Dollar reluctant to give up key levels
Yesterday we saw a correction in equities developing in the markets. This provided temporary support for the Dollar index, which stabilised close to its February lows, near 90.
In EURUSD, buyers encountered bearish pressure as they approached 1.2180. From this area, the pair has been methodically reversing downwards for the past four months. Not surprisingly, the bulls have to get their act together before taking on local highs. The pair’s pullback seems like a consolidation after a jump rather than reversal, indicating the strength of USD bears.
Yesterday we saw a correction in equities developing in the markets. This provided temporary support for the Dollar index, which stabilised close to its February lows, near 90.
In EURUSD, buyers encountered bearish pressure as they approached 1.2180. From this area, the pair has been methodically reversing downwards for the past four months. Not surprisingly, the bulls have to get their act together before taking on local highs. The pair’s pullback seems like a consolidation after a jump rather than reversal, indicating the strength of USD bears.
US inflation data caused a surge in volatility. The general price index rose 0.8% for April, against expectations of 0.2% and 0.6% in March.
The rate of price increases continued to pick up last month, contrary to expectations of stabilisation. The core index (without energy and food) jumped 0.9% MoM, the strongest since 1982.
Annual inflation accelerated to 4.2% from 2.6% a month before. It is easy to see that this acceleration goes well beyond the low base. Used car prices were the driver (+10%), and transportation costs rose 2.9% in April after increasing 1.8%.
This acceleration in inflation reinvigorated speculation of an imminent monetary policy tightening, causing an increased pull into the dollar after the release.
The next move is now up to the Fed. Inflation worries are a support for the dollar. Signals from the FOMC that this report does not affect monetary policy will turn markets 180 degrees as investors will look for insurance against inflation by buying commodities and foreign currencies.
The rate of price increases continued to pick up last month, contrary to expectations of stabilisation. The core index (without energy and food) jumped 0.9% MoM, the strongest since 1982.
Annual inflation accelerated to 4.2% from 2.6% a month before. It is easy to see that this acceleration goes well beyond the low base. Used car prices were the driver (+10%), and transportation costs rose 2.9% in April after increasing 1.8%.
This acceleration in inflation reinvigorated speculation of an imminent monetary policy tightening, causing an increased pull into the dollar after the release.
The next move is now up to the Fed. Inflation worries are a support for the dollar. Signals from the FOMC that this report does not affect monetary policy will turn markets 180 degrees as investors will look for insurance against inflation by buying commodities and foreign currencies.
#WaveAnalysis
#ChinaA50 reversed from support area
• Likely to rise to resistance level 17500
https://fxpro.news/technical-analysis/chinaa50-wave-analysis-12-may-2021-20210512/
#ChinaA50 reversed from support area
• Likely to rise to resistance level 17500
https://fxpro.news/technical-analysis/chinaa50-wave-analysis-12-may-2021-20210512/
#WaveAnalysis
#EURCAD broke support area
• Likely to fall to support level 1.4500
https://fxpro.news/technical-analysis/eurcad-wave-analysis-12-may-2021-20210512/
#EURCAD broke support area
• Likely to fall to support level 1.4500
https://fxpro.news/technical-analysis/eurcad-wave-analysis-12-may-2021-20210512/
Fed’s look beyond inflation fears will hurt the dollar
The dollar enjoyed upside momentum, almost regaining losses after the weak jobs report, as traders in the markets returned to expectations of an imminent tightening of monetary policy in response to the sharpest one-month jump of Core CPI since the heydays of raging inflation in the early 1980s.
In our view, it is unlikely that the Fed will mechanically react to the price spike with more hawkish rhetoric.
Fed cannot tighten the policy without risking triggering a second recession. And it will be good news for commodities and equity markets but bad news for the dollar.
The dollar enjoyed upside momentum, almost regaining losses after the weak jobs report, as traders in the markets returned to expectations of an imminent tightening of monetary policy in response to the sharpest one-month jump of Core CPI since the heydays of raging inflation in the early 1980s.
