USD

Supported by tensions in the Middle East, WTI crude oil prices ended the week higher by 1.68%, closing at $83.30 per barrel. However, the strength of the US dollar and US inflation data dampened hopes of the Federal Reserve quickly lowering interest rates, thus limiting the growth of inflation. Supply concerns supported prices as geopolitical crises continued in the Middle East, with ongoing disputes and unresolved proxy wars providing support and helping to alleviate pressure from data-induced sanctions. On the other hand, Janet Yellen's comments last week suggested that the US may be stronger than the somewhat weak quarterly data indicated. Yellen's remarks echoed the astonishing similarity with the growth in inflation data released on Friday. Additionally, OPEC Secretary-General Mohammed Barkindo stated in a commentary that the end of oil is not yet in sight because the pace of energy demand growth implies that alternatives cannot replace it at the required scale, emphasizing the focus should be on reducing oil production and emissions rather than oil usage.

From a technical standpoint, WTI crude oil rebounded last week to a high near $84.00 as geopolitical tensions persisted, and US crude oil inventories remained at low levels. Prices bounced consecutively from the early-week low of $80.60 to just above $84.00 before the weekend. Currently, key levels for short-term upward movement in WTI crude oil are at $84.00 (61.8% Fibonacci retracement from $93.94 to $67.94), $84.05 (20-day moving average), and $84.14 (last week's high). If oil prices can break above these levels this week, further challenges towards $85.48 (April 19th high) and $87.08 (April 5th high) are possible. On the downside, attention should first be paid to the support zone formed by $81.60 (an upward trendline stretching from the low point of $71.42 on February 5th), $81.52 (45-day moving average), and $81.20 (midline of the downward channel). Below this level, $80.00 (psychological level) and $79.74 (200-day moving average) are expected to halt any further decline.

Consider going long on crude oil near $83.00 today, with a stop loss at $82.70 and targets at $84.30 and $84.45.

Top of Form

WTI Spot Crude Oil

Supported by tensions in the Middle East, WTI crude oil prices ended the week higher by 1.68%, closing at $83.30 per barrel. However, the strength of the US dollar and US inflation data dampened hopes of the Federal Reserve quickly lowering interest rates, thus limiting the growth of inflation. Supply concerns supported prices as geopolitical crises continued in the Middle East, with ongoing disputes and unresolved proxy wars providing support and helping to alleviate pressure from data-induced sanctions. On the other hand, Janet Yellen's comments last week suggested that the US may be stronger than the somewhat weak quarterly data indicated. Yellen's remarks echoed the astonishing similarity with the growth in inflation data released on Friday. Additionally, OPEC Secretary-General Mohammed Barkindo stated in a commentary that the end of oil is not yet in sight because the pace of energy demand growth implies that alternatives cannot replace it at the required scale, emphasizing the focus should be on reducing oil production and emissions rather than oil usage.

From a technical standpoint, WTI crude oil rebounded last week to a high near $84.00 as geopolitical tensions persisted, and US crude oil inventories remained at low levels. Prices bounced consecutively from the early-week low of $80.60 to just above $84.00 before the weekend. Currently, key levels for short-term upward movement in WTI crude oil are at $84.00 (61.8% Fibonacci retracement from $93.94 to $67.94), $84.05 (20-day moving average), and $84.14 (last week's high). If oil prices can break above these levels this week, further challenges towards $85.48 (April 19th high) and $87.08 (April 5th high) are possible. On the downside, attention should first be paid to the support zone formed by $81.60 (an upward trendline stretching from the low point of $71.42 on February 5th), $81.52 (45-day moving average), and $81.20 (midline of the downward channel). Below this level, $80.00 (psychological level) and $79.74 (200-day moving average) are expected to halt any further decline.

Consider going long on crude oil near $83.00 today, with a stop loss at $82.70 and targets at $84.30 and $84.45.

Top of Form

XAUUSD

Due to profit-taking by investors after months of upward momentum, gold prices are experiencing their first decline in six weeks. Despite expectations of relaxed policies by the Federal Reserve gradually dissipating, gold prices have risen by about 17% since mid-February, a shift that has boosted the US dollar and Treasury bonds, both of which traditionally act as drags on gold prices. The strong performance of gold is attributed to central bank purchases, increased interest in some Asian markets including China, and the potential protection against inflation that investors may seek. Currently, gold is undergoing a belated, relatively aggressive but healthy correction. It's worth noting that traders are still digesting ongoing data expectations, which is why gold's response to today's surge in data has been limited. Should US data unexpectedly decline significantly, gold is likely to plummet, sparking interest from investors worldwide—coupled with China's absorption, a move towards $2,500 or higher for gold "would be reasonable."

