• Dollar nudges higher as stocks, yields stay anchored
• Major central banks confirm to revert back to weekly dollar swaps with the Fed
• ECB’s Lane: Further rate hikes beyond May will depend on the data
• ECB’s Villeroy: Inflation will probably come down towards 2% at the end of 2024
• BOE’s Broadbent: Had we seen inflation shocks coming, we would’ve tightened policy sooner
• Switzerland March trade balance CHF 4.53 billion vs CHF 3.31 billion prior
• UK April CBI trends total orders -20 vs -20 expected

Markets:

• JPY leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.5%
• US 10-year yields down 7 bps to 3.445%
• Gold down 0.5% to $1,978.43
• WTI crude down 0.8% to $78.13
• Bitcoin down 0.2% to $27,415

The dollar is getting a bit of love again after a rough start to the new week, as stocks and bond yields are looking heavier today. It’s tough to balance out the narratives in broader markets at the moment but here’s my take on things.

As the risk mood is leaning towards the softer side, the dollar is seen nudging higher in European trading with EUR/USD falling from 1.1050 to 1.1010 on the session. The pair is flanked by a large set of option expiries, so there is also that to consider before they roll off later in the day.

GBP/USD also extended its fall from Asia, when it hit a high of 1.2500, to 1.2430 as sellers start to wrestle back near-term control. The aussie is the laggard as risk trades are on the defensive, with AUD/USD down 0.7% to 0.6650 levels at the moment.

Equities were sluggish throughout, with European indices opening lower and consolidating losses so far on the day. Meanwhile, Treasury yields are also feeling heavy and have kept lower since Asia trading already.

With the dollar inching higher and risk staying subdued, gold is marked lower again to contest daily support at $1,981 – as it has been doing since last week. Then, we are also seeing oil slip back by nearly 1% towards $78 ahead of US trading.

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

Lower rates weighed on the dollar yesterday but are not really working against the greenback in trading so far today. In part, I would say the softer mood in equities is helping to reaffirm a more risk-off approach and that is perhaps helping to see the dollar nudge a little higher now.

EUR/USD is down 0.2% to 1.1018 with GBP/USD keeping a rejection from 1.2500 earlier to 1.2450 at the moment. The former is sandwiched between large option expiries with the highs also limited around a large one at 1.1050-60. Meanwhile, here’s a snapshot of price action in the latter:

As you can see, price is slowly inching towards the confluence of the 100 and 200-hour moving averages at 1.2442-43. Stay above and buyers will keep near-term control but break below and sellers will take charge of the near-term momentum instead.

Elsewhere, AUD/USD is down 0.6% to 0.6655 as the aussie stays pressured amid a softer stance in risk trades. Oil is down 0.7% to $78.18 and that is helping USD/CAD climb up 0.4% to 1.3590 as well. And we are seeing gold tick lower as well by 0.3% to $1,982 as sellers continue to contest daily support at around $1,981 since last week.

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

On the daily chart below for the AUDUSD,
we can see that the price has failed again to break above the 0.6781 resistance where we have also the 38.2% Fibonacci
retracement level. The last failure came as the US
Retail Sales missed expectations across the board giving the
market recessionary vibes and sending the price lower.

This double failure may turn into
a double
top within a
correction, which is a nice bearish setup for the sellers. Last Friday’s US
PMIs beat forecasts but failed to lift the risk sentiment as the market is
increasingly worried about the rise in Jobless Claims and new lows in the regional
PMIs.

AUDUSD technical analysis

On the 4 hour chart below, we can
see that the market has been ranging for quite some time. Such choppy markets
are the worst for traders. The levels are defined though with the support at
0.6620 and the resistance at 0.6790.

The best strategy is generally to
sit out and wait for a breakout accompanied by a clear fundamental catalyst.
While traders can also “play the range” buying at support and selling at
resistance, this is generally a more risky and often hard to implement
strategy.

On the 1 hour chart below, we can
see that the price is now targeting the bottom of the range. At the moment
there isn’t much to do for traders as there is no strong level to lean on. The
next key level will be the 0.6620 support where the buyers are likely to pile
in with defined risk below the range and the top of the range as target.

The sellers, on the other hand,
will want to see a breakout before jumping onboard and target first the low at
0.6563 and then a new lower low.

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

He won’t be the only one running for re-election, as this tees up a rematch between himself and Trump. Here’s the video announcement:

Every generation has a moment where they have had to stand up for democracy. To stand up for their fundamental freedoms. I believe this is ours.That’s why I’m running for reelection as President of the United States. Join us. Let’s finish the job. https://t.co/V9Mzpw8Sqy pic.twitter.com/Y4NXR6B8ly

— Joe Biden (@JoeBiden) April 25, 2023

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

• Prior -20

UK factory orders contracted once again, with the monthly reading unchanged from March – which was a more than two-year low. The positive news is that quarterly business optimism improved to -2 from -5 previously and while still in negative territory, is at least the highest reading since October 2021.

