Gold prices moved positively for the sixth consecutive session and remained near all-time highs.Cautious market sentiment as well as geopolitical risks provided support for the safe-haven XAUUSD.Reduced expectations of a Fed rate cut in June continue to support the USD and could pose resistance to gold prices.

Data released on Monday showed that the ISM Manufacturing PMI for the U.S. in March rose by 2.5 to 50.3. Although only slightly above the 50 boom-or-bust line, the ISM Manufacturing PMI halted 16 consecutive months of contraction. The March reading exceeded all expectations in the agency's survey of economists. Purchasing and supply management executives in the U.S. have recently expressed optimism. Concerning the outlook for the manufacturing sector, the stabilization of order growth reflects resilient consumer demand and business investment, suggesting that enterprises are making progress in aligning inventory levels with sales.

From some details, new orders rose from 49.2 to 51.4. Production jumped from 48.4 to 54.6. The employment rate rose from 45.9 to 47.4. The price rose from 52.5 to 55.8, the highest level since July 2022.

Timothy Fiore, Chairman, ISM Manufacturing Business Survey Committee: The Supplier's Deliveries Index declined slightly, and the Inventories Index improved but remained in a modest contractionary zone. The Price Index rose further in a moderate expansion range as commodity-driven costs remained volatile.

Timothy Fiore, Chairman of the ISM Manufacturing Business Survey Committee: U.S. manufacturing is in expansion for the first time since September 2022. Demand was positive, output strengthened, and inputs remained accommodative. The improvement in demand was reflected in a resumption of expansion in the New Orders Index; a renewed expansion in the New Export Orders Index; the Backlog of Orders Index remaining in moderate contractionary territory, the same as in February; and a fourth consecutive monthly contraction in the Customers' Inventories Index, which was maintained at a level conducive to future production.

The swap market priced in a less than 50% probability of a Fed rate cut in June, boosted by U.S. manufacturing data. The U.S. Dollar Index (DXY) broke above 105 for the first time since November 2023, up 0.49% on the day.

Following strong manufacturing data and a sharp rebound in Treasury Securities yields overnight, the USD remained largely firm in the Asian session today. As markets seek clues about the Fed's path of monetary easing, the focus now turns to upcoming comments from Fed officials, including Governor Michelle Bowman and New York Fed President John Williams.

The most pressing question for investors and analysts is whether the Fed is prepared to start cutting rates in June and whether it will implement three rate cuts this year. Upcoming comments from Fed officials are expected to shed light on the current hawkish dynamics within the Fed and may draw additional guidance from the ISM services data and non-farm payrolls due later this week.

In the broader FX market, the GBP is currently the weakest-performing currency so far this week, followed by the NZD and the EUR. On the other hand, the CAD and JPY have shown relative resilience, while the AUD and CHF have been mixed.

In broader trading, the USD entered Q2 with strong momentum. As the timing of the Fed's easing policy is still uncertain, compared with the current consensus expectation, the risk balance shows that the rate cut will be smaller, not larger. It is suggested to hold the USD without hedging, but the strength of the USD is obviously limited, which is related to double deficits in the U.S. and the global growth momentum is expected to converge with the U.S. in the second half of the year.

At the same time, the mutual chasing of bullish bets and central bank demand for gold formed the basis for buying, and the momentum continued after the gold price broke through US$2,200. There is also no doubt that geopolitical tensions provided additional support.

From a technical perspective, the Relative Strength Index in the 1D timeframe is becoming overbought, which makes it wise to wait for a near-term consolidation before the next round of gains. Any meaningful correction could usher in buying on the lows. For aggressive traders, it is recommended to stay on the sidelines.

Any limited pullback deserves to stop at the threshold of US$2,223. Otherwise, more meaningful declines will trigger technical selling and pave the way for deeper declines.

On the other hand, the US$2,265-2,280 range is now the key resistance limiting the bulls' further gains, a break of which would test the US$2,300 psychological barrier.

