• Italy cuts 2024 GDP growth forecast to 1% vs previous 1.2% target set in September
• Italy confirms deficit-to-GDP ratio at 4.3% in 2024
• Italy sees 2025 deficit at 3.7% of GDP
• Italy cuts 2024 debt-to-GDP ratio to 137.8% vs previous 140.1%
• Italy sees 2025 debt at 138.9% of GDP

This article was written by Arno V Venter at www.forexlive.com.

USD:

• Market expectations for a Federal Reserve policy rate change
  in June are uncertain, with a 40% chance seen for an unchanged rate and a 60%
  chance for a rate cut.
• Anticipation
  is that the Fed will guide market expectations more clearly as the June meeting
  approaches.
• The
  upcoming CPI data
  are key to understanding potential rate moves.
• UBS
  expects a rate cut in June, which could limit the current USD strength against
  the euro, pound, and other currencies, although the risk remains for continued
  dollar strength if the Fed does not cut rates.

EUR:

• The
  next ECB meeting is not expected to be decisive, but there’s a growing
  possibility of more concrete signals about a June rate cut.
• Option
  implied volatility is at extreme lows, making it cheaper to hedge against
  potential market moves.
• UBS
  anticipates the EURUSD might first drop within the 1.05–1.10 range before
  eventually rising, with a clearer ECB signal on rate cuts potentially injecting
  more activity into the market.

CHF:

• Despite
  the Swiss franc’s strong momentum indicating further depreciation, fundamental
  factors suggest a potential sideways trend or appreciation against the USD.
• Short
  to medium-term expectations are for EURCHF and USDCHF to rise further, with a
  potential falter as more clarity on Fed and ECB rate cuts emerges.
• The
  current wide yield differential between the EUR and CHF is expected to narrow,
  which could temporarily boost EURCHF towards 1.00 but eventually lead to a
  decline in both EURCHF and USDCHF pairs.

GBP:

• GBPUSD
  saw fluctuations in March, ending back where it started after initially
  rallying due to the UK government’s budget decisions and dovish Bank of England
  signals.
• Current
  level of 1.26 for GBPUSD is seen as fair, with expectations of an upward
  trajectory reaching 1.30 by the end of the year.

JPY:

• With
  minimal major economic data from Japan expected, USDJPY will likely be
  influenced by US inflation data and FOMC meeting minutes.
• Markets
  are alert for a potential FX intervention by Japanese officials if USDJPY
  breaks out significantly.
• Despite
  the potential for higher exchange rates due to elevated US rates, UBS prefers
  selling upside risk, anticipating more balanced Fed rate cut expectations and
  considering crowded short positions in yen and the Bank of Japan’s stance on
  yen weakness.

This article was written by Arno V Venter at www.forexlive.com.

Reports by Israeli media that Netanyahu has met with Finance Minster Smotrich.

This is being cited as part of the progress made in the Cairo negotiations.

Without more context not sure whether this matters but worth keeping in mind in case we get more information.

Here are some previous updates on the geopolitical developments:

• Israeli ground operation in Rafah depends on the hostage deal
• Senior official says gaps to a deal between Israel and Hamas remains large
• Oil is recovering some of its earlier loss
• Reports that progress has been made in Gaza ceasefire talks

This article was written by Arno V Venter at www.forexlive.com.

US treasury yields have continued to push higher, printing a new 2024 high (also highest since November last year).

As commodities stay supported, and as expectations of a higher-for-longer Fed continues to build, it makes sense why yields are pushing higher.

The divergence between yields and the USD, and gold and yields is a bit confusing.

The main event for the week ahead is US CPI coming up on Wednesday. With growing expectations of a re-acceleration in inflation, a big surprise miss would arguably be the most exciting opportunity to trade this week.

This article was written by Arno V Venter at www.forexlive.com.

Last Friday, the Nasdaq Composite ended the day
positive following the US NFP report.
In fact, the data beat expectations across the board showing once again that
the labour market remains resilient without too much inflationary pressure as
wage growth continues to ease. The focus will now switch towards the US CPI
data on Wednesday as a hot report could change the Fed’s strategy in the near
term and delay the rate cuts further.

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. The price recently broke out of the rising wedge which
opened the door for a bigger correction into the 14477 level. The price has
been consolidating around the highs for quite some time now and we will likely
need to wait for the US CPI report on Wednesday to decide where to go next.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price last Friday rallied following the goldilocks NFP report and it’s now
trading back above the critical 16206 level. If the price were to continue
lower and fall below the 16206 level again, we can expect the sellers to pile
in more aggressively to extend the drop into the first support level
at 15929. That’s also where we can expect the buyers to step in with a defined
risk below the support to position for a rally back into a new all-time high.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the price getting rejected several times
from the black counter-trendline except
the fakeout on the 4th of April. We can also notice that the latest
leg lower diverged with the MACD, which might give the buyers some more
conviction for further upside. In fact, if the price were to break above the
counter-trendline, we can expect the buyers to increase the bullish bets into
new highs, while the sellers will likely lean on the trendline to position for
a drop into new lows with a better risk to reward setup.

