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Daily Pivots: (S1) 1.2757; (P) 1.2811; (R1) 1.2878; More...

Intraday bias in GBP/USD stays neutral for the moment. Risk will stay on the downside with 1.2933 minor resistance intact. Break of 1.2706 will resume the decline from 1.3206 to 61.8% retracement of 1.2099 to 1.3206 at 1.2522. Nevertheless, firm break of 1.2933 will bring stronger rebound back to retest 1.3206 high.

In the bigger picture, price actions from 1.3433 are seen as a corrective pattern to the up trend from 1.3051 (2022 low). Rise from 1.2099 could be the second leg. Overall, GBP/USD should target 1.4248 key resistance (2021 high) on break of 1.3433 at a later stage.

The Consumer Price Index (CPI) declined 0.1% in March, following a gain of 0.2% month-on-month (m/m) in February. On a twelve-month basis, CPI was up 2.4% (from 2.8% in February).

• Energy prices fell 2.4% m/m, thanks to a 6.3% m/m pullback in gasoline prices. Meanwhile, food prices jumped by 0.4% m/m and are up 3.0% on a year-ago basis.

Excluding food and energy, core inflation rose by a meager 0.1% m/m (0.06% unrounded) – well below the consensus forecast of 0.3% m/m – and a tick lower than February's gain. The twelve-month change slipped to 2.8% (from 3.1% in February).

Services prices rose 0.1% m/m, or the softest monthly gain since August 2021. This was due to a pullback in non-housing services (-0.2% m/m), with notable declines in vehicle insurance premiums (-0.8% m/m) and travel related costs (-4.1% m/m). Meanwhile, primary shelter costs rose 0.4% m/m, following a string of softer gains in months prior.

Core goods inflation declined 0.1% m/m, after having trended higher over the prior three months. Used vehicle prices (-0.7% m/m), medical (-1.1% m/m) and recreational goods (-0.3% m/m) all declined in March.

Key Implications

While this morning's softer inflation reading came as welcome news, the reality is the figures are backward-looking. Sweeping tariff announcements in recent weeks mean that inflationary pressure is likely to heat-up over the coming months. But the magnitude of the increase will depend on both the size and duration of the tariffs. Yesterday, President Trump delayed the implementation of all reciprocal tariffs and instead imposed a flat 10% tariff on all trading partners (except for China, where the tariff rate was raised to 125%). Sectoral tariffs, including those applied to the steel/aluminum and foreign made autos and parts, remain unchanged at 25%.

To say uncertainty is elevated at the moment would be an understatement. We see economic growth stalling out through the front half of this year, which will be accompanied by a mild increase in the unemployment rate. But with core measures of inflation likely to push higher as early as Q2, the Fed will quickly find itself stuck between a rock and hard place. Fed futures have nearly fully priced the next cut to come in June, but the recent pivot in tone from some Fed officials suggests policymakers' bias has shifted to holding rates higher for longer.

Daily Pivots: (S1) 1.0876; (P) 1.0986; (R1) 1.1057; More...

Intraday bias in EUR/USD remains neutral first, but focus is immediately on 1.1145 resistance with today's rebound. Firm break there will resume whole rally from 1.0176. Next target is 1.1213/74 key resistance zone next. In case of another retreat, downside should be contained by 38.2% retracement of 1.0176 to 1.1145 at 1.0775 to complete the near term consolidation.

In the bigger picture, fall from 1.1274 (2024 high) has completed as a three wave correction to 1.0176. Rise from 0.9534 ready to resume. Decisive break of 1.1274 will target 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Also, that will send EUR/USD through the multi-decade channel resistance will carries larger bullish implication. This will now be the favored case as long as 1.0731 support holds.

Dollar faced renewed selling pressure in early US session, as markets digested softer-than-expected inflation data. The latest CPI report confirmed that disinflation is regaining traction, with both headline and core inflation easing more than expected in March. This strengthens the case for Fed to resume its rate cut cycle in the coming months.

A May rate cut remains unlikely — with Fed fund futures currently pricing in an 84% chance of a hold. Markets are still more confident that a move will come by June, with odds now standing around 78%. If the disinflation trend persists, that expectation could soon become consensus.

