• All eyes on the US CPI data later today
• Dollar steady with major currencies mostly little changed on the day
• French stocks at record high as European equities maintain the optimism
• BOJ’s Uchida: Will continue monetary easing to achieve price stability target
• US MBA mortgage applications w.e. 7 April +5.3% vs -4.1% prior

Markets:

• AUD leads, GBP lags on the day
• European equities slightly higher; S&P 500 futures up 0.1%
• US 10-year yields up 1.7 bps to 3.450%
• Gold up 0.2% to $2,007.88
• WTI crude flat at $81.45
• Bitcoin down 0.6% to $30,009

It was a largely quiet session and understandably so, as markets are sitting on edge awaiting the US CPI data release later today.

There isn’t much to really comment as it was a sideways session with little appetite for any market moves while there were no major economic data releases in Europe as well.

Major currencies are little changed with the dollar keeping more mixed and relatively steady, after a bit of a retreat yesterday. Meanwhile, the bond market also isn’t hinting at much with Treasury yields not much changed. 2-year yields are seen around 4.05% while 10-year yields in the US are still holding just above the key threshold of 3.30% – now at 3.45% on the day.

In the equities space, there is some mild optimism as European stocks are inching higher. The CAC 40 index is at fresh record highs while the DAX itself is also trading to its highest levels for the year. The gains are modest at best though, as there is still some caution in the air for now.

All eyes are fixated on the US consumer price inflation report (and Fed minutes) to follow and that will set the tone for the remainder of the week.

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

• Prior -4.1%
• Market index 229.5 vs 217.9 prior
• Purchase index 179.6 vs 166.6 prior
• Refinance index 477.5 vs 477.2 prior
• 30-year mortgage rate 6.30% vs 6.40% prior

The climb down in the average interest rate for the most popular US home loan (as seen below) is continuing to benefit mortgage activity in general over the past two months or so. This time around, purchase activity is seen picking up substantially and that is helping to give a bit of a lift to the market after a rather awful last one year.

/US Dollar

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

On the daily chart below for USDCAD, we can
see that after breaking the strong support at 1.3664, the pair just melted
for hundreds of pips. We got a bounce recently as bad US data started to give
the market recession vibes and the US Dollar is the go-to currency in case a
recession unfolds.

The NFP report last Friday surprised again though showing
strong labour market data. We’ve got some choppy price action afterwards due to
Easter Holidays. Today is the US
CPI Day, and
the market is unlikely to move much ahead of it.

USDCAD technical analysis

On the 4 hour chart below, we can
see that the recent bounce stalled right at the previous swing level at 1.3553
where we also had the confluence with the 38.2% Fibonacci
retracement level. The moving
averages have crossed to the downside again after the price rejected the
resistance, so the sellers are in control for now.

The first natural target should
be the low at 1.3406 with more to come in case the sellers manage to break
below it. Today’s data is likely to decide the next big move. A miss to the
expectations should favour the sellers, while a beat should give the buyers
some control.

On the 1
hour chart below, we can see a nice setup for the sellers in case the price
pulls back to the 1.3480 level where we have the trendline, the swing level resistance and
the 50% Fibonacci retracement level.

All this
confluence in the same spot makes that zone a strong resistance and gives the
sellers a nice barrier where they can lean onto and have a defined risk just
above it. The buyers, on the other hand, will want to see the price to break
above this strong area to start piling in and target the resistance at 1.3553.

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

On the daily chart below for
AUDUSD, we can see that the buyers couldn’t break above the 0.6781 resistance and the 38.2% Fibonacci
retracement level. That’s where bad US economic data started
to come in and the market began to have recessionary vibes. In such instances,
the US Dollar is the go-to currency, especially against the commodity
currencies like the Australian Dollar.

The moving
averages have crossed to the downside, although not much yet, but this may be a
bad omen for the buyers. The market today will be focused on the US
CPI report
and surprises are likely to cause big movements.

AUDUSD technical analysis

On the 4 hour chart below, we can
see that the price was trading in a channel rallying into the 0.6781
resistance. As the breakout failed, the price fell strongly, and it even broke
below the lower bound of the channel. The moving averages are crossed to the
downside and the red long period moving average will act as resistance now.

