S&P500 (SPX) Price Analysis – April 05, 2024
Daily Price Outlook
The S&P 500 index has been unable to stop its downward rally and is still flashing red for the day. Investors have witnessed several days of losses, with the index dropping by more than 1% on the day. This downward trend continued as the Dow Jones Industrial Average also faced declines for the fourth consecutive day. However, the reason for its downward trend can be attributed to the cautious stance taken by Federal Reserve officials regarding potential interest rate cuts.
This suggests a reluctance to implement interest rate cuts, which can affect investor expectations and confidence in the market's future performance. This uncertainty often leads to selling pressure and volatility in the S&P 500 as investors adjust their positions accordingly.
Federal Reserve's Caution Impacts S&P 500
On the US front, Federal Reserve officials have adopted a cautious approach toward potential interest rate cuts. This caution stems from concerns about inflation and the need for consistent improvement in economic indicators before considering rate adjustments. Minneapolis Fed Bank President Neel Kashkari hinted at the possibility of rate cuts but emphasized that they might not be necessary if inflation remains stable. Therefore, this stance was seen as hawkish, which has influenced investor sentiment and added pressure on the S&P 500.
Escalating Geopolitical Tensions Add to S&P 500 Uncertainty
In addition to the cautious approach by the Federal Reserve, the ongoing escalating geopolitical tensions have further dampened investor confidence in the S&P 500. It should be noted that the recent events, including heightened tensions in the Middle East following an attack on Israel's embassy in Syria, the ongoing Russia-Ukraine conflict, and a major earthquake in Taiwan, have contributed to uncertainty in the market. Investors are concerned about the potential impact of these geopolitical factors on global stability and economic growth, leading to hesitancy in equity markets, including the S&P 500.
Therefore, the S&P 500 index has faced downward pressure due to combined factors: cautious monetary policy outlook and geopolitical uncertainty. Investors closely monitor economic data and geopolitical developments for signs of future market direction.
S&P 500 - Technical Analysis
The S&P 500 index faced a downturn, shedding 1.23% to close at 5,147.20. This retreat situates the market near its pivot point of 5,130.97, a critical juncture that could dictate the short-term market direction. Resistance is in sight at 5,155.41, with further barriers at 5,178.50 and 5,216.52. Should the index ascend, these levels will be crucial to surpass to signal a stronger bullish sentiment. Conversely, immediate support is noted at 5,106.53, with additional lower thresholds at 5,239.60 and 5,278.98, potentially serving as floors in case of a further pullback.
The index's Relative Strength Index (RSI) at 41 indicates a tilt towards a bearish sentiment but not yet in the oversold territory. The 50-day Exponential Moving Average (EMA) is positioned at 5,210.98, slightly above the current price, suggesting that the market might be under pressure but with room for recovery.
Considering these factors, the market's posture leans towards caution with a bearish inclination. Investors might consider a strategic position to sell below 5,178, targeting a pullback to 5,129, while placing a stop loss at 5,213 to mitigate risk.
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- GOLD Price Analysis – April 05, 2024
GOLD Price Analysis – April 05, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to stop its previous-day bearish trend and remained well offered around the $2,275 level. However, the reason for its downward rally can be attributed to the hawkish remarks by Fed officials, which underpinned the US dollar and contributed to the gold losses. Furthermore, the ongoing geopolitical tensions could help the safe-haven gold price to limit its deeper losses. Moving ahead, traders seem hesitant to place any strong position ahead of the release of the US monthly employment data, popularly known as the Nonfarm Payrolls (NFP) report due later during the North American session.
Recent Developments Impacting Gold and Market Sentiment
On the US front, Federal Reserve officials took a cautious stance on potential interest rate cuts this year, which led to some investors selling their gold holdings to secure profits, causing a decline in the price of gold. Richmond Fed President Thomas Barkin indicated a willingness to consider reducing interest rates once there is consistent improvement in inflation throughout the economy. Minneapolis Fed Bank President Neel Kashkari suggested the potential for two interest rate cuts during the year. However, he also stated that these cuts might not be needed if inflation remains steady.
This tone is considered hawkish because it suggests a reluctance to implement rate cuts unless certain conditions are met, indicating a more cautious approach to monetary policy. These hawkish remarks have kept US Treasury bond yields high, boosting the US Dollar and adding pressure on gold.