In our view, it is unlikely that the Fed will mechanically react to the price spike with more hawkish rhetoric.
Fed cannot tighten the policy without risking triggering a second recession. And it will be good news for commodities and equity markets but bad news for the dollar.
#WaveAnalysis
#Facebook reversed from support area
• Likely to rise to resistance level 320.00
https://fxpro.news/technical-analysis/facebook-wave-analysis-13-may-2021-20210513/
#Facebook reversed from support area
• Likely to rise to resistance level 320.00
https://fxpro.news/technical-analysis/facebook-wave-analysis-13-may-2021-20210513/
#WaveAnalysis
#EURCHF reversed from resistance area
• Likely to fall to support level 1.0930
https://fxpro.news/technical-analysis/eurchf-wave-analysis-13-may-2021-20210513/
#EURCHF reversed from resistance area
• Likely to fall to support level 1.0930
https://fxpro.news/technical-analysis/eurchf-wave-analysis-13-may-2021-20210513/
Fed backs stock buyers and returns pressure on the dollar
Fed's assurances of continued soft monetary policy and tolerance of higher inflation piles pressure on the dollar as markets will look for ways to preserve capital from depreciation due to inflation.
The DXY is losing 0.2% to 90.50 on Friday but remains 0.5% above the lows of the week when the latest sell-off in equity markets kicked off.
On the technical analysis side, traders should look out for a retest of the 89-90 area in the coming days, this year’s low. A drop below would be the prologue for the next chapter of the dollar’s decline in the global trend that started in 2020, after the correction pullback in January-March.
Fed's assurances of continued soft monetary policy and tolerance of higher inflation piles pressure on the dollar as markets will look for ways to preserve capital from depreciation due to inflation.
The DXY is losing 0.2% to 90.50 on Friday but remains 0.5% above the lows of the week when the latest sell-off in equity markets kicked off.
On the technical analysis side, traders should look out for a retest of the 89-90 area in the coming days, this year’s low. A drop below would be the prologue for the next chapter of the dollar’s decline in the global trend that started in 2020, after the correction pullback in January-March.
US retail sales are another unpleasant surprise from the macroeconomic side. In April, sales were unchanged compared with March, against an expected 1% increase. Sales excluding automobiles fell by 0.8% last month against a forecast of 0.5% growth.
In April 2021, retail sales were 51.2% higher than exactly one year earlier, the time of the toughest lockdown in the USA, when sales collapsed by 14.7%. The low base for this indicator will also be extremely low next month before beginning to stabilise.
Since US retail sales are counted in nominal terms (not adjusted for inflation), stagnating sales when prices jump adds to the worries around a sustained recovery.
As with the weak employment report, this data could again cast doubt on the proximity of a QE rollback and interest rate hike. This is good news for the assets that the Fed is buying at 120bn a month and bad news for the dollar that is being printed for these purchases.
In April 2021, retail sales were 51.2% higher than exactly one year earlier, the time of the toughest lockdown in the USA, when sales collapsed by 14.7%. The low base for this indicator will also be extremely low next month before beginning to stabilise.
Since US retail sales are counted in nominal terms (not adjusted for inflation), stagnating sales when prices jump adds to the worries around a sustained recovery.
As with the weak employment report, this data could again cast doubt on the proximity of a QE rollback and interest rate hike. This is good news for the assets that the Fed is buying at 120bn a month and bad news for the dollar that is being printed for these purchases.
#WaveAnalysis
#AUDUSD reversed from support area
• Likely to rise to resistance level 0.7845
https://fxpro.news/technical-analysis/audusd-wave-analysis-14-may-2021-20210514/
#AUDUSD reversed from support area
• Likely to rise to resistance level 0.7845
https://fxpro.news/technical-analysis/audusd-wave-analysis-14-may-2021-20210514/
#WaveAnalysis
#GBPAUD reversed from resistance 1.8200
• Likely to fall to support level 1.8070
https://fxpro.news/technical-analysis/gbpaud-wave-analysis-14-may-2021-20210514/
#GBPAUD reversed from resistance 1.8200
• Likely to fall to support level 1.8070
https://fxpro.news/technical-analysis/gbpaud-wave-analysis-14-may-2021-20210514/
Gold growth confirms restart of dollar downtrend
Gold gave an even more bullish signal compared to majors (GBPUSD, USDCAD, USDCNH), coming back above the 200 SMA on Monday morning and making new 4-month highs.