Trading direction: Long

Entry price: 2232, 2235, 2238

Target price: 2341

Stop loss: 2216

Deadline: 2024-04-16 23:55:00

Support: 2232, 2223, 2212

Resistance: 22265, 2280, 2300

The euro extended its decline on Tuesday, tumbling against a basket of major currencies for the second day in a row. The single currency hit a two-month low versus the U.S. dollar, pressured by growing expectations of a widening interest rate gap between the U.S. and the Eurozone.

Market sentiment is firmly convinced of a European Central Bank (ECB) rate cut in June. Traders are eagerly awaiting key inflation data from Germany and the broader eurozone later this week to solidify this belief. The EUR/USD pair mirrored this sentiment, dropping 0.2% to 1.0725, its lowest level since mid-February. This follows Monday's 0.4% loss, marking the fourth decline in five days for the euro, all fueled by strong U.S. manufacturing data.

The current interest rate gap between the U.S. and Europe sits at a narrow 100 basis points, the smallest since May 2022. This gap is expected to widen to 125 basis points by June if the ECB cuts rates while the Federal Reserve holds steady. Recent dovish remarks by several ECB policymakers have strengthened the case for a June rate cut, with markets now pricing in a total of 90 basis points of rate reductions in the eurozone this year.

Consumer price data for Germany and other European nations released today, with eurozone-wide figures following tomorrow, will be crucial in shaping expectations for future ECB policy decisions.

The EUR/USD pair has exhibited a concerning lack of volatility today, clinging stubbornly to the $1.0740 level. This stagnant behavior aligns with the anticipated bearish trend, with the next potential downside target situated at $1.0645.

For the bears to maintain their grip, a sustained breach below the crucial support level of $1.0765 is essential. This level acts as a pivotal point, and a break beneath it could unleash a wave of selling pressure. Conversely, a surprise rally above $1.0765 could indicate a temporary reprieve for the euro, with potential for a short-lived surge towards $1.0860 as the first resistance point.

Looking beyond immediate support and resistance, the 50-day Moving Average (MA) also paints a bearish picture. This key technical indicator currently sits around $1.0820, and the euro's inability to reclaim it further reinforces the downtrend. A convincing break above the 50-day MA would be a necessary signal for a potential trend reversal, but for now, it remains out of reach.

Overall, the technical outlook for EUR/USD is bleak. The lack of volatility suggests a market resigned to a decline, with key support levels and the 50-day MA all stacked against the euro. A dovish ECB stance coupled with potentially disappointing inflation data could exacerbate the euro's woes and accelerate its descent towards $1.0645 and potentially lower.

SELL EURUSD 

ENTRY PRICE : 1.0760

STOP LOSS : 1.0820

TAEKE PROFIT : 1.0645

The recent movement of the GBPJPY has sometimes been in sync with the GBP and sometimes with the USD, making it quite intriguing for investors. But either way, the direction is clear. The bulls may be aiming for the high in 2015.

In the recent trend, the GBPJPY has a moderate intraday bias to the downside as the GBPJPY extends its decline from the short-term top of 193.51. Further declines would point to the structural support level of 187.94. However, we do not see the GBPJPY retreating further, instead, it is holding the key upside base in recent trading, just waiting for the price to be triggered to the upside. On the upside, a break above the secondary resistance level of 191.65 would turn the bias back to the upside for a retest of the recent high at 193.51.

From a broader perspective, the current rebound is part of an uptrend since 123.94 and is heading towards long-term resistance (2015 high). A break below the support level of 187.94 would be an early sign of a medium-term top; otherwise, the outlook remains bullish in case of a pullback.

The GBPJPY has had a lukewarm performance over the past four sessions, but remains near its short-term uptrend line, setting up a key foundation for further gains. It is currently moving away from around the threshold of 190.00. Oscillators are showing weak momentum despite price gains. The Relative Strength Index is below the neutral 50 and the MACD remains below the 0-axis trigger line.

Judging from the supply and demand rotation, the GBPJPY has fully tested point C on the supply side, despite the lack of bullish momentum, and the uptrend remains intact at this point, as long as it holds the fundamentals and does not break below.