On the data front, investors are now focused on the US monthly jobs report, expected to show an addition of 200,000 jobs in March compared to the previous 275,000, with the unemployment rate holding steady at 3.9%. Market attention is also on the Average Hourly Earnings data, which will impact expectations about the Federal Reserve's rate-cutting path. This, in turn, will influence the US Dollar's movement and provide fresh momentum to the commodity market.
Escalating Geopolitical Tensions Boost Safe-Haven Appeal of Gold (XAU/USD)
On the geopolitical front, the tensions in the Middle East heightened as fears of Iranian retaliation against Israel grew after an attack on its embassy in Syria. This, along with the ongoing Russia-Ukraine conflict and a major earthquake in Taiwan, has dampened investor sentiment. These geopolitical uncertainties are expected to bolster the safe-haven appeal of gold (XAU/USD) as investors seek refuge from market volatility.
Therefore, the increasing conflicts and natural disasters make global markets nervous. Investors are turning to safe assets like gold to protect their money from risks and instability.
GOLD (XAU/USD) - Technical Analysis
Gold experienced a modest decline in its value, dropping 0.52% to $2,278.10. The metal's trading dynamics pivot around the $2,258 mark, setting the stage for its short-term trajectory. Immediate resistance is charted at $2,284, with subsequent barriers at $2,332 and $2,377, hinting at a stiffer challenge for bullish momentum. On the downside, support begins at $2,211, extending to $2,187 and $2,138, levels that could entice buyers if breached.
The Relative Strength Index (RSI) stands at 56, suggesting that gold is neither overbought nor oversold, providing a balanced field for traders. The 50-day Exponential Moving Average (EMA) of $2,285 nearly aligns with the current price, indicating a potential inflection point for the market's direction.
Given these indicators, the market exhibits a cautiously optimistic tone. A strategic entry for buyers would be above $2,270, targeting a profit at $2,300 while maintaining a stop loss at $2,255 to manage risks.
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- EUR/USD Price Analysis – April 05, 2024
EUR/USD Price Analysis – April 05, 2024
Daily Price Outlook
The EUR/USD currency pair has been experiencing a bearish performance recently, with the euro losing ground against the US dollar. However, the several factors have contributed to this downward trend including the geopolitical tensions in the Middle East, which have led to increased uncertainty in the market. This has bolstered the US dollar, as higher inflation often leads to expectations of tighter monetary policy.
Furthermore, the cautious stance of the Federal Reserve, coupled with weaker German economic data and geopolitical tensions, has contributed to the bearish performance of the EUR/USD currency pair. Traders will continue to monitor economic data and central bank policies for further insights into the direction of the currency pair.
Weak German Data and Its Impact on EUR/USD
Apart from this, the downbeat economic data from Germany has also weighed heavily on the EUR/USD currency pair. German industrial orders and factory data have both disappointed economists' expectations, indicating a slowdown in the German manufacturing sector. Meanwhile, Industrial orders tumbled at an annual rate of 10.6% in February, while factory orders only rose by 0.2% over the same period, missing estimates.
Therefore, the sluggish performance of the German economy has raised concerns about the broader Eurozone economy, as Germany is its largest economy. Investors are worried that weaker economic growth in Germany could drag down the entire Eurozone, putting pressure on the shared currency. As a result, the EUR/USD currency pair has faced selling pressure, contributing to its bearish trend.
Cautious Fed Stance and US Initial Jobless Claims: Impact on EUR/USD
On the US front, the cautious stance of the Federal Reserve, coupled with weaker-than-expected US economic data, has also influenced the EUR/USD currency pair. Despite initial speculation about potential interest rate cuts, recent comments from Fed officials have tempered expectations. Some policymakers have indicated that if inflation remains stable, there may be no need for rate cuts in 2024.
Additionally, US initial jobless claims increased to 221,000, slightly higher than expected. This uncertainty has supported the US dollar, as investors seek safe-haven assets amid economic uncertainties.
