Daily Market Report

[FOREX.com]

AUD/USD teetering as selling momentum delivers death cross. March 25th 2024​

AUD/USD is threatening to break the uptrend it’s been in since October, failing to find traction despite what was the largest coordinated central bank dovish pivot since the start of the pandemic last week. With little event risk on the calendar, the fortunes of AUD/USD may be determined by USD/CNY following a dramatic end to trade in Chinese markets on Friday.

By : David Scutt, Market Analyst

• AUD/USD slumped to multi-week lows last week in an environment you’d normally expect it would rally
• Watch Chinese markets today as they were very influential on AUD/USD last Friday
• AUD/USD looks horrible on the charts, topped off by a death cross being generated to start the trading week

The summary​

AUD/USD is threatening to break the uptrend it’s been in since October, failing to find traction on the charts despite what was the largest coordinated central bank dovish pivot since early 2020 last week. With little event risk on the calendar, the fortunes of AUD/USD may be determined by USD/CNY following a dramatic end to trade in mainland Chinese markets on Friday.

The background​

For a currency long regarded as a proxy for risk appetite, the Australian dollar didn’t behave as you’d expect last week, sinking to multi-week lows on Friday.

It was the largest coordinated central bank dovish policy shift since the start of the pandemic, coming out of nowhere. It would be naive to think it was merely a coincidence. It almost certainty was by design, providing a green light for traders take add to risk.

However, the interesting thing was risk didn’t rally by any significant degree. The US dollar ended up rebounding despite the Fed’s dovish surprise.

Instead, the focus of AUD/USD traders was on an abrupt decline across multiple asset classes in China on Friday, pushing the hourly correlation with USD/CNH to an extreme -0.98 on the one-minute tick chart during the session. There was no catalyst to explain the sudden offer across Chinese markets.

With AUD and CNH moving in lockstep against the USD in Asia, it’s likely we may see a similar outcome to start the trading week, potentially determining whether AUD/USD will manage to hold its uptrend.

The trade setup​

AUD/USD looks vulnerable to further downside.

The price action late last week was undeniably bearish, with a rejection on Thursday from downtrend resistance resulting in an inverse hammer candle printing. That was followed up on Friday by an ugly bearish candle, seeing the price break through its 50 and 200-day moving averages, delivering a death cross in the process.

AUD/USD is now teetering on its uptrend, with price and momentum indicators suggesting the risk of a break is growing.

Should we see a break, initial downside may be hard won with the price finding of support on dips towards .6490 over the turn of last month. Below, the double bottom around .6450 would be the next downside target with little visible support evident below until below .6300.

Those considering selling a break should ensure they place a stop above the trendline for protection against a reversal. If the price works in your favour, you could lower the stop to the initial entry level, providing a free hit on possible downside flush.

The wildcards​

The performance of Chinese markets on Monday may be influential on the AUD/USD. We may get an early sighter of what to expect when the People’s Bank of China announces its daily USD/CNY fixing at 12.15pm AEDT. A weak fix last Friday seemed to set off the declines asset classes, so keep an eye on it today.

Later in the week, Australia’s monthly inflation indicator and US core PCE inflation reports dominate the AUD/USD calendar, although neither screen as particularly important for the longer-term trajectory. The Federal Reserve conditioned markets to look through inflation reads until we get further into the year while the Australian inflation indicator does not contain much new information on services prices, the area of most interest for the RBA.

Click the website link below to get our exclusive Guide to AUD/USD trading in 2024.

https://www.forex.com/en-us/market-outlook/

-- Written by David Scutt

Follow David on Twitter @scutty


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

Crude oil rises on production cuts, ASX 200 set to retrace? Asian Open March 26th 2024​

With geopolitical tensions on the rise and Russia announcing production cuts as infrastructure continues to face attacks, the path of least resistance for WTI crude oil appears to be higher.

