EURUSD
- The EUR/USD currency pair decreased by 0.15% to 1.1029, indicating a slight weakening of the euro against the U.S. dollar.
- A potential 50 basis point hike remains a live option at next week's central bank meeting, which could affect the exchange rate of the currency pair.
- Traders are positioning themselves for a more hawkish stance from the European Central Bank (ECB) in comparison to the Federal Reserve ahead of the upcoming policy-setting meetings.
- The April inflation reports from the largest economies in the Eurozone, such as Germany, France, and Spain, which are due later this week, are expected to reflect elevated inflationary pressures in the region.
- ECB board member Isabel Schnabel has expressed that a 50 basis point rate hike is not off the table, but its implementation will depend on the data.
| SMA (1D) | Rising |
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| RSI (1D) | Neutral | ||
| MACD (1D) | Neutral |
Closing statement: The EUR/USD currency pair experienced a slight decrease, and a potential 50 basis point hike remains a live option at the upcoming central bank meeting, which may affect the exchange rate of the currency pair. Traders are positioning for a more hawkish stance from the ECB in comparison to the Federal Reserve, with the April inflation reports from the region's largest economies likely to reflect elevated inflationary pressures. ECB board member Isabel Schnabel's remarks suggest that a rate hike is a possibility but contingent upon economic data.
GBPUSD
- The GBP/USD currency pair experienced a 0.18% fall to 1.2462, drifting off a 10-day high, with the Bank of England (BoE) expected to hike rates next week after consumer prices rose 10.1% in March from a year earlier.
- The increase in consumer prices was driven by the strongest surge in food costs in more than four decades.
- Sterling's price action indicates indecisiveness within the short term, with the currency pair trading in a ranging motion.
- The DXY, which tracks the dollar against six other currencies, traded marginally higher at 101.468, remaining near a new 10-day low after dropping 0.4% overnight.
- The U.S. Federal Reserve is widely anticipated to raise rates by 25 basis points at next week's policy-setting meeting. However, expectations are growing that the central bank will begin reducing interest rates later in the year.
| SMA (1D) | Slightly Rising |
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| RSI (1D) | Slightly Falling |
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| MACD (1D) | Slightly Falling |
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Closing statement: The GBP/USD currency pair experienced a fall following a 10-day high, as the BoE is expected to hike rates next week due to a sharp rise in consumer prices driven by food costs. Sterling's short-term price action is showing indecisiveness, with the currency pair trading in a ranging motion. The DXY, which tracks the dollar against other currencies, is marginally higher and close to a 10-day low, while the U.S. Federal Reserve is widely expected to raise rates by 25 basis points at the upcoming policy-setting meeting, but there are increasing expectations of a rate cut later this year.
GOLD
- Gold prices reached $2000 level but fell sharply on Tuesday after testing the 23.6% Fibonacci level traced back from February 28th low.
- The U.S. economy has been showing signs of slowing down lately, while news overnight of plunging deposits at First Republic Bank highlighted the fragility of the country’s banking system.
- The first-quarter U.S. GDP data is due on Thursday and is expected to show that growth slowed from the prior quarter.
- Friday’s PCE price index, the Fed’s preferred inflation gauge, would need to show a sharp upward surprise to change the dovish narrative.
- A Bloomberg survey also pointed to growing bets that the Fed will cut interest rates later this year, especially if economic conditions worsen.
Closing statement:The recent performance of gold prices suggests that investors are taking a cautious approach amidst economic uncertainties in the U.S. and the fragility of the banking system. The upcoming U.S. GDP data and PCE price index are expected to play a key role in shaping market expectations of future Fed policy, with growing bets of interest rate cuts later this year.
CRUDE OIL
- Crude oil prices rose over 1% on Monday on the back of hopes that holiday travel in China would increase fuel demand in the world's second-biggest economy.
- Bookings in China for trips abroad during the upcoming May Day holiday suggest a continued recovery in travel to Asian countries, although the numbers remain far off pre-COVID levels.
- A pullback in the U.S. dollar index on expectations of a slowdown in U.S. GDP growth in the first quarter supported gains in oil prices.
- A weaker U.S. dollar can boost global demand for oil by making it cheaper for holders of foreign currencies in other countries.
- Investors remain cautious about the potential for central banks in the United States, Britain, and the European Union to raise interest rates further to combat inflation, which could slow economic growth and dampen energy demand.
| SMA (1D) | Rising |
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| RSI (1D) | Slightly Rising |
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| MACD (1D) | Slightly Falling |
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Closing statement: The recent rise in crude oil prices reflects optimism about a recovery in fuel demand from China's holiday travel and a pullback in the U.S. dollar index. However, concerns remain about the potential impact of central bank policies on economic growth and energy demand.
DAX
- DAX futures in Germany traded 0.44% lower, CAC 40 futures in France dropped 0.72%, and FTSE 100 futures in the U.K. fell 0.26%.
- European stock markets are expected to open with small losses on Tuesday, as investors exercise caution ahead of the start of big tech earnings season on Wall Street.
- Germany's business morale index, released by the Ifo institute on Monday, showed a slight rise in April, adding to hopes that Europe's largest economy has managed to avoid a winter recession.
- Tuesday's economic data calendar is relatively quiet, with only U.K. public sector net borrowing for March and Spanish PPI numbers scheduled for release. However, ECB's Supervisory Board Chair Andrea Enria is due to speak later in the session, and investors will be paying attention for any hints on the central bank's future monetary policy.
| SMA (1D) | Rising |
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| RSI (1D) | Slightly Falling |
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| MACD (1D) | Neutral |
Closing statement:European stock markets are expected to start the day with small losses as investors remain cautious amid the beginning of big tech earnings season on Wall Street. While Germany's slight rise in business morale index adds to the hope that the economy has managed to avoid a winter recession, Tuesday's economic calendar is relatively quiet with only a few releases. Investors will be closely watching the speech by the ECB's Supervisory Board Chair Andrea Enria later in the session for any hints on the future path of the central bank's monetary policy.