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Daily Pivots: (S1) 1.2489; (P) 1.2513; (R1) 1.2547; More...

A temporary top is formed at 1.2545 with current retreat and intraday bias in GBP/USD is turned neutral first. Still, outlook will remain bullish as long as 1.2343 support holds. Above 1.2545 will target 1.2759 fibonacci level first. Firm break there will target 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095.

In the bigger picture, the rise from 1.0351 medium term term bottom (2022 low) is in progress for 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. Sustained break there will add to the case of long term bullish trend reversal. Further break of 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095 could prompt upside acceleration to 100% projection at 1.3895. For now, this will remain the favored case as long as 1.1801 support holds, even in case of deep pull back.

Dollar is attempting to rebound in early trading sessions, as market sentiment is shaken by disappointing US retail sales data. Furthermore, a top Fed official has cautioned that interest rates could remain high for a more extended period than previously anticipated by the market. Nevertheless, the greenback continues to be one of the week's worst performers, alongside the Japanese yen. On the other end of the spectrum, Swiss Franc remains the top performer, now followed by Canadian Dollar and the Australian Dollar.

From a technical standpoint, it is too early to declare that the dollar has reached its bottom despite today's recovery. At a minimum, EUR/USD would have to breach the 1.0972 resistance-turned-support level. In addition, USD/CHF would need to break through the 0.8973 resistance level to signal that a more robust recovery is underway. Otherwise, risk will remain on the downside, and selling pressure could resurface at any moment.

In Europe, at the time of writing, FTSE is up 0.61%. DAX is up 0.48%. CAC is up 0.44%. Germany 10-year yield is up 0.026 at 2.401. Earlier in Asia, Nikkei rose 1.20%. Hong Kong HSI rose 0.46%. China Shanghai SSE rose 0.60%. Singapore Strait Times rose 0.25%. Japan 10-year JGB yield dropped -0.0041 to 0.461.

US retail sales down -1% mom in Mar, ex-auto sales down -0.8% mom

US retail sales contracted -1.0% mom to USD 691.7B in March, worse than expectation of -0.5% mom. Total sales for January through March period were up 5.4% from the same period a year ago.

For the month, ex-auto sales dropped -0.8% mom to USD 562.9B, below expectation of -0.4% mom. Ex-gasoline sales decreased -0.6% mom to USD 636.5B. Ex-auto and gasoline sales declined -0.3% mom to USD 507.6B.

Fed's Waller: Not much progress on inflation, my job is not done

In a speech, Fed Governor Christopher Waller expressed concern over the persistently high inflation rates and emphasized the need for the continuation of tighter monetary policies.

Waller stated, "Whether you measure inflation using the CPI or the Fed's preferred measure of personal consumption expenditures, it is still much too high and so my job is not done."

"I interpret these data as indicating that we haven't made much progress on our inflation goal, which leaves me at about the same place on the economic outlook that I was at the last FOMC meeting, and on the same path for monetary policy," he added.

His outlook remains consistent with the stance from the last FOMC meeting, indicating a steadfast commitment to tightening monetary policy. He emphasized that "the labor market continues to be strong and quite tight, and inflation is far above target, so monetary policy needs to be tightened further."

The Fed Governor also emphasized that, given the current circumstances, "monetary policy will need to remain tight for a substantial period of time, and longer than markets anticipate."

Fed Bostic: Recent data consistent with one more rate hike

In a recent interview with Reuters, Atlanta Fed President Raphael Bostic discussed the implications of this week's slowing consumer price increases and falling producer price inflation. According to Bostic, these developments are in line with the possibility of one more rate hike, as momentum suggests a trajectory towards 2% inflation.

Bostic expressed that the aggressive rate increases over the past year are just beginning to "bite" the economy, justifying a pause after one more rate increase. This pause would allow for an assessment of the economy and inflation's progression while aiming to minimize the impact on growth and employment.

Despite the current economic landscape, Bostic remains optimistic, believing that unemployment won't need to surpass 4% and that the economy can continue to grow, albeit at a slower pace. He attributes the persistent consumer demand and robust hiring to the economic distortions caused by the trillions of dollars in government support provided during the COVID-19 pandemic.