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

• What are the key risk events in markets this week?
• ECB’s Wunsch says wouldn’t be surprised if rates hit 4% at some point
• Germany April Ifo business climate index 93.6 vs 94.0 expected
• SNB total sight deposits w.e. 21 April CHF 538.4 bn vs CHF 544.1 bn prior
• Bundesbank says German economy likely expanded in Q1
• China reportedly calls for banks to further cut deposit rates

Markets:

• CHF leads, JPY lags on the day
• European equities little changed; S&P 500 futures down 0.1%
• US 10-year yields down 3.5 bps to 3.537%
• Gold up 0.1% to $1,984.04
• WTI crude down 0.1% to $77.61
• Bitcoin up 0.7% to $27,461

It was a relatively slow session to kick start the new week, as markets are still treading with caution after the more mixed showing last week.

Major currencies didn’t do much, though the yen is seen weaker while the dollar trades more mixed across the board. USD/JPY climbed from 134.10 to 134.60 on the session despite the fact that Treasury yields are a little heavier.

Meanwhile, EUR/USD is up around 0.1% now and testing waters back above 1.1000 while AUD/USD is marked down by 0.2% to 0.6680. The changes are relatively light, as traders don’t really have much to work with for now.

European equities started off a little softer, matching the mood in US futures. However, that all switched up after the cash open as stocks gradually pared losses to keep lightly changed at the moment.

After the back and forth action from last week, we might be in store for more of that in early stages of this week before getting to month-end trading, the BOJ policy decision, and some key economic data on Friday.

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

Jacques
Attali’s dire future is fast becoming a reality: the imperial dominance of the
United States is fading, and the dollar might soon turn into a pumpkin.

Oddly
enough, the blame for this tectonic shift lies with the country itself. The
decision to freeze Russian currency reserves consecutively prompted other
countries hostile to the US to reduce the share of „greenbacks“ in
both portfolios.

According
to the IMF, the dollar’s share in central bank accounts fell by 0.44% to 58.36%
by the end of 2022, the lowest level in 27 years. In absolute terms, the fall
was 8.7% over the year to $6.471 trillion and in euros, 8.5% to $2.27 trillion.

Given
that in the last month Russia, India, Brazil, Kenya, Saudi Arabia, UAE, ASEAN
countries, and China announced their intention to increase the proportion of
national currencies in their export payments, the situation could get even
worse.

The idea
of independence is also gaining prominence in Europe. Just this week, the
French president suggested that the bloc should strengthen its autonomy
vis-à-vis its big brother by reducing dependence on the
„extraterritoriality of the U.S. dollar.“ What a turn of events…

What do
the French propose? Among other things, to sign an agreement similar to the US
Inflation Reduction Act (IRA). Macron also claims that Europe won the
ideological battle to develop the continent’s strategic autonomy.

Further
impetus to de-dollarization could be given by inflation or, rather, by the Fed
itself. The new round of money printing will cause the supply of dollars to
increase and thus lower the price of the dollar. The regulator’s change in tone
could also negatively affect the US
dollar index.

So what
can we do with this information? Although the situation does not look good for
the US currency, this does not mean that it will disappear tomorrow. However,
if the US economic situation worsens, one should think about possible safe
havens such as gold (XAUUSD).

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

It started off with a bit of a softer mood but we are seeing things improve in European morning trade. Here’s a snapshot of the equities space at the moment:

• S&P 500 futures -0.1%
• Nasdaq futures flat
• Dow futures -0.1%
• Eurostoxx -0.1%
• Germany DAX +0.1%
• France CAC 40 flat
• UK FTSE flat

The push and pull mood continues from last week and with the Fed only coming up next week, it might be tough to build much conviction in the days ahead as well. Don’t forget, there’s also month-end trading to contend with in the latter stages this week.

For European indices, the DAX and CAC 40 are continuing to hang at the highs for the year.

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

• German economy did better in Q1 than expected a month ago
• Activity is likely to have picked up again somewhat
• Price growth is likely to ease further even if core inflation remains elevated for some time
• Services inflation is anticipated to ease slowly moving forward
• High employment should keep supporting consumption, with unemployment likely to fall slightly in the month ahead

Just a couple of token remarks but the long story short is that the German, and euro area, economy has held up better than expected to start the new year. Inflation is still a problem but the situation and outlook should gradually improve in the months ahead, even if core prices are estimated to hold higher for now. At least, that is what they are believing.

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

The market moves so far today have been generally light but the euro is seeing a decent advance from around 1.0970 to 1.1020 in European trading today. There’s not much of a catalyst but it comes off the back of more mixed trading among major currencies, with Treasury yields keeping lower while equities have trimmed losses somewhat.

EUR/USD is testing waters just above 1.1000 for the first time since in over a week after having consolidating around 1.0930 to 1.0990 for the most part last week.

Buyers are back in near-term control and they are keeping a hold above the 100-week moving average of 1.0923 but will have to work through weekly resistance around 1.1033 and last week’s high of 1.1075 to really solidify any further upside momentum.

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