The Aussie dollar (AUD) rose modestly on Wednesday, trading around $0.6504. Earlier, it had spiked to a high of $0.6529 following the release of Australia's inflation data. However, the gains were short-lived, with the AUD retracing some of its initial jump.

Australia's inflation came in hotter than expected, clocking in at 3.6% year-on-year for the first quarter. While this is lower than the previous quarter's 4.1%, it still surpassed market forecasts of 3.4%. Notably, core inflation, a key metric for the Reserve Bank of Australia (RBA), also picked up steam on a quarterly basis.

This inflation surprise rattled market expectations for a potential RBA rate cut in the near future. Before the data release, markets had assigned a 3% chance of a May cut. Now, that probability has plummeted, with investors not fully pricing in a rate reduction until February 2025 at the earliest.

The RBA is likely nearing the end of its tightening cycle, having raised rates to 4.25%. However, with inflation showing more resilience than anticipated, the central bank is unlikely to ease policy anytime soon. They'll likely wait for clearer signs of a slowdown in inflation and a softening labor market before considering a rate cut.

The AUD/USD pair is currently exhibiting a bullish bias, recently achieving a significant breakout above the $0.6500 level. This psychological resistance level has historically acted as a pivot point for the currency pair. A sustained move and daily close above $0.6500 would be a bullish confirmation, potentially opening the door for further gains towards $0.660, the next key resistance level on the upside.

Traders should closely monitor price action around these key levels. A failure to hold above $0.6500 could signal a potential reversal, with the $0.6475 level acting as initial support. A decisive break below this support zone could indicate a return of selling pressure and a possible retest of lower levels.

While the breakout above $0.6500 is a positive technical development, incorporating additional technical indicators can provide further confirmation of the bullish trend. The 50-day exponential moving average (EMA) is a widely used indicator to gauge the overall direction of the currency pair. If the AUD/USD can sustain a move above the 50-day EMA, it would bolster the bullish case. Conversely, a fall below the 50-day EMA would suggest a potential loss of momentum.

The Relative Strength Index (RSI) is another valuable technical indicator that measures price momentum. If the RSI is currently below 70, it suggests there may be room for further upside potential. However, a reading above 70 could indicate the pair is overbought and susceptible to a pullback.

BUY AUDUSD

ENTRY PRICE : 0.6500

STOP LOSS : 0.64600

TAKE PROFIT : 0.66000

The New Zealand dollar (NZD) edged higher against the US dollar (USD) on Thursday, buoyed by a combination of factors. Improved global risk sentiment, a weaker USD, and potentially slowing US interest rate hikes all contributed to the Kiwi's modest gains.

Investor concerns over escalating tensions between Iran and Israel appear to be subsiding, leading to a return of risk appetite in markets. This benefits the NZD, often seen as a proxy for global risk sentiment. A more positive risk environment typically fuels demand for growth-sensitive currencies like the Kiwi.

Recent US data revealed a contraction in manufacturing activity alongside slower growth in services. This economic slowdown puts pressure on the Federal Reserve to potentially slow its pace of interest rate hikes, weakening the USD. A weaker USD makes the NZD relatively more attractive to currency traders. The NZD/USD pair thrives when the USD weakens, as it takes fewer New Zealand dollars to purchase one US dollar.

The Reserve Bank of New Zealand (RBNZ) maintained its hawkish stance this month, keeping interest rates at 5.5%. While inflation in New Zealand has eased slightly, the RBNZ remains committed to containing price pressures. This could limit the NZD's upside potential in the near term. A central bank with a hawkish bias typically raises interest rates, which strengthens the domestic currency. However, the RBNZ's wait-and-see approach suggests they may be nearing the peak of their tightening cycle, potentially allowing the NZD some breathing room.

The NZD/USD pair exhibits a cautiously bullish bias. A break above the 50-day exponential moving average (EMA50), currently sitting around $0.5930, would solidify the uptrend. This technical indicator is often used to gauge the overall direction of the currency pair. A sustained move above the EMA50 suggests the bulls are in control, potentially paving the way for a test of the $0.6000 resistance level.

