Sample Category Title

Daily Pivots: (S1) 167.45; (P) 168.02; (R1) 168.82; More...

EUR/JPY is extending consolidation from 171.58 short term top and intraday bias remains neutral. Overall outlook will remain bullish as long as 165.33 resistance turned support holds. Above 171.58 will resume larger up trend to 178.39 projection level next.

In the bigger picture, current rally is part of the up trend from 114.42 (2020 low), which is still in progress. Decisive break of 169.96 (2008 high) will pave the way to 100% projection of 139.05 to 164.29 from 153.15 at 178.39. On the downside, break of 162.26 support is needed to be the first sign of medium term topping. Otherwise, outlook will stay bullish in case of retreat.

Daily Pivots: (S1) 0.8527; (P) 0.8541; (R1) 0.8553; More...

Intraday bias in EUR/GBP is turned neutral with current recovery. Some consolidations would be seen above 0.8529 temporary low. But further decline is expected as long as 0.8582 resistance holds. Below 0.8529 will target 0.8491/7 support zone.

In the bigger picture, outlook remains bearish as EUR/GBP is capped below medium term falling trendline. That is, down trend from 0.9267 (2022 high) is still in progress. Firm break of 0.8491/7 will target 100% projection of 0.8764 to 0.8497 from 0.8643 at 0.8376.

Daily Pivots: (S1) 1.6368; (P) 1.6433; (R1) 1.6544; More...

Intraday bias in EUR/AUD remains neutral at this point. Further decline is expected as long as 1.6484 resistance holds. Below 1.6288 will resume the fall from 1.6742 to 1.6127 support, or further to 100% projection of 1.7062 to 1.6127 from 1.6742 at 1.5807. However, break of 1.6484 will turn bias back to the upside for further rebound.

In the bigger picture, fall from 1.7062 medium term top is seen as a correction to the up trend from 1.4281 (2022 low). In case of another fall, strong support is expected around 1.5846 and 38.2% retracement of 1.4281 to 1.7062 at 1.6000 to bring rebound. Break of 1.7062 is in favor as a later stage.

Daily Pivots: (S1) 0.9765; (P) 0.9791; (R1) 0.9833; More...

Intraday bias in EUR/CHF is back on the upside with break of 0.9800 temporary top. Retest of 0.9847 resistance should be seen. Firm break there will resume larger rise from 0.9252 to 61.8% projection of 0.9252 to 0.9847 from 0.9563 at 0.9931 next. Further rally is now expected as long as 0.9748 support holds, in case of retreat.

In the bigger picture, while 55 D EMA (now at 0.9644) was breached, EUR/CHF rebounded strongly since then. Rise from 0.9252 medium term bottom should still be in progress. Break of 0.9847 will target 38.2% retracement of 1.2004 (2018 high) to 0.9252 (2023 low) at 1.0303, even as a correction to the down trend from 1.2004. However, sustained trading below 55 D EMA will argue that the rebound has completed.

In focus today

Today's main event will be the FOMC meeting, where we and the markets expect no changes to the Fed's policy rate. With no new economic projections, focus will be on Powell's verbal guidance as well as on any hints on the Fed's plans to taper the pace of QT. Read more in Research US - Fed preview - Cuts still in the horizon, 26 April.

Just ahead of the rate decision, ISM Manufacturing index and ADP private sector employment report will be released for April alongside JOLTs labour turnover data for March.

Economic and market news

What happened over night

Markets in Asia have kicked off the first trading session of May ahead of the Fed decision in mixed fashion, with Australian and Japanese stock indices trading lower, and South Korean indices trading marginally higher. This also comes on the back of US equities yesterday closing their worst month since September last year. US equities ended up taking a turn for the worse yesterday after the release of the Employment Cost Index (read more below). Most US futures are also in the red as of this morning with only Dow Jones futures trading slightly up.

In Japan, data indicated that Japanese authorities had intervened in FX markets Monday using upwards of USD35bn supporting the yen, which hit a 34-year low against the dollar (USDJPY). This morning the yen is trading around 157.9 against the dollar.

