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US ISM Manufacturing PMI edged lower from 49.0 to 48.7 in April, slightly better than expectations of 47.9, but still firmly in contraction territory.

The report paints a mixed picture beneath the headline: new orders improved modestly from 45.2 to 47.2, signaling tentative stabilization in demand. But production dropped sharply from 48.3 to 44.0, marking the eighth straight month of contraction. Employment remained weak, rising only slightly from 44.7 to 46.5, with job losses continuing across the sector.

Export activity was a particular drag, with new export orders plunging from 49.6 to 43.1, reflecting growing external headwinds and perhaps early signs of tariff impacts. Imports also fell back into contraction, dipping from 50.1 to 47.1.

The rise in the Prices Index—from 69.4 to 69.8—marks the highest level since mid-2022 and reflects growing cost pressures, especially from tariffs, which are now being passed through to buyers amid longer supplier delivery times and rising inventories.

According to ISM, the overall backdrop suggests weakening demand and output amid rising input costs, "not considered positive for economic growth. ISM estimates the current PMI level aligns with a modest 1.8% annualized GDP growth rate.

Full US ISM manufacturing release here.

Daily Pivots: (S1) 142.42; (P) 142.81; (R1) 143.45; More...

Intraday bias in USD/JPY remains on the upside for the moment. Rebound from 139.87 should target 100% projection of 139.87 to 144.02 from 141.96 at 146.11. But still, near term outlook will stay bearish as long as 38.2% retracement of 158.86 to 139.87 at 147.12 holds. On the downside, firm break of 141.96 will argue that the rebound has completed as a corrective move. Retest of 139.87 should then be seen next in this case.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Yen weakness remains the dominant theme in an otherwise range-bound forex market today. While all other major pairs and crosses are contained within yesterday’s trading range, the Japanese currency continues to lose ground as traders react to BoJ’s dovish tone. Governor Kazuo Ueda attempted to soften the impact of the downgraded growth outlook and emphasized that a delay in inflation convergence wouldn’t necessarily mean a delay in rate hikes.

However, markets took greater note of his admission that the baseline scenario for Japan's economy “no longer has very high probability,” a statement that effectively resets expectations for near-term tightening. The prospect of a move in June has effectively diminished, and the odds for a Q3 hike now hinge heavily on how trade negotiations evolve between the US and its key partners, including Japan.

In the US, equity market sentiment is buoyant today as strong earnings from tech giants Meta Platforms and Microsoft lifted futures. Initial jobless claims rose more than expected, but the data has been largely brushed aside for now. Markets are instead turning attention to the upcoming ISM manufacturing report, which will offer more timely insights into how business activity and pricing dynamics are responding to the trade policy shockwaves. Still, the real litmus test for broader sentiment will be Friday’s non-farm payrolls release.

On the week, Kiwi leads losses for now, followed by Yen and Euro. Loonie outperforms, along with Sterling and Swiss Franc. Dollar and Aussie are treading water in the middle of the pack.

Technically. Gold's correction from 3499.79 extended lower today. Deeper fall might be seen, but downside should be contained by 3167.62 resistance turned support, which is close to 38.2% retracement of 2584.24 to 3499.79 at 3150.04. Break of 3352.92 resistance will bring retest of 3499.79 high.

In Europe, at the time of writing, FTSE is down -0.13%. UK 10-year yield is down -0.01 at 4.436. Germany and France are on holiday. Earlier in Asia, Nikkei rose 1.13%. Japan 10-year JGB yield fell -0.04 to 1.275. Hong Kong, China, and Singapore were on holiday.

US initial jobless claims rise to 241k vs exp 221k

US initial jobless claims rose 18k to 241k in the week ending April 26, above expectation of 221k. Four-week moving average of initial claims rose 5.5k to 226k.

Continuing claims rose 83k to 1916k in the week ending April 19, highest since November 13, 2021. Four-week moving average of continuing claims rose 6k to 1868k.

UK PMI manufacturing finalized at 45.4, rising costs, declining demand

UK manufacturing continued to contract in April, with PMI finalized at 45.4, a modest rise from March’s 44.9.

The sector is facing mounting challenges as output, new orders, and exports all declined further. Business confidence also fell to its lowest level since late 2022, reflecting growing unease over global trade disruptions and rising input costs.

S&P Global’s Rob Dobson highlighted a nearly five-year record drop in new export orders, particularly from the US, Europe, and China.

Manufacturers are also being squeezed by a surge in purchase price inflation, now at a 28-month high. This is prompting firms to raise prices and cut discretionary spending, reinforcing a troubling mix of "rising costs, declining demand".

BoJ holds rates, slashes growth outlook on trade headwinds

BoJ kept its benchmark interest rate unchanged at 0.50% today, by unanimous vote, in line with expectations. However, it struck a cautious tone on the economic outlook by sharply cutting its growth forecasts.