From a technical perspective, gold has closed below the 10-day moving average on the daily chart since mid-February. The aforementioned obstacle is currently near $2,353.50, and with oscillators on the daily chart signaling unclear, this level should now serve as a short-term key resistance point. Meanwhile, if gold continues to strengthen, it will become a new trigger point for bullish traders, pushing gold towards the next relevant level near $2,364.10. Subsequent gains could extend further to resistance areas at $2,386.50 and $2388.00, potentially reaching the historical peak near $2,431.50 earlier this month. Conversely, bearish traders may await some follow-through selling and establish new bets after breaking below the key level of $2,322.40. At that point, gold could further extend its corrective decline towards $2,300.00, ultimately testing support areas at $2288.80 and $2,272.50.

Consider going short on gold near $2,342.00 today, with a stop loss at $2,347.00 and targets at $2,320.00 and $2,315.00.

AUDUSD

Last week, the Australian dollar continued its upward trend for five consecutive trading days, reaching a high near 0.6554, following the release of US March Core Personal Consumption Expenditures (PCE) Price Index data. Despite the data showing higher-than-expected inflation rates, the US dollar's reaction was muted across most currency pairs, including the AUD/USD. On the other hand, last week's release of Australian factory price inflation data provided new momentum for the currency pair, with the data showing a 4.3% year-on-year increase in the first quarter, up from the previous quarter's 4.1% increase. Additionally, Thursday's first-quarter CPI data exceeded expectations, and Producer Price Index (PPI) data further demonstrated price pressures facing the Australian economy, thus boosting the AUD/USD. Continued inflation implies that the Reserve Bank of Australia (RBA) is seen as the last G10 central bank likely to cut interest rates, with the market now delaying calls for an RBA rate cut until February 2025. Higher interest rates in other countries attract more capital inflows, thereby supporting the Australian dollar.

Last week, Australian bond yields rose, further strengthening the Australian dollar, attributed to Wednesday's release of Australian Consumer Price Index data, which exceeded expectations and triggered hawkish sentiment surrounding the Reserve Bank of Australia. The AUD/USD traded at its highest near 0.6554 last week. The 14-day Relative Strength Index (RSI) above the 50 level supported this bullish outlook. The AUD/USD currency pair may target resistance levels for a pullback at 0.6554 and 0.6550. A break above the latter could potentially bring the currency pair close to the psychological level of 0.6600 and the region around 0.6616, targeting near the upper boundary of the horizontal channel at 0.6636. On the downside, immediate support is expected near the psychological level of 0.6500. Breaking below this level may lead to further downward momentum towards around 0.6465. The next important support area is around 0.6400.

Consider going long on the Australian dollar near 0.6515 today, with a stop loss at 0.6500 and targets at 0.6560 and 0.6575.

Top of Form

GBPUSD

Ahead of the weekend, the British pound faced selling pressure near 1.2500 against the US dollar. The GBP/USD exchange rate declined as strong expectations mounted for the Bank of England (BoE) to begin cutting interest rates from its June meeting. BoE policymakers anticipate a significant drop in inflation in the coming months but have yet to provide a specific timeline for rate cuts. Following the last monetary policy meeting, BoE Governor Andrew Bailey indicated during the press conference that the market's expectation of two to three rate cuts this year was not "unreasonable." Meanwhile, despite maintaining relatively high rates, the UK's economic outlook has improved. The preliminary April report of the S&P Global/CIPS PMI released on Tuesday showed that although manufacturing PMI lagged, service sector activity remained strong, driving overall activity higher. The data also indicated robust inflows of new business into the service sector. Additionally, BoE policymakers remain concerned about persistently high service sector inflation. Currently, the annual service sector inflation rate in the UK stands at 6%, above the level needed to bring inflation down to the 2% target.

From a daily chart perspective, the GBP/USD exchange rate rebounded to near the two-week high of around 1.2540 before the weekend. At present, the currency pair is struggling to extend its upside momentum above the 200-day moving average, which is trading near 1.2557. The 14-day Relative Strength Index (RSI) has rebounded above 45.00, indicating that bearish momentum may temporarily subside. However, the long-term bearish bias remains intact. Continued breakthrough of the psychological resistance level at 1.2500 will push the currency pair towards the 200-day moving average hovering around 1.2557. The next level will target 1.2600, with a break extending the uptrend to 1.2666. On the other hand, breaking below last Friday's low of 1.2448 and 1.2439 will drive the GBP/USD lower towards 1.2400.