EUR/USD - Technical Analysis
The EUR/USD pair saw a slight decrease of 0.10%, settling at 1.08257. Currently, the currency pair hovers around the pivot point of 1.0809, indicating a delicate balance in market sentiment. Immediate resistance is found at 1.0850, with further hurdles at 1.0905 and 1.0945. Should the Euro strengthen, these are the levels to watch for potential breakouts. On the downside, support is established at 1.0753, with additional safety nets at 1.0712 and 1.0657, which could come into play if the pair weakens.
The Relative Strength Index (RSI) at 54 suggests a relatively neutral market momentum, neither overly bought nor sold. The 50-day Exponential Moving Average (EMA) at 1.0833 is in close proximity to the current price, further signaling a market in equilibrium.
Given these observations, the EUR/USD pair is at a crossroads. The advised trading strategy involves buying above 1.08232, with a target of 1.08686 and a stop loss at 1.07938.
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AUD/USD Price Analysis – April 04, 2024
Daily Price Outlook
Despite geopolitical tensions and concerns about a slowdown in China, the AUDUSD currency pair has maintained an upward trend and remained well-bid around the 0.6607 level. The bullish bias can be attributed to the upbeat domestic economic data, such as higher Judo Bank Services and Composite PMIs, which typically strengthen the Australian dollar (AUD) and contribute to the AUD/USD pair gains. Meanwhile, the improved Judo Bank PMI data and Building Permits figures suggest a stronger Australian economy, likely bolstering the AUD currency. In addition to this, the bearish US dollar, triggered by the lower US Treasury yields, was seen as another key factor that kept the AUD/USD pair higher.
Impact of RBA's Stance and Economic Data on AUD/USD
On the AUD front, the Reserve Bank of Australia (RBA) didn't discuss raising interest rates in their March meeting. They find it hard to predict future rate changes. They think things are balanced but need more time to be sure inflation will be where they want it. Westpac, summarizing the RBA meeting, thinks the current cash rate is fine for now, but it might change later. Basically, they're being careful and not making any quick decisions about interest rates until they're more certain about the economy.
On the data front, Australia's Judo Bank Services PMI rose to 54.4 in March from 53.5 in February, indicating growth in the services sector. The Judo Bank Composite PMI also improved to 53.3 from 52.4, reflecting overall economic expansion. However, Building Permits fell by 1.9% in February, missing expectations for a 3.3% increase, though they were up 5.2% year-on-year.
Meanwhile, Australian Industry Group (AiG) Industry Index improved to -5.3 in February, signaling a smaller contraction compared to the previous -14.9 reading. The AiG Manufacturing PMI and AiG Construction PMI also showed improvement, coming in at -7 and -12.9, respectively, indicating a slowdown in the pace of decline in these sectors.
Therefore, the RBA's cautious stance on interest rates and the mixed economic data could lead to a neutral impact on the AUD/USD currency pair. While positive PMI figures indicate economic growth, the RBA's reluctance to raise rates and the decline in Building Permits could limit the AUD's strength against the USD.
Impact of USD Performance and Economic Indicators on AUD/USD
On the US front, the broad-based US dollar continued its decline and remained well offered around 103.23, mainly due to lower US Treasury yields and increasing expectations for an imminent interest rate cut later this year. Cleveland Fed President expects rate cuts this year, while San Francisco Fed President thinks three rate cuts in 2024 are reasonable with more evidence. They both have different opinions on the timing and number of rate cuts, but they agree that economic conditions will determine the final decision.
On the data front, US ADP Employment Change increased by 184K in March, surpassing expectations and indicating improved job growth compared to February's 155K rise. However, US ISM Services PMI declined to 51.4 in March, falling short of expectations, signaling a slowdown in the services sector.
Conversely, US ISM Manufacturing PMI unexpectedly expanded in March to 50.3, up from February's 47.8, marking the highest level since September 2022. Therefore, the US dollar's decline, fueled by lower Treasury yields and expectations of a future interest rate cut, helped the AUD/USD pair to stay bid.
AUD/USD - Technical Analysis
The Australian Dollar (AUD/USD) shows a robust ascent, registering at 0.65969 with a 0.43% increase, indicative of a solid bullish sentiment. This movement aligns with the three white soldiers candlestick pattern, suggesting a strong uptrend and attracting traders' attention to the pair's potential for further gains. The currency trades above its pivot point of 0.6585, which serves as a critical juncture for short-term direction. Resistance levels at 0.6611, 0.6634, and 0.6654 mark the thresholds where selling pressure could intensify, while immediate support at 0.6562, followed by 0.6545 and 0.6525, provides downside protection.
