FXTM Market Analysts

Like a rampant bull, the dollar trampled most G10 currencies this week and climbed to a fresh 25-month high above 103.00!

Market expectations over the Federal Reserve aggressively raising interest rates and demand for safe-haven assets continue to empower dollar bulls.

There are several key data points over the next few days which could move the dollar even further. It may be wise to keep a close eye on the US Q1 GDP figures, US weekly initial jobless claims, and PCE deflator among other reports. Should the pending data reinforce market expectations of tighter Federal Reserve policy, the dollar could tighten its grip on the FX throne.

An appreciating dollar has triggered some big movements in various currency pairs. Below, we use technical analysis to uncover these opportunities and potential setups over the next few days.

Dollar Index sprints higher 

The dollar's explosive appreciation is akin to a speeding train reaching maximum velocity with fundamentals keeping the engines running at maximum capacity! Bulls are certainly in a position of power with the DXY hitting the 103.00 level. A strong breakout and daily close above this point could open the doors towards 103.96 – the peak of 2020.

Should 103.00 prove to be reliable resistance, a decline back towards 101.00 could be on the cards.

Equally weighted USD Index eyes 1.1550 

The daily chart says it all. Prices are bullish on the daily timeframe as there have been consistently higher highs and higher lows. A strong break above 1.1550 could encourage a move towards 1.1750 – a level not seen since June 2020!

EURUSD tumbles towards 1.0500

EURUSD has dropped over 250 pips since the start of the week! Prices are trading below the 50, 100, and 200-day Simple Moving Average while the MACD trades below zero. The downside momentum could take prices towards 1.0500. A break under this level may signal steeper declines.

GBPUSD descends into the abyss 

The past few days have been pretty rough for the pound. It has weakened across the board, shedding over 3% versus the dollar since last Friday. Looking at the charts, the GBPUSD is under intense pressure. A solid breakdown and daily close below 1.2500 could encourage a selloff towards 1.2300.

USDJPY to hit 130?

Prices remain heavily bullish on the charts with the next key level of interest at 130.00. A breakout above 129.40 could signal a move towards 130.00. Should prices decline back under 126.40 could open a path back towards 125.10.

AUDUSD slams through 200-week SMA

After securing a weekly close below 0.7300, Aussie bears have stepped into higher gear with prices slamming into 0.7120 yesterday. A strong move below this point could trigger a selloff to 0.6990.

USDCAD aims for 1.2900 resistance 

Since the breakout from the 1.2650 resistance level, the USDCAD has pushed higher with 1.2900 acting as a key level of interest. Beyond this point, bulls could aim for 1.3000. If the upside momentum runs out of steam and 1.2900 proves to be reliable resistance, prices may decline back towards 1.2700-1.2650 before resuming the uptrend.

NZDUSD targets 0.6530 

The NZDUSD is heavily bearish on the daily charts. Bears are on a tear with the next key level of interest at 0.6530. Below this point, bears may target 0.6400. Investors should not rule out the possibility of a technical bounce back towards 0.6600 before the downtrend resumes.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Asian markets were wrapped in caution on Tuesday as investors nursed the nasty hangover from the previous day’s rout as fears over the impact of China’s new lockdowns lingered in the air.

Overnight, Wall Street was thrown a lifeline later in the session after Twitter agreed to be bought by billionaire Elon Musk. In the currency space, the mighty dollar climbed to its highest level since March 2020 thanks to risk aversion and expectations over the Fed raising rates by 50 basis points next month. There was no love for gold despite the risk-off mood, with the precious metal securing a daily close below $1900, while oil tumbled below $100 amid worries about the global energy demand outlook.

Caution is likely to remain the name of the game this week with sentiment fragile as strict lockdowns in China, concerns around a global slowdown, Fed rate hike fears and geopolitical risks leave investors on edge. On the data front, there are a couple of key economic data releases from major economies, especially in the United States. Tech titans will be publishing their earnings this week with Microsoft and Google’s parent company Alphabet announcing their results on Tuesday after the market close. With so much going on, this promises to be another eventful and potentially volatile week for financial markets. Yesterday’s wild movements across the FX, commodity and equity space are testament to this.