However, a decline and sustained break below $0.5915 could signal a reversal. This level acted as support in recent days, and a breach could indicate a return of selling pressure. If the NZD falls through this support zone, traders should watch for additional technical indicators to confirm a potential downtrend.

The near-term direction of the NZD/USD pair will likely hinge on the interplay between global risk sentiment, the US economic data calendar, and any further pronouncements from the RBNZ. A sustained improvement in risk appetite and continued signs of a slowing US economy could provide further tailwinds for the Kiwi. However, the RBNZ's hawkish stance remains a potential headwind, and any unexpected shift in their policy outlook could trigger a reversal in the NZD's fortunes.

BUY NZDUSD

ENTRY PRICE : 0.594

STOP LOSS : 0.589

TAKE PROFIT : 0.6000

The USDCAD remained weak around the threshold of 1.3700 during the European session on Tuesday. The CAD asset was supported by the decline in the USD as market participants' risk appetite improved.

The market had previously expected a 50% chance of a rate cut in June by BOC, but the likelihood of a cut in June rose to around 65% as bond yields and the CAD fell after March's inflation data was seen as moderate.

Inflationary pressures remain weaker and more concentrated in Canada than in the U.S. If the next release of the inflation report does not show a significant pickup in core indicators, then it should be reasonable to make the first rate cut in June. However, the market is now expecting that the BOC may wait until Q3 to cut rates, given strong growth in early 2024, massive government spending, and a weaker CAD. (Supporting the CAD's recent strength)

The deceleration in inflation needs to be considered in the broader context given the stronger growth outlook for the Canadian economy. We now expect growth of 1.5% in 2024, rather than the 1% previously forecast. Canada's annual budget plan, released last week, projects a solid 6.7% increase in government spending, which will boost economic growth. In fact, public sector spending in Canada could account for half of economic growth this year. The CAD weakened in anticipation of a BOC rate cut, and further weakness could influence policy decisions.

The USDCAD continued its pullback from the five-month high of 1.3845 level on Tuesday, after attempting to re-enter the 1.3800 range earlier. However, the upside strength soon faded, forcing the price back down to the 1.3700 support range.

The Relative Strength Index and stochastic have exited the overbought zone, suggesting that the recent pullback in prices is reasonable. Nonetheless, in the broader cycle, the RSI is still comfortably above the neutral threshold of 50 and the MACD is well above the 0-axis, which remains promising for a late rally for the bulls.

On the other hand, the price has now broken slightly below the upper band of the bullish channel at 1.3690. If it continues lower, it could stabilize between the 20-day SMA and the threshold of 1.3600. If not, the sell-off could continue to push toward the 50-day SMA at 1.3565.

In a positive scenario, the USDCAD will continue to move higher relying on the 50-day SMA support, and could face more competition within the 2023 peak range of 1.3860-1.3896. Once it manages to break above such resistance, the next target will be the 2022 top at 1.3975, while if it moves higher, the bulls could meet resistance between the threshold of 1.4040 seen in May 2020 and the psychological barrier of 1.4100.

Overall, the USDCAD has shifted into neutral mode and is waiting for the strength of key support to determine the direction. It is recommended to buy the dips.

Trading direction: Long

Entry price: 1.3620

Target price: 1.3898

Stop loss: 1.3540

Deadline: 2024-05-07 23:55:00

Support: 2290, 2283, 2265

Resistance: 2315, 2334, 2351

The Pound Sterling has defied recent pessimism, recovering against the Euro after a sharp selloff earlier this week. This reversal highlights the ever-present volatility in currency markets and the delicate dance between central bank policy and investor sentiment.

The initial decline stemmed from a shift in market expectations for Bank of England (BoE) monetary policy. Comments from Governor Bailey and Deputy Governor Ramsden fueled speculation of a potential mid-year rate cut being brought forward. This contrasted with a more static rate outlook elsewhere, making UK bonds appear less attractive compared to their Eurozone counterparts.

The market reacted swiftly, repricing expectations. By Tuesday, a 50/50 chance of a June cut materialized, with August fully priced in. This rapid shift translated into a near 1% drop in the Pound-to-Euro exchange rate over just two days.

However, a dose of reality arrived courtesy of BoE Chief Economist Huw Pill. Emphasizing stability, Pill asserted that the outlook for monetary policy hadn't changed significantly since March. This statement, coupled with PMI data revealing a strengthening UK economy and rising inflationary pressures, signaled a potential reassessment from the BoE.