By : Matt Simpson, Market Analyst

Market Summary:​

• Crude oil prices snapped a three-day bearish streak after Russia announced a cut in oil production, and geopolitical tensions continued to rise with attacks on energy infrastructure in Russia and Ukraine
• The US dollar index retraced slightly from resistance levels around 104.20 including trend resistance from the 2022 high
• And that sums up FX moves nicely on a quiet Monday; prices essentially retraced slightly against Friday’s moves to see EUR/USD retest its 200-day MA from below, GBP/USD bounce slightly from its 200-day MA, USD/CAD retreat back below 1.36 and USD/JPY remain in a tight range between 151 – 151.50.
• The retracement shows a slight hesitancy to break immediately higher, but is not deep enough to threaten the bias for an eventual upside break
• Gold prices are standing up to the stronger US dollar overall, although volatility has picked up notably after its failed break above $2200 but at the same time looks comfortable above the 2150 area – hence the bias for some choppy trade above that key level
• Fed member Bostic repeated his stance that he only expects one Fed cut this year, a view in line with my own despite the dot plot continuing to favour three cuts
• This saw Wall Street indices retreat for a third day, but again the trading ranges were very small and not enough to spark fears of a sustainable move lower

Click the website link below to get our exclusive Guide to oil trading in 2024.

https://www.forex.com/en-us/market-outlook/

Events in focus (AEDT):​

• 10:30 – Australian consumer sentiment (Westpac)
• 10:50 – Japan’s corporate services price index
• 23:15 – BOC deputy governor Roger speaks
• 23:30 – US durable orders
• 23:30 – Canadian wholesale sales
• 00:00 – US house price index
• 01:00 – US consumer confidence (Consumer Board)
• 03:30 – Atlanta Fed GDPNow (Q1)

ASX 200 technical analysis:​

The move lower on Wall Street saw the ASX 200 futures contract retrace slightly, but given it has once again met resistance at 7900 then I suspect another dip lower could be in order. We have not seen any real trading volumes since last Tuesday, and since then prices have risen whilst volumes declined to show a lack of bullish enthusiasm. Therefore, today’s bias is to fade into minor rallies and seek a move to at least 7800, 7767 or the bullish trendline.

WTI crude oil technical analysis (daily chart):​

As a reminder, I set an upside target around $84 ahead of crud oil’s latest leg higher. Whilst it failed to hit that level initially, the bias remains for it to do so. The daily chart shows an inverted hammer on the third day of its retracement, which found support at the March 1 high. Bullish range expansion formed on Monday, and the plan is to seek retracements of bullish continuation patterns on lower timeframes with $84 still in mind.

WTI crude oil technical analysis (1-hour chart):​

The 1-hour chart shows that prices accelerated higher above the weekly pivot and were accompanied by higher volumes. A small pennant is also forming, which could indicate a breakout from the bullish continuation pattern, with a break above the weekly R1 bringing the $83.70 - $84 zone into focus. Should prices initially break lower from the pennant, I would then be looking for evidence of a swing low around the weekly pivot point for a potential bullish setup.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

Gold forecast: Pullback on the radar - just don’t expect Armageddon. March 27th 2024​

By : Matt Simpson, Market Analyst

Looking at an equal-weighted gold basket against FX majors, its bullish character has certainly changed since breaking above its previous ATH.

• Bullish momentum is waning
• There's a slight RSI (2) divergence
• Three upper wicks show a reluctance to hold above $2500 immediately

And this places a potential retracement lower on the cards. Yet as much as that excites the potential for a pullback, it's difficult to construct an overly bearish case with the current backdrop of geopolitics and potential CB easing. So the basic thesis is that any pullback at this stage may be limited, and bears may want to be nimble with their shorts. At the same time, these may not be the levels bulls want to reload either.

Ultimately, unless we see the gold basket or XAU/USD dip back within 2-day bullish rally on March 1st and 2nd (below the prior ATH), any retracement could be limited.

And specifically, there's a nice volume cluster around $2456 on the gold basket which could act as support initially, which equates to a -1.7% move lower from current levels A break beneath here brings the previous ATH (all-time high) into focus, which is around -3% from current levels. And as the rally for gold has been broad-based, XAU/USD traders may want to monitor the general performance of gold to better pick potential swing points on gold against the US dollar.


Click the website link below to get our exclusive Guide to gold trading in 2024.

https://www.forex.com/en-us/market-outlook/

Gold market positioning from the COT report:​

A look at positioning also shows support for XAU/USD futures (gold in US dollars) with large speculators and managed funds trimming shorts with longs trending higher. Sure, there's a case for gold to lose some steam with large specs ~200k net long and managed funds ~140k net long, but net-long exposure is not extreme by historical standards. And this further suggests that any pullback may be limited.

