Istat notes that the slight acceleration in inflation this month was partly caused by an easing in the recent trend of declining prices for energy goods. Meanwhile, core annual inflation is seen at 2.5% – marginally lower from 2.6% in February.
This article was written by Justin Low at www.forexlive.com.
The pressure is most definitely on for the Japanese yen as the Easter break approaches. The barrage of verbal interventions by Tokyo officials have helped to stem the bleeding in trading this week. But is merely just a band aid at this point in time?
The BOJ took a big step in putting an end to negative rates and scrapping its yield curve control policy this month. That being said, one can argue that they should have already started that process some time last year already. I mean, even they themselves are finding that the inflation trend in Japan is perhaps turning now.
Taking that into consideration, it will make it tougher to justify any further normalisation steps. They are very much in a race against the clock, despite all the recent positive wage developments.
From a technical standpoint, traders were also cautious and took profit when USD/JPY tested the 2022 and 2023 highs as seen above. The 151.90-94 region remains a key technical ceiling for price now as we settle down ahead of the weekend break.
So, what’s next for USD/JPY?
If you look at the psychological perspective, traders are definitely being more wary and cautious now after the many warnings by Tokyo. But if the BOJ faces an uphill task to normalise policy further while the Fed may still have a 50-50 chance of not acting in June, there is an argument for USD/JPY to move up further as the pressure keeps up.
As we have seen in trading this week, this is a market that is very much driven by big data. I mean, the lack of releases this week shows how languid price action can be. This makes the US jobs report on Friday next week an even more critical factor for USD/JPY right now.
The tricky part is identifying when Tokyo might step in to intervene, if need be. Times of lesser liquidity are mostly preferred and the Easter break does present such an opportunity. However, traders are not really giving Japanese officials much of a sniff at the moment. USD/JPY has backed away slightly from the above high points, but is still looking poised.
That could see traders look to slowly push the same threshold again when we get to trading next week, all else being equal. But in doing so, the risk now is that we’re getting closer and closer to the point where Tokyo might say enough is enough.
As much as Japanese officials want to fight the uptrend, they also have to be realistic. Unless USD/JPY oversteps by surging to 153 to 154 before the US jobs report, they might want to wait until Friday before acting. And if there is reason to, I reckon they might actually do so in the late stages of the day.
For now, buyers can take heart in the fact that the pair is set to close flat this week. There is some consolidation now around 151.15 to 151.50 over the last two days. Meanwhile, key near-term levels are also starting to build closer with the 200-hour moving average at 151.28 currently. Keep above that and buyers will stay poised going into next week.
This article was written by Justin Low at www.forexlive.com.
Nasdaq Composite Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq
Composite has
been diverging with
the MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. We continue to trade inside the rising wedge, and
it’s worth to keep an eye on it because if the price were to break below the trendline, the
sellers will have much more conviction to look for new lows with the base of
the wedge at 14477 being the ultimate target.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the
price bounced near the bottom trendline recently where we had the confluence of the
red 21 moving average and
the 50% Fibonacci
retracement level. The buyers keep on stepping in
with a defined risk below the trendline to position for a rally into a new
all-time high. The sellers, on the other hand, will want to wait for the price to
break below the trendline before considering short positions.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more
closely the recent price action with the price consolidating around the major
trendline. We can also see that we have now a black counter-trendline. The
buyers will want to see the price breaking above the counter-trendline to gain
even more conviction and increase the bullish bets into a new all-time high.
This article was written by FL Contributors at www.forexlive.com.
Towards the end of last year, it was a case of traders being overly aggressive in pricing in rate cuts. And in the first two months of this year, we saw that pricing course correct a fair bit. But where does that leave us now? The SNB has already surprised with action and there are perhaps rate cuts coming in Q2. So, let’s take stock of the situation.
Here was how things looked like at the end of December, in terms of what is priced in for the whole of 2024:
And this is how things are playing out right now:
Those are definitely considerable shifts in pricing when compared to the end of last year. But during the course of the first three months, they might’ve been hardly felt. That especially if you’re looking at risk trades and stocks.
The dollar is one of the beneficiaries though, especially in March. That considering US economic developments might warrant the Fed to hold rates higher for longer compared to most other major economies. The odds of a June move for the Fed are only roughly 68% now. If anything, it speaks to the uncertainty in play as opposed to market pricing for the ECB.
In that lieu, we could be starting to see some diverging trade opportunities from hereon. The SNB has already kick started the race to cut rates. And we’re already seeing what that is doing to the Swiss franc. So, the winning currency now will be the one whose central bank will be most resistant in conforming to the above rate cut expectations.
This article was written by Justin Low at www.forexlive.com.
Well, he’s not wrong. If not for the Covid pandemic, it would have been unfathomable to imagine the BOJ being able to normalise monetary policy. The main worry for Japan now is that they might have gotten onto the ship a little too late.
This article was written by Justin Low at www.forexlive.com.
Markets:
The session started off with a quieter mood but picked up as the dollar nudged higher across the board. Other major currencies all have their own struggles and the greenback looks to be taking advantage.
EUR/USD is down to a five-week low, touching 1.0775 during the session. The euro is not helped by another poor German retail sales print for February. Meanwhile, GBP/USD is down 0.2% to 1.2620 but is off earlier lows of 1.2585 at least.
USD/JPY was calmer though, keeping little changed at around 151.20-30 levels as traders remain disinterested after the warnings from Japan yesterday.
