Sample Category Title

• EURJPY recovers losses but lacks new highs.
• Mixed signals; breakout above 164.20 or below 159.70 needed.

EURJPY has been range-bound after immediately recouping the steep drop to 158.14 last week. Persistent rejections around the 163.00 area have capped upside momentum, but not all signs are negative.

A bullish cross between the 20- and 200-day SMAs – the first since December 2023 – is providing a ray of hope to buyers. The pair also appears to be tracing an upward channel since February.

A move above the 162.60 zone could test the 164.20 area, aligning with the 50% Fibonacci retracement of the December - July uptrend. A breakout might open the way to October’s peak of 166.67 or even the 38.2% Fibonacci at 166.90. Then the bulls could meet the channel's upper band near 167.90, with 169.20 acting as the subsequent resistance.

On the downside, support is currently developing near the 200-day SMA and the 61.8% Fibonacci level of 161.65. The broken resistance trendline at 160.60 and the 50-day SMA could also protect the market from selling pressures. A drop below the ascending trendline at 159.70, however, could shift sentiment bearish, exposing the pair to the 158.00 region and potentially to 156.00.

In summary, EURJPY remains neutral ahead of today’s ECB rate decision. The central bank is expected to cut rates by 25bps but may avoid signaling future moves. A break above 164.20 or below 159.70 could end the current stalemate.

Just six days ago, we highlighted the historic breakthrough of the $3,200 level for the first time. Now, as the XAU/USD chart shows today, the price of an ounce of gold on global exchanges is fluctuating above $3,300.

Bullish sentiment is being driven by a weakening US dollar and rising trade tensions between the United States and China, which are boosting gold’s appeal as a safe-haven asset. In response to these developments, Goldman Sachs analysts have raised their year-end 2025 forecast to $3,700.

However, technical analysis is beginning to flash some bearish signals.

Technical Analysis of XAU/USD

Using the latest data, we have drawn an ascending channel on the hourly chart that more accurately reflects price action since 8 April. Initially, the price moved within a narrow range, but after breaking the S-line, it found support (indicated by an arrow) at the lower boundary of the channel.

At present, there are signs of fading upward momentum in the gold market, as the price:

→ is failing to reach the median line (marked with a symbol);

→ is falling below the lower boundary of the channel.

After a rally of over 26% since the beginning of the year, the market may now be heavily overbought, and a correction could help “let off steam”. In this case, a test of the $3,250 level cannot be ruled out.

Long-Term Gold Price Forecasts → see the article: Analytical Gold Price Predictions for 2025 and Beyond.

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Market Picture

Over the past seven days, the cryptocurrency market went from falling to $2.5 trillion to rising to $2.71 trillion but later corrected to the $2.65 trillion area. The recovery momentum lost strength near the previous consolidation zone. The market has so far failed to overcome the descending resistance line formed from the peak on the US Presidential Inauguration Day.

The sentiment index is gradually moving out of the ‘extreme fear’ zone and consolidating in the ‘fear’ area. This is a good signal that the correction may be over, but there are still not enough catalysts for a full-fledged rally.

Bitcoin continues to trade within a relatively narrow range of $83K–$86K, hovering around the 50-day moving average but still struggling to break above the 200-day. On the daily chart, the RSI is showing a bullish divergence, with a higher low on the indicator despite a lower local price low.

News Background

Gold continues to update records amid the escalation of the trade war, while bitcoin is not yet demonstrating the behaviour of a ‘protective asset,’ QCP Capital noted. A similar trend is also observed for the US dollar and US government bonds.

Standard Chartered predicts that by 2028, the capitalisation of stablecoins will increase more than eightfold, up to $2 trillion. The growth driver will be the expected adoption of the GENIUS Act in the US, which will create a regulatory framework for the stablecoin sector.

The state of Oklahoma (USA) rejected a bill to create a strategic bitcoin reserve (SBR). The document did not receive approval in the Senate’s profile committee, and the decision was made with a minimum margin of six votes against five.

According to Reuters, local authorities in China are using private companies to sell confiscated cryptocurrencies to supplement the budget. Bitbo estimates the number of bitcoins in the possession of Chinese officials at 194,000 BTC (~$16.3bn).

