EURUSD
- Current Position: EUR/USD extends its decline, reaching a three-day low around 1.0840 during the late Asian session on Friday. The pair continues to face downward pressure.
- Impact of Powell's Press Conference: The recent downtrend is attributed to increased bearish sentiment following Federal Reserve Chair Powell's dovish message at his press conference after the Fed's decision to maintain interest rates unchanged in the previous session. Powell's comments have influenced market sentiment towards the USD and its impact on currency pairs like EUR/USD.
- Market Expectations: Market participants anticipate the Fed to reduce interest rates three times this year, with the first rate cut expected in June. These expectations contribute to the bearish outlook for the USD and consequently affect EUR/USD dynamics.
- ECB Rate Cut Expectations: Market sentiment towards the Euro has been influenced by expectations of a rate cut by the European Central Bank (ECB) during its June meeting. The recent surprise rate cut by the Swiss National Bank (SNB) has further bolstered expectations for ECB rate reductions.
- Diverging Economic Conditions: The Eurozone's inflation deceleration rate is perceived to be higher than that of the US economy. This divergence in economic conditions strengthens the belief that the ECB may adopt a more aggressive approach to rate cuts compared to the Federal Reserve.
| SMA (20) | Rising |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: EUR/USD continues its downward trajectory, influenced by Powell's dovish remarks, market expectations of Fed rate cuts, and heightened anticipation of ECB rate reductions following the SNB's unexpected move. The perceived divergence in economic conditions between the Eurozone and the US reinforces expectations of a more aggressive ECB stance on interest rates, contributing to the pair's bearish outlook.
GBPUSD
- Current Position: GBP/USD remains under pressure and trades in negative territory below 1.2650 in the European session on Friday, indicating a downward trend for the currency pair.
- Bank of England (BoE) Decision: The BoE announced its decision to maintain the Bank Rate at 5.25%. The vote resulted in a split of 8-1, with one member dissenting in favor of a rate cut. This contrasts with the previous meeting, where policymakers voted 6-3, with two members expecting a rate hike. The adjustment in the voting pattern suggests a growing consensus within the BoE regarding the current level of rates and their impact on inflationary pressures.
- Inflation Reports: Recent inflation reports in the UK showed a decline in inflation from 4% to 3.4%. This data, coupled with the BoE's decision, has led to increased market expectations of a rate cut in June. Money markets are now pricing in a 75% chance of a rate cut, up from 65% earlier in the day.
- US Economic Data: The US economic docket revealed a mixed set of data. Unemployment claims for the last week decreased from 212K to 210K, beating the estimated 215K. Additionally, S&P Global Flash PMI final readings for March were mixed, with manufacturing activity showing improvement. Existing Home Sales also increased from 4 million to 4.38 million, marking a 9.5% rise.
| SMA (20) | Rising |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: The GBP/USD pair continues to face downward pressure amid the BoE's decision to maintain rates and mixed economic data from the US. Market sentiment is influenced by growing expectations of a rate cut in the UK, contrasting with improvements in certain sectors of the US economy.
GOLD
- Current Position: Gold price edges lower on Friday amid some follow-through US Dollar buying interest, indicating a downward trend for the precious metal.
- US Dollar Strength: The US Dollar has strengthened, putting pressure on gold. The Fed's projected three rate cuts in 2024 are expected to cap the USD and limit losses for gold. However, the greenback's sharp gains, with the dollar index hitting a three-week high above the 104 level, have contributed to the downward pressure on gold. The dollar surged following a surprise rate cut from the SNB and dovish signals from the Bank of England, leaving it as the only major high-yielding, low-risk currency.
- Impact on Gold: The strength of the dollar is expected to limit any major upside in gold, at least until the Fed begins trimming interest rates later this year. Market participants anticipate the Fed to cut rates by 25 basis points in June, according to the CME FedWatch tool.
- Market Sentiment: Traders are looking forward to Fed Chair Jerome Powell’s speech for short-term opportunities, suggesting that market sentiment remains sensitive to central bank communications and monetary policy decisions.
Closing statement: Gold prices are facing downward pressure amid follow-through US Dollar buying interest and a strengthening dollar. The Fed's projected rate cuts and expectations of a rate cut in June are key factors influencing market sentiment. Traders are closely monitoring central bank communications and speeches for potential short-term opportunities in the gold market.
CRUDE OIL
- Current Position: West Texas Intermediate (WTI) US Crude Oil prices are facing selling pressure for the third successive day on Friday, trading near the weekly low around the $80.50 region during the Asian session. This indicates a bearish trend in the crude oil market.
- US Secretary of State's Comments: US Secretary of State Antony Blinken mentioned that gaps are narrowing in the ongoing talks aimed at reaching a ceasefire in Gaza and the release of hostages. This statement has eased concerns about potential supply disruptions in the Middle East, which typically impact crude oil prices.
- US Dollar Strength: Some follow-through US Dollar (USD) buying is observed, driven by the optimistic US economic outlook. This trend in the USD has exerted downward pressure on USD-denominated commodities, including crude oil prices.
- Geopolitical Developments: Ukrainian drone strikes on Russian oil refineries have raised concerns about potential disruptions in fuel production by Russia. Such geopolitical tensions can impact global oil supply dynamics and consequently influence oil prices.
- OPEC+ Decision and IEA's Outlook: OPEC+ members have decided to extend production cuts of 2.2 million barrels per day through the second quarter, indicating efforts to balance supply and demand in the oil market. Additionally, the International Energy Agency (IEA) has revised its outlook for 2024 oil demand growth upward, which could support oil prices in the long term.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Rising |
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Closing statement: WTI Crude Oil prices continue to face selling pressure amidst geopolitical developments, US Dollar strength, and market sentiment influenced by OPEC+ decisions and demand forecasts. Traders will monitor further developments in geopolitical situations and the USD trajectory for short-term trading opportunities in the crude oil market.
DAX
- Thursday's Economic Indicators: On Thursday, both German and Eurozone Services PMIs signaled an improving macroeconomic backdrop. The German Services PMI increased from 48.3 to 49.8, while the Eurozone Services PMI rose from 50.2 to 51.1. These indicators suggest positive momentum in the services sector, which is a crucial component of economic activity.
- SNB Interest Rate Cut: The Swiss National Bank (SNB) surprised the markets on Thursday by cutting interest rates by 25 basis points. This unexpected move drove demand for riskier assets, including equities like those listed on the DAX.
- US Economic Data: US economic data released on Thursday supported expectations of a Federal Reserve rate cut in the first half of 2024 and indicated a soft landing for the US economy. Jobless claims and manufacturing sector data surpassed expectations, while service sector activity moderated slightly.
- Upcoming Ifo Business Climate Index: Economists anticipate the Ifo Business Climate Index to increase from 85.5 to 86.0. Better-than-expected numbers in this index could further support buyer demand for stocks listed on the DAX index.
- ECB Focus: Beyond economic indicators, investors will closely monitor the European Central Bank (ECB). The ECB General Council meeting and ECB commentary, including speeches by ECB President Christine Lagarde and Chief Economist Philip Lane, will be significant events influencing market sentiment.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The DAX index is influenced by positive signals from economic indicators, including improving services PMIs in Germany and the Eurozone. The surprise interest rate cut by the Swiss National Bank and optimistic US economic data further bolster market sentiment. Traders will continue to watch upcoming economic releases and ECB developments for insights into market trends and potential trading opportunities in DAX-listed stocks.