Gold technical analysis:​

The rally to new highs on gold against the US dollar seems less impressive than the broad-based rally on the gold basket. And that is down to the strength of the US dollar. Yet the potential for at least a near-term reversal on gold seems apparent here too. A bearish divergence has formed on RSI (2) and RSI (14), two bearish pinbars have formed – one of which is a lower high and both failed to close above $2200. In fact, Tuesday’s bearish pinbar met resistance at the $2200 handle.

There is also a potential head and shoulders top on the daily chart, which projects a target around $2070, near the 2020 high.

• For now, the bias is for a move to $2050, and bears could fade into minor rallies whilst prices remain below $2200.
• A break below $2046 confirms the head and shoulders pattern, although for that to happen we likely need to see the gold basket also break below its prior all-time high.

• 

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD forecast: Why this textbook bearish pattern may be prone to failure​

At the end of last week, I highlighted a potential bearish continuation pattern on AUD/USD. But the further this week has progressed, the more I have questioned its potential to break lower.

By : Matt Simpson, Market Analyst

AUD/USD technical analysis:​

The daily chart sports a potential head and shoulders pattern. Whilst this is usually a bearish reversal pattern seen at market tops, it can also be a continuation pattern during a downtrend. Conversely, an inverse head and shoulders pattern is usually associated with market bottoms as a reversal pattern can also be bullish continuation patterns during an uptrend. They are treated the same as the reversal patterns, in that a break of the neckline confirms the move and the distance between the neckline and top of its head is projected from the breakout point, to estimate a potential target.

Click the website link below to get our exclusive Guide to AUD/USD trading in 2024.

https://www.forex.com/en-us/market-outlook/

In this instance, the head and shoulders top projects a downside target just below the 0.6336. And whilst it appears on the cusp of breaking the neckline, bears may want to see if it breaks the 65c handle nearby for added confirmation. But will that be enough?

AUD/USD: A failed pattern can also bring opportunity​

As great as this pattern looks, there are a few things troubling me about this pattern.

• A breakout from a head and shoulders pattern should be hard and fast. No messing around. Yet AUD/USD has been messing around since Friday's close
• AUD/USD is holding above 65c despite weighed-mean inflation coming in softer than expected today.
• We're also at end of the month and quarter, heading into the long Easter weekend. And that can lead to fickle price action and false breakouts.
• Traders were also net-short AUD/USD by a record amount last week - so shorting the Aussie is NOT a new idea. Far from it.

So unless we're treated to a sudden bout of risk off, my guess is that any break of 65c could be a failure for bears. And in turn, an opportunity for countertrend traders.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

US Dollar Forecast: GBP/USD Clears March Low Ahead of US NFP Report​

GBP/USD clears the March low (1.2575) after struggling to retrace the decline following the Bank of England (BoE) interest rate decision.

By : David Song, Strategist

British Pound Outlook: GBP/USD​

GBP/USD snaps the range bound price action from last week as the US ISM Manufacturing survey prints at 50.3 in March versus forecasts for a 48.4 reading, and the exchange rate may attempt to test the yearly low (1.2518) as the Relative Strength Index (RSI) falls to its lowest level since October.

US Dollar Forecast: GBP/USD Clears March Low Ahead of US NFP Report​

GBP/USD clears the March low (1.2575) after struggling to retrace the decline following the Bank of England (BoE) interest rate decision, and the exchange rate may no longer track the flattening slope in the 50-Day SMA (1.2673) even though the Federal Reserve continues to forecast lower interest rates in 2024.

Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here

However, the Federal Open Market Committee (FOMC) may have little choice but to keep US interest rate higher for longer as the core US Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred gauge for inflation, holds steady at 2.8% per annum in February.

US Economic Calendar

​

FOREX.com Economic Calendar

At the same time, the update to the Non-Farm Payrolls (NFP) report may push the FOMC to retain a restrictive policy as the economy is anticipated to add 200K jobs in March while the Unemployment Rate is expected to hold steady at 3.9% during the same period.

