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.

Headlines:

• Markets pensive awaiting US PPI data
• US unveils steep tariff hikes on Chinese chips, cars
• China expresses strong dissatisfaction to US tariff hikes
• BOE’s Pill: We can cut interest rates while maintaining restrictive policy stance
• BOE’s Pill: There is still some work to do on inflation persistence
• UK March ILO unemployment rate 4.3% vs 4.3% expected
• What has changed after the UK jobs data?
• Germany May ZEW survey current conditions -72.3 vs -75.8 expected
• US April NFIB small business optimism index 89.7 vs 88.5 expected
• OPEC leaves world oil demand growth forecast unchanged in latest monthly report

Markets:

• JPY lags on the day
• European equities little changed; S&P 500 futures flat
• US 10-year yields down 0.4 bps to 4.476%
• Gold up 0.3% to $2,343.71
• WTI crude down 0.2% to $78.95
• Bitcoin down 2.1% to $61,759

There were some headlines to move things along during the session but the bottom line is that markets are just waiting on the US PPI data that is to come later. We’re almost there now..

The US officially unveiled a host of steep tariff increases on Chinese chips and cars mostly, impacting roughly $18 billion worth of Chinese imports. That did little to shake market sentiment though as the move has been well telegraphed already.

Equities remain relatively muted amid a more pensive mood overall. The exception being GME and AMC – which are soaring in pre-market as the memes are back, baby!

In FX, there’s not much to really work with as the dollar is fairly muted as well. Major currencies are keeping in tight ranges awaiting the US PPI data for the next move.

The pound was a little softer early on as BOE chief economist Pill spoke but he didn’t really offer much of anything new. Cable fell to 1.2510 but has recovered back to flat levels around 1.2550 now.

It’s now all on the US PPI data to offer something up for traders. Otherwise, it’ll be another wait until we get to the CPI and retail sales data tomorrow.

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

• China will take resolute measures to defend its rights and interests
• Calls for US to immediately correct its ‚wrongdoings‘ and cancel additional tariff measures
• Tariff hikes violates Biden’s commitment to not suppress and contain China’s development

This is the common response as per what we saw previously with Trump in the many years before. But at the same time, the Taiwan defence ministry says that it has spotted 23 Chinese military aircraft operation around its island today. Coincidence? Hmm.

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

The chart of the S&P 500 E-mini futures shows how much the market hinges on the US inflation figures as we’ve been trading in a tight range for days. Before the US CPI, we will see the US PPI data today which will likely trigger a spike out of the range in either direction depending on the outcome.

The CPI is more important but given the worries around inflation, we might see the market turning more defensive into the CPI report if the PPI figures surprise to the upside. Conversely, soft readings might lead to a rally although I wouldn’t expect much follow through until the CPI is out of the way.

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

Will we get to see some fireworks today? The US PPI data coming up later will be the one to watch. And it might take on much more importance, in terms of impact, considering that markets have been rather sidelined for over a week now. It’s all about how the US data will affect the Fed outlook at this point.

While the CPI report tomorrow is the be-all and end-all, we could get a taste of things to come from the PPI data later already. And for now, markets are looking rather pensive in the run up to that. Major currencies are extremely muted on the day with little change among dollar pairs as seen below:

The pound was the only notable mover earlier as it dipped slightly to 1.2510 before recovering back to 1.2550 levels now. But besides that, there is very little action overall.

In the equities space, European indices are also lightly changed with US futures still relatively flat at the moment. The same goes for bond yields and that’s a clear sign that traders are all sitting on their hands, waiting to potentially react later in the day.

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

Both the forecast numbers are unchanged compared to the month before. The bloc notes that despite some downside risks, there is further upside potential for global economic growth this year.

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

Headlines:

• US data in the spotlight this week
• Time to go fishing
• Gold down slightly on the day, awaits US data for next move
• Switzerland Q2 consumer confidence -24 vs -26 prior
• SNB total sight deposits w.e. 10 May CHF 468.9 bn vs CHF 473.2 bn prior

Markets:

• AUD, EUR, and GBP lead, JPY lags on the day
• European equities mixed; S&P 500 futures up 0.2%
• US 10-year yields down 2.3 bps to 4.482%
• Gold down 0.7% to $2,343.91
• WTI crude up 0.8% to $78.85
• Bitcoin up 3.6% to $62,650

It was a quiet session and understandably so. All eyes this week are on the upcoming data from the US, with the main spotlight being on the CPI report on Wednesday. That being said, the PPI report tomorrow might take on more importance and have a larger impact than usual in that regard.

But for now, it’s all about the calm before the storm.

The dollar was little changed early on but is now mildly softer, although the changes are light. It comes as yields are also down slightly on the day. EUR/USD is up 0.2% to 1.0790 as it tests its 200-day moving average at the level with offers lined up near 1.0800 as well. AUD/USD was also down near 0.6600 but is now up to 0.6615, with eyes on key resistance around 0.6634-50 on the week.

Besides that, equities are looking a bit more mixed although US futures are holding on to slight gains for now. It’s still early in the week to be calling for anything, as it will all depend on the data in the next few days.

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