With the Relative Strength Index (RSI) at 71, the AUD/USD is on the brink of the overbought zone, suggesting that the rally might soon face resistance. However, the 50-day EMA of 0.65 reinforces the upward trend, indicating that the currency has solid ground to sustain its momentum.
In light of this technical outlook, a prudent strategy would involve initiating a long position above 0.65856, aiming for a take profit at 0.66230, and placing a stop loss at 0.65620 to mitigate potential downside risks. This approach capitalizes on the current upward trajectory while remaining vigilant of the inherent market volatility.
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- USD/JPY Price Analysis – April 04, 2024
USD/JPY Price Analysis – April 04, 2024
Daily Price Outlook
The USD/JPY currency pair has shown a mixed performance recently, influenced by several factors. These include the cautious outlook of the Bank of Japan, the positive risk tone in the market, and the uncertainty surrounding the Federal Reserve's rate-cut path. Traders and investors closely monitor these variables to gauge the direction of the currency pair.
It should be noted that the BoJ has maintained a cautious outlook, highlighting the need for continued easy monetary policy to support economic growth. This dovish stance contrasts with the more uncertain path of the Federal Reserve, which has led to fluctuations in the value of both the US dollar and the Japanese yen. Additionally, a positive risk tone in the market has contributed to the subdued performance of the USD/JPY pair.
BoJ's Cautious Outlook and Positive Risk Tone: Impact on Safe-Haven JPY and USD/JPY Currency Pair
On the JPY front, the cautious outlook of the Bank of Japan (BoJ) and the positive risk tone in the market have strong impact for both the safe-haven status of the Japanese yen and the performance of the USD/JPY currency pair. However, the BoJ's dovish stance, indicating that monetary policy will remain accommodative for the foreseeable future, undermines the safe-haven appeal of the Japanese yen.
Furthermore, the positive risk tone in the market, driven by factors such as improving economic data and progress in geopolitical issues, exacerbates the downward pressure on the Japanese yen and contributed to the USD/JPY pair gains. Investors' appetite for riskier assets increases, prompting them to sell off safe-haven currencies like the yen in favor of higher-yielding alternatives.
Uncertainty Over Federal Reserve's Rate-Cut Path: Impact on USD and USD/JPY Currency Pair
On the US front, the uncertainty surrounding the Federal Reserve's rate-cut path adds bearish pressure on the US dollar and contributed to the USD/JPY pair losses. Federal Reserve officials have provided mixed signals regarding the timing and scale of potential rate cuts, leading to uncertainty among investors. While some policymakers have indicated a cautious approach, others have emphasized the need for patience in evaluating economic conditions before making any decisions on interest rates.
Therefore, this uncertainty has caused the US dollar to fluctuate, as people consider how different monetary policies might affect it. The unclear Fed rate-cut plans have also influenced the USD/JPY pair, with traders being careful before important economic data and central bank announcements.
USD/JPY - Technical Analysis
The USD/JPY pair is exhibiting a slight upward movement, trading at 151.714, which signals a marginal increase of 0.02%. The pair is currently navigating through a choppy trading session, with its price oscillating around the pivot point of 151.56. Immediate resistance levels are observed at 151.96, 152.39, and 152.82, which could serve as potential ceilings for any upward price actions. Conversely, the pair finds immediate support at 151.03, with further cushions at 150.61 and 150.25, suggesting zones where buying interest might emerge to halt downward pressures.
The Relative Strength Index (RSI) standing at 56, points towards a moderately bullish sentiment, yet not overextended, indicating room for potential upside. The 50-day Exponential Moving Average (EMA) closely aligns with the current price at 151.48, signifying a balanced market state with no clear long-term directional bias. This equilibrium suggests that traders should remain vigilant for signals of either a breakout or a reversal.
Given the current market dynamics, the technical outlook suggests a cautiously optimistic approach for USD/JPY. Traders might consider a long position if the price breaks above 151.593, targeting 152.330, while maintaining a stop loss at 151.200 to manage risk effectively.