With today marking International Labour Day, Hong Kong and Chinese markets are closed. China will also be out for the remainder of the week.

What happened yesterday

In the euro area, headline HICP inflation for April came in at 2.4% y/y as was expected, and unchanged from the month prior. Core inflation stood slightly higher than expected at 2.7% y/y (consensus 2.6% y/y), although it declined from 2.9% y/y the month before. Headline was unchanged despite the lower core inflation due to a rise in both food and energy inflation.

The much-important momentum in services inflation came in at 0.35% m/m s.a. which does not rhyme with 2% annual inflation. As such it poses an upside risk to the aggregate inflation outlook. Momentum in services inflation has been strong in the first months of 2024 and this has likely caused some concerns at the ECB.

The euro area economy grew more than what consensus expected in Q1 2024, as the economy saw 0.3% growth q/q (consensus: 0.1% q/q). However, the Q4 2023 number was revised down from 0.0% q/q to -0.1% q/q. We are yet to receive a full and detailed picture of what subcomponents stood out as growth drivers. However, country data suggests that demand especially from outside the euro zone contributed to and drove economic growth in Q1.

In the US, consumer confidence numbers for April surprised to the downside, as it the confidence metric stood at index 97 (prior: 104.7), whereas index 104 had been expected.

Conversely, the Employment Cost Index surprised to the upside, as it rose 1.2% q/q in Q1 2024 (prior: 0.9% q/q) compared to expectations of 1.0% q/q. The subcomponents for wages and benefits both rose 1.1% q/q (prior: 0.9% q/q and 0.7% q/q, respectively). Markets reacted by sending yields higher and EUR/USD lower.

Mood among investors is not cheery into the Federal Reserve’s (Fed) latest monetary policy decision due later today. And it’s understandable. The Fed must respond to three straight month jump in inflation and probably take a step back in its plans to cut the interest rates this year. There is even a risk that the Fed drops the expectation of a rate cut in 2024; that’s the most dovish statement that could reasonably be expected from the Fed at this point, and in the light of the latest economic data.

Speaking of data, figures released yesterday came to back the idea that the Fed’s inflation battle doesn’t necessarily continue to move toward the right direction. The employment cost index rose more than expected in the Q1. The consumer confidence on the other hand sank below 100, it should yet result in slowing spending to help inflation tame – a thing that we haven’t seen yet. The S&P500 fell more than 1.5% yesterday and posted the worse performance this year, the US 2-year yield – which best tracks the Fed rate bets – advanced past the 5% level ahead of the Fed decision and the US dollar extended gains for the fourth month. Investors will watch the ADP, JOLTS and PMI numbers today, but it won’t change the fact that the first quarter of the year was marked with strong jobs data and a notably rise in US inflation. The Fed must address the inflation issue by keeping its rates higher for longer.

Holly AI

If the first few months of the year ended in tears for the Fed doves, the AI-related stocks lived up to very high expectations in the Q1. All the Maginficent 7 stocks that reported earnings so far – except from Tesla – surpassed high market expectations. Amazon posted the best beat among them, as its AWS cloud platform grew 17% compared to the same time last year thanks to sustained AI demand and its advertising services jumped 24% over the same period thanks to new ads on Prime Video.

All in all, Amazon added another piece to the AI puzzle revealing that demand for AI remained robust in the first three months of the year, but the stock price rose less than 2% in the afterhours trading as a weak sales forecast for the current quarter tempered optimism regarding the Q1 results. So maybe – but just maybe – we will see AI growth level out in Q2, and trigger a certain profit taking tech stocks?

Regardless, Amazon remains a strong AI play. They not only benefit directly from AI investments through the AWS unit, but AI also enhances the company’s ad business, as well as automated operations and logistics.