Gold investors are more concerned about preserving the value of fiat currencies with the major central banks’ printing presses constantly running.
Not surprisingly, therefore, gold’s recovery has been more robust. However, the rally above $1855 this morning has yet to be cemented by closing the day above the 200-day moving average (now at $1847).
A move higher would confirm the rebound from the two-year trendline support and allow the area above $2600 to be seen as the long-term target for a new upside momentum, well above last August’s all-time highs of $2075.
Gold gave an even more bullish signal compared to majors (GBPUSD, USDCAD, USDCNH), coming back above the 200 SMA on Monday morning and making new 4-month highs.
Gold investors are more concerned about preserving the value of fiat currencies with the major central banks’ printing presses constantly running.
Not surprisingly, therefore, gold’s recovery has been more robust. However, the rally above $1855 this morning has yet to be cemented by closing the day above the 200-day moving average (now at $1847).
A move higher would confirm the rebound from the two-year trendline support and allow the area above $2600 to be seen as the long-term target for a new upside momentum, well above last August’s all-time highs of $2075.
📈Gold at $1865, 4-month high on crypto slump & USD decline. BUY or SELL?
Anonymous Poll
64%
BUY
36%
SELL
#WaveAnalysis
Natural gas (#NTG) broke round resistance level 3.000
• Likely to rise to resistance level 3.265
https://fxpro.news/technical-analysis/natural-gas-wave-analysis-17-may-2021-20210517/
Natural gas (#NTG) broke round resistance level 3.000
• Likely to rise to resistance level 3.265
https://fxpro.news/technical-analysis/natural-gas-wave-analysis-17-may-2021-20210517/
#WaveAnalysis
#WTI oil reversed from support level 63.25
• Likely to rise to resistance level 66.80
https://fxpro.news/technical-analysis/wti-oil-wave-analysis-17-may-2021-20210517/
#WTI oil reversed from support level 63.25
• Likely to rise to resistance level 66.80
https://fxpro.news/technical-analysis/wti-oil-wave-analysis-17-may-2021-20210517/
An unfolding battle for the Dollar
The markets are now seeing renewed pressure on the US currency after dovish comments from the Fed.
Richard Clarida reminded us that the FOMC would warn us before considering winding down its asset purchase programme for the central bank balance sheet.
Rafael Bostic pointed out that “it is not the time” to think about policy changes. Both agree that the labour market is unstable, and therefore, the pressure on prices is temporary.
With such policy approach, we have seen increased pressure on the Dollar against major competitors and multiple increases in the prices of underlying commodity assets.
We will have to listen carefully to the words of the Fed members once again when the dollar index is renewing multi-year lows. Note, the dollar index is now at 89.75. This year’s low is 89.16, and 2018’s low is 88.15. This concentration of pivot points promises an interesting battle in the currency market in the near term.
The markets are now seeing renewed pressure on the US currency after dovish comments from the Fed.
Richard Clarida reminded us that the FOMC would warn us before considering winding down its asset purchase programme for the central bank balance sheet.
Rafael Bostic pointed out that “it is not the time” to think about policy changes. Both agree that the labour market is unstable, and therefore, the pressure on prices is temporary.
With such policy approach, we have seen increased pressure on the Dollar against major competitors and multiple increases in the prices of underlying commodity assets.
We will have to listen carefully to the words of the Fed members once again when the dollar index is renewing multi-year lows. Note, the dollar index is now at 89.75. This year’s low is 89.16, and 2018’s low is 88.15. This concentration of pivot points promises an interesting battle in the currency market in the near term.