Persistent signs of a robust labor market may generate a bullish reaction in the Greenback as it raises the Fed’s scope to further combat inflation, but a weaker-than-expected NFP print may curb the recent weakness in GBP/USD as it fuels speculation for a looming FOMC rate cut.

Click the website link below to get our exclusive Guide to central banks and interest rates in 2024.

https://www.forex.com/en-us/market-outlook/

With that said, the opening range for April is in focus as GBP/USD clears the March low (1.2575), and the exchange rate may attempt to test the yearly low (1.2518) as the Relative Strength Index (RSI) falls to its lowest level since October.

GBP/USD Price Chart –Daily​

Chart Prepared by David Song, Strategist; GBP/USD on TradingView

• GBP/USD snaps the range bound price action from last week after struggling to trade back above the 50-Day SMA (1.2673), and the exchange rate may no longer track the flattening slope in the moving average as the Relative Strength Index (RSI) falls to its lowest level since October.
• Failure to defend the February low (1.2518) may lead to a test of the December low (1.2500), with the next area of interest coming in around 1.2470 (50% Fibonacci retracement).
• Nevertheless, GBP/USD may attempt to retrace the recent selloff if it defends the February low (1.2518), with a breach above the moving average bringing 1.2710 (23.6% Fibonacci extension) on the radar.

Additional Market Outlooks​

US Dollar Forecast: USD/JPY Opening Range for April in Focus

US Dollar Forecast: EUR/USD Defends March Opening Range for Now

--- Written by David Song, Strategist

Follow on Twitter at @DavidJSong

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/JPY, ASX 200 forecast: Asian Open – April 3, 2024​

AUD/JPY and the ASX 200 look set to diverge with the former strongly hinting at a swing low and the latter failing to hold above 7900 on Tuesday.


By : Matt Simpson, Market Analyst

Market Summary:​

• Odds of a June Fed cut have fallen below 50% following Monday’s strong ISM manufacturing report, although Fed fund futures still favour a June cut with a 61.6% probability.
• US bond yields rallied for a second day, the Dow Jones fell around -1% and led the Nasdaq 100 and S&P 500 lower and the VIX rose to a 2-week high as markets repriced in the ‘higher for longer’ narrative
• Regardless, the US dollar retraced after traders presumably booked profits when the US dollar index tapped 105 on Monday, resulting in a mild pullback from its 6-week high
• AUD/USD bounced from the March 5th low and closed back above 65c in line with yesterday’s bias, to further underscore we’re not witnessing a head and shoulders top.
• The RBA said it plans to change how it provides liquidity to the banking system, through regular money market operations to provide ample liquidity
• The BOE are considering mimicking the Fed’s ‘dot plot’, to show where members think interest rates could be in the future whilst remaining anonymous
• The relentless rally on gold continued higher for a seventh day, with spot prices rising above $2080 and closing just off the daily high
• The equally-weighted gold basket was also at a record high to show the rally is based on gold strength, not on US dollar weakness
• Crude oil prices continued higher, above my prior $84 target and closing comfortably above $85 on supply concerns ahead of today’s OPEC meeting, with Ukraine continuing to attack Russian oil facilities

Click the website link below to get our exclusive Guide to index trading in 2024.

https://www.forex.com/en-us/market-outlook/

Events in focus (AEDT):​

• 09:00 – Australian manufacturing, construction index (AIG)
• 11:30 – Japan Services PMI
• 12:45 – China services PMI (Caixin)
• 20:00 – Eurozone inflation, unemployment
• 20:15 – OPEC meeting
• 23:15 – ADP employment change
• 00:45 – FOMC member Bowman speaks, US services and composite PMIs (Final – S&P Global)
• 01:00 – ISM services PMI
• 03:00 – Fed Goolsbee speaks
• 03:10 – Fed Powell speaks

ASX 200 technical analysis:​

• The ASX 200 cash market reached a fresh record high on Tuesday with a intraday break above 7900, although it closed back beneath that key level to form a narrow-ranged doji at the highs to hint at trend exhaustion (see the daily chart here)
• The ASX 200 futures chart formed a 3-day bearish reversal pattern at the highs (evening star formation) which also hints at a pullback.
• The 1-hour chart of the ASX 200 futures chart shows momentum turned swiftly lower before consolidating around 7880.
• We saw a bounce in the final hour of NY trade, but the bias is to fade into rallies up to the 7920-7935 level for a move towards support zones around 7860, 7835 or 7800 / lower trendline

