EURUSD
- EUR/USD continues to trade with a bearish bias near 1.0650 in European trading on Tuesday, reflecting ongoing pressure on the euro against the US dollar.
- The dollar's modest strength follows investors' revised expectations regarding the timing of potential Federal Reserve (Fed) interest rate cuts, now anticipated to occur later, possibly in September, with a chance of a move in July not completely ruled out.
- Both the US and Eurozone will release updates to Purchasing Managers Index (PMI) figures on Tuesday, providing insights into the health of manufacturing and services sectors in both regions.
- In the US, the S&P Global PMI for April is expected to print at 52.0 for both Manufacturing and Services components, indicating modest expansion. Manufacturing and Services components were last seen at 51.9 and 51.7, respectively, in March.
- Later in the week, market participants will focus on US quarterly Gross Domestic Product (GDP) and March's Core Personal Consumption Expenditure (PCE) Price Index, which are expected to provide further clarity on the state of the US economy and inflationary pressures.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: EUR/USD faces downward pressure amid revised expectations of Federal Reserve interest rate cuts, with investors eyeing key economic indicators from both the US and Eurozone for further guidance. The release of PMI figures and upcoming data on US GDP and inflation will likely influence market sentiment and the direction of the currency pair in the coming sessions.
GBPUSD
- GBP/USD is slipping below 1.2350 in the European session, as the US Dollar gains fresh buying interest amid subdued risk sentiment, driving the pair lower.
- The USD Index (DXY) is consolidating its gains above 106.10 as traders await the preliminary S&P Global Purchasing Managers Index (PMI) data from both the US and UK for April, which could provide further direction for the currency pair.
- Federal Reserve (Fed) policymakers have indicated that while inflation in the US is gradually easing, it remains elevated, leading the central bank to maintain a cautious stance on interest rate cuts.
- Atlanta Fed President Raphael Bostic emphasized that interest rates will need to remain at a "restrictive level" and may only be eased "at the end of 2024," highlighting the Fed's commitment to managing inflationary pressures.
- Bank of England Deputy Governor Dave Ramsden suggested that the UK's progress on inflation and its subdued economic outlook could prompt the BoE to initiate a rate cut cycle earlier than previously anticipated, adding to the downward pressure on GBP/USD.
| SMA (20) | Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: GBP/USD faces downward pressure against the US Dollar amid cautious risk sentiment and expectations of a delayed rate cut by the Federal Reserve. The release of PMI data from both the US and UK, along with insights from central bank policymakers, will likely drive market sentiment and influence the currency pair's direction in the near term.
GOLD
- Gold price experiences another decline in Asia on Tuesday, despite a decrease in risk aversion among investors. Market participants are adopting a cautious stance ahead of key US tech earnings reports and the release of preliminary business PMI data from the UK, Eurozone, and the US. These data releases are expected to offer insights into the potential timing of interest rate cuts by major central banks, particularly the US Federal Reserve (Fed).
- Last week, Fed policymakers, including Chair Jerome Powell, reiterated their commitment to maintaining interest rates at elevated levels for an extended period.
- Chicago Fed President Austan Goolsbee suggested a prolonged timeline for rate cuts, citing a stall in progress on inflation indicators.
- The US S&P Global preliminary Manufacturing PMI is projected to increase slightly to 52.0 in April, compared to the 51.9 reading recorded in March. Additionally, the Services PMI is anticipated to climb to 52.0 in the same period, up from the previous figure of 51.7.
Closing statement: Gold price faces downward pressure amid reduced risk aversion, as investors await key earnings reports and PMI data releases that could influence the timing of interest rate cuts by major central banks, particularly the Federal Reserve. The cautious sentiment is reinforced by statements from Fed policymakers indicating a commitment to maintaining higher interest rates for an extended period. The upcoming PMI data from the US is expected to provide further clarity on economic conditions, potentially impacting gold price movements.
CRUDE OIL
- Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $82.00 on Tuesday, maintaining its position amidst ongoing market fluctuations.
- Crude oil prices experience a slight decline as concerns regarding a broader conflict in the Middle East diminish, alleviating some of the upward pressure on prices.
- The recent increase in US crude oil inventories, surpassing market expectations, contributes to downward pressure on WTI prices, indicating potential oversupply concerns in the market.
- Despite the downward trend, hopes for increased Chinese demand provide a glimmer of relief for WTI prices. China, as the world's largest oil importer, is implementing fiscal and monetary stimulus measures to support economic growth, potentially bolstering oil demand.
- Later in the day, oil traders will closely monitor the release of preliminary US S&P Global Purchasing Managers Index (PMI) data for April and the API Weekly Crude Oil Stock report, which could offer further insights into market dynamics and influence crude oil price movements.
| SMA (20) | Rising |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: Crude oil prices remain relatively stable around $82.00 amidst shifting market dynamics. Concerns about a broader conflict in the Middle East have eased, contributing to a slight decline in prices. However, the increase in US crude oil inventories continues to weigh on prices, offsetting some of the downward pressure. Hopes for increased Chinese demand provide a potential boost to prices, as the Chinese government implements stimulus measures to support economic growth. Traders await further cues from the release of US PMI data and the API Weekly Crude Oil Stock report later in the day.
DAX
- Consumer confidence across the Eurozone showed a modest improvement, with the Consumer Confidence Index rising from -14.9 to -14.7 in April, slightly below economists' expectations of -14.0.
- Despite geopolitical tensions in the Middle East and fading expectations of multiple rate cuts by the Federal Reserve in 2024, investors remain optimistic about the prospects of ECB rate cuts, driving sentiment in the DAX.
- Preliminary private sector PMI numbers for Germany and the Eurozone on Tuesday are key focal points for investors, offering insights into economic activity and business sentiment in the region.
- Beyond headline figures, investors will scrutinize data on prices, employment, and new orders. Any signs of increasing input and output price pressures could challenge expectations of a June ECB rate cut.
- ECB Executive Board member Edouard Fernandez-Bollo's scheduled speech adds to the importance of ECB rate cut timeline discussions, while corporate earnings results also influence market sentiment and direction.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: Consumer confidence in the Eurozone showed a slight improvement in April, although slightly below expectations. Investor sentiment in the DAX remains positive, driven by expectations of ECB rate cuts despite geopolitical tensions and evolving monetary policy expectations. Focus shifts to preliminary PMI data for Germany and the Eurozone, with investors closely monitoring various economic indicators for insights into the region's economic health. ECB commentary and corporate earnings results further shape market sentiment and expectations.