The natural target for the
sellers is the previous low at 0.6563. We should see the sellers piling in
aggressively in case the CPI beats expectations, while the buyers are likely to
regain control in case the CPI misses.

On the 1 hour chart below, we can
see that at the moment there’s a bit of consolidation ahead of the CPI report.
The market is erring on the cautious side as surprises can cause aggressive
movements. This little range can be a good starting point for both buyers and
sellers.

A break above would be bullish
and give the buyers the conviction to target the resistance at 0.6781. On the
other hand, a break below would give the sellers control and the target would
be the support at 0.6563.

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

Gold is catching a second wind in the past month or so, after having seen the January seasonal rally wane in February trading. The banking turmoil saw gold benefit from being a traditional safe haven asset and as the Fed outlook was dented, gold also benefited from markets no longer seeing an aggressive tightening path this year.

That culminated in a push back above the $2,000 mark last week and prices are still holding on to that for the most part. There is a slight state of flux so far this week but if you look at the near-term chart, buyers are definitely showing up where it matters most.

The 200-hour moving average (blue line) is where buyers leaned on before running into familiar resistance from the 100-hour moving average (red line) yesterday. The latter was broken through earlier today though, as gold buyers establish a more bullish near-term momentum just above the $2,000 mark for now.

As such, those will be key lines in the sand in determining the near-term momentum bias ahead and in the aftermath of the US CPI data later.

In the bigger picture though (going back to the weekly chart), gold is trying to stay poised in scaling to the 2020 and 2022 highs around $2,070-75. That will be the biggest and most important resistance region for gold in trying to establish a stronger upside break.

It seems almost likely that markets are becoming increasingly convinced that such a break is more of a question of when than if, considering that major central banks are slowly heading to the sidelines.

If the economic downturn can be managed gracefully and inflation becomes less of a problem in the year to come, the idea of rate cuts might start coming into the picture and that will be yet another major boost for gold down the road.

But for now, it’s baby steps. The first immediate hurdle will come from the US CPI data later today. If we do see a softer set of inflation numbers, that will certainly validate the recent upside push in gold with buyers potentially poised to test the key resistance region above.

However, on the flipside, a stronger set of inflation numbers will more than likely weigh on gold back under $2,000 as buyers head back to the drawing board – awaiting for the next key event to validate their long-term view.

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

• Dollar retraces yesterday’s gains so far today
• Fed rate hike in the balance as we gear towards the key risk events this week
• Eurozone April Sentix investor confidence -8.7 vs -9.9 expected
• Eurozone February retail sales -0.8% vs -0.8% m/m expected
• US March NFIB small business optimism index 90.1 vs 90.9 prior
• SNB total sight deposits w.e. 7 April CHF 532.2 bn vs CHF 563.6 bn prior
• China March M2 money supply +12.7% vs +12.7% y/y expected

Markets:

• CHF leads, NZD lags on the day
• European equities slightly higher; S&P 500 futures flat
• US 10-year yields down 0.4 bps to 3.411%
• Gold up 0.5% to $2,000.28
• WTI crude down 0.3% to $79.51
• Bitcoin up 3.2% to $30,090

It was a largely quiet session as European traders returned from the Easter break, only to gain a sense of trepidation ahead of key US data to come later in the week.

Equities opened with some decent optimism but has seen gains slowly pared back, with US futures also little changed now. Meanwhile, European bond yields are holding higher in trying to play catch up to Treasury yields – which jumped after the US jobs report on Friday. The latter is not really doing much today after having held lower earlier in the session.

In FX, the dollar retraced its post-NFP gains with EUR/USD climbing back above 1.0900 and GBP/USD also pushing back above 1.2400 during the session. USD/JPY is down slightly by 0.3% to 133.25 but off the lows close to 133.00 from earlier in the day.

Meanwhile, commodity currencies were more mixed with USD/CAD flattish around 1.3500 and NZD/USD down slightly by 0.1% to 0.6210 as the kiwi continues to struggle somewhat since the drop last Thursday.

Elsewhere, gold is hugging the $2,000 mark again as traders continue to contemplate the rates and dollar outlook. Then, we have Bitcoin rising back above the $30,000 mark for the first time since June last year.