The central bank now projects Japan’s real GDP to grow just 0.5% in fiscal 2025, down from the 1.1% forecast in January, and 0.7% in fiscal 2026 (downgraded from 1.0%). Growth is expected to recover to 1.0% in fiscal 2027, assuming stabilization in global conditions.

In its statement, BoJ acknowledged that “Japan's economic growth is likely to moderate” as global trade and policy uncertainty weigh on external demand and corporate profitability. Still, the bank expects activity to reaccelerate once overseas economies resume “a moderate growth path.”

On inflation, BoJ maintained that price pressures are broadly on course toward the 2% target, but revised its CPI core forecast down from 2.4% to 2.2% for fiscal 2025, and from 2.0% to 1.7% for fiscal 2026.

BoJ raised its projection for the core-core CPI from 2.1% to 2.3% for fiscal 2025, reflecting persistent domestic inflation pressures. However, this is followed by a downgrade from 2.1% to 1.8% in 2026 before stabilizing at 2.0% in 2027.

BoJ's Ueda: Inflation target delay won’t necessarily postpone rate hikes

At the post meeting press conference, BoJ Kazuo Ueda acknowledged that the surge in global trade tensions, sparked by the US's "reciprocal" tariffs, has sharply elevated uncertainty over global policy direction. He warned that these tariff shocks would "weigh on" on Japan’s growth and inflation in the near term, but expressed hope that such effects would fade as overseas economies stabilize.

Ueda noted that BoJ downgraded its growth outlook for fiscal 2025 and 2026, with both inflation and wage gains expected to "likely slow somewhat. However, he maintained that Japan’s "severe labour shortage" should keep the positive wage-inflation cycle intact over the medium term.

Despite pushing back the timeline for inflation to converge with the 2% target, Ueda stressed "that doesn't mean the timing of further rate hikes will automatically be delayed by the same margin."

Ueda emphasized that BoJ's forecasts hinge on the assumption that trade negotiations will progress and avoid serious supply chain disruptions. However, he admitted that the probability of the baseline scenario being realized "is no longer very high." Further tariff escalation could alter both the economic outlook and BoJ’s future policy stance.

Japan’s PMI manufacturing finalized at 48.7, slump persists amid trade uncertainty

Japan’s manufacturing sector remained in contractionary territory in April, with the final PMI reading at 48.7, up slightly from March’s 48.4. While the deterioration in business conditions marked the tenth consecutive month of decline, it remained modest.

However, underlying components revealed more concerning trends, with sharper drops in new orders and exports, highlighting persistent demand-side weakness.

According to S&P Global, firms responded by scaling back purchasing and adjusting inventories, while overall sentiment worsened.

Business confidence around future output fell to its lowest since mid-2020, as companies expressed caution amid ongoing global trade tensions and muted demand. Without a significant turnaround in both domestic and external demand, "firms are likely to struggle to see a recovery in conditions".

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 142.42; (P) 142.81; (R1) 143.45; More...

Intraday bias in USD/JPY remains on the upside for the moment. Rebound from 139.87 should target 100% projection of 139.87 to 144.02 from 141.96 at 146.11. But still, near term outlook will stay bearish as long as 38.2% retracement of 158.86 to 139.87 at 147.12 holds. On the downside, firm break of 141.96 will argue that the rebound has completed as a corrective move. Retest of 139.87 should then be seen next in this case.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

US initial jobless claims rose 18k to 241k in the week ending April 26, above expectation of 221k. Four-week moving average of initial claims rose 5.5k to 226k.

Continuing claims rose 83k to 1916k in the week ending April 19, highest since November 13, 2021. Four-week moving average of continuing claims rose 6k to 1868k.

Full US jobless claims release here.

• Gold prices decline as US-China trade deal hopes rise, impacting safe-haven demand.
• US GDP contracts in Q1 2025, but tariff developments overshadow data releases.
• Key support levels for Gold (XAU/USD) are identified as bearish pressure builds, with 3200 and 3167 being crucial

Gold prices have slipped below two crucial areas of support as hopes of a trade deal between the US-China continues to grow. The precious metal is now trading near a two-week low.

Risk appetite and sentiment continues to improve on rising hopes that a trade deal between the US-China will be reached. According to reports from both Bloomberg and the Financial Times, the Trump administration has reportedly tried reaching out to Beijing to start tariff talks, according to a Chinese state-run media outlet.

The outlet stated that China isn’t in a rush to negotiate and won’t engage unless the US takes meaningful actions. However, it added that there’s no harm for China in talking if the US wants to. Analysts noted this language shows a softer stance from Beijing compared to last week, when China’s commerce ministry said negotiations couldn’t begin until the US removed its heavy tariffs.

The result of this growing optimism has definitely weighed on safe haven demand and thus pushed Gold prices lower.