Pill's intervention, alongside the PMI data, served as a counterweight to the earlier market frenzy. The Pound responded positively, regaining most of its lost ground.

Meanwhile, the European Central Bank (ECB) maintains a dovish stance, with rate cuts anticipated in June and potentially further reductions throughout the year. Some even speculate a second cut as early as July.

This divergence, however, might be temporary. If the ECB delivers a "double-hit" in June and July, the current weakness in the Pound-Euro exchange rate becomes difficult to sustain.

Assuming the BoE follows a similar path, the two central banks would effectively be in sync again. This scenario would bring us back to "square one" - a familiar environment where UK and Eurozone monetary policy move in tandem. This scenario has been the dominant theme for much of 2024, reflected in the well-defined trading range of 0.858 - 0.864 for the Euro-Pound pair.

The recent volatility appears to be a temporary blip. The gravitational pull of the established trading range is strong, suggesting a potential return to the 0.864 zone.From a technical analysis standpoint, the Pound's price action aligns with a potential reversal. After breaking above a channel and experiencing a sharp rise, the current correction seems to be finding support at a key level (confluence of previous support and Fibonacci level). This suggests the uptrend remains intact, with a potential move towards 0.8700. A clear break below this support could expose further downside, with 0.8520 acting as the next potential hurdle.

BUY EURGBP

ENTRY PRICE: 0.85900

STOP LOSS : 0.85600

TAKE PROFIT : 0.87000

The U.S. Dollar Index (USDX) moved lower overnight, and after modest gains in the Asian session, it fell sharply in the European and U.S. sessions, closing down 0.41% to a 7-day low. The USDX's decline yesterday was roughly divided into two rounds, both caused by PMI data.

In the European session, the French, German, and Eurozone PMIs were released. Among them, the manufacturing PMIs in France and the Eurozone (44.9 and 45.6 respectively) were lower than the previous readings, but the services PMIs performed well, with performance in France, Germany, and the Eurozone (50.5, 53.3, and 52.9 respectively) better than the previous readings and expectations.

Following the release of the data, the market interpreted it as "the European Central Bank (ECB) may postpone the rate cut in June". Expectations of a rate cut were suppressed, causing the EUR to strengthen, subsequently leading to a decline in the USDX. However, various institutions later provided different interpretations. For instance, the strong performance of the German services PMI might act as a "catalyst" for the overall economy. While the Eurozone services PMI showed strength, it might be primarily driven by rising oil prices and wages, so it will have little impact on the rate cut in June. Market expectations gradually shifted, and the USDX recovered most of its losses seen at the time of the data release.

The U.S. April PMI was released during the U.S. session. The preliminary reading of the manufacturing PMI was 49.9, falling back below the threshold of 50 and hitting a 4-month low; the preliminary reading of the services PMI was 50.9, a 5-month low. In addition, both manufacturing and service sector new business declined, and the number of new orders from companies in April fell for the first time in six months. Business concerns about obtaining new orders led to weakened confidence in the outlook for business activity in the coming year, and business confidence fell to a five-month low. The data has led the market to raise expectations of a Fed rate cut, causing a sharp drop in the USDX in the short term. This is the second time the USDX has experienced short-term sharp fluctuations due to PMI data, with the previous fluctuation being driven by the ISM Manufacturing PMI on April 1, which triggered strong market sentiment at that time.

Normally, PMI data does not have such a significant impact to cause a sharp decline in the USDX. This indicates that the market's attention has shifted from the previous Middle East situation to the Fed's policy path. The GDP and PCE data to be released on Thursday and Friday are likely to be influenced by strong market sentiment, which could lead to a repricing of market expectations.

The U.S. durable goods orders data will be released in the day. The prominent dove, Goolsbee, has shifted his stance before the "blackout period," stating, "Progress in reducing inflation has stalled, adjustments must be made, and we must stay on the sidelines." The Fed has entered a "blackout period," and against this backdrop, the market will be seeking clues about the Fed's policy path from any data. In other words, this data release will also be accompanied by strong market sentiment.