On the trade front, the mood is notably less tense today. The European Union announced a 90-day suspension of its first wave of retaliatory tariffs, originally planned in response to the US’s 25% steel and aluminum duties. This follows US decision to pause the broad reciprocal tariff for 90 days.

European Commission President Ursula von der Leyen emphasized, "We want to give negotiations a chance". But she also made clear that the EU remains ready to act if talks fail. Preparatory work for broader countermeasures remains underway, with all options said to be "on the table."

Despite this temporary de-escalation, overall market sentiment remains shaky. US futures are pointing to a weaker open after yesterday’s massive relief rally, suggesting that investors are still wary of the underlying risks. In contrast, European markets are tracking Asia higher, but overall confidence is fragile.

In the currency markets, Dollar is currently the worst performer of the week, followed by Sterling and Loonie. Swiss Franc continues to shine as a safe haven, with Aussie and Kiwi showing resilience as well. Meanwhile, Yen and Euro are positioning in the middle.

Technically, Gold's rebound from 2956.61 extended higher today. The strong support from 2956.09, as well as rising trend line, keeps Gold's up trend intact. Nevertheless, corrective pattern from 3167.62 might still be incomplete. Break of 3048.43 support will start another down leg. Though, firm break of 3167.62 will confirm up trend resumption.

In Europe, at the time of writing, FTSE is up 3.84%. DAX is up 4.83%. CAC is up 4.49%. UK 10-year yield is down -0.073 at 4.742. Germany 10-year yield is up 0.049 at 2.640. Earlier in Asia, Nikkei rose 9.13%. Hong Kong HSI rose 2.06%. China Shanghai SSE rose 1.16%. Singapore Strait Times rose 5.43%. Japan 10-year JGB yield rose 0.095 to 1.377.

US CPI surprise: Both headline and core inflation cools sharply in March

US inflation came in much softer than expected in March, with headline CPI falling -0.1% mom, surprising markets that had forecast a 0.2% mom increase. Core CPI, which excludes food and energy, also underwhelmed with just a 0.1% mom gain, well below the anticipated 0.3% mom. The pullback was led by a -2.4% mom drop in energy prices, while food costs continued to climb, rising 0.4% mom.

On an annual basis, the CPI decelerated from 2.8% yoy to 2.4% yoy, lower than the expected 2.5% yoy. Core CPI also slowed to 2.8% yoy, down from 3.1% yoy, and marked the smallest 12-month increase since March 2021. The sharp drop in energy prices, down -3.3% yoy, played a significant role, although food inflation remained sticky at 3.0% yoy.

US initial jobless claims rise to 223k, vs exp 222k

US initial jobless claims rose 4k to 223k in the week ending April 5, slightly above expectation of 222k. Four-week moving average of initial claims was unchanged at 223k.

Continuing claims fell -43k to 1850k in the week ending March 29. Four-week moving average of continuing claims fell -250 to 1868k.

ECB’s Villeroy: Thank God we created Euro, as tariff turmoil undermines Dollar

French ECB Governing Council member François Villeroy de Galhau emphasized today that while the US has long championed the global centrality of the Dollar, recent policy moves on tariffs are beginning to erode international confidence in the greenback.

Speaking on France Inter radio, Villeroy said the Trump administration’s approach is “very incoherent,” and suggested that its recent actions “play against the confidence” typically held in Dollar.

He contrasted this with the Euro, praising Europe’s foresight in establishing its own independent monetary system 25 years ago. “Thank God that Europe… created the Euro,” he noted, adding that the bloc now enjoys “monetary autonomy” that allows ECB to manage interest rates in a way that diverges from US policy, something that was not possible in the past.

RBA’s Bullock: Too early to call rate path amid tariff-driven uncertainty

RBA Governor Michele Bullock stated today that it is “too early” to judge how escalating global trade war will shape the path of Australian interest rates. "it’s too early for us to determine what the path will be for interest rates," she added.

Bullock noted that “a period of uncertainty and adjustment” is inevitable as countries react to Washington’s trade moves. RBA plans to stay patient while assessing how these global shocks might affect both supply and demand dynamics. “It will take some time to see how all of this plays out,” she said.

