GBP

• The BoE left interest rates unchanged as expected but with Haskel and
  Mann this time voting for a hold instead of a hike.
• The employment report missed expectations with an uptick
  in the unemployment rate and an easing in wage growth.
• The UK CPI missed expectations across the board but with
  Services inflation remaining sticky, which continues to support the BoE’s
  patient stance.
• The latest UK PMIs showed the Services PMI missing expectations
  slightly and the Manufacturing PMI beating.
• The market expects the first rate
  cut in June.

JPY

• The BoJ finally exited the negative interest rates
  policy as expected
  at the last meeting raising interest rates by 10 bps bringing the rate to a
  target between 0.00-0.10%. Moreover, the central bank scrapped the yield curve
  control and the ETF purchases, while maintaining QE in place.
• The latest Unemployment Rate missed expectations although it
  continues to hover around cycle lows.
• The Japanese PMIs improved further for both the
  Manufacturing and Services measures although the former remains in
  contractionary territory.
• The latest Japanese wage data came in line with expectations.
• The Tokyo CPI, which is seen as a leading
  indicator for National CPI, came in line with expectations.
• The market expects another rate hike
  from the BoJ this year although the timing remains uncertain.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY bounced
on the 61.8% Fibonacci retracement level
near the lower bound of the rising channel where we had also the red 21 moving average for confluence. The
buyers extended the rally into the 193.00 handle and will certainly keep
targeting the upper bound of the channel around the 195.00 handle. The sellers,
on the other hand, will want to see the price reversing and breaking below the
lower bound to position for a drop into the 187.96 low.

GBPJPY 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 risk to reward setup
around the trendline where
they will also find the 61.8% Fibonacci retracement level for confluence. The
sellers, on the other hand, will want to see the price breaking lower to
position for a drop into the lower bound of the channel eventually targeting a
break below it.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the pair bouncing on the most recent swing
high level at 192.20. If we get a pullback from the current high, that’s where
the buyers should pile in with a defined risk below the 192.20 level to
position for a rally into new highs. The sellers, on the other hand, will want
to see the price breaking lower to position for a drop into the trendline
around the 191.50 level.

Upcoming Events

Today we get the US CPI report and the FOMC Minutes.
Tomorrow, we will have the US PPI and the latest US Jobless Claims figures. On
Friday, we conclude the week with the UK GDP and the University of Michigan
Consumer Sentiment Survey.

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

Some
thoughts from Monex on the USD:

• Solid
  US job growth: The strong March job numbers hint at robust economic health
  which will potentially delay Fed rate cuts.
• Bond
  yields: Strong growth and higher commodities have pushed yields higher, which
  increases appeal for the dollar.
• Market
  dynamics: Despite a brief delay, there is potential for significant technical
  breaches in key major pairs which suggest readiness for the dollar to
  strengthen, especially if CPI points higher this week.
• Central
  bank policies: Expected dovish shifts from the ECB and BoC contrast with that
  of the Fed and should enhance dollar attractiveness

One risk to
a higher dollar this week is if a strong CPI pushes USDJPY into 152 and
triggers possible intervention. That should only mean short-term pressure on
the dollar but a risk worth considering.

Also think watching global growth is important
for the dollar. There have been green shoots in the data in other parts of the
world which explains some of the recent dollar weakness as well.

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

The
bank offers their views on why the numbers weren’t as bad as we thought:

1. Self-employment drove the weakness (29k drop), which offset a 27k rise in private sector (15k) and public sector (12k) jobs.
2. The soft headline was driven by youths’ (aged 15-24) falling 28k. As youths do not have the same impact in housing and consumer markets, the implication for the drop in youths’ employment isn’t as bad as it would have been if the losses were in the 25+ age group.
3. Quebec youths drove most of the softness by showing 18k fewer jobs.
4. Wages still grew by 4.5%, which is still running at over twice the BoC’s 2% inflation target.

With this
in mind the bank doesn’t think that Friday’s report changes anything for the
BoC.

I agree that one jobs print shouldn’t change
anything, especially looking at the details under the hood. But when we combine
Friday’s job report with the recent CPI deceleration and the lower expectations
of higher inflation by Canadian businesses seen in the Business Outlook survey,
it gives the bank the cover it needs to sound more dovish.

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

Below
is a very handy ECB cheat sheet from ING:

The bank
thinks that EURUSD is expensive at current levels, but unless we get strong
guidance for deeper cuts after June the impact might be more short-lived. I share their sentiment in this regard.

They think
that the pair would need an equity-sell off as well as an official start to the
ECB’s rate cutting cycle for a move lower.

There is a
greater chance of a move towards 1.07 compared to a break higher to 1.09.

Personally, I think a lot of bad news is priced
for the EUR, but time will tell.

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

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• Fed Chair Powell maintained a neutral stance as he said that it was
  premature to react to the recent inflation data given possible bumps on the way
  to their 2% target.
• The US CPI and the US PPI beat expectations for the second
  consecutive month.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• There’s now basically a 50/50 chance of a rate cut
  in June.

NZD

• The RBNZ kept its official cash rate
  unchanged dropping
  the tightening bias and stating that the OCR will need to remain at restrictive
  level for a sustained period.
• The latest New Zealand inflation data printed in line with expectations
  supporting the RBNZ’s patient stance.
• The labour market report beat expectations across the
  board with lower than expected unemployment rate and higher wage growth.
• The Manufacturing PMI improved in February remaining in
  contraction while the Services PMI increased further holding on in
  expansion.
• The market expects the first cut in
  August.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that NZDUSD rallied
all the way back to retest the broken support zone now turned
resistance where we have also the confluence of the
38.2% Fibonacci retracement level
and the red 21 moving average. This is
where we can expect the sellers to step in with a defined risk above the
Fibonacci level to position for a drop into new lows. The buyers, on the other
hand, will want to see the price breaking higher to start targeting the 0.6218 resistance.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4
hour chart, we can see that we got a rejection of the resistance recently and a
pullback into the 50% Fibonacci retracement level and the red 21 moving
average. The price bounced from that support zone following a goldilocks NFP
report and rallied all the way back into the resistance zone. If we get another
rejection from the resistance, we can expect the buyers to lean on the trendline with a
defined risk below it to position for a breakout with a better risk to reward
setup. The sellers, on the other hand, will want to see the price breaking
lower to increase the bearish bets into new lows.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have another trendline which has been defining the recent uptrend following the
NFP release. If the price breaks the trendline, we can expect the sellers to
pile in with more conviction to position for a drop into the next trendline.
The buyers, on the other hand, will likely continue to lean on the trendline to
print new higher highs and higher lows.

Upcoming Events

Tomorrow we get the RBNZ Rate Decision, the US CPI
report and the FOMC Minutes. On Thursday, we will have the US PPI and the
latest US Jobless Claims figures. On Friday, we conclude the week with the New
Zealand Manufacturing PMI and the University of Michigan Consumer Sentiment
Survey.

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

• 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.