Eurozone exits recession

Eurozone grew at the fastest pace in 18 months and exited recession in the Q1. Germany, France, Italy and Spain – all - exceeded forecasts. Core inflation also slowed in April, though it slowed less than expected. Yesterday’s better-than-expected growth and hotter-than-expected inflation figures could’ve weighed on European Central Bank (ECB) doves, but traders were too busy pricing in the Fed expectations that yesterday’s minor surprises from the Eurozone couldn’t help the euro counter the increased bullish pressure in the dollar. The EURUSD slipped to 1.0650, and risks are tilted to the downside at today’s FOMC announcement.

In energy, US crude cleared the 50-DMA and slipped below the $82pb level after the latest AI report posted an almost 5-mio-barrel build in US oil inventories last week. Hope of easing geopolitical tensions keep the bears in a dominant position while the fading expectations of a Fed rate cut threatens the reflation boost. That also explains why we saw such a sharp drop in copper futures yesterday. Back to oil, the next natural target for the oil bulls stands at $80pb level, that shelters the 200-DMA and the major 38.2% Fibonacci retracement on ytd rise.

Daily Pivots: (S1) 1.3694; (P) 1.3739; (R1) 1.3824; More...

USD/CAD's break of 1.3730 minor resistance suggests that pullback from 1.3845 has completed at 1.3613. Intraday bias is back on the upside for retesting 1.3845 first. Firm break there will resume larger rise from 1.3176 towards 1.3976 key resistance next. For now, risk will stay on the upside as long as 1.3613 support holds, in case of retreat.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern only. In case of another fall, strong support should emerge above 1.2947 resistance turned support to bring rebound. Firm break of 1.3976 will confirm up resumption of whole up trend from 1.2005 (2021 low). Next target is 61.8% projection of 1.2401 to 1.3976 from 1.3176 at 1.4149.

Daily Pivots: (S1) 0.6439; (P) 0.6504; (R1) 0.6537; More...

Break of 0.6482 minor support argues that rebound from 0.6361 has completed importantly, fall from 0.6870 might not be over yet. Intraday bias is back on the downside for retesting 0.6361 low next. On the upside, above 0.6513 minor resistance will turn intraday bias neutral again first.

In the bigger picture, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern to the down trend from 0.8006 (2021 high). Fall from 0.7156 (2023 high) is seen as the second leg, which is still in progress. Overall, sideway trading could continue in range of 0.6169/7156 for some more time. But as long as 0.7156 holds, an eventual downside breakout would be mildly in favor.

Daily Pivots: (S1) 1.0642; (P) 1.0688; (R1) 1.0713; More...

Break of 1.0673 minor support argues that EUR/USD recovery from 1.0601 has completed at 1.0752 already. Intraday bias is back on the downside for retesting 1.0601 first. Firm break there will resume larger fall and target 100% projection of 1.1138 to 1.0694 from 1.0980 at 1.0536. For now, risk will stay on the downside as long as 1.0752 resistance holds, in case of recovery.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern to rise from 0.9534 (2022 low). Current fall from 1.1138 is seen as the third leg. While deeper decline is would be seen to 1.0447 and possibly below, strong support should emerge from 61.8% retracement of 0.9534 to 1.1274 at 1.0199 to complete the correction.

Daily Pivots: (S1) 1.2465; (P) 1.2517; (R1) 1.2544; More...

Intraday bias in GBP/USD remains neutral for the moment. On the upside, above 1.2568 will resume the rebound from 1.2298 to 55 D EMA (now at 1.2580). Sustained break there will argue that fall from 1.2892 has completed already, and bring further rise to this resistance. Nevertheless, on the downside, break of 1.2448 minor support will indicate that rebound from 1.2298 has completed, and turn bias back to the downside for this low.

In the bigger picture, price actions from 1.3141 medium term top are seen as a corrective pattern to up trend from 1.0351 (2022 low). Fall from 1.2892 is seen as the third leg. Deeper decline would be seen to 1.2036 support and possibly below. But strong support should emerge from 61.8% retracement of 1.0351 to 1.2452 at 1.1417 to complete the correction.