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- GOLD Price Analysis – April 04, 2024
GOLD Price Analysis – April 04, 2024
Daily Price Outlook
Despite the bearish US dollar, the price of gold (XAU/USD) failed to gain bullish traction and remained subdued near the $2,290 level. However, the reason for its sluggish performance can be linked to the risk-on-market sentiment, which undermined the safe-haven gold price. Furthermore, increasing doubts about whether the Fed will cut rates three times this year boosted the US dollar, but it failed to limit gold losses. However, the losses in the gold price could be long-term as previously released upbeat US data validated the view that the US economy is in good shape. This makes people more confident in the US economy, which could lead to keeping interest rates high to keep things stable.
Moving ahead, traders seem hesitant to place strong positions as they prefer to wait for more cues about the Fed's rate-cut path. Hence, the focus will remain on the release of the US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday.
Mixed Signals from Federal Reserve Impacting US Dollar and Gold Prices
On the US front, mixed messages from Federal Reserve officials have caused the US dollar to drop, which is typically good news for gold prices, but it failed to help gold prices limit their losses. It is worth noting that members of the Federal Open Market Committee (FOMC), like Fed Chair Jerome Powell, have said that rate cuts could happen in 2024, but they haven't been clear about when exactly.
Powell mentioned on Wednesday that it will take time to assess the current inflation levels and that more discussion and data are needed before deciding on rate cuts. Therefore, the mixed signals from Federal Reserve officials, indicating possible rate cuts in 2024 but lacking clarity on timing, have weakened the US Dollar. Thus, the current situation is seen as positive for gold prices but negative for the US Dollar.
Geopolitical Tensions Drive Surge in Gold Prices
On the geopolitical front, tensions between Israel and Hamas, with the potential involvement of Iran, have raised concerns about a wider conflict in the Middle East. Iran has vowed to retaliate against an Israeli attack, increasing uncertainty in the region. This has led to a surge in the price of gold, which is often seen as a safe-haven investment during times of geopolitical instability. The situation is considered positive for gold prices as investors seek safe assets amid the escalating conflict.
GOLD (XAU/USD) - Technical Analysis
Gold's market sentiment reflects cautious optimism as it trades at $2,296.65, down 0.24%, closely watching the pivotal $2,305 mark. The commodity's slight retreat suggests a consolidation phase, with investors gauging the balance between bullish momentum and potential corrective pressures.
The key resistance levels at $2,315, $2,332, and $2,348 delineate the thresholds where sellers might reassert control, while immediate support at $2,286 provides a near-term floor, with further cushions at $2,265 and $2,247. The RSI at 68 edges near overbought territory, hinting at potential profit-taking or a pause in the uptrend.
The 50-day EMA of $2,261 reinforces the underlying bullish trend but also underlines the need for vigilance against pullbacks. Given these dynamics, a strategic approach would involve considering a sell position below the $2,302 threshold, targeting a take-profit level at $2,280, while setting a stop loss at $2,310 to manage risks effectively.
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GOLD Price Analysis – April 03, 2024
Daily Price Outlook
Gold prices (XAU/USD) have maintained their upward trend and hit new all-time highs around 2,288 level. However, this bullish trend was driven by a combination of factors, including rising geopolitical tensions globally. It should be noted that the ongoing conflict in the Middle East, particularly tensions related to the Russia-Ukraine war, has heightened uncertainty in the market, which was seen as one of the key factor that helped the safe-haven assets like gold to gains traction.
Moreover, the modest decline in the value of the US Dollar has helped boost gold prices. However, the declines in the dollar were bolstered by the Federal Reserve's reduced likelihood of cutting interest rates and investors' expectations of fewer rate cuts in the future. This overall trend of a weaker dollar makes gold more appealing and leads to higher prices for the precious metal.
Furthermore, the recent US economic data releases have also impacted the gold prices positively. On the data front, the released reports indicating growth in the US manufacturing sector, strong demand for labor, and increased orders for manufactured goods, which have boosted investor confidence. However, these upbeat economic signs are dampened by worries regarding how the Federal Reserve handles monetary policy.
Rising Geopolitical Tensions in the Middle East and Gold Price Impact
On the geopolitical front, the long-lasting tensions in the Middle East, particularly recent escalations such as Israeli strikes on Iran's embassy in Syria, have bolstered the safe-haven status of gold. In the meantime, the ongoing Russia-Ukraine conflict has also contributed to the overall geopolitical uncertainty, further boosting demand for gold.