As part of the diagonal rebound, the next resistance will be the AB=CD rotation. Potential higher highs could push the price up to the high of 195.86 in 2015.

On the other hand, a break below the support near the psychological threshold of 190.00 would be supported again in the uptrend support line connecting the February 2-March 12 period. A break below the 50-day SMA at 189.45 could be a turning point for the GBPJPY in the medium term; a move below the 187.94 level could neutralize the outlook.

Overall, even though the GBPJPY is in a pullback phase, the fundamentals remain solid and the next move for the GBPJPY is expected to be a continuation of the uptrend.

Trading direction: Long

Entry price: 190.50

Target price: 195.86

Stop loss: 187.70

Deadline: 2024-04-16 23:55:00

Support: 189.89, 189.51, 188.58

Resistance: 191.67, 192.19, 193.52

During the Asian session on Tuesday (April 2), EURUSD fluctuated in a narrow range and is currently trading around 1.074. 

After the release of US PMI data yesterday, the market's optimistic expectations for a rate cut took another hit. At present, the market is less than 50% confident in the first rate cut in June. The US dollar strengthened after gaining support, and non-US currencies came under pressure and weakened. The dollar index has risen for 3 consecutive months, and the EURUSD has shown its decline recently, testing support in the 1.0700-1.0750 zone again. The weakening of the Euro is partly due to the strength of the dollar, while the main factor is the direct monetary policy scissors gap between Europe and the US. Europe's monetary cycle has always followed the dollar, but judging from the attitude of ECB officials, the internal unity supports the start of interest rate cuts in June, which is basically in line with the current market pricing. This round of the ECB is likely to be ahead of the Fed to start cutting interest rates, which will limit the upside of the Euro this year. However, given that this round of EURUSD has been fully priced and continues to decline to the key support area, it is not recommended for traders to chase the market. If the support at 1.07 is broken, the price will have to test 1.0650 further.

Data: The US ISM manufacturing PMI expanded to 50.3 in March, which exceeded expectations, compared with the expected 48.4, ending a 16-month streak of contractions. Sub-indices such as prices, new orders, and production have risen.

News: According to CCTV news, the Syrian military stated on April 1 local time that Israel launched an airstrike from the direction of the Golan Heights on the consular building of the Iranian Embassy in Syria in Damascus, the Syrian capital. Israeli missiles were intercepted by Syrian air defense forces.

Today, traders need to focus on US JOLTS job openings in February, and factory orders in February.

EURUSD has been extremely bearish recently, maintaining weakening oscillations for 1 consecutive month. Currently, the price has fallen to around 1.0700 and is testing the support of the previous lows. As can be preliminarily seen from the chart below, the support around the double bottom is relatively firm, which will make it difficult for the price to break through the support without major bearish news. However, if it is breached, support will retreat to 1.0650. Therefore, traders should focus on the incoming data this week.

The recent technical pressure on EURUSD is the continued strengthening of the US dollar, which has led to the breakdown of several support levels. At the moment, the extremely important support zone is 1.0700-1.0750, and in case of a valid breakout, the price will fall. However, I think this area is not easy to be broken in the short term, or even a one-time breakout. It is not recommended for traders to continue chasing the market. In the 1-hour candlestick chart, the momentum of the bears has been fully released and is now nearing the end. The MACD line starts to crosse above the signal line and the golden cross is gradually widening. As there is a rebound demand in the market, an hourly rebound will occur. In the 4-hour candlestick chart, the MACD line starts to crosse below the signal line and the death cross is gradually widening, which has entered the oversold area. Due to the full release of bearish momentum, the market may rebound at any time. Therefore, traders should better not chase the market. On the daily chart, the MACD line starts to crosse below the signal line and the death cross is gradually widening. Bears are still dominating the market for now, with the bearish momentum still being released. Since the price has fallen to the double-bottom support level in the chart below, traders should be bearish but avoid taking short positions. If the price rebounds, you can try to go short. During the day, aggressive traders can buy low and sell high in the range of 1.0650-1.0800 and mainly focus on going short at high

Trading Direction: Long

Entry Price: 1.0650

Target Price: 1.0800

Stop Loss: 1.0600

Support: 1.0700/1.0650

Resistance: 1.0800/1.1000

Due to the vast majority of the markets closed on Friday, the impact of the PCE data and Powell's speech last Friday finally "showed" on Monday, triggered by the U.S. March ISM Manufacturing PMI, after which the USDX rose all the way, closing up 0.41%.