Asian stocks rose slightly on Thursday, and the dollar gained a bit as traders evaluated trade talks between the U.S. and Japan, while concerns over tariffs introduced by President Donald Trump kept the mood cautious.

Markets were also digesting comments by Federal Reserve Chair Jerome Powell yesterday.

Fed Chair Jerome Powell gave a firm hawkish message, dismissing hopes for rate cuts despite inflation worries. He projected higher inflation and a weaker jobs market due to tariffs, while focusing mainly on inflation control. This stance, paired with Trump tolerating market volatility, is likely to leave equities under pressure.

Gold prices took a breather in the Asian session after printing a fresh high around $3357/oz in early Asian trade. At the time of writing Gold is trading at $3325/oz, down about 0.50% on the day. The move does not appear to be down to sentiment but could be due to profit taking ahead of the Easter break.

Oil prices rose slightly after US Treasury Secretary Scott Bessent made a comment that President Trump is ready to ensure Iran's oil exports drop to zero. Oil is on course for another weekly gain.

As we head into the European session, sentiment remains fragile after TSMC noted that Trump policies would hurt growth.

TSMC’s net income jumped 60.3% from last year to NT$361.56 billion, and its revenue grew 41.6% in the March quarter to NT$839.25 billion. However, the company is facing challenges due to U.S. President Donald Trump's trade policies, which include tariffs on Taiwan and stricter export rules for its clients Nvidia and AMD.

Economic data releases

From a data perspective, the major event for the European session will be the ECB meeting today with a rate cut likely in my opinion. Market participants have for a long period been pricing in a 25bps cut, so the euro is unlikely to be strongly affected.

There is no reason why the Euro cannot extend its gains against the US Dollar, barring a strong recovery from the Greenback.

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

Chart of the day - Crude Oil

From a technical standpoint, crude oil prices have broken above a significant resistance level after comments on Iranian oil by US Treasury Secretary Bessent.

After a period of consolidation, are oil prices ready to explode?

Explode might be the wrong word given the fragile sentiment markets are currently experiencing. From a technical standpoint though the break of the 66.42 handle is significant as crude has spent the majority of April testing this level.

There is significant resistance ahead and with global dynamics still a worry there is a chance that the breakout may not have the legs to continue.

If a move higher materializes, immediate resistance may be found at 68.17, 68.58 and of course the psychological 70.00 handle.

A move lower which we are seeing in early European trade, could bring support at 64.36, 62.81 and 61.00 into focus.

Crude Oil Four-Hour (H4) Chart, April 17, 2025

Source: TradingView.com (click to enlarge)

The GBP/USD pair climbed for seven consecutive days, reaching 1.3210, before experiencing a slight dip on Thursday. This marks the longest sustained rise for the currency pair since July last year, with the pound’s strength primarily driven by a weakening US dollar.

Key factors influencing GBP/USD movements

Fundamentally, the outlook remains mixed. The UK’s Consumer Price Index (CPI) fell more than anticipated in March, with annual inflation dropping to 2.6% and services sector inflation easing to 4.7%. This has alleviated some pressure on the Bank of England (BoE), prompting markets to adjust their expectations for monetary policy easing.

Traders are now pricing in rate cuts of around 85 basis points by year-end, with the first reduction widely expected in the coming months. By December, there is a greater than 50% probability of a further cut, as slowing inflation could give the BoE more flexibility to support the economy and households amid ongoing trade uncertainties.

Technical analysis: GBP/USD outlook

H4 Chart Perspective

• The GBP/USD pair recently completed an upward wave, peaking near 1.3290
• A downward impulse is now unfolding, targeting 1.3165
• A potential rebound towards 1.3222 may follow before a possible decline to 1.2990
• This outlook is supported by the MACD indicator, where the signal line has exited the histogram area and is trending sharply downward

H1 Chart Perspective

• The pair consolidated around 1.3222 before breaking lower
• The immediate downside target is 1.2880, followed by a potential retest of 1.3222 from below
• The Stochastic oscillator reinforces this view, with its signal line below 50 and descending towards 20

Conclusion

While the pound benefits from a softer dollar and shifting rate expectations, technical indicators suggest potential near-term volatility. Traders should monitor both macroeconomic developments and key technical levels for further directional cues.