US GDP contracts in Q1

The U.S. economy shrank by 0.3% in the first quarter of 2025, its first decline since early 2022. This was a sharp drop from 2.4% growth in the previous quarter and missed market predictions of 0.3% growth.

A 41.3% jump in imports played a big role in slowing the economy, as businesses and consumers stocked up on goods ahead of higher costs from new tariffs announced by the Trump administration. Consumer spending grew just 1.8%, its slowest pace since mid-2023, and federal government spending fell by 5.1%, the biggest drop since early 2022. However, fixed investment rose by 7.8%, the largest increase since mid-2023.

The impact saw the US Dollar weaken as recession fears gained momentum. Gold prices also enjoyed a rally but as we have noted of late, tariff developments will overshadow data releases in the short-term.

Gold failed to hold onto gains and experienced a swift selloff in the Asian session as it failed to consolidate gains above the $3300/oz handle.

Looking ahead

There remains a significant amount of high impact data releases for the US this week, with the NFP release tomorrow taking center stage.

Even if the data disappoints, the chances of a stellar Gold recovery may not be forthcoming. As long as sentiment and risk appetite continues to improve Gold bulls will face significant headwinds.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Technical Analysis - Gold (XAU/USD)

From a technical analysis standpoint, Gold prices have failed to hold above crucial support at the $3300/oz handle.

A daily candle close below the 3300 handle yesterday has led to an accelerated selloff in the Asian session. This has continued after the European open with the precious metal trading at 3220 at the time of writing.

Looking at the period-14 RSI and it is approaching the neutral 50 level which could prove key. A bounce here could be a sign that bullish momentum remains intact and thus facilitate a short-term recovery.

The precious metal is down around $60 on the day and yet a push toward support at the 3200 handle looks likely.

A crucial level of support i will be keeping an eye on rests at 3167, which was the April 3 swing high, just after the universal tariff announcements. This level could hold the key, and have a big impact on whether the precious metal is able to hold above the crucial 3000 handle.

Gold (XAU/USD) Daily Chart, May 1, 2025

Source: TradingView (click to enlarge)

Support

• 3195
• 3167
• 3150

Resistance

• 3250
• 3300
• 3325

The Japanese yen continues to lose ground and is sharply lower on Thursday. In the European session, USD/JPY is trading at 144.36, up 0.92% on the day. Earlier, the yen weakened to 144.74, its weakest level since April 10.

BoJ stays pat, pessimistic about tariffs

There were no surprises from the Bank of Japan, which maintained its key interest rate at 0.5% in a unanimous vote. The BoJ has signaled that it plans to continue hiking rates and normalize policy, but the turmoil caused by US President Trump's tariff policy may delay the next rate increase until after the summer.

The BoJ board cut its growth and inflation forecasts in its quarterly outlook report. The growth forecast for the fiscal year ending March 2026 was slashed to 0.5% from 1.1% in January and inflation is not expected to remain sustainable at 2% until the second half of 2026, a year later than in the January forecast.

The forecast noted that US tariffs would dampen Japan's economy by weighing on global trade and consumer and businesses confidence would be impacted due to the "heightened uncertainties" over the tariffs.

US GDP takes a tumble

The markets expected a soft GDP release for Q1 but the 0.3% q/q decline was well below the market estimate of 0.2%. This followed a strong 2.4% gain in the fourth quarter of 2024. The surprise decline was driven by Trump's tariffs, as imports surged ahead of the tariffs taking effect and consumer spending declined.

The weak GDP figure raised the probability of further rate cuts and the markets are looking for up to four rate cuts before the end of the year. The Fed is in a wait-and-see mode, with little chance of a cut in May, but further economic deterioration could force the Fed to cut in June.

USD/JPY Technical

• USD/JPY has pushed above resistance at 143.45 and 143.84 and is testing resistance at 144.48
• There is support at 142.81 and 142.42

USDJPY 1-Day Chart, May 1. 2025

UK manufacturing continued to contract in April, with PMI finalized at 45.4, a modest rise from March’s 44.9.

The sector is facing mounting challenges as output, new orders, and exports all declined further. Business confidence also fell to its lowest level since late 2022, reflecting growing unease over global trade disruptions and rising input costs.

S&P Global’s Rob Dobson highlighted a nearly five-year record drop in new export orders, particularly from the US, Europe, and China.

Manufacturers are also being squeezed by a surge in purchase price inflation, now at a 28-month high. This is prompting firms to raise prices and cut discretionary spending, reinforcing a troubling mix of "rising costs, declining demand".

Full UK PMI manufacturing final release here.

Gold dropped 1.6% in holiday-thinned Asian trading on Thursday, hitting the lowest in two weeks, as fresh risk appetite on fading trade tensions further dented metal’s safe-haven appeal.