Therefore, the impact of rising geopolitical tensions in the Middle East on gold prices has been evident in the recent surge to record highs. Investors closely monitor developments in the region, as any escalation could further support gold's safe-haven appeal and contribute to continued upward pressure on prices.
Weaker USD, Fed's Less Dovish Remarks, and US Data Impact on Gold Price
On the US front, the bearish US dollar has been a key driver behind the strength of gold prices as it makes gold more attractive to international investors and can lead to increased demand for the precious metal. However, the dollar's decline has been influenced by various factors, including the Federal Reserve's less dovish remarks and reduced expectations of interest rate cuts.
It is worth noting that Fed officials' comments indicating a gradual approach to monetary policy and a focus on inflation have tempered market expectations of aggressive rate cuts. This stance has bolstered the dollar while curbing its potential gains, thereby offering continued backing to gold prices.
Furthermore, positive US economic data releases, such as growth in the manufacturing sector, strong labor demand, and rebounding orders for manufactured goods, have boosted investor confidence. However, concerns about inflation and the Fed's cautious stance on rate cuts have kept gold prices higher.
GOLD (XAU/USD) - Technical Analysis
Gold's trading session on April 3 saw a slight increase, with the price moving up 0.15% to $2,268.23. The market's attention is fixated on the pivotal $2,285.97, serving as the immediate fulcrum for price movements. Resistance levels are staged at $2,302.73, $2,314.96, and $2,332.15, indicating potential ceilings for upward trends. Conversely, support is found at $2,261.84, with further cushions at $2,244.48 and $2,228.81, outlining possible floors for pullbacks.
The Relative Strength Index (RSI) stands at 57, suggesting a neutral to slightly bullish sentiment among traders. The 50-day Exponential Moving Average (EMA) at $2,235.75 adds a layer of technical support, bolstering the gold market's resilience. However, the technical landscape hints at caution: a doji candle formation and the closing of bearish engulfing patterns below the $2,285 level could precipitate a selling trend.
Investors are advised to consider a strategic approach: selling below $2,286 could be prudent, targeting a take-profit level at $2,260, while placing a stop-loss order at $2,305. This cautious strategy reflects the nuanced interplay of support and resistance levels, RSI readings, and candlestick patterns, underpinning the overall technical perspective for gold.
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- EUR/USD Price Analysis – April 03, 2024
EUR/USD Price Analysis – April 03, 2024
Daily Price Outlook
The EUR/USD currency pair has been showing bearish performance and facing downward pressure due to speculation surrounding potential rate cuts by the European Central Bank (ECB). Moreover, the previously released downbeat data was seen as another negative factor for the EUR/USD pair as it suggests softer inflation in both Germany and the Eurozone, raising expectations for an ECB interest rate cut, which puts downward pressure on the Euro. In contrast to this, the bearish US dollar was seen as a key factor that helped the EUR/USD pair limit its deeper losses.
Weaker US Dollar Offers Some Support:
Despite the bearish sentiment, the EUR/USD pair found some support from the weaker US Dollar Index (DXY), which dipped below the 105.00 mark. The softened stance of the US Federal Reserve, with expectations of easing beginning in the June meeting, contributed to the subdued performance of the greenback. Meanwhile, the comments from Fed officials, including Cleveland Fed President Loretta Mester and San Francisco Fed President Mary Daly, indicating potential rate cuts in 2024, added to the pressure on the US dollar, providing a modest boost to the EUR/USD pair.
Eurozone and German Inflation Impact on ECB Policy and EUR/USD
On the data front, the German Harmonized Index of Consumer Prices (HICP) rose by 2.3% year-on-year in March, marking its lowest level since June 2021. This slight easing in inflation, falling slightly below market expectations, has raised concerns about the economic outlook in Germany and the Eurozone as a whole. The softer inflation data have fueled speculation of imminent interest rate cuts by the ECB, as Germany approaches the ECB's target inflation rate of 2.0%. Market participants are closely monitoring these developments as they weigh on the euro and create headwinds for the EUR/USD pair.