Upcoming
Events

This week is going to be a bit more tranquil on the data
front with the US CPI being the main highlight. On Wednesday, we have the US
CPI report which will likely decide if the Fed is going to delay rate cuts
further. On Thursday, we get the US PPI and the latest US Jobless Claims
figures. Finally, on Friday we conclude the week with the University of Michigan
Consumer Sentiment survey.

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

Some interesting points from ING about 10-year yields, and the risks they see that could take us back to 5%.

• Unlike previous cycles where the 10-year yield typically decreased after the Fed’s rate peak, in the current cycle, the yield has actually increased, hitting a cycle high of 5% in October 2023, three months after the presumed rate peak
• Contrary to expectations following a „Fed peak moment,“ market rates have not decreased significantly. This is attributed to strong labor market data and intermittent increases in inflation.
• Historically, market rates tend to increase temporarily when the Fed makes its first rate cut, as market participants sell on the fact. However, as the Fed continues to cut rates, the 10-year yield eventually decreases and finds a new bottom.

• The current cycle has not seen the typical initial decrease in the 10-year yield following the Fed’s rate peak, partly due to a relative shortage of longer-dated Treasuries from the Federal Reserve’s pandemic-induced holdings.
• The article highlights uncertainty regarding whether the Fed has actually peaked, as there has been no clear data justifying a rate cut, which would confirm the peak.
• The ongoing strength of the economy and anticipated inflation readings are expected to maintain or even increase the pressure on the 10-year yield, possibly pushing it to retest the 5% level or even higher.

Useful info to consider. At the end of the day it’s all still about inflation. There is a lot that can happen before the Fed’s June meeting in terms of the data, and the data will lead the way.

This article was written by Arno V Venter at www.forexlive.com.

UPCOMING EVENTS:

• Monday: Japan
  Wage data, Swiss Unemployment Rate.
• Tuesday: US
  NFIB Small Business Optimism Index.
• Wednesday: Japan
  PPI, RBNZ Policy Decision, US CPI, BoC Policy Decision, FOMC Minutes.
• Thursday: China
  CPI, ECB Policy Decision, US PPI, US Jobless Claims.
• Friday: New
  Zealand Manufacturing PMI, New Zealand Retail Sales, UK GDP, UK Industrial
  Production, US University of Michigan Consumer Sentiment.

Monday

The Japanese Average Cash Earnings Y/Y are
expected to rise to 3.0% vs. 2.0% prior. The JPY might get bid on a strong
figure as the BoJ continues to see the achievement of their inflation target
and mentioned that another rate hikeis dependent
on the data. The timing for such a
move remains uncertain though with July and October being on the table,
although the latter is the most probable one. Overall, even if we see a
beat, the market will likely want to wait for the US CPI on Wednesday as that
is what will likely decide the USD trend for the following days and weeks.

Wednesday

The RBNZ is expected to keep the OCR
unchanged at 5.50%. As a reminder, the central bank dropped
the tightening bias in the last policy
decision stating that interest rates will need to remain at restrictive level
for a sustained period of time. There’s nothing to expect from this week’s
decision as the RBNZ is looking to normalise policy in 2025 while the
market sees the first cut coming in August.

The US CPI Y/Y is expected at 3.4% vs.
3.2% prior, while the M/M measure is seen at 0.3% vs. 0.4% prior. The Core CPI
Y/Y is expected at 3.7% vs. 3.8% prior, while the M/M reading is seen at 0.3%
vs. 0.4% prior. This is probably one of the most important inflation reports
of 2024 as the recent data has already hit the Fed’s confidence and another
hot release will likely trigger a change in the near-term policy outlook,
especially following a good labour
market report on Friday.

Fed’s
Waller recently said that he wanted to see
a couple of good reports to consider a rate cut in June, so we just need
this week’s report to be hot to make the market to price out the June cut.
This will most likely have big repercussions on the markets with Treasury
yields and the US Dollar rallying and the stock market correcting lower. On the
other hand, a cold report should trigger the opposite reaction with the stock
market hitting new highs and the Treasury yields and the US Dollar coming under
pressure as the risk-on sentiment ensues.

The BoC is expected to keep interest rates
unchanged at 5.00%. Their policy decision comes right after a weak labour
market report on Friday where we saw
job losses and the unemployment rate jumping to 6.1% from the prior 5.8%
figure. StatCan said that the spike in the unemployment rate is tied to an
additional 60,000 people looking for work or on temporary layoff in March as
the agency reported recently that population growth hit its fastest rate since
1957.