#WaveAnalysis
#EURUSD is likely to rise further toward the next resistance level 1.2240 (top of the previous wave (B) from February) – from where the price is likely to correct down.
https://fxpro.news/technical-analysis/eurusd-wave-analysis-18-may-2021-20210518/
#EURUSD is likely to rise further toward the next resistance level 1.2240 (top of the previous wave (B) from February) – from where the price is likely to correct down.
https://fxpro.news/technical-analysis/eurusd-wave-analysis-18-may-2021-20210518/
#WaveAnalysis
#Corn reversed from strong support level 650.00
• Likely to rise to resistance level 700.00
https://fxpro.news/technical-analysis/corn-wave-analysis-18-may-2021-20210518/
#Corn reversed from strong support level 650.00
• Likely to rise to resistance level 700.00
https://fxpro.news/technical-analysis/corn-wave-analysis-18-may-2021-20210518/
Stocks slump, but FX market maintains optimism
The pressure on equities has returned, once again testing the depth of buyers’ pockets.
Germany’s DAX30 hit new all-time highs before coming under pressure, now losing 2.2%.
The caution and profit-taking near the extremes seem to be the main driving force in the stock markets.
A confirmation of the short-term nature of the correction is the dynamics of the currency market. EURUSD is attempting to reach the area of January’s highs, having climbed above 1.2240 in the morning. The Chinese yuan and British pound are again testing yearly highs against the Dollar, also confirming their interest in risky assets.
At the same time, Nasdaq100 failed to rise above its 50-day average and once again stays near the lower boundary of the uptrend channel at 13150. A further test of the previous lows at 12910 might be a harbinger of severe pressure in the markets.
The pressure on equities has returned, once again testing the depth of buyers’ pockets.
Germany’s DAX30 hit new all-time highs before coming under pressure, now losing 2.2%.
The caution and profit-taking near the extremes seem to be the main driving force in the stock markets.
A confirmation of the short-term nature of the correction is the dynamics of the currency market. EURUSD is attempting to reach the area of January’s highs, having climbed above 1.2240 in the morning. The Chinese yuan and British pound are again testing yearly highs against the Dollar, also confirming their interest in risky assets.
At the same time, Nasdaq100 failed to rise above its 50-day average and once again stays near the lower boundary of the uptrend channel at 13150. A further test of the previous lows at 12910 might be a harbinger of severe pressure in the markets.
The headline UK Consumer Price Index rose in line with expectations, marking an acceleration in inflation to 1.5% y/y.
At the same time, the Producer Price Index significantly exceeded expectations, reflecting domestic pressures that soon promise to be passed on to consumers. Its year over year pace of growth reached 9.9% - close to the peaks of 2017 when it peaked at 10.3%.
Despite the magnitude of inflation, its nature gives little reason for the Bank of England to tighten monetary policy now. The rise in prices is caused by supply shortages in some sectors and by companies wanting to get back into the battle for market share amid the easing of pandemic restrictions.
Supply has not had time to adjust to demand, but until the economy and employment have broken through pre-coronavirus highs, it looks more like a morning jam than a steady increase in traffic.
So perhaps the Bank of England, as well as the ECB and the Fed, will look the other way until employment returns to early 2020 levels.
At the same time, the Producer Price Index significantly exceeded expectations, reflecting domestic pressures that soon promise to be passed on to consumers. Its year over year pace of growth reached 9.9% - close to the peaks of 2017 when it peaked at 10.3%.
Despite the magnitude of inflation, its nature gives little reason for the Bank of England to tighten monetary policy now. The rise in prices is caused by supply shortages in some sectors and by companies wanting to get back into the battle for market share amid the easing of pandemic restrictions.
Supply has not had time to adjust to demand, but until the economy and employment have broken through pre-coronavirus highs, it looks more like a morning jam than a steady increase in traffic.
So perhaps the Bank of England, as well as the ECB and the Fed, will look the other way until employment returns to early 2020 levels.