In contrast to the slight easing in German inflation, the Eurozone's annual Harmonized Index of Consumer Prices (HICP) rose by 2.4% in March, falling short of the forecasted 2.6% increase. This deceleration in inflation, coupled with a softer core HICP inflation rate of 2.9% year-on-year, indicates a moderation in price pressures within the Eurozone. On a monthly basis, while the bloc's HICP recorded a slightly higher increase compared to the previous month, the core HICP inflation softened.
Therefore, the ECB's struggle to meet its inflation goal could affect its policy decisions. This might cause volatility in the EUR/USD pair as investors react to economic data and bank announcements.
EUR/USD - Technical Analysis
On April 3, the EUR/USD pair exhibited a modest uptick of 0.06%, reaching a closing price of 1.07727. Key price levels played a significant role in shaping intraday movements, with the pivot point positioned at 1.07756. Immediate resistance levels were identified at 1.08044 and 1.08265, with subsequent hurdles at 1.08559. Conversely, immediate support was observed at 1.07481, followed by 1.07254 and 1.06948, marking essential levels to monitor for potential reversals.
Technical indicators provided mixed signals, with the Relative Strength Index (RSI) registering at 55, indicating a neutral stance. Meanwhile, the 50-day Exponential Moving Average (EMA) rested at 1.07730, aligning closely with the current market price. Notably, a downward channel presented resistance around the $1.0772 level, potentially influencing market sentiment.
The formation of a Doji candlestick pattern below the downward trendline could signal a shift towards a selling trend. Hence, a strategic entry point for traders might be selling below 1.07760, targeting a take-profit at 1.07314, while setting a stop-loss at 1.07994 to manage potential downside risks effectively.
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GBP/USD Price Analysis – April 03, 2024
Daily Price Outlook
The GBP/USD currency pair has been unable to break its downward trend, remaining around the 1.2565 level despite the bearish US dollar. This downward movement can be attributed to the dovish monetary policy stance of the Bank of England (BoE). Traders are increasingly betting that the BoE will cut interest rates, leading to downward pressure on the GBP.
Conversely, statements from Fed officials suggesting potential rate cuts and the decreased likelihood of a rate cut by June, as seen in the CME FedWatch Tool, have initially bolstered the US dollar. However, this positive impact was short-lived as the dollar's gains lost momentum. Despite the dollar's weakened state, the GBP/USD pair continues to show a bearish performance.
Impact of BoE's Monetary Policy Outlook on GBP/USD Pair
On the UK front, traders are increasingly betting that the Bank of England (BoE) will cut interest rates before the US Federal Reserve (Fed) does this year. This sentiment is putting downward pressure on the Pound Sterling (GBP). In the meantime, concerns about easing UK inflation and a generally downbeat market sentiment are further weighing on the GBP.
Therefore, the anticipation of a rate cut by the Bank of England, coupled with concerns about UK inflation and market sentiment, is likely to keep the GBP/USD pair under downward pressure, limiting its upward potential.
Impact of Fed's Monetary Policy Outlook on USD and GBP/USD Pair
On the US front, Fed officials discussed the monetary policy outlook recently. Cleveland Fed Bank President Loretta Mester expects interest rate cuts this year but not in May's policy meeting. Meanwhile, San Francisco Fed Bank President Mary Daly also foresees rate cuts but wants more proof of inflation cooling. She considers three rate cuts this year. Currently, investors see a 65% chance of a rate cut by June, down from 70% after March's meeting, according to the CME FedWatch Tool.
Therefore, the anticipation of potential interest rate cuts by the Fed could initially weaken the US dollar, while uncertainties surrounding inflation and rate cuts may also impact the GBP/USD pair's performance.
GBP/USD - Technical Analysis
On April 3, the GBP/USD pair saw a marginal gain, inching up by 0.01% to close at 1.25732. The day's trading revolved around the pivot point of 1.25840, with immediate resistance noted at 1.26432. Further resistance points are observed at 1.26744 and 1.27017, marking the upper thresholds the pair might encounter. On the downside, the initial support aligns at 1.25409, extending to 1.24779, setting the stage for potential fallbacks.