Loss of pivotal $3300 support zone has generated strong bearish signal (daily close below these levels to confirm the signal).

Fresh bears cracked next strong supports at $3230 zone (daily Kijun-sen / 50% retracement of $2959/$3500 upleg), adding to negative near term outlook.

Daily studies show 14-d momentum in a steep fall and approaching the centreline, while daily Tenkan-sen turned south that supports the action.

April’s monthly candle with very long upper shadow also contributes to developing reversal signal.

Firm break of $3230 zone to further weaken near term structure and expose targets at $3200 (psychological) and $3164 (Fibo 61.8%) in extension.

Former spike lows at $3260 mark initial resistances, with $3300 zone now acting as solid resistance which should cap potential upticks and signal positioning for deeper correction.

Res: 3260; 3292; 3300; 3328
Sup: 3221; 3200; 3164; 3100

At the post meeting press conference, BoJ Kazuo Ueda acknowledged that the surge in global trade tensions, sparked by the US's "reciprocal" tariffs, has sharply elevated uncertainty over global policy direction. He warned that these tariff shocks would "weigh on" on Japan’s growth and inflation in the near term, but expressed hope that such effects would fade as overseas economies stabilize.

Ueda noted that BoJ downgraded its growth outlook for fiscal 2025 and 2026, with both inflation and wage gains expected to "likely slow somewhat. However, he maintained that Japan’s "severe labour shortage" should keep the positive wage-inflation cycle intact over the medium term.

Despite pushing back the timeline for inflation to converge with the 2% target, Ueda stressed "that doesn't mean the timing of further rate hikes will automatically be delayed by the same margin."

Ueda emphasized that BoJ's forecasts hinge on the assumption that trade negotiations will progress and avoid serious supply chain disruptions. However, he admitted that the probability of the baseline scenario being realized "is no longer very high." Further tariff escalation could alter both the economic outlook and BoJ’s future policy stance.

GBP/USD started a downside correction from the 1.3450 zone. USD/CAD declined and now consolidates below the 1.3850 level.

Important Takeaways for GBP/USD and USD/CAD Analysis Today

• The British Pound rallied above 1.3200 and 1.3320 before the bears appeared.
• There is a key bearish trend line forming with resistance at 1.3375 on the hourly chart of GBP/USD at FXOpen.
• USD/CAD started a fresh decline after it failed to clear the 1.3900 resistance.
• There is a major bearish trend line forming with resistance at 1.3815 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair formed a base above the 1.3200 level. The British Pound started a steady increase above the 1.3320 resistance zone against the US Dollar, as discussed in the previous analysis.

The pair even cleared 1.3400 before the bears appeared. A high was formed at 1.3443 before there was a downside correction. There was a move below the 1.3400 and 1.3350 levels.

A low was formed at 1.3301 and the pair is now consolidating losses. On the upside, the pair is facing resistance near the 1.3335 level and the 23.6% Fib retracement level of the downward move from the 1.3443 swing high to the 1.3301 low.

The next key resistance near the 1.3375 level. There is also a key bearish trend line forming with resistance at 1.3375. The trend line is near the 50% Fib retracement level of the downward move from the 1.3443 swing high to the 1.3301 low.

An upside break above the 1.3375 zone could send the pair toward 1.3410. Any more gains might open the doors for a test of 1.3445.

If there is another decline, the pair could find support near the 1.3300 level. The first major support sits near the 1.3245 zone. The next major support is 1.3200. If there is a break below 1.3200, the pair could extend the decline. The next key support is near the 1.3150 level. Any more losses might call for a test of the 1.3080 support.

USD/CAD Technical Analysis

On the hourly chart of USD/CAD at FXOpen, the pair climbed toward the 1.4000 resistance zone before the bears appeared. The US Dollar formed a swing high near 1.3890 and recently declined below the 1.3850 support against the Canadian Dollar.

There was also a close below the 50-hour simple moving average and 1.3820. The bulls are now active near the 1.3770 level. The pair is now consolidating losses below the 23.6% Fib retracement level of the downward move from the 1.3892 swing high to the 1.3768 low.

If there is a fresh increase, the pair could face resistance near the 1.3800 level. The next key resistance on the USD/CAD chart is near the 1.3815 level.

There is also a major bearish trend line forming with resistance at 1.3815. If there is an upside break above 1.3815, the pair could rise toward the 1.3845 resistance or the 61.8% Fib retracement level of the downward move from the 1.3892 swing high to the 1.3768 low.

The next major resistance is near the 1.3890 zone, above which it could rise steadily toward the 1.3950 resistance zone. Immediate support is near the 1.3770 level.

The first major support is near 1.3720. A close below the 1.3720 level might trigger a strong decline. In the stated case, USD/CAD might test 1.3640. Any more losses may possibly open the doors for a drop toward the 1.3550 support.

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