AUD/JPY technical analysis:​

The daily chart shows an established uptrend for AUD/JPY, which entered a corrective phase after its failed ‘bid’ to close above 100. After a 7-day correction, a bullish engulfing day formed above the 61.8% Fibonacci retracement level to hint at a swing low. It also closed above the 2022/2023 highs. What is also interesting is that the potential ow landed right in the 40-47 day cycle estimate which I highlighted back in February. RSI (14) is curling higher above 50 and RSI 2 is above 50 after touching the oversold zone on Monday.

The bias remains bullish above this week’s low, and bulls could seek to enter dips within Tuesday’s range in anticipation of a break above 99. The upside target is open, although 99.50 and 100 make obvious resistance levels to expect some sort of profit taking along the way.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

US dollar slammed at start of historically bad month, AUD/USD rallies. April 4, 2024​

US dollar bears wasted no time to short the buck after a soft ISM services report, to mark its second worst day this year - in a month usually associated with losses.

By : Matt Simpson, Market Analyst

Market Summary:​

A softer ISM services report slammed the US dollar broadly lower and saw yields hand back earlier gains. The headline figure expanded at its slowest pace in three months, new orders were slower whilst the employment index contracted again. Yet the standout figures is the 'prices paid' index, which expanded at its slowest pace since the pandemic and notched up its second month in a row that the index has shed over 5 points.

Clearly, this excited doves as the US dollar index its worst day in three months, falling for a second day after meeting resistance around 105. It is also a good time to remember that April is generally the second worst month of the year.

As the matrix shows, the US dollar index has averaged a negative return of -0.33%. It median return is -0.79% which suggest a few bullish outliers have propped the average up, and the win rate is 37.2% (which means it has closed lower 62.8% over the past 43 years).

• Whilst Fed fund futures lowered the odds of a June cut, they’re still pricing one in with a 58.3% probability
• Fed members continued to push back against imminent rates cuts, with Jerome Powell on Wednesday saying that that they need greater “confidence that inflation is moving substantially down” before rates are cut.
• Usually, that could have supported the US dollar as it plays nicely into the ‘higher for longer’ narrative, yet traders are placing greater emphasis on economic data over what the Fed says
• Gold reached yet another new record high, stopping just shy of the $2300 handle
• WTI crude settled above $85 for the first time this year, although it also closed the day flat with a Rikshaw man doji outside the upper Keltner band to warn of near-term trend exhaustion
• The S&P 500 and Nasdaq printed modest gains on Wednesday whilst the Down Jones closed flat with a small-ranged Doji, which provides little in the way of clues for its next move ahead Friday’s NFP report

US dollar index seasonality (daily):​

We’ve established that April tends to the second most bearish month of the year, so we’ll take a look at average daily returns for the month. Whilst far from perfect, the US dollar index tends to generate negative returns between April 8th – 18th, and most of those days are accompanied with negative win rates. Incidentally, this also ties into the bullish pattern identified on GBP/USD after the beginning of the new financial year. So if GBP/USD and the US dollar index are to follow their intramonth seasonality, traders could be on guard for GBP/USD gains or DXY weakness beginning next week.

US dollar index technical analysis:​

The US dollar index fell for a second day and tallied up its second worst day of the year. Its failure below 105 has left a double top, and further downside potential is on the horizon. The 200-day average and EMA make a likely support level around 103.60, but it could at least make a near-term target for bears. Whether it can break back below these key averages are likely down to whether the Fed begin signalling cuts or if incoming data continues to convince the Fed will be forced to cut anyway. And that makes tomorrow’s NFP report the more important.