The currency pair's technical indicators reveal a mixed sentiment. The Relative Strength Index (RSI) at 47 leans towards a neutral stance, neither distinctly bullish nor bearish. The 50-day Exponential Moving Average (EMA) is positioned at 1.25966, hovering slightly above the current market price, suggesting a cautious outlook. Notably, a downward trendline presents resistance around the $1.2585 level, indicating a technical barrier.
Market behavior, particularly the formation of Doji candlesticks beneath this trendline, may signal an impending bearish trend. Therefore, a strategic entry point for traders could be selling below 1.25849, targeting a take-profit at 1.25044 while maintaining a stop-loss at 1.26256 to mitigate risk and capitalize on the anticipated downward momentum.
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AUD/USD Price Analysis – April 02, 2024
Daily Price Outlook
Despite the renewed strength of the US dollar, the AUD/USD currency pair has managed to stop its previous losses and regained some traction around the 0.6499 level. However, this mild bullish performance of the AUD/USD pair can be attributed to several factors, including the strength shown by the Australian economy. Despite global economic challenges, Australia has shown a strong recovery, supported by strong domestic demand and ongoing fiscal stimulus measures. Moreover, rising commodity prices, especially for key exports like iron ore, have bolstered Australia's export earnings and contributed to the positive sentiment surrounding the Australian dollar.
On the other hand, the Reserve Bank of Australia (RBA) is cautiously optimistic and committed to helping the economy with supportive monetary policies. Despite ongoing inflation worries, the RBA's actions have given stability and confidence to investors, boosting the AUD/USD pair's upward movement.
RBA Minutes and Impact on AUD/USD Currency Pair
It is worth noting that the recent RBA meeting minutes showed that the bank is not thinking about raising interest rates and this was not surprising to markets because the RBA is focused on helping the economy recover and managing inflation using other methods. However, the decision to keep rates unchanged had a mixed impact on the AUD/USD pair. Initially, it caused a small drop in the Australian dollar against the US dollar, but overall, the market stayed positive because of the RBA's supportive policies, which helped the AUD/USD pair to regain its traction.
Chinese Yuan's Performance and Its Impact on AUD/USD Currency Pair
On the other side, the Chinese Yuan recently dropped to its lowest level in four-and-a-half months, leading China to take steps to stabilize its currency and boost economic growth. It should be noted that China's National Bureau of Statistics (NBS) reported better manufacturing and non-manufacturing PMI figures, suggesting a potential economic recovery. These improvements in China, along with efforts to support the Yuan, have indirectly helped the Australian dollar due to Australia's close trade relationship with China.
If China's economy keeps improving, it could lead to higher demand for Australian exports, which would benefit the AUD/USD pair.
US ISM Manufacturing PMI and Fed's Stance on Interest Rates
On the US front, the rise of the US ISM Manufacturing PMI to its highest level since September 2022, along with other positive economic data, has strengthened the US dollar and increased expectations for a less dovish stance from the Federal Reserve. Federal Reserve Chairman Jerome Powell's recent comments, expressing contentment with inflation data and suggesting a cautious approach to interest rate adjustments, have contributed to the dollar's strength.
Therefore, the strengthened US dollar, fueled by positive economic data and expectations of a less dovish stance from the Federal Reserve, has put downward pressure on the AUD/USD pair due to the inverse relationship between the two currencies.
AUD/USD - Technical Analysis
The AUD/USD pair on April 2 exhibits slight bearishness, trading at 0.64885, a decrement of 0.01%. The currency pair is currently hovering around a critical pivot point at 0.6498, which may serve as a juncture for potential directional shifts. Resistance levels are established at 0.6515, 0.6539, and 0.6557, marking thresholds where the price may encounter upward pressure. Conversely, support is found at 0.6474, 0.6462, and 0.6443, which could provide a foundation for price stabilization or a rebound.
The technical landscape is shaped by the 50-Day Exponential Moving Average (EMA) at 0.6515 and the Relative Strength Index (RSI) at 37, both of which signal a bearish inclination, corroborated by the prevailing downward trendline and bearish channel observed in the 2-hour timeframe.
In conclusion, the AUD/USD pair presents a bearish outlook below the pivot of 0.6498. Traders may consider a selling strategy below the 0.64979 mark, targeting a profit at 0.64615 while placing a stop loss at 0.65157, paying close attention to the identified technical levels and indicators for any shifts in market dynamics.
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