In Australia, the RBA Minutes from the April meeting provided some extra colour around the Policy Board’s deliberations. Despite pre-dating President Trump’s ‘Liberation Day’ tariff announcements and the subsequent volatility in markets, many of the statements around the potential impact on Australia remain relevant, especially that “the effects on GDP growth and inflation in Australia could be relatively modest… reflect[ing] Australia’s limited direct trade exposure to the United States, additional policy support in China and Australia’s flexible exchange rate.” Still, they note that the risks to inflation were “more two-sided” depending on the balance between upside factors such as supply-side disruptions and a weaker exchange rate, and downside factors like weaker global demand and trade diversion away from the US. The Board noted that having a fresh set of forecasts alongside new information around inflation, wages and the labour market will “have a considerable bearing on their decision” at the next policy meeting on May 19-20. At that meeting, Westpac anticipates the Board will deliver a 25bp rate cut, bringing the cash rate to 3.85%.

On the data front, this week’s labour force data, was a bit of a mixed bag. There was only a partial bounce-back in labour supply, seeing the participation rate hold broadly steady at 66.8%. Labour demand looks to have largely moved in tandem, with employment rising +32k, falling short of expectations. Measures of labour market slack were therefore little changed, with the unemployment rate increasing only 0.01ppt. Overall, the RBA are likely to see this data as broadly in line with their expectations, still reflecting a degree of ‘tightness’ relative to full employment. Ultimately, the Q1 CPI data, due April 30, will prove to be a critical input to their May decision.

This week was not short of excitement. FOMC Chair Powell had a clearer tone. In a speech to the Economic Club of Chicago, he noted that the Fed’s “obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing problem”. This, alongside his previous references to Teal Book modelling through Trump’s first term, reaffirms his commitment to prioritising managing inflation risks over growth. This sentiment has been echoed by the Bank of England and Bank of Canada who have been quick to point out that they will allow fiscal policy to support growth, particularly if its decline is caused by supply-side factors.

The Bank of Canada kept rates steady this meeting after seven consecutive rate cuts. The pause comes as the central bank assesses the impact of trade policy with the US and its uncertain impact on the Canadian economy. Governor Tiff Macklem noted that the BoC would be ‘less proactive than usual until we have greater clarity.’ Macklem doubled down on prior comments that monetary policy cannot offset the impact of a trade war, only maintain price stability. Instead of a central forecast, the monetary policy report published two forecasts one which had minor deviations from the previous set of forecasts and another showing a recession caused by trade tensions. The overall messaging suggests the balance between growth and inflation is once again slowly being nudged towards inflation. Further moves down will come after careful consideration and confidence that inflation and inflation expectations are contained.

In the UK, CPI data for March showed a downtick in inflation. The headline rate fell by 0.2ppt to 2.6%yr while the core rate ticked down to 3.4%yr. The deceleration came from the services component, which rose 4.7%yr down from 5.0%yr. These figures came after a mixed labour market report. While the official labour force statistics indicated employment increased by 206k in February, administrative data from tax authorities was down 78k in the month. Average weekly earnings growth over the three months to February were unchanged at a downwardly revised 5.6%yr. Private sector wages excluding bonuses were also unchanged at 5.9%. While progress on inflation is being made, stubbornness in wages will keep the BoE attentive to inflation risks. Still, we expect the central bank to cut rates in the May meeting by 25bps justified by the progress on inflation and emerging growth risks from a slowdown in global trade.

In China, Q1 GDP came in stronger than anticipated at 5.4%yr and rose 1.2% in the quarter. The official press release was quick to attribute the 'positive momentum' to effective macro policy by authorities. Monthly activity data for March also painted a solid picture of the economy. Retail sales rose 4.6%yr on a year-to-date basis supported by spending generally seen during the Lunar New Year -- household appliances, furniture and services. Industrial production lifted 6.5%yr/ytd far exceeding expectations. While the high-tech manufacturing sector continues to expand at a solid pace, this quarter also saw a solid uptick in coal and crude oil production. The 4.2% gain in fixed asset investment was supported not only by state-owned enterprises but also by private investment which has been declining since August 2024. All this offset the 9.9%yr decline in property investment. The data played well into the narrative authorities in China want to convey -- China is a thriving economy and a solid trade partner. Authorities can point to its solid manufacturing sector and their policy decisions to back up their claims. We retain our view that the Chinese economy will hit its growth target of 5.0% for 2025 supported by further policy measures as the authorities see fit and growth in the high tech manufacturing sector.