Dollar bulls charge on…

The dollar kicked off the week by appreciating against almost every single G10 currency as concerns over the economic impact of China’s strict lockdown sent investors rushing towards safety.

Market expectations over the Federal Reserve aggressively raising interest rates also empowered dollar bulls, propelling the dollar index (DXY) to a fresh two-year high. There are several key economic data points over the next few days which are likely to inject the currency with renewed vigour. US consumer confidence, Q1 GDP, and the PCE deflator will all be published, ahead of the key FOMC meeting next week. Should the data further reinforce market expectations over the Fed aggressively raising interest rates, the dollar could be set to appreciate further.

Oil back below $100

Oil benchmarks wobbled below $100 this morning after experiencing a sharp selloff in the previous session, due to fears that lockdowns in China will hit energy demand in the world’s second largest economy. On top of this, an appreciating dollar is adding extra pressure on the global commodity with Brent shedding roughly 1.5% this month. That said, geopolitical risks may limit downside losses, especially if the United States and its allies consider expanding sanctions on Russian oil imports.

On the data front, it may be wise to keep a close eye on the Energy Information Administration (EIA) report published on Wednesday. Another weekly drawdown in crude inventories could lend oil bulls a helping hand.

Commodity spotlight - Gold

After trading within a range for many weeks, gold finally experienced a solid breakdown below $1920 support with bears securing a daily close beneath the psychological $1900 level. The precious metal struggled to shine against a mighty dollar and aggressive Fed rate hike bets. With the greenback on a tear and potentially receiving further support in the week ahead, this could spell more trouble for gold despite the market caution and risk aversion.

Looking at the technical picture, sustained weakness below $1920 could signal a decline towards $1880 and $1850. Should $1900 prove to be reliable support, prices could retest $1920. A move back above this level will send prices into the prior range with the first level of resistance at $1960.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Sterling hijacked our attention last Friday after collapsing like a house of cards!

It has stumbled into the new week under renewed pressure, struggling to nurse deep wounds inflicted by the dismal retail sales and consumer confidence data. Mounting concerns over the cost-of-living crisis dragging the UK economy into a recession continue to hammer the pound, which is currently trading at levels not seen since September 2020. Disappointing economic data may fuel speculation over the BoE slowing interest rate rises while political noise from Westminster regarding the post-Brexit trade deal is likely to compound the currency’s woes. Since the start of April, sterling has weakened against most G10 currencies, shedding over 3% versus the dollar of writing.

Taking a quick peek at the technicals, prices look heavily bearish on the weekly timeframe with support at 1.2750. A solid breakdown below this point could drag the GBPUSD to levels not seen since mid-2020 around 1.2500.

More pain on the horizon for sterling?

Since the start of 2022, the pound has weakened against almost every single G10 currency. It's is down over 6% versus the dollar and more than 5% against the Canadian dollar.

The pound has the potential to weaken further if disappointing economic data forces the Bank of England to adopt a cautious approach towards rate hikes. In fact, Andrew Bailey, BoE governor recently hinted that the UK interest rates may be increased less aggressively amid recession fears.

Indeed, retail sales fell by an unexpected 1.4% in March as the rising cost of living hit consumer spending. Consumer confidence plunged to its lowest level since the 2008 recession while PMIs decline in April, signalling that the economy is slowing considerably. But with inflation hitting a 30 year high of 7% which is more than triple the target of 2%, the BoE is certainly in a tricky position.

The central bank is widely expected to raise interest rates by 0.25bp in May, with a total of 6 hikes expected by the end of 2022.

However, repeatedly weak economic data and post-Brexit related uncertainty could throw a spanner in the works for BoE hawks – resulting in a weaker pound. This weakness is likely to be intensified by an increasingly aggressive and hawkish U.S Federal Reserve.