Click the website link below to get our exclusive Guide to AUD/USD trading in 2024.

https://www.forex.com/en-us/market-outlook/

Events in focus (AEDT):​

• Public holiday in China, Hong Kong
• RBA assistant governor Jones speaks
• 10:50 – Japan foreigner stock/bond purchases
• 11:00 – New Zealand commodity price index (ANZ)
• 11:30 – Australian building approvals
• 17:30 – Swiss inflation
• 18:55 – German PMIs (services, composite)
• 19:00 – Eurozone PMIs (services, composite)
• 19:30 – UK PMIs (services, composite)
• 20:00 – Eurozone PPI
• 22:30 – US job cuts (challenger)
• 23:30 – US jobless claims
• 23:30 – Canadian trade balance

AUD/USD technical analysis:​

I can’t say it didn’t come without warning, but AUD/USD has rallied after a false break of 65c. Two weeks ago I identified a potential head and shoulders top on the AUD/USD daily chart, yet decided to scrap it after it spent too long messing around the neckline. Simply put, a breakout on such reversal patterns should be hard and fast, hence the call for a false break and rally above 65c.


The 1-hour chart shows a clear burst of bullish momentum. Prices have retraced to the monthly pivot point and weekly R1, so perhaps the swing low has already formed and the next stop is around the daily R1 / 0.6590 handle. Should price instead move lower during the Asian session, the bias is to seek dips around the daily pivot / 0.6550.




-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

US dollar hints at NFP rebound, ASX 200 to track Wall Street lower? April 5, 2024​

The US dollar retraced for a third day, but with NFP stats favouring a 'beat' then we're on guard for a dollar bounce.

By : Matt Simpson, Market Analyst

Market Summary:​

Markets entered a phase of risk off near the end of the New York session on Thursday on rising geopolitical tensions, as Israel’s President Netanyahu threated to work against ‘Iran and its proxies’. This prompted Biden to call Netanyahu and request civilian safety, in order for the US to continue supporting Israel.

• Wall Street indices were quick to turn lower, with the S&P 500, Down Jones and Nasdaq all forming prominent bearish engulfing days
• Oil prices rose for a sixth day, sending WTI crude oil above $86 for the first time in nearly six months, whilst the Japanese yen and US dollar attracted safe-haven bids
• The Japanese yen was the strongest forex and also supported by safe-haven flows, and BOJ governor Ueda’s threat to “respond with monetary policy” if FX moves impacted wages and inflation.
• USD/fell to a 4-day low and AUD/JPY reversed sharply lower after hitting my 100 upside target outlined earlier this week.
• The US dollar index fell for a third day, although support was found just above the 200-day MA and EMA before recouping some of its earlier losses, to close the day with a bullish hammer.
• AUD/USD reached and exceeded yesterday’s upside target around 0.6590, trading briefly above 66c before pulling back near the end of the US session. Given the strength of the rally and reversal, I now have a neutral bias until we head into next week
• Fed members continued to shed doubt over a June rate cut, with Barkin saying the central bank has “time for the clouds to clear” before easing, and Kashkari saying that rate cuts could be under threat if the slowdown if inflation continues to stall
• Gold snapped an 8-day bullish streak

Click the website link below to get our exclusive Guide to index trading in 2024.

https://www.forex.com/en-us/market-outlook/

Events in focus (AEDT):​

• 23:30 – US Nonfarm payrolls report, Fed Collins speaks
• 23:30 – Canadian employment report
• 01:00 – Canadian Ivey PMI
• 03:15 – FOMC Bowman speaks

US dollar index technical analysis:​

The dollar retraced lower for a third day, finding support just above the 200-day MA/EMA and closing the day with a bullish hammer. Volume delta was slightly positive which means there were more bids than offers, which further suggests the dollar is trying to form a swing low.

As noted in an article yesterday, NFP job growth has beaten analyst estimates 67.4% of the time since June 2020, and the previous figure has been upwardly revised 53.4% of the time. With odds of another NFP on side and the US dollar index holding above key support, the bias is for a bounce into the weekend. Of course, something to also keep in mind is for headlines surrounding a Middle East conflict. But for now, the US dollar remains supported.

ASX 200 technical analysis:​

Price action on the ASX 200 futures chart is appearing increasingly bearish. 7900 has been a challenging level for the ASX, given two bearish engulfing candles and a 3-bar bearish reversal (evening star) have formed around it. Yet Thursday’s price action has challenge the bullish trendline and is now considering a break below 7800.