The central bank is also focused on wage
growth and unfortunately for them, the rate increased again to 5.1% from the
prior positively revised 5.0% rate. On the positive side, the latest inflation
report missed expectations across the board
with notable easing in the underlying inflation measures. This puts the central
bank in a difficult position although they should have enough reasons to start
leaning more dovish. The market expects the first rate cut in June.

Thursday

The ECB is expected to keep interest rates
unchanged at 4.00%. The central bank will likely set the stage for the June
rate cut as policymakers have been touting such a move for quite some time
and we even got the uber-hawk Holzmann joining the team recently. The latest Eurozone
inflation report missed expectations for
both the Headline and Core measures although the M/M readings were both very
high and Services inflation got stuck at 4% since November 2023. Nevertheless,
the data before the June decision will have the final word as the ECB is also
waiting for the Q1 2024 wage data to give it a bit more confidence.

The US PPI Y/Y is expected at 2.3% vs.
1.6% prior, while the M/M measure is seen at 0.3% vs. 0.6% prior. The Core PPI
Y/Y is expected at 2.3% vs. 2.0% prior, while the M/M reading is seen at 0.2%
vs. 0.3% prior. The data will come after the US CPI report, so it’s unlikely
to see it changing whatever trend will be set by the CPI release.

The US Jobless Claims continue to be one
of the most important releases every week as it’s a timelier indicator on the
state of the labour market. This is because disinflation to the Fed’s target is
more likely with a weakening labour market. A resilient labour market though
could make the achievement of the target more difficult. Initial Claims
keep on hovering around cycle lows, while Continuing Claims remain firm around
the 1800K level. Initial Claims are expected at 215K vs. 221K prior, while
there’s no consensus at the time of writing for Continuing Claims although last
week we saw a decrease to 1791K vs. 1810K prior.

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

Dow jones (DJIA) technical analysis: bearish trend watch

Investors and traders, a key technical signal in the Dow Jones Industrial Average (DJIA) points to a potential bearish trend. Let’s dive in:

• Broken trendline: the DJIA has broken below a significant trendline support, indicating a shift toward selling pressure and a possible downward trend.

Looking ahead: Bullish vs bearish price targets for Dow Jones

• Bearish target: if the price fails to cross back above the broken trendline, I’m looking at a potential downside target of 38,600.
• Bullish target: conversely, if the DJIA manages to cross back above the trendline, a bullish move toward 39,300 could be in play.

Stay informed with ForexLive.com

Keep a close eye on the DJIA! Resources like ForexLive https://www.forexlive.com/ offer up-to-date news, analysis, and expert insights to help you navigate the market. Trade the Dow Jones at your risk only.

This article was written by Itai Levitan at www.forexlive.com.

Friday’s jobs report from the US, nonfarm payrolls, was sizzling:

• Forexlive Americas FX news wrap: US dollar jumps on hot NFP and then gives it back

Bond giant Pacific Investment Management Company (PIMCO) has dialed back its forecast for Federal Open Market Committee (FOMC) rate cuts this year. The previous PIMCO projection was for 3, but they’ve dialled that back to 2 now as thier ‚base case‘. A PIMCO rep spoke with Reuters after the NFP numbers on Friday:

• this means a little bit less out of the Fed
• the economy is proving for now that it can handle higher rates

Checking FedWatch you’ll see the pricing for a June rate cut is now bordering on a coin toss. I reckon the likelihood is closer to 10% than 50%. If you’ve been following along with my ’no June rate cut for you!‘ shouting this’ll come as no surprise.

FOMC members are piling on the later cut bandwagon:

• Fed’s Logan: It’s much too soon to think about cutting interest rates

• Fed’s Waller says may need to hold current rate for longer than expected, no rush to cut
• Waller’s remarks have pumped up the US dollar
  • (ps still is too)
• More Fed’s Waller: The economy has supported the cautious approach by the Federal Reserve

• Still more from Fed’s Waller: If unemployment goes up no reason to panic
• Fed’s Bostic say he now anticipates only one rate cut this year
• If economy continues to be healthy, why would we cut rates

And, I like this reasoning:

• Global economic recovery, blistering commodities rally … threatening to derail the Fed

FedWatch update:

This article was written by Eamonn Sheridan at www.forexlive.com.

Oil prices have been moving up since late December 2023 and are now (for Brent) forming a ‚Golden Cross‘. This is a sign that technical analysts like, when a shorter-term moving average (MA) crosses above a longer-term MA:

• 50 and 200 day simple moving averages (SMAs) are commonly used, but those parameters are not chiselled in stone somewhere

Brent has thrown out the signal now, WTI is not quite there. I’ve used the free charts on our site, that you can access here. Or of course, use your own charting program as you prefer.

Brent below. Check out the link the chart above and use the ‚BRENT‘ code shown in the chart. Its not really visible on the screenshot below but around $91 there will be a lot of work to be done (ie resistance).

WTI:

This article was written by Eamonn Sheridan at www.forexlive.com.