ECB's Lagarde expects inflation to continue falling with receding price pressures

In a speech, ECB President Christine Lagarde anticipates Eurozone inflation to continue falling as lagged price pressures recede and tighter monetary policy increasingly affects demand. However, she notes that historically high wage growth, driven by tight labor markets and compensation for high inflation, will support core inflation over the projection horizon, as it gradually returns to rates around the ECB's target.

Lagarde admits that this outlook is shrouded in uncertainty, with both upside and downside risks. She states, "Stronger than expected pipeline pressures or higher than anticipated increases in wages or profits could drive up inflation, while financial market tensions and falling energy prices could lead to faster disinflation."

ECB staff projections predict that Eurozone economy will recover in the coming quarters, driven by a strong labor market, resolved supply bottlenecks, and moderating inflation. Nevertheless, Lagarde acknowledges that risks to the growth outlook lean towards the downside, with persistently elevated financial market tensions potentially dampening confidence and tightening broader credit conditions more than anticipated. Russia's ongoing war against Ukraine remains a significant downside risk to the economy, potentially raising energy and food costs once more.

BoJ Ueda foresees core inflation slowing, reiterates commitment to ultra-loose monetary policy

BoJ Governor Kazuo Ueda, who recently attended the G20 finance leaders' meeting in Washington, expects core consumer inflation in Japan, currently around 3%, to slow below 2% by the latter half of this fiscal year. Ueda emphasized the central bank's commitment to maintaining ultra-loose monetary policy in order to achieve its 2% inflation target in a stable and sustainable manner.

Ueda believes that "as our base scenario is for global growth to pick up after a period of slowdown, Japan's wages will likely keep rising." He added that the BoJ's forecasts already factor in the possibility of a global economic slowdown, but a severe global recession is not considered in the baseline projection.

As for the upcoming April policy meeting, Ueda said, "It's been just a week since I took office and now I am on a business trip. I'll think about it closely once I'm back." Market participants are closely watching the BoJ's first policy meeting under Ueda's leadership on April 27-28, where the board will release fresh quarterly growth and inflation forecasts extending through fiscal 2025.

NZ BNZ manufacturing dropped to 48.1, sector faces headwinds

New Zealand's BusinessNZ Performance of Manufacturing Index fell from 51.7 in February to 48.1 in March, slipping back into negative territory after briefly reaching positive levels in January and February. The decline in the index signals challenges for the manufacturing sector.

A closer look at the data reveals that production dropped from 48.7 to 43.3, its lowest level since August 2021. Employment shrank from 55.2 to 47.1, while new orders dipped from 51.5 to 46.7, matching November 2022 levels. Finished stocks decreased from 55.1 to 48.4, and deliveries rose slightly from 52.2 to 53.8.

Catherine Beard, BusinessNZ's Director of Advocacy, pointed out that the numbers behind the main March result indicate the manufacturing sector is facing significant headwinds. BNZ Senior Economist Craig Ebert added that although New Zealand's March PMI was disappointing, it was "not especially negative in the longer-term context" and was in line with global manufacturing readings.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2489; (P) 1.2513; (R1) 1.2547; More...

A temporary top is formed at 1.2545 with current retreat and intraday bias in GBP/USD is turned neutral first. Still, outlook will remain bullish as long as 1.2343 support holds. Above 1.2545 will target 1.2759 fibonacci level first. Firm break there will target 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095.

In the bigger picture, the rise from 1.0351 medium term term bottom (2022 low) is in progress for 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. Sustained break there will add to the case of long term bullish trend reversal. Further break of 61.8% projection of 1.0351 to 1.2445 from 1.1801 at 1.3095 could prompt upside acceleration to 100% projection at 1.3895. For now, this will remain the favored case as long as 1.1801 support holds, even in case of deep pull back.

Economic Indicators Update

In a speech, Fed Governor Christopher Waller expressed concern over the persistently high inflation rates and emphasized the need for the continuation of tighter monetary policies.

Waller stated, "Whether you measure inflation using the CPI or the Fed's preferred measure of personal consumption expenditures, it is still much too high and so my job is not done."

"I interpret these data as indicating that we haven't made much progress on our inflation goal, which leaves me at about the same place on the economic outlook that I was at the last FOMC meeting, and on the same path for monetary policy," he added.