Besides that, USD/CAD is up a touch to test 1.3600 and is keeping just below that now. And AUD/USD is down 0.6% to a three-week low just under the 0.6500 mark.
In the equities space, the mood is more tentative at best. European indices are following up on Wall Street gains yesterday but US futures are marginally lower today.
In other markets, gold is shining brightly as it pushes up above the $2,200 mark once again. Buyers are hoping that the break this time will hold better than it did a week ago at least.
As a reminder, it is going to be an extended weekend for a number of markets starting from tomorrow until Monday. Of note, Australia, New Zealand, and Europe in general will be off for the next four days with Canada also observing a holiday tomorrow.
This article was written by Justin Low at www.forexlive.com.
Gold Technical Analysis –
Daily Timeframe
On the daily chart, we can see that Gold erased
almost all of the losses from the prior week. From a risk management
perspective though, the buyers will have a much better risk to reward setup
around the 2142 level where we can also find the confluence of the
38.2% Fibonacci retracement level
and the red 21 moving average. The
sellers, on the other hand, will want to see the price breaking below the 2142
level to position for a drop into the trendline around
the 2080 support.
Gold Technical Analysis – 4
hour Timeframe
On the 4 hour chart, we can see that the latest leg
higher diverged with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the target for the pullback should be the support zone
around the 2142 level. A break below that zone should confirm the reversal and
trigger a selloff into the major trendline. For now, the price is supported by
the minor upward trendline where the buyers continue to lean onto to position
for new higher highs. The sellers will want to see the price breaking below the
trendline to position for a drop into the support targeting a break below it
with a better risk to reward setup.
Gold Technical Analysis – 1
hour Timeframe
On the 1 hour chart, we can see that we had
an important level at 2200 which has been a strong resistance for the recent
bullish wave. The breakout triggered a rally as the buyers piled in to target a
retest of the all-time. If the price pulls back into the resistance
now turned support, we can expect the buyers to step in again. The sellers,
on the other hand, will likely lean on the all-time to position for a drop into
the 2142 support.
Upcoming Events
Today we get the latest US Jobless Claims figures,
while tomorrow we conclude with the US PCE report and Fed Chair Powell. Strong
data is likely to weigh on Gold, while weak figures should give it a boost.
This article was written by FL Contributors at www.forexlive.com.
The precious metal is staying poised in trading today despite the dollar also sitting higher on the session. After hitting record highs last week, gold buyers have found it a bit tough to contest the $2,200 mark again so far. But we’re getting another run at that key level again at the moment.
If it breaks, expect that to potentially lead to a quick shoot higher for gold. I would argue that the onus is on sellers to keep price down, especially since gold is staying bid despite the dollar’s strength on the day.
Update (1025 GMT): Well, that was quick. Gold now threatens that particular break in a quick jump to $2,206 at the moment.
This article was written by Justin Low at www.forexlive.com.
S&P 500 Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500
has
been diverging with
the MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, it led to pullbacks into the red 21 moving average and
the trendline where
the dip-buyers kept on stepping in to position for the rallies into new highs.
The sellers might want to wait for the price to break below the trendline
before even considering going short in this market.
S&P 500 Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from
a risk management perspective, the buyers will have a much better setup around
the trendline where we can also find the confluence with
the 38.2% Fibonacci
retracement level and the red 21 moving average. The
sellers, on the other hand, will want to see the price breaking lower to
invalidate the bullish setup and position for a bigger correction to the
downside.
S&P 500 Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the
price bounced on the 38.2% Fibonacci retracement level but didn’t fall all the
way back to the trendline. We can also notice that we have an important level
at 5230 where the price reacted to several times. If we get a retest of this
level, we can expect the buyers to step in to position for even higher prices.
Upcoming Events
Today we get the latest US Jobless Claims figures,
while tomorrow we conclude with the US PCE report and Fed Chair Powell.
This article was written by FL Contributors at www.forexlive.com.
Markets:
The main focus on the session was the Japanese yen, as it fell early on in Asia to its lowest since 1990 against the dollar.
USD/JPY touched a high of 151.97 before backing off slightly to around 151.60-70 levels as we got into European trading. Then, came a barrage of comments from Japanese officials but it did little to move the needle.
Japan top currency diplomat Kanda then came out to say that a meeting between the MOF, FSA, and BOJ was not needed yet. But as the verbal intervention lacked effectiveness, they had to resort to that as a meeting was called with less than 15 minutes warning.
That saw the yen gain some ground with USD/JPY falling from 151.70 to 151.15 initially. Kanda’s remarks were as you’d expect, just added jawboning and that saw USD/JPY bounce back to 151.40. But as the dust settles and the potential for Tokyo to act going into the Easter break later this week, we are seeing USD/JPY bulls favour caution as the pair now falls to 151.05 on the day.
Outside of that, the major currencies space was quite a bore. The dollar traded more steadily across the board with light changes to note. That makes the yen the only notable mover, with CHF/JPY also falling to its lowest levels for the year amid a „divergence“ in policy stance.
In other markets, equities are looking to bounce back after the late setback in Wall Street yesterday. European indices are higher again alongside US futures during the session. Meanwhile, gold is once again looking poised after a rejection at $2,200 yesterday. Is it third time the charm for the precious metal in March trading?
This article was written by Justin Low at www.forexlive.com.