latest Japanese wage data came in line with expectations.
• The Japanese CPI came in line with expectations.
• The market expects another rate hike
  from the BoJ this year although the timing remains uncertain.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY fell
once again into the lower bound of the channel where the buyers piled in to
push the price back into the highs. The pair continues to get rejected from the
193.00 resistance and this
led to a rangebound price action. The buyers will need to break through the
level to increase the bullish bets into new highs, while the sellers will look
for a break below the lower bound of the channel to position for a drop into
the 187.96 level.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more clearly the
range between the 193.00 resistance and the 190.00 support. The market
participants will likely continue to play the range by selling at resistance
and buying at support until we get a catalyst to trigger a breakout on either
side.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
latest push higher diverged with
the MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be a signal for another reversal from the
resistance into the support. The sellers should step in around these levels
with a defined risk above the resistance to position for a break below the
lower bound of the channel with a better risk to reward setup. The buyers, on
the other hand, should wait to buy around the support.

Upcoming Events

Tomorrow we will see the latest US Jobless Claims
figures. On Friday we conclude the week with the BoJ Rate Decision, the Tokyo
CPI and later in the day, the US PCE report.

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

• Prior -18

The UK manufacturing order book balance falls in April to its lowest since January. But at least the good news is that the output expectations balance increased to 11 on the month, its highest since October last year. Adding to that is an improvement in the quarterly business optimism reading to +9 (previously -3 in January). And that is the highest since July 2021.

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

• No reason for BOE to move rates in lockstep with either Fed or ECB

Cable is up from around 1.2355 to 1.2385 on the day now as Pill is trying to temper with market expectations. The BOE had previously said they were comfortable with markets pricing in a move in August. However, traders had recently pushed to test that narrative by pricing in a June move – which is now at near 50% (it was 62% before the PMI data today). I reckon we’re seeing a bit of a walk back in that regard now.

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

• Policy outlook has not changed substantially since March
• There has been little news in recent months on inflation persistence
• Now seeing signs of a downward shift in the persistent component of inflation dynamic
• A cut in the bank rate would not entirely undo the restrictive policy stance
• Will need to maintain a degree of restrictiveness in policy stance to squeeze out inflation persistency
• Absence of news and passage of time have brought a bank rate cut somewhat closer

This is pretty much the step before the step to cut rates. As such, the language is angling towards a move in the next few months. As for market pricing, a move in June is ~51% priced in. Meanwhile, an August move is ~98% priced in after the PMI data today.

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

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

AUD

• The
  RBA left interest rates unchanged as expected at the last meeting and
  finally dropped the tightening bias.
• The
  last Monthly CPI report came in line with
  expectations although the underlying inflation measure increased from the prior
  month.
• The
  latest labour market report missed expectations.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  latest Australian PMIs showed the Manufacturing PMI almost
  jumping back into expansion while the Services PMI ticked slightly lower
  remaining in expansion.
• The
  market expects the first rate cut in February 2025.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD fell
below the 0.64 handle but eventually bounced back to retest the previous lows
where we can also find the 38.2% Fibonacci retracement level
for confluence. This is
where we can expect the sellers to step in with a defined risk above the
Fibonacci level to position for a drop into the 0.6272 level. The buyers, on
the other hand, will want to see the price breaking higher to increase the
bullish bets into the 0.65 resistance zone
where we have also the red 21 moving average for
confluence.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the latest leg
lower diverged with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it led to a pullback into the resistance around the
0.6475 level. If the price were to break higher, the chances for a reversal
will increase and we could see a quick rally into the 0.6520 resistance.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor upward trendline defining the current bullish momentum with the
red 21 moving average acting as dynamic support. The buyers are leaning on this
trendline to
keep bidding up the pair into new highs. The sellers, on the other hand, will
want to see the price breaking lower to pile in and position for a drop into
new lows.

Upcoming Events

Today we get the US Flash PMIs. Tomorrow, we have
the Australian CPI data. On Thursday we will see the latest US Jobless Claims
figures, while on Friday we conclude the week with the US PCE report.

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

Well, that’s quite a bummer in European morning trade. There was a bit of life after the PMI data earlier but things have quickly settled back down. Dollar pairs are sitting within 10 pips of one another, showing very little change on the day.

That speaks to the lack of conviction we’re seeing for the time being. Hopefully that will change when we get to the US PMI data later, to help set the tone for the sessions ahead as well. Otherwise, it might stay quieter until we get to the US Q1 GDP data on Thursday and the PCE price index on Friday.

If anything else, USD/JPY remains one to pay close attention to as it holds close to the 155.00 mark.

In other markets, gold is still down a little over 1% at $2,300 while equities are hoping to post back-to-back daily gains this week. S&P 500 futures are up 0.2% but things are still looking a little nervy, as seen in US trading yesterday. Nonetheless, investors managed to snap the run of six straight days of losses so let’s see if they can keep the bounce going for now.

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

It was a quick one at that, as EUR/USD backs away from the earlier high of 1.0695 to fall to 1.0655 on the day. The data doesn’t change the ECB’s plan for a move in June but it is perhaps a first step in keeping their options open after that. For now at least, traders are more focused on the next move.

And as mentioned earlier:

„Taking that into consideration, the euro bounce we’re seeing might not have much legs to it. But at least from the near-term chart above, EUR/USD is working above both its 100 and 200-hour moving averages again. That sees the near-term bias turn more bullish at least. But we’ll see if price can hold above the high last week at 1.0690 for the day. If that doesn’t last, I’m inclined to fade this move for a quick one.“

A good ol‘ fade the pop trade in the bag. Now, we’re back to square one on the day. And with price action continuing to consolidate in and around the key hourly moving averages, we’ll have to wait on the US PMI data to settle the score.

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