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

On the daily chart below for the Nasdaq
Composite, we can see that after bouncing on the 61.8% Fibonacci
retracement level, the market started a strong rally towards
the key 12274 resistance.

The break of the trendline of the bullish flag is also another confirmation
that the buyers are in control and want to extend the rally possibly above the
key resistance. The moving
averages have crossed to the upside on the flag breakout and the trend now is
firmly upwards. As the market now returns to the regular trading regime after
the Easter Holidays, we may see the buyers trying a breakout again.

Nasdaq Technical Analysis

On the 4 hour chart below, we can
see that after the rally stalled near the 12274 resistance and pulled back, it
found support at the red long period moving average. The buyers piled in there
and looks like the rally is restarting.

The NFP
report is also being interpreted as goldilocks since the jobs market remains
strong but the wage inflation keeps on moderating. The next big event is the US CPI report tomorrow where we may see
another big rally if the data misses expectations.

On the 1 hour chart below, we can
see that there’s a mini range between the 12100 resistance and the 50%
Fibonacci retracement level at 11915. For the buyers a break above the resistance
should give the conviction to target the 12274 level. On the other hand, the
sellers are likely to jump onboard in case the price falls below the 11915
support and then target the previous swing low at 11650.

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

• Prior 90.9

This is the 15th straight month that the index has come in below its 49-year average of 98, as business sentiment continues to dawdle to start the new year. NFIB notes that:

„While prospects for the economy continue to dim, the widely expected
recession has not yet appeared. Fourth quarter growth was shaded
down to 2.6%, inventory accumulation accounted for 60% of the total
growth. Weakness in residential construction took 1.2 percentage
points off of the growth rate and will continue to be a negative in the
first quarter numbers. Hiring plans fell to their lowest level since May
2020.

„There are major uncertainties ahead, most immediate is concern that
a banking crisis could develop. This usually results from too many risky
loans going bad, including auto and consumer credit. However, the
current issue resulted from poor risk management. The Fed kept rates
too low for too long, encouraging the growth of risky assets. Lots of
investments looked good with a 2% cost of funds and bank savings
paid virtually nothing.“

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

Let’s take a look at how the odds for the May decision have changed since two weeks back:

• 27 March: No change (85%), +25 bps (15%)
• 29 March: No change (59%), +25 bps (41%)
• 31 March: No change (42%), +25 bps (58%)
• 5 April: No change (58%), +25 bps (42%)
• 7 April*: No change (29%), +25 bps (71%)
• 11 April: No change (33%), +25 bps (67%)

*after the US non-farm payrolls

And as mentioned countless times since then, the shift in pricing is definitely no coincidence to the story in the bond market – where we are seeing 10-year Treasury yields continuing to hold above the key threshold around 3.30% for now.

In turn, we have also seen the dollar be brought towards the edge before finding a bid again after the jobs report on Friday last week.

As such, it’s all about the Fed outlook right now and expect the volatility to continue as we gear towards the key risk events lined up for this week here.

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

On the daily chart below for the
Dow Jones, we can see that after the major breakout of the trendline and the 32684 resistance, the market rallied strongly and
managed to break above the key 33538 resistance consolidating just above it.
The trend is now bullish as we can see from the moving
averages.

The market seems to be trading
again on the goldilocks scenario where inflation comes down on its own without
major losses in the labour market. In fact, the latest NFP
report showed moderating wage inflation with a tight jobs market. The next big
event is US CPI tomorrow.

Dow Jones technical analysis

On the 4 hour chart below, we can
see more closely the consolidation just above the 33538 resistance. This may be
due to both negative and positive news we got the last week coupled with the
Easter Holidays that led to lower liquidity and a more cautious price action.
Today European traders come back from the holidays and the market should come
back to its normal trading regime. The key releases to watch this week are the
US CPI tomorrow and the US Jobless Claims on Thursday.

In the 1 hour chart below, we can
see the mini range highlighted by the blue rectangle. The buyers will want to
see a break above the upper bound of the range to start piling in and extend
the move to higher highs with 34477 as the ultimate target. The sellers, on the
other hand, will want to see a break below the lower bound of the range to jump
in and target lower lows with 32684 as the major target.

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