The week ahead…

It's a relatively quiet week on the UK economic calendar. However, this does not mean it will be a quiet week for the British pound.

The GBPUSD has already dropped over 100 pips this morning, with weakness being seeing across the board.

There is a lot going on with the dollar with key economic data likely to inject the currency with renewed vigour. Over the next few days, US consumer confidence data, Q1 GDP, consumer sentiment and the PCE deflator among other key reports will be published. Should they reinforce market expectations over the Federal Reserve aggressively raising interest rates, the dollar is set to appreciate further – dragging the GBPUSD lower.

GBPUSD bears step into higher gear

The GBPUSD is heavily bearish on the daily timeframe as there have been consistently lower lows and lower highs. Prices are trading well below the 50, 100 and 200-day Simple Moving Average while the MACD trades below zero. Interestingly, the RSI has fallen below 30 which suggests that the GBPUSD could be oversold.

A solid daily close below the 1.2750 support level could see the currency pair sink towards 1.2600 before experiencing a technical bounce. Alternatively, should 1.2750 prove to be reliable support, the GBPUSD could rebound back towards 1.2900 before resuming the downtrend.

On the monthly timeframe, the GBPUSD is respecting a monthly bearish trend. A solid monthly close below 1.2750 could open the doors towards 1.2500 and 1.2300.  If bears run out of steam, a move towards 1.3000 and 1.3150, respectively.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Currency markets exploded to life this week as global growth concerns, inflation worries, and geopolitical tensions rocked global risk sentiment.

The mighty dollar jumped to a fresh two-year high yesterday only to tumble like a house of cards this morning.

There was no love for the Yen, which collapsed to a 20-year low below 129.00 before clawing back some losses. Even the Aussie made some noise by appreciating against most G10 currencies since the start of the trading week. With so much going on across the FX arena, this presents fresh opportunities and trading setups.

Our primary focus will be on yen crosses, complemented by other movers and shakers.

As stated earlier, the past few days have not been kind to the yen...

It has weakened against every single G10 currency since the start of the week.

USDJPY closes in on 130…

In recent weeks, after prices broke to the upside above the March high at 125.10 who would have thought that the USDJPY would test 130.00? As the fundamentals drag the yen lower and lower, 130.00 could become reality this month. Looking at the technical picture, the currency pair is heavily bullish. According to the RSI, prices are extremely overbought and have been since mid-March. A technical throwback could be in the making before the USDJPY challenges 130.00.

It may be worth keeping a close eye on how prices behave around 126.40 and 125.10 over the next few days. Should these levels prove to be reliable support, this could encourage a rebound back towards 129.00 and 130.00 respectively. A breakdown below 125.10 may invite bears back into the scene.

GBPJPY bulls take a breather

It looks like the GBPJPY could be experiencing a minor decline lower before bulls return to the scene.

Prices remain bullish on the daily charts as there have been consistently higher highs and higher lows. The MACD trades above zero while the 50, 100, and 200-day Simple Moving Averages have been left in the dust. Should 165.40 prove to be reliable support, a move back towards 168.50 could be on the cards. Alternatively, a decline below 165.40 could trigger a selloff to 165.40 and lower.

EURJPY remains bullish for now

A weakening yen continues to drive the EURJPY higher. Prices remain heavily bullish as there have been consistently higher highs and higher lows. A technical bounce from 138.00 could encourage a move towards 139.70 and 140.00. Should 138.00 prove to be unreliable support, prices could slip back towards 137.00. Weakness below 137.00 may drag the EURJPY back within the 250-pip range.

CADJPY touches 102.50

The trend is certainly a traders friend on the CADJPY. Prices are moving higher with bulls in the driving seat. A strong daily close above 102.50 could inspire an incline towards 103.40. Should 102.50 prove to be reliable resistance, a throwback towards 100.17 could be on the table before prices push higher. Weakness below 100.17 may trigger a selloff towards 99.40 and 97.00.