Japan's PPI accelerates to 4.2% while import costs ease

Japan’s PPI rose 4.2% yoy in March, a slight acceleration from February’s 4.1% yoy and topping expectations of 3.9% yoy rise. The increase was broad-based, with notable gains in food prices, which rose 3.1% yoy, and energy costs, with petroleum and coal prices surging by 8.6% yoy.

Despite the uptick in domestic producer prices, import costs in Yen terms fell -2.2% yoy in March, extending the -0.9% decline in February. Export prices, however, rose a modest 0.3% yoy, slowing sharply from February’s 1.7% yoy growth.

China's CPI falls -0.1% yoy in March, PPI highlights persistent deflationary pressures

China’s consumer inflation remained in negative territory for a second straight month in March, with CPI falling -0.1% yoy, missing expectations of 0.1% yoy increase. While the decline was narrower than February’s -0.7% yoy, it still reflects subdued demand pressures across the economy.

Food prices was a drag, down -1.4% yoy, while service prices provided only modest support, rising 0.3% yoy. Core CPI, which excludes volatile food and energy prices, edged up to 0.5% yoy from 0.3% previously, offering a slight glimmer of resilience.

However, with headline inflation still hovering around zero and signs of consumer caution persisting, the broader disinflation trend appears entrenched.

On a monthly basis, CPI dropped -0.4% mom, following February’s -0.2% mom decline, suggesting continued weakness in household spending momentum.

Meanwhile, producer prices extended their decline for a 30th straight month, with PPI dropping -2.5% yoy, deeper than the expected -2.3%.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0876; (P) 1.0986; (R1) 1.1057; More...

Intraday bias in EUR/USD remains neutral first, but focus is immediately on 1.1145 resistance with today's rebound. Firm break there will resume whole rally from 1.0176. Next target is 1.1213/74 key resistance zone next. In case of another retreat, downside should be contained by 38.2% retracement of 1.0176 to 1.1145 at 1.0775 to complete the near term consolidation.

In the bigger picture, fall from 1.1274 (2024 high) has completed as a three wave correction to 1.0176. Rise from 0.9534 ready to resume. Decisive break of 1.1274 will target 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Also, that will send EUR/USD through the multi-decade channel resistance will carries larger bullish implication. This will now be the favored case as long as 1.0731 support holds.

US initial jobless claims rose 4k to 223k in the week ending April 5, slightly above expectation of 222k. Four-week moving average of initial claims was unchanged at 223k.

Continuing claims fell -43k to 1850k in the week ending March 29. Four-week moving average of continuing claims fell -250 to 1868k.

Full US jobless claims release here.

US inflation came in much softer than expected in March, with headline CPI falling -0.1% mom, surprising markets that had forecast a 0.2% mom increase. Core CPI, which excludes food and energy, also underwhelmed with just a 0.1% mom gain, well below the anticipated 0.3% mom. The pullback was led by a -2.4% mom drop in energy prices, while food costs continued to climb, rising 0.4% mom.

On an annual basis, the CPI decelerated from 2.8% yoy to 2.4% yoy, lower than the expected 2.5% yoy. Core CPI also slowed to 2.8% yoy, down from 3.1% yoy, and marked the smallest 12-month increase since March 2021. The sharp drop in energy prices, down -3.3% yoy, played a significant role, although food inflation remained sticky at 3.0% yoy.

Full US CPI release here.

• The Australian dollar has extended its gains on Thursday.
• AUD/USD is trading at 0.6172 in the European session, up 0.39% on the day.

Australian dollar on a wild ride

The Australian dollar continues to take market participants on a wild roller-coaster ride. AUD/USD soared 3.2% on Wednesday, recovering from a three-day slide in which the Aussie plunged 6%. The sharp swings are a direct result of the massive moves in the global equity markets.

The week started with sharp losses in equities in response to the latest round of US tariffs. This triggered flows away from risk currencies like the Australian dollar to safer assets, such as the Japanese yen. The equity markets completely reversed directions and soared on Wednesday after Trump dropped tariffs to a universal 10% on all countries except China, and the Australian dollar surged higher.

Australian inflation expectations jumps to 4.2%

Australian consumer inflation expectations climbed to 4.2% in April, up from 3.6% in March and above the forecast of 3.6%.
The sharp gain reflects the concern that the latest escalation in trade tensions could boost Australia's inflation rate. The Reserve Bank of Australia has only lowered rates once after holding rates for over a year but may have to accelerate its easing due to the tariff turmoil.