Our updated views on the domestic and global economy alongside forecasts can be found in our Market Outlook for April 2025.

While on a client trip through Europe and North America, I have seen investors go through all five stages of financial market grief about the US: confusion, fatalism, denial, revulsion – and reallocation

What a time to be on a client trip through Europe and North America. The ‘US exceptionalism’ narrative that prevailed between the election and inauguration had already broken by mid-March. As the news unfolded in April and daily market convulsions ensued, I noticed a deeper thread in the questions and observations from clients, and also from peer chief economists at an international meeting in Basel: the mood has shifted from ‘US exceptionalism’ to ‘US revulsion’.

Prior to ‘Liberation Day’, and in the first few days after, many institutional and official sector investors simply didn’t know which way to jump. They had little conviction about the direction of the market and were therefore taking little risk. The next stage of market grief after the freeze of confusion was a kind of fatalism. Yes, the US looks a lot less attractive and the US dollar is overvalued, they would say, but nothing is deeper and more liquid than the US Treasury market; one can’t get out of it. This is the ‘TINA problem’ – There Is No Alterative – that we have discussed previously.

A couple of US-based clients were detouring through the denial phase of grief. They highlighted the US’s entrepreneurial dynamism and were holding on to the prospect that the US would continue to enjoy a growth differential over other Western economies, perhaps following some unspecified deregulation by the Trump administration. Most US-based contacts, though, were even more strongly in the Revulsion phase than their European peers. As one US-based client commented, “America is cooked”.

That’s the thing with narratives. Once you start to see the cracks in a narrative, you start to question things more broadly. Tariff policy and bullying of close allies opened up the crack. But then the high valuations in the equity market, previously shrugged off, start to look more concerning. So does the parlous fiscal position of the US government and the incapacity of the US political system to solve this and other problems. Then some of the wilder ideas of Trump administration officials – like coercively converting US Treasury bonds to non-marketable zero-coupon paper – start to be seen as genuine – and alarming – possibilities. The previously unthinkable becomes plausible.

Then came the revulsion, the simultaneous sell-off in the US dollar, bonds and equities. There is still a TINA issue – There Is No Alternative to the US Treasury market. Selling out of US markets entirely is infeasible, for all the talk about US markets becoming uninvestible. There is, however, also McRAE – Markets Can Reallocate Easily. Right now everyone wants to be at least a bit less long US markets. Thus the final stage of market grief is reallocation. And because it is flows that determine pricing, not legacy stocks, with reallocation comes repricing: TINA McRAE.

What, then, are investors and asset managers looking to reallocate into as they reallocate out of the US? Everywhere, but for now mostly Europe; it is the ‘adjacent possible’. Even before Liberation Day, we heard, equity investors were looking at Europe in a more positive light. This is especially true for the defence sector. The Trump administration’s treatment of Ukraine, Canada and its NATO allies has been as much behind investor revulsion as the chaotic tariff policies. Germany’s constitutional change and pivot to increased defence spending was something of a catalyst for the shift in thinking, too.

More broadly, people are noticing that Greater Europe – including not just the euro area or even the EU but also others in the region such as the UK, Switzerland and Norway – represents an enormous and reasonably integrated economic market, even if not an integrated and homogeneous bond market. It is also a region that has been driven by the Trump administration’s behaviour to seek ways to extricate itself from dependence on US defence and tech sector vendors. On this front, broader cooperation with Canada and Australia – a kind of ‘Eurovision plus one’ grouping – was widely discussed in my recent meetings with clients. (Canadian clients were already aware and others interested to hear about Canada’s decision to purchase Australia’s JORN over-the-horizon radar technology.)