His outlook remains consistent with the stance from the last FOMC meeting, indicating a steadfast commitment to tightening monetary policy. He emphasized that "the labor market continues to be strong and quite tight, and inflation is far above target, so monetary policy needs to be tightened further."

The Fed Governor also emphasized that, given the current circumstances, "monetary policy will need to remain tight for a substantial period of time, and longer than markets anticipate."

Full speech of Fed Waller here.

US retail sales contracted -1.0% mom to USD 691.7B in March, worse than expectation of -0.5% mom. Total sales for January through March period were up 5.4% from the same period a year ago.

For the month, ex-auto sales dropped -0.8% mom to USD 562.9B, below expectation of -0.4% mom. Ex-gasoline sales decreased -0.6% mom to USD 636.5B. Ex-auto and gasoline sales declined -0.3% mom to USD 507.6B.

Full US retail sales release here.

In a speech, ECB President Christine Lagarde anticipates Eurozone inflation to continue falling as lagged price pressures recede and tighter monetary policy increasingly affects demand. However, she notes that historically high wage growth, driven by tight labor markets and compensation for high inflation, will support core inflation over the projection horizon, as it gradually returns to rates around the ECB's target.

Lagarde admits that this outlook is shrouded in uncertainty, with both upside and downside risks. She states, "Stronger than expected pipeline pressures or higher than anticipated increases in wages or profits could drive up inflation, while financial market tensions and falling energy prices could lead to faster disinflation."

ECB staff projections predict that Eurozone economy will recover in the coming quarters, driven by a strong labor market, resolved supply bottlenecks, and moderating inflation. Nevertheless, Lagarde acknowledges that risks to the growth outlook lean towards the downside, with persistently elevated financial market tensions potentially dampening confidence and tightening broader credit conditions more than anticipated. Russia's ongoing war against Ukraine remains a significant downside risk to the economy, potentially raising energy and food costs once more.

Full speech of ECB Lagarde here.

Hold on to your seats, folks! Bitcoin (BTC) is back with a vengeance, soaring past the $30 000 mark on April 11th, reaching its highest point since June 2022. And it's not just BTC - Ethereum (ETH) is also making gains, trading at $1917 and bagging 3.1% gains over the past day. But watch out for the Shanghai upgrade on April 12th, as it's expected to create some selling pressure on ETH and negatively impact its price. Still, with BTC and ETH up over 81% and 60% year-to-date, respectively, the crypto market is hotter than ever! In my article last week, I mentioned that the bulls might be back for Bitcoin, yet the lingering question is: how long can this move last?

BTCUSD - Weekly Timeframe

The bullish spring of Bitcoin prices has reached a key pivot zone that may serve as a resistance to push prices back down slightly. It is also worthy of note that the current price action is a consolidation move within a rising channel, with the trendline resistance overlapping with the pivot zone. Another important confluence is the presence of a drop-base-drop supply zone right inside the pivot zone. Suppose the consolidation holds without a significant break above the trendline resistance. In that case, we should see a retracement move on Bitcoin pretty soon - even though the overall trend is largely bullish.

Analysts’ Expectations:

• Direction: Bearish
• Target: $23,100
• Invalidation: $32,783

ETHUSD - Weekly Timeframe

Similar to what we saw on the Bitcoin chart, Ethereum is also inching toward its pivot zone. However, with the resistance trendline of the rising channel price currently trading inside, the 100-Period Moving Average is another indicator of a bearish movement. Even though I expect the overall direction to be bullish, there's nothing wrong with having a few bearish correction movements along the way.

Analysts’ Expectations:

• Direction: Bearish
• Target: $1,613
• Invalidation: $2,505

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

Shanghai, an important upgrade to the Ethereum blockchain, has been a success. Against the backdrop of the news, the ETHUSD rate rose by 10% per day, breaking the psychological level of $2,000. As of Friday morning, ETH is trading above $2,100, something that has not happened since May 2022. Since the beginning of the year, ETHUSD has risen in price by about 77% (for comparison, Bitcoin, by about 86%).