Yesterday's March ISM Manufacturing PMI rose from 47.8 in February to 50.3 in March, the highest since September 2022, since which it exceeded 50 for the first time, ending 16 consecutive months of contraction. This was the longest contraction cycle since the August 2000-January 2002 period.

This, coupled with last Friday's personal income and spending data for February showing that consumption remains strong, implies that the U.S. economy remains resilient.

Although the PCE data is mixed, under the guidance of ISM manufacturing PMI data, the market's interpretation of it is obviously biased toward "the Fed's process of reducing inflation shows a stagnant trend". This is not blind speculation. In fact, before the release of the ISM Manufacturing PMI data, traders had already evaluated the Fed's interest rate cut path based on the recently released economic data such as inflation, employment, and salary growth. Coupled with the cautious comments made by Fed Chairman Powell when the U.S. stock market closed last Friday, the bond market had already sold off before the data was released, and the yields on 2-to 30-year Treasury Securities rose by at least 10 points from the previous day, making it one of the largest gains this year.

Meanwhile, bond traders have lowered their expectations for monetary easing this year, at one point expecting a less than 50% probability of initiating a rate cut in June. Meanwhile, the market expects the Fed to cut interest rates by less than 65 basis points during the year, which is lower than the expectations of Fed officials themselves.

Overall, due to last Friday's market closure, PCE data and the impact of Powell's speech were temporarily "put on hold". Guided by the ISM Manufacturing PMI, the market interprets it as that the resilience of the economy gives the Fed patience, and the stagnation of the de-inflation rate process will also make the Fed spend more time to determine whether inflation will fall back to the target level sustainably. At this point, the Fed's interest rate cut bet has once again "ebbed".

Three voting committee members will make speeches during the intraday U.S. trading session. If they continue to show a hawkish attitude, there is still room for a further rise in the U.S. Dollar Index (USDX), and the cooling of rate-cut expectations may keep affecting the USDX movements for this whole week. Otherwise, it will boost interest rate cut expectations, and limit the rise of the USDX. However, judging from the views expressed by the three voting members (Williams, Mester, and Daly) in their previous speeches, there is little hope for such a scenario.

Mester and Daly are still expected to hold the view that "rates will be cut this year, but not in a hurry". In their own words: "The Fed's interest rate policy is in a good position, and we don't mind waiting before taking interest rate cuts."

Williams' attitude, on the other hand, is noteworthy, as in his last speech he argued that three rate cuts during the year would be appropriate. However, it was a speech delivered on March 1, also before the Fed's interest rate decision. Whether his views have changed is currently unknown. However, it can be expected that once Williams' attitude changes, it will further suppress the market's expectation of interest rate cuts.

In the 4H timeframe, the USDX has set a new high of 105.075 for this year, showing signs of hitting 105.506. It was only after the USDX fell below this level on November 14 last year that it officially started its decline. At the same time, this level is also the Fibonacci retracement line of 0.236. If the USDX breaks above this level, it will open a new round of uptrend. The support below is 104.397, and falling below this level means that the USDX will have a deep pullback.

In terms of indicators, the baseline and the conversion line show a slight uptrend in the Ichimoku chart, indicating that there is still an upside for the USDX. However, the price has risen sharply in the short term, which shows that the USDX has the possibility of a short-term correction. In the DMI, the ADX line is moving up, showing that the USDX has increased its upward momentum. However, the cross between +DI and -DI has expanded, and -DI is located below +DI at 11.2, showing that the USDX will pull back in the short term.

Overall, the USDX is currently in a strong uptrend, and it is recommended to go long after a pullback.