China's CPI decline for second consecutive month

China's consumer prices declined for a second successive month as domestic consumption has weakened. CPI dropped by 0.1% y/y in March after a sharp 0.7% decline in February, below the market estimate of 0.1%. Monthly, CPI declined by 0.4%, down from -0.2% in February and below the market estimate of -0.2%.

Producer Price inflation also eased as China could face more unsold exports due to the trade war with the US. A decrease in domestic demand in China could translate into less demand for Australian exports.

AUD/USD Technical

• AUD/USD pushed above resistance at 0.6164 and tested 0.6193 earlier
• 0.6125 and 0.6094 are providing support

RBA Governor Michele Bullock stated today that it is “too early” to judge how escalating global trade war will shape the path of Australian interest rates. "it’s too early for us to determine what the path will be for interest rates," she added.

Bullock noted that “a period of uncertainty and adjustment” is inevitable as countries react to Washington’s trade moves. RBA plans to stay patient while assessing how these global shocks might affect both supply and demand dynamics. “It will take some time to see how all of this plays out,” she said.

• Market breadth measured by the percentage of Nasdaq 100 component stocks above their 20-day and 50-day moving averages remains lacklustre.
• An elevated widening trend of US high-yield corporate bonds credit spread may trigger another jump in the implied volatility of the Nasdaq 100.
• Key intermediate resistance stands at 19,290 on the Nasdaq 100.

This is a follow-up analysis of our prior analysis “Nasdaq 100 Technical Outlook: Bearish move materialised; how low can it go?” dated 1 April 2025.

Since our last publication, the Nasdaq 100 CFD Index (a proxy for the Nasdaq 100 E-mini futures) has tumbled 16%, breaking below the 17,300/17,250 medium-term support zone highlighted in our report. It went on to test the major support level at 16,590, printing an intraday low of 16,335 on 7 April before recovering to close higher at 17,508 by the end of the U.S. trading session.

In a dramatic move on Wednesday, April 8, U.S. President Trump announced a 90-day suspension of the increased reciprocal tariff rates for countries that choose not to retaliate, excluding China from this exemption.

Tensions between the U.S. and China remained high, as the White House imposed additional tariffs on Chinese goods, raising the tariff rate to 125% in response to Beijing's retaliatory measures of imposing 84% duties on all US imports.

The U.S. stock market skyrocketed, posting significant gains across major indices. Mega-cap-focused benchmarks, the S&P 500 and Nasdaq 100, surged by 9.5% and 12%, respectively. The Dow Jones Industrial Average and the small-cap Russell 2000 also rallied, climbing 7.9% and 8.7%, respectively, as investor optimism fuelled a broad-based market upswing.

Yesterday's massive rally in the Nasdaq 100 marked its largest single-day gain since 2001, and the second biggest on record, trailing only the 19% surge recorded on 3 January 2001.

The key question on most traders' minds now is whether yesterday’s stellar performance signals the start of a medium-term bullish reversal in the Nasdaq 100, or if it’s merely a corrective rebound, commonly referred to as a “dead cat bounce.”

Market breadth indicators remain weak

Fig 1: Percentage of Nasdaq 100 & 500 component stocks above key moving averages as of 9 Apr 2025 (Source: TradingView)

As of Wednesday, April 9, only 32% and 15% of Nasdaq 100 component stocks were trading above their respective 20-day and 50-day moving averages—both remaining below the 50% threshold (see Fig 1).

This lacklustre market breadth suggests that the Nasdaq 100’s impressive single-day rally may not necessarily signal the start of a medium-term bullish reversal.

Implied volatility may see a jump again

Fig 2: ICE BofA US High Yield Index Option-Adjusted Spread with VXN as of 9 Apr 2025 (Source: TradingView)

20-day moving average is acting as an immediate ceiling at 19,290

Fig 3: Nasdaq 100 CFD major & medium-term trends as of 10 Apr 2025 (Source: TradingView)

After yesterday’s steep rally on the Nasdaq 100 CFD Index has started to stall the bullish tone at its 20-day moving average, acting as a key intermediate resistance at 19,290, where an intraday bearish reaction of -2.8% has materialised at this time of writing (see Fig 3).