In the long run, the Shanghai (also known as Shapella) upgrade has the advantage of providing more freedom to invest. But in the short term, a collapse in the value of ETH could occur, as investors got the opportunity to withdraw funds from staking. According to on-chain metrics, after the update, more than 1 million ETH tokens were requested for withdrawal. “[This] is much lower than what was previously expected,” Matt Maximo, an analyst with Grayscale, told CNBC.

The growth of the ETHUSD rate was also facilitated by the lower US dollar index — it fell to the lows of the current year after the release of March producer price index on Thursday, which showed signs of weakening inflation.

On the daily chart of ETHUSD, there was a bullish breakout (1) of the upper boundary of the rising channel that was active in 2023 – which suggests that the market is overbought, and a technical pullback with a breakout test of the $2k psychological level will be a likely scenario.

The Euro has established above psychological 1.10 level and holding gains above former top at 1.1032, with Friday’s upside extension to new one-year high, adding to positive signals.

On the other hand, strongly overbought daily studies and 14-d momentum turning south, point to growing risk of rally’s stall and pullback that would prompt traders to collect some profits on larger long positions.

This is so far seen as an indication, with more evidence needed to generate negative signal, however the idea of bulls taking a breather after strong acceleration will remain on the table.

Weekly close will be in focus, as the pair is on track for the biggest weekly gain since the second week of Nov 2022 and also for the fourth consecutive bullish week.

Potential dips should be shallow in current euro-positive environment and offer better prices to re-enter larger uptrend, with 1.10 level offering initial support, followed by broken 100WMA/10DMA (1.0945) and 20DMA (1.0880) expected to contain extended dips and mark a healthy correction ahead of fresh push higher.

Res: 1.1075; 1.1100; 1.1154; 1.1229.
Sup: 1.1032; 1.1000; 1.0945; 1.0880.

BoJ’s Ueda says he’ll maintain policy

It has been a light data calendar in Japan this week, leaving Bank of Japan Governor Ueda’s remarks at a G20 meeting in Washington as the highlight of the week. Ueda took over as head of the central bank on Sunday and will chair his first BoJ policy meeting at the end of the month.

Ueda didn’t veer from the script which he has been using since his confirmation hearings earlier this year. He reiterated to maintain the BoJ’s ultra-loose monetary policy, as the central bank expects inflation, which is around 3%, to return back to the 2% target later in the year. There has been speculation that Ueda might tweak policy, such as widening the target band on 10-year government bonds. The BoJ surprised the markets with such a move in December and the yen shot higher as a result.

The G-20 meeting provided Ueda with another opportunity to outline his policy plans and pour cold water on any expectations of a shift in policy. The previous governor, Haruhiko Kuroda, injected massive monetary stimulus in order to boost the weak economy, which has kept the yen at low levels and distorted bond markets. Speculators, who play a cat-and-mouse game with the BoJ, will be on the alert for policy change by Ueda, if not at the April meeting, then perhaps in the coming months.

Markets brace for weak US retail sales

The US releases March retail sales later today, with the markets projecting a weak report. Headline retail sales is expected to decline by 0.4% for a second straight month, while the core rate is forecast to fall by 0.3%, after a -0.1% read in February.

Currently, the odds of a 25-bp hike are 69%, with a 31% chance of a pause, according to the CME Group. The retail sales release could affect the direction of the US dollar. A strong release would make a rate hike more likely, which is bullish for the greenback, while a soft release would raise expectations of a Fed pause and weigh on the dollar.

USD/JPY Technical

• There is resistance at 133.45 and 135.31
• 132.18 and 130.61 are providing support

In a recent interview with Reuters, Atlanta Fed President Raphael Bostic discussed the implications of this week's slowing consumer price increases and falling producer price inflation. According to Bostic, these developments are in line with the possibility of one more rate hike, as momentum suggests a trajectory towards 2% inflation.

Bostic expressed that the aggressive rate increases over the past year are just beginning to "bite" the economy, justifying a pause after one more rate increase. This pause would allow for an assessment of the economy and inflation's progression while aiming to minimize the impact on growth and employment.

Despite the current economic landscape, Bostic remains optimistic, believing that unemployment won't need to surpass 4% and that the economy can continue to grow, albeit at a slower pace. He attributes the persistent consumer demand and robust hiring to the economic distortions caused by the trillions of dollars in government support provided during the COVID-19 pandemic.