Within this broader pivot of views, a lot depends on how the trade dispute plays out from here. The tariff rates announced on Liberation Day are too self-destructive to stand. It was therefore no surprise that a 90-day pause on most of the highest rates came soon after, and a further carve-out for certain tech items. Expect more unilateral concessions by the Trump administration, though probably dressed up to look like a deal. And if the result is that most countries, including Asia outside China, end up being tariffed at 10% like Australia, New Zealand and the penguins, all that will happen is that US consumers end up paying more. Nobody will shift the location of production for the sake of a 10% tariff, not when the currency of the tariffing nation is already at least 20% overvalued.

The Chinese reaction and escalated bilateral tariffs will be a tougher nut to crack. Clearly the Chinese authorities have assessed that China can outlast the US and withstand the disruption to trade. At these tariff levels, trade between the two nations will simply stop, other than in items already exempted. While US demand for Chinese exports is an important engine of China’s growth, it is not the only one. Autonomous domestic demand in the rest of Asia is becoming at least as big a driver of China’s export growth lately. And together with some inevitable domestic stimulus, this could be enough to ride out the hit to growth while it redirects trade elsewhere. The US, on the other hand, will only have a few months before the pre-tariff rush to build up inventories is depleted, prices spike and shelves start to empty.

It is because we expect the Trump administration to crack and roll back its tariffs further that we see the US as teetering on the brink of recession but not necessarily falling in. Meanwhile, China will again stimulate, including by boosting capacity in advanced manufacturing. This is disinflationary for the rest of the world and – importantly for Australia – when coupled with measures targeting infrastructure and residential property, supportive of iron ore demand. China’s high levels of debt, deflation and sub-national fiscal imbalances are all genuine medium-term challenges. In the short term, though, China looks better placed to muddle through than the US.

The deeper reason for this is that, like Europe, China retains state capacity to respond to challenges, even when the necessary actions are uncomfortable. By contrast, the policy chaos of the Trump administration is in many ways the culmination of a decades-long decline in capacity for collective action. Consider that the President’s power to impose tariffs stems from an Act of Congress. Congress could amend or repeal that Act, but almost certainly won’t.

A consequence of that loss of state capacity – and loss of trust – is the current revulsion phase of market repricing. The tariffs may well be rolled back quickly; if so, some of the current sell-off may prove overdone. Even in that event, though, lasting damage has been done to the US’s reputation as a reliable partner and investment destination. TINA McRAE is out there: a more volatile financial landscape, more diversified and less centred on the US. Asset allocations, hedging strategies and business models will all need to adapt, and soon.

Daily Pivots: (S1) 187.02; (P) 188.34; (R1) 189.11; More...

Intraday bias in GBP/JPY stays neutral for the moment,, and more consolidations would be seen above 184.35. Risk will remain on the downside as long as 190.06 resistance holds. Below 184.35 will target 180.00 low. Nevertheless, break of 190.06 will turn bias back to the upside for stronger rebound.

In the bigger picture, price actions from 208.09 are seen as a correction to rally from 123.94 (2020 low). Strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. However, sustained break of 175.94 will bring deeper fall even still as a correction.

Daily Pivots: (S1) 161.24; (P) 161.76; (R1) 162.18; More...

Intraday bias in EUR/JPY remains neutral as range trading continues. On the upside, above 164.16 will resume the rally from 154.77 to 164.89 resistance, and then 166.67. However, decisive break of 158.27 support will bring deeper decline back to 154.77 support. Overall, sideway consolidation pattern from 154.40 is still extending.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). Strong support should be seen from 38.2% retracement of 114.42 to 175.41 at 152.11 to contain downside. However, sustained break of 152.11 will bring deeper fall even still as a correction.

Daily Pivots: (S1) 0.8553; (P) 0.8584; (R1) 0.8640; More...

Intraday bias in EUR/GBP remains neutral for the moment. Consolidations from 0.8737 could extend but further rise is still expected as long as 0.8518 support holds. On the upside, break of 0.8737 will resume the larger rally from 0.8221.

In the bigger picture, down trend from 0.9267 (2022 high) should have completed at 0.8221, just ahead of 0.9201 key support (2024 low). Rise from 0.8221 is likely reversing the whole fall. Further rise should be seen to 61.8% retracement of 0.9267 to 0.8221 at 0.8867 next. This will now remain the favored case as long as 0.8472 resistance turned support holds.