Forex Signals Brief April 19: Watch Out for Risk Aversion Ahead of Weekend

The US dollar ended the day on a strong note yesterday compared to other major currencies, while the euro showed weakness after many rate cut comments from ECB members. ECB’s Knot expressed contentment with market expectations of rate cuts, signaling a positive view on the disinflationary trend. He aligned with market sentiment anticipating a rate reduction in June. Similarly, ECB’s Nagel foresaw a cautious easing of rates starting in June, indicating a coordinated and gradual monetary policy adjustment within the ECB amid easing inflationary pressures.

However, the trading range among currencies was relatively narrow. Economic data for the day included a significant jump in the Philadelphia Fed manufacturing business index, surpassing expectations. Initial jobless claims continued to increase steadily, and existing home sales came in line with expectations.

The employment report early in the morning from Australia came in mixed, with the unemployment rate ticking down while employment change fell instead of increasing. The US dollar strengthened further as Federal Reserve officials maintained a more hawkish stance, suggesting fewer interest rate cuts in the future. Despite not projecting additional rate hikes, Fed officials indicated they would consider such moves if economic conditions warranted. Overall, there was no immediate need to lower interest rates.

Today started with Japan’s March core CPI coming in at 2.6% year-on-year, meeting expectations, while the headline CPI stood at 2.7%, slightly lower than the previous reading of 2.8%. Excluding fresh food and energy, core CPI rose by 2.9%, falling short of the expected 3.0%. Excluding food, core CPI was at 2.5%, unchanged from the previous report.

However, the strikes in Iran took all the attention soon and sent safe havens higher. The UK headline M/M retail sales are expected to remain flat from the previous month’s print. Recent retail data shows that the BRC retail sales metric increased by 3.2% YoY in February, compared to a 1.0% increase the previous month. According to the press release, this improvement was largely driven by Easter falling unusually early and the subsequent uplift to food sales in the week preceding the long weekend.

Additionally, according to the Barclaycard Consumer Expenditure Report, overall retail spending grew by 0.7% in March 2024, a decrease from the year-on-year growth of 1.4% in February 2024. This decline in growth was attributed to persistent damp weather in March, which made for another difficult month for high-street merchants.

Yesterday the US Dollar resumed the uptrend after being bearish since Friday and pushed higher against most major currencies> however the volatility remained low in most forex majors. We opened 6 trading signals in total, ending up with 3 losing ones and 3 winning forex signals in total after getting caught up in the volatility and the bounces.

Gold experienced a notable price surge earlier today, reaching a peak of $2,392.70, marking a gain of about 1% before retracing. The precious metal jumped above its pivot point of $2.400, signaling a bullish sentiment in the market, with moving averages providing additional support. If buyers maintain upward pressure on the price, key resistance levels to monitor include $2,420, and $2,431.

The Japanese yen remained relatively stable on Tuesday, with the USD/JPY pair experiencing minimal fluctuations despite a decline in Treasury yields. Market participants seem hesitant to push the pair higher, and despite efforts from Japanese authorities, the 155.00 level remains elusive for now. However, the chart indicates that buyers maintain control in the near term. Currently, the currency pair is consolidating below the 155.00 level, reminiscent of its behavior below the 152.00 barrier previously, however, we saw a sharp move last night. Traders are awaiting a catalyst or trigger point to generate momentum for the next upward movement in the pair. While Japan released its March CPI data yesterday, it did not serve as a significant catalyst as it was in line with expectations.

NZD/USD – 60 minute Chart

Bitcoin’s price has recently dropped below the $60,000 mark, reaching its lowest value since the start of March. Currently trading around $61,200, the cryptocurrency is nearing its lowest level in almost a month, which was around $59,300. If this level is breached, the next target to the downside is anticipated. On the daily chart, the initial support is the 100-day moving average, situated at $57,850.

Bitcoin’s price has recently dropped below the $60,000 mark, reaching its lowest value since the start of March. Currently trading around $61,200, the cryptocurrency is nearing its lowest level in almost a month, which was around $59,300. If this level is breached, the next target to the downside is anticipated. On the daily chart, the initial support is the 100-day moving average, situated at $57,850.