In addition, the daily RSI momentum indicator has also failed to break above a parallel resistance at the 50 level after it exited from an extreme oversold condition yesterday.

These observations suggest that yesterday’s 12% rebound on the Nasdaq 100 CFD Index may be a bull trap, and the medium-term downtrend phase is still intact.

A break with a daily close below 16,590 may trigger a fresh impulsive down move to expose the next medium-term supports at 15,820/15,290, and 14,060.

On the other hand, a clearance above 20,360 key medium-term pivotal resistance (also the intersection of the 50-day and 200-day moving averages) invalidates the bearish scenario for the next medium-term resistances to come in at 21,440, and 22,470/22,980 next.

• Gold prices have risen beyond $3100/oz due to ongoing US-China trade tensions.
• FOMC minutes indicate potential challenges for the Fed with inflation and slower growth.
• Market rate cut expectations are fluctuating due to tariff news.
• Technical analysis shows key support levels for Gold at 3100, 3087, and 3050, with resistance at 3125, 3150, and 3167.

This is a follow-up analysis of our prior report “Gold (XAU/USD) grinds above $3000/oz. Are bulls ready to take charge?” published on 5 February 2025.

Gold prices have exploded beyond the $3100/oz level with bulls now firmly in control. US-China trade tensions continue to escalate which is keeping safe haven demand strong.

However, as discussed in the article on April 8, Gold seems to be the preferred safe haven when the CHF and JPY lose value. This goes against the traditional norms when all three would usually move in tandem during periods of extreme volatility and safe haven demand.

This was evident once more yesterday as US President Donald Trump announced a 90day pause on tariffs to most countries while ratcheting up tariffs on China. The result saw the JPY, CHF lose ground but Gold continued to soldier on.

Gold surprisingly followed risk assets like the S&P 500 higher despite the threat of a continued tit-for-tat between the US and China which many are starting to call ‘cold war 2.0’.

FOMC minutes and rate cut bets

Yesterday brought the release of the FOMC minutes which revealed that Federal Reserve policymakers mostly agreed that the U.S. economy faces the risk of higher inflation and slower growth. They warned that the central bank might have to make tough decisions ahead.

This would definitely complicate matters for the Fed. Slower growth usually requires a stimulus in the form of rate cuts, while a rise in inflation would necessitate a rate hike. Interesting times ahead for the Fed indeed.

Markets have been changing their rate expectations at break neck speeds of late. Just yesterday markets were pricing in a 44% chance of a 25 bps cut in May which dropped to 20% after President Trump announced the tariff pause.

As developments around tariffs and their impact continue, I expect rate cut expectations to continue to fluctuate. More data will be needed before the Fed is comfortable making any move.

Source: CME FedWatch Tool

US CPI data ahead

US inflation data may not hold the same sway on market moves at present. The reason being that markets are well aware the supposed impacts of tariffs will not be reflected in today's numbers.

That being said however, a significant uptick in inflation could stir some trouble as markets may be concerned that inflation could explode once the tariff effects are fully felt. Thus a higher than expected print could dent overall market sentiment which means the data remains key in my humble opinion.

Tomorrow we have the Michigan consumer sentiment preliminary data which will be just as intriguing. Inflation expectations last month saw a significant increase with markets likely to play close attention to consumers expectations this time around.

Technical Analysis - Gold (XAU/USD)

From a technical analysis standpoint, Gold prices found their legs yesterday finally breaking above the 3040 handle and pushing on.

The daily candle closed as a massive bullish engulfing candle and finished the day some 3.38% higher.

Gold peaked this morning just above the 3125 resistance handle before falling back toward the 3100 support handle. A base needs to form around here if bulls are to maintain their dominance and push the precious metal to fresh all-time highs.

So far Golds reaction to tariff developments have surprised. Hence caution is the way forward as a deal between the US-China seems some way off at this point.

If such a deal materializes there is a chance that gold prices will fall once more.

Gold (XAU/USD) Daily Chart, April 10, 2025

Source: TradingView (click to enlarge)

Support

• 3100
• 3087
• 3050

Resistance

• 3125
• 3150
• 3167 (all-time highs)