Although market expectations suggest that the data for this month will be higher than the previous reading, there is too much uncertainty surrounding durable goods orders data. The actual readings often exhibit significant discrepancies from both expected and previous ones, so caution is needed for investors. If the released data surpasses both expected and previous readings, the market may interpret it as "strong U.S. economic activity, giving the Fed more time to make choices," potentially dampening expectations for interest rate cuts. Otherwise, it would increase market expectations.

In the 4H timeframe, the USDX is strongly supported below, with the bottom of the downtrend channel and the 0.236 Fibonacci retracement line at the same level (105.531); at the same time, the bottom of the narrow trading range and the bottom of the uptrend channel in the 1D timeframe are also essentially at the same level (105.815). Although the USDX has currently broken below the support of both, whether it can stabilize still requires further observation. If it fails, this would only be a false breakdown, with strong support expected from both levels in the future. In other words, the support range formed by 105.531--105.815 is highly likely to provide strong support for the USDX before the release of GDP and PCE data.

In terms of indicators, the baseline and conversion line in the Ichimoku chart are consolidating, indicating that the short-term bearish trend of the USDX is coming to an end. The current price had previously been far from both lines, but there are signs of approaching them, indicating a short-term uptrend for the USDX. In the DMI, there are signs of -DI crossing below +DI, but -DI is currently at 27.1, showing that there is still room for the short-term bullish trend of the USDX to continue upwards before a downtrend begins.

Overall, following a sharp decline in the short term yesterday, the USDX is currently in a retracement phase, awaiting guidance from durable goods orders. Therefore, we can go long at the lows after a slight drop in the USDX.

Trading direction: Long

Entry price: 105.6

Target price: 106.428

Stop loss: 105.2

Support: 105.531, 105.27, 105.088

Resistance: 105.815, 106.04, 106.428

During the Asian session on Wednesday (April 24), spot gold was once again sold off, currently trading around $2,322.

The US manufacturing PMI data released yesterday came in lower than expected, hitting a new low in four months; while the services PMI also fell short of expectations, hitting a new low in five months. The US dollar index accelerated its decline to 105.69, with the 10-year US Treasury yield closed at 4.61%. Market expectations for interest rate cuts have risen, providing support for gold. After oversold conditions in the Asian session, gold initiated a rebound, rising from a low of $2,291 to a high of $2,330 before encountering resistance.

There are heavyweight data releases in the latter half of the week. The current market sentiment leans towards caution, potentially slowing down the downward trend in gold prices. Attention will be on the US first-quarter GDP data set to be released on Thursday and the US March PCE data set to be released on Friday, which may provide more clues about the prospect of US interest rate cuts. Moreover, the phased adjustment of gold has already begun, and there may be short-term fluctuations. But the adjustment is expected to continue despite this, with attention on the strength of support at key levels below.

Regarding the geopolitical tensions, the Israeli Defense Forces stated on April 23 that an Israeli drone carried out an airstrike in southern Lebanon, killing a senior officer of Hezbollah's air defense unit, Hussein Ali Azkul. The Israeli military claimed that Azkul had planned and executed attacks against Israel.

Data-wise, the preliminary US manufacturing PMI for April recorded 49.9, lower than the expected 52.0, hitting a four-month low; while the preliminary services PMI recorded 50.9, lower than the expected 52.0, hitting a five-month low. US new home sales exceeded expectations, with an annualized figure of 693,000, the highest since September last year. However, inventory surged to the highest level since 2008, and house prices continued to decline year-on-year.

Focus of the Day: March US durable goods orders month-on-month and crude oil inventory data. Key attention is on the US GDP and PCE data to be respectively released on Thursday and Friday this week.

Yesterday's gold price movement completely aligned with our expectations. During the US session, gold once again fell to $2,292 before stabilizing with a double bottom formation and initiating a rebound. We had already alerted everyone to pay attention to changes in the long-short rhythm, indicating that the two days' declines were influenced by market selling pressure, which may have short-term impacts and present significant room for recovery. However, there won't be much downside room in the short term. On the upside, we observed resistance around the $2,324 level, with the highest point also encountering resistance around $2,330. Gold has risen from $1,982 to $2,431, currently experiencing a minimum pullback to around $2,292