AUDUSD fights back

After experiencing three consecutive weeks of losses, the AUDUSD is attempting to stage a rebound. Prices are trading around 0.7430 as of writing while the MACD on the weekly timeframe trades above zero. A strong move above last week’s high of 0.7492 could signal an incline back towards the 0.7550 resistance level. If 0.7550 is conquered, this may open doors towards 0.7600 and beyond. Alternatively, weakness below 0.7300 may result in a selloff towards 0.7120.

NZDUSD to resume downtrend?

The NZDUSD remains bearish on the daily charts. However, today’s rebound could throw the spanner in the works for bulls. If the 0.6800 level proves to be reliable resistance, a decline back towards 0.6700 is likely. Alternatively, a strong move and daily close above 0.6800 could trigger a move higher to 0.6860 and 0.7000.

Gold back within a range?

After experiencing a heavy selloff yesterday, gold has found itself back within a range with support at $1920 and resistance at $1960. The precious metal may need a fresh fundamental spark to experience another breakout/down. In the meantime, it may be wise to sit back and enjoy the view.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Stocks in Asia traded cautiously on Tuesday, following a negative close on Wall Street overnight as growth concerns, inflation worries and geopolitical tensions hit risk sentiment. European markets opened lower this morning due to the deepening crisis in Ukraine, with the caution likely to find its way back to US markets this afternoon. In the currency space, the mighty dollar rose to a fresh two-year high during early trade, supported by rising treasury yields and Fed hike bets. Gold slipped after almost kissing $2000 in the previous session, while oil benchmarks steadied after jumping on Monday.

Despite the public holiday in most of Europe yesterday, this is shaping up to be another volatile and eventful week for global markets. The latest comments from the World Bank have added to the cocktail of caution that will most likely influence sentiment over the next few sessions. The bank cut its global growth forecast for 2022 by nearly a full percentage point to 3.2% from its previous estimate of 4.1%, thanks to the war in Ukraine, soaring inflation, and the lingering effects of Covid-19. Later today, the International Monetary Fund (IMF) will release its updated global economic outlook with markets expecting a downgrade for growth this year. Such a development may hit investor confidence, sweetening appetite for safe-haven assets.

On the earnings front, Johnson & Johnson and insurance company, Travelers will report their latest results before the opening bell. Streaming giant Netflix will release its earnings after the market close. Traders will also focus on speeches from financial heavyweights Fed Chair Jerome Powell and ECB President Christine Lagarde later this week.

Dollar flexes muscles across the FX space

The dollar tightened its grip on its throne this morning by rising to a fresh two-year high as investors braced for more aggressive U.S rate hikes. Markets have fully priced in a 50bp rate hike at the Fed’s May meeting, with the odds of another half-point rate hike in June very high. Given how the dollar has appreciated against every single G10 currency this month, bulls are certainly in a position of power to drive prices higher.

When considering how the week ahead will be filled with more speeches from Fed officials, this could fuel upside gains if they all sing a hawkish tune. Indeed, we heard from arch-hawk Bullard overnight who signaled an openness to a 75bp hike. The dollar index (DXY) has the potential to challenge 103.00 if a solid daily close above 101.00 is secured.

Commodity spotlight: Gold

After rallying within a hair’s length of $2000 in the previous session, gold is trading back around $1974 as of writing. With numerous competing themes likely to influence market sentiment this week, gold may find itself pulled and tugged by conflicting forces. Heightened geopolitical risks and global growth concerns could trigger risk aversion, sending investors rushing towards gold’s safe embrace. However, an appreciating dollar, rising Treasury yields, and Fed hike expectations may create multiple obstacles down the road.

Looking at the technical picture, gold has the potential to trend higher, but prices seem to be forming another range. Support can be found at around $1960 and resistance at $2000. A move back below $1960 could trigger a selloff towards $1920. Alternatively, a solid breakout above $2000 may open the doors towards $2009, $2015, and $2050, respectively.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.