Today, it is advised to short the British pound before 1.2505, with a stop loss at 1.2525 and targets at 1.2440 and 1.2430.

Top of Form

USDJPY

After the Bank of Japan was expected to maintain its monetary policy unchanged, the yen hit a new low against a basket of currencies in 34 years, while against the US dollar it dropped to as low as 158.43. The latest catalyst for the yen's decline was weaker-than-expected inflation data from Tokyo, further solidifying the central bank's dovish stance. The Tokyo Consumer Price Index is considered a significant leading indicator for nationwide inflation. Due to the divergence between the Bank of Japan's policy tightening stance and other major central banks, the yen remains susceptible to further volatility and depreciation. The USD/JPY is currently above 158.00, and the market believes that at this level, the Bank of Japan will begin seriously considering forex intervention to support the yen. This bottom line has now been breached, sparking questions in the market about whether the Bank of Japan is discussing coordinated forex intervention with other major central banks. The longer the Bank of Japan waits, the more the market will force them to take action. The longer the Bank of Japan waits, the more drastic the subsequent yen appreciation will be. The yen was once seen as a safe haven currency with the help of arbitrage trading. This is no longer the case, and strict risk management must be employed when trading any yen crosses.

From the daily chart, the USD/JPY reached a new 43-year high of 158.43 on Friday, marking the largest single-day gain since October 31, 2021 (+1.69%). The momentum breaking above 156.45 (223.6% Fibonacci retracement from 150.88 to 146.37) ahead of the weekend may be seen as a new trigger for bullish traders, supporting further upside potential. However, the extreme overbought condition on the daily chart with the 14-day Relative Strength Index (RSI) suggests a cautious approach of waiting for consolidation or mild pullbacks before preparing for the next bullish move towards the 160.40 (April 1990 high) and 160.97 areas. Meanwhile, any corrective downside breaking below 156.45 now seems likely to find decent support around the 155.39 (200.0% Fibonacci retracement) - 155.25 region. Next levels to watch are the psychological level of 155.00 and the short-term trading range resistance breakpoint, located near 154.60. Breaking below the latter could potentially drag the USD/JPY towards the vicinity of the 154.00 integer level.

Today, it is recommended to short the USD before 158.60, with a stop loss at 159.00, and targets at 157.60 and 157.30.

Top of Form

EURUSD

Last week, although the Euro/US dollar rebounded by 0.36%, the closing price remained below 1.07. Currently, the currency pair is still facing moderate bearish pressure in the short term. Last week, the Euro/US dollar fell below 1.0700, as traders digested the impact of the March Core Personal Consumption Expenditures Price Index (PCE), which is the Federal Reserve's preferred inflation gauge. After the report was released, the currency pair immediately rose but then sharply declined, falling below the key 1.0700 level. Previously, the core PCE data showed a year-on-year increase of 2.8%, higher than the analysts' expectations of 2.6%, but lower than the previous 2.8% according to data from the Bureau of Economic Analysis (BEA). This month, the core PCE rose by 0.3%, meeting expectations and remaining the same as before. This week's economic calendar includes a plethora of important data releases and events that could impact both the Euro and the US dollar. The Eurozone and Germany will release preliminary monthly inflation data and quarterly growth reports, while the United States will release the Consumer Confidence Index, as well as ISM Manufacturing and Services data, and the US monthly employment report on Friday. Furthermore, Wednesday will see the latest policy decision and press conference from the Federal Open Market Committee (FOMC).

Despite the growing market expectation that the United States will postpone the start of the interest rate cut cycle, the Euro/US dollar exchange rate has still risen in the second half of this month. The European Central Bank is preparing to cut rates in June, which should be favorable for the US dollar and push down the Euro/US dollar. Earlier last weekend, the currency pair touched 1.0752, but quickly reversed back below 1.0700. The closing of the weekend session showed a "head and shoulders" bearish pattern, and the Euro/US dollar is currently approaching just below 1.0700, near the volatility low point of mid-February. Therefore, under bearish pressure, this week could see a test of 1.0673, and breaking below could target 1.0601 (the low point on April 16) and 1.0600. If the Euro/US dollar continues to hold above 1.0690 and rises above the 1.0700 region, the next resistance levels will be at 1.0746 and 1.0752 and breaking above could target 1.0795 and the 1.0800 level.

Today, it is suggested to short the Euro before 1.0710, with a stop loss at 1.0730 and targets at 1.0650 and 1.0640.

Top of Form

Disclaimer: The information contained herein (1) is proprietary to BCR and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and, (4) does not constitute advice or a recommendation by BCR or its content providers in respect of the investment in financial instruments. Neither BCR or its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.