Given the weak lead from Wall Street and relatively subdued reaction from the ASX futures market overnight, I suspect further downside could be due today. Bears could seek a break below 7800 or fade into minor rallies within yesterday’s range. The bias remains bearish whilst prices remain below 7900.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

USD/JPY eyes 155, WTI crude oil looks set to bounce: Asian Open April 16, 2024​

USD/JPY is less than a day's trade from 155, a level an ex-FX diplomat warned could trigger an intervention if breached. WTI crude oil seems to have solid support above $84, to hint at a swing low.

By : Matt Simpson, Market Analyst


Any hopes that tensions in the Middle East had receded were dashed on Monday when the Israeli army pledged a response to Iran’s recent attacks, which kept appetite for risk suppressed and traders on alert for incoming headlines to drive sentiment.

Nasdaq futures below 18k and on track for a bearish engulfing month around current levels. It's also attempting to have a fourth consecutive bearish week. It’s early days in both instances, but still.

If geopolitical tensions recede, then maybe the Nasdaq can pop back into that prior range. As mentioned yesterday, asset managers gave clues that the Dow Jones would 'bear' the burnt of any selloff, and net-long positioning remained robust for S&P 500 futures and picked up for the Nasdaq.

Hence the expectations for the Nasdaq 100 and S&P 500 to outperform the Dow Jones if sentiment allows, and for the Dow to be the preferred choice for bears should sentiment continue to deteriorate.

• The US dollar was again the strongest FX major on a combination of safe-haven flows, stronger economic data and the unwinding of dovish Fed bets
• The Fed Atlanta’s GDPnow estimates US Q1 GDP to be 2.8% (2.4% prior and expected), retail sales also beat expectations at 0.7% m/m compared with 0.4% forecast and the prior month was upgraded to 0.9% from 0.6%
• USD/JPY closed above 154 for the first time since May 1990 which brings a test of 155 into focus today in Asia – a level recently highlighted by ex-FX diplomat Watanabe, as a level that the BOJ could intervene if breached
• Gold formed a bullish engulfing day and reached a record high on a daily closing basis, although it remains below $2400 – a key level for bulls to test today
• WTI crude oil took the headlines within its stride and closed slightly lower on Monday, although the hammer low suggests strong support around $84

Economic events (times in AEST)​

• 10:00 – Fed Daly speaks
• 11:30 – China house prices
• 12:00 – China GDP, fixed asset investment, industrial production, retail sales, NBS press conference
• 16:00 – UK average earnings, employment change
• 19:00 – German and eurozone ZEW economic sentiment
• 22:30 – Canadian CPI
• 23:00 – Fed Jefferson speaks
• 23:15 – Capacity Utilisation, industrial production, manufacturing production
• 02:30 – FOMC member Williams speaks
• 03:00 – BOE governor Bailey speaks

Click the website link below to get our exclusive Guide to USD/JPY trading in 2024.

https://www.forex.com/en-us/market-outlook/

USD/JPY technical analysis:​

The bullish trend on USD/JPY is undeniably strong, and is only growing with conviction since it broke convincingly above 152 without a stir from the BOJ following strong US CPI data. BOJ officials have been uncharacteristically quiet since, but with USD/JPY trading just 80 pips below 155, I’m now thinking about the warning sent by ex-FX diplomat earlier this month that a break above 155 could prompt intervention.

Given the strength of the trend and sentiment behind the US dollar, I find it hard to believe traders will not at least try to push it to 155. The question I have is whether we’ll see direct gains in Asia, or if we’ll be presented with a pullback towards 154 / daily pivot point before its next leg higher.

If USD/JPY heads for 155, if history is anything to go by we could expect a volatile break above it followed by a shakeout and move back below it. Obviously, traders would be wise to keep an ear out for any comments from the MOF or BOJ to see if it impacts prices. But with the Fed potentially not being able to cut rates at all this year, it might require actual intervention to stall this trend.

WTI crude oil technical analysis:​

The daily chart on WTI crude oil displays a solid uptrend, although it has been within a corrective phase for over a week. Yet with RSI trending higher with prices and without a bearish divergence in sight, I’m seeking crude oil’s next leg higher. And perhaps it is close. A bullish hammer formed on Monday and its lower wick found support at the 20-day EMA, just above the $84 handle.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD, ASX 200 dragged lower during risk-off trade: Asian Open April 17, 2024​

A risk-off tone ensued across global markets to send the US dollar higher, to the detriment of AUD/USD and the ASX 200.