Trading direction: Long

Entry price: 104.70

Target price: 105.50

Stop loss: 104.20

Support: 104.698, 104.370

Resistance: 105.076, 105.50

During Tuesday's (April 2nd) Asian session, WTI oscillated narrowly, and it is now trading at 83.6.

Yesterday, WTI rebounded in a V shape, and descended with oscillations in the Asian session, once touching 82.2. Then, it rebounded again to touch the annual high at 84, getting more resistant to decline. On the one hand, the inherent logic of the tightening supply and improved demand support oil prices, and yesterday's U.S. PMI data highlighted the economic rebound again. Also, as summer is approaching, the U.S. traveling season will support the demand expectation. On the other hand, according to the U.S. news, Israel's air attack on Iranian diplomatic institutions in Syria's Islamic Revolutionary Guards Corps killed a commander, and the Iranian side claimed that Israel would be responsible for the consequences. As a result, the Middle East geopolitical situation gets worse again to pull up oil prices.

For the oil market, the worries from the supply side support oil prices, and the improvement in the demand side also boosts the price. Supply-side tightening is expected to play a limited role in the short term, and the crude oil inventory situation is more significant. For the demand side, with the arrival of the demand season, oil prices will go strong with better expectations. If WTI turns strong, oil prices should move up further to a new stage.

The change of geopolitical risk is the current disturbing factor for oil prices. Yesterday, the change in the Middle East pattern is a better support, but the risk may ease in the future as the Security Council has adopted a ceasefire agreement. In this regard, I think this situation will change repeatedly, and we should not overly trade it. Now, try to see if there is an improvement in the supply and demand sides.

News: A Reuters survey of five refining sources showed that the OSP for Arab light crude in May would rise 20-30 cents a barrel from April. Expected tightening supplies of medium and heavy grades due to field maintenance in Saudi Arabia, OPEC+ production cuts, and increased domestic consumption in several Middle Eastern producers will support Saudi Arabian medium- and heavy-grade crude prices in May, the sources said. According to Iranian state media, the Iranian side will reserve the right to take reciprocal action against the Israeli attack on the Iranian consulate in Damascus.

Today's focus: API crude oil inventories, and U.S. JOLTS in February, and February monthly factory orders.

Yesterday, WTI crude oil retraced as expected in the Asian session, but the retracement range was small. After dropping slightly to 82.2, WTI rebounded again to a new high. Now, WTI is near the upper area of the previous channel, facing strong resistance above. In addition, the sentiment supports WTI to cross above, while the supports from fundamentals are also necessary. If the data is supportive, WTI is likely to ascend further. However, the traction exists as well, and we should not expect a high level above. Therefore, it is better not to chase the rise, but go long after a retracement.   

Technically, overbought risks are accumulated after WTI rises for a period. Meanwhile, WTI is approaching the upper area of the channel below, indicating more risks. However, WTI is under a bullish trend, and we should go long after a retracement, or try to trade with a small stop loss and small positions at highs. In the 1H chart, the MACD line crosses below the signal line and WTI is at the Bollinger Upper Bands. After the release of bearish momentum, WTI is likely to rebound later. Therefore, we should consider the resistance in the range of 84.8-85.3. Even so, we should not chase the rising trend and wait until WTI reaches this area. Then, we can trade with a small stop loss for a possible retracement. Regarding the 4H chart, the MACD line crosses above the signal line and the golden cross widens, indicating the release of bullish momentum. As WTI has not reached the overbought zone, it is possible to rise further later. In the daily chart, WRI closed with a bull candle yesterday to achieve 3 consecutive growths. The V-shape rebound implied resistance to decline and a strong bullish sentiment. Nevertheless, WTI is near the Bollinger upper bands, and the retracement demand is tremendous after rising for a long time. Thus, we stop going long as WTI is near the Bollinger upper bands. Today, our trading range will be 82.3-85.0, in which investors can buy low and sell high.  

Trading direction: Short

Entry price: 85.000

Target price: 82.300

Stop loss: 86.000

Support: 82.300/81.300

Resistance: 84.000/84.800