By : Matt Simpson, Market Analyst

The US dollar rose for a sixth consecutive day as Fed chair Jerome Powell hinted that inflation was not slowing fast enough. Describing the economy as “quite strong”, Powell said that inflation data showed a “lack of further progress” and that the Fed could retain the current rates for as long as needed “if higher inflation persists”.


US yields continued to climb for a second day across the curve, with the 10-year closing above 4.6% for the first time this year and the 2-year within a couple of basis points below 5%.


Sentiment remained fragile which saw European indices extend their losses and Wall Street trade slightly lower. This meant AUD/USD was the weakest forex major as it was caught within the mild risk off session, falling for a third day and touching 64c for the first time since mid November.

Click the website link below to get our exclusive Guide to central banks and interest rates in 2024.

https://www.forex.com/en-us/market-outlook/

BOC governor Macklem said that inflation was moving in the right direction after another set of softer CPI figures on Tuesday. This further fed hopes of the BOC to begin easing first with a June rate cut, as Macklem said a couple of weeks ago that such as move was “possible”. Core CPI landed right on the BOC’s 2% target, median CPI slowed to 2.8% y/y and trimmed mean was 3.1%. I suspect that should trimmed mean CPI fall within the BOC’s 1-3% target band at next month’s inflation report, a rate cut in June could be al but confirmed.


UK wage data was mixed on Tuesday, with warnings excluding bonus ‘slowing’ to 6% to 6.1%, and earnings with bonus rising 5.6% compared with 5.5% forecast and 5.6% prior. Job claims were also lower than expected at 10.9k versus 17.2k forecast. These figures aren’t exactly deflationary, which helped GBP/USD withstand most of the US dollar strength and hold above 1.24. All eyes will now be on UK data released later today.

Economic events (times in AEST)​

• 08:45 – New Zealand quarterly CPI (could decide the timing of any RBNZ cut)
• 09:00 – Japan’s monthly Tankan survey (Reuters)
• 09:50 – Japan’s trade balance
• 16:00 – UK CPI (key report for BOE policy)
• 19:00 – Euro area CPI

ASX 200 at a glance:​

• At -1.8%, the ASX 200 cash index suffered its second worst day of the year
• Daily trading volumes were the highest in a month, to show conviction in the bearish day
• All 11 sectors were lower, led by consumer discretionary and utilities
• 176 ASX200 stocks declined (88%), 16 advanced (8%), 4 were unchanged
• 1-week implied volatility

ASX 200 technical analysis:​

The ASX 200 saw a clear break of the daily channel and the 7700 handle, during its second worst day of the year. A move to 7500 at a minimum could now be on the cards, although channel breaks can also lead prices back to the base which would be around 7300 in this instance if successful. However, Tuesday’s low stalled around a 161.8% Fibonacci projection and RSI (2) reached oversold on the daily chart to warn of overextension to the downside. Bears could seek to fade into minor rallies if sentiment remains sour, but if we’re treated to a turn in sentiment then bears could seek evidence of a swing high closer to 7700, in anticipation of a swing lower to at least 7500.

AUD/USD technical analysis:​

AUD/USD fell to 64c on Tuesday to take the Aussie to a 5-month low. The fall from 0.6650 has come in a relatively straight line, although support was found around 64c which is also near a 61.8% Fibonacci projection. Interestingly, we may also have a head and shoulder pattern playing out which projects a downside target just below 63c.

I saw in the 2024 outlook that I doubt we’ll see AUD/USD fall below 63c unless the wheels fall off the global or domestic economy. I’ll remain optimistic and assume that to be the case for now, given AUD/USD successfully held 63c last year despite a slew of negative sentiment and a relatively dovish RBA.

For now, AUD/USD remains on my ‘sell the rally’ watchlist, however minor it may be. Traders may also want to keep an eye on how global indices perform alongside AUD/USD to better asses sentiment. As AUD/USD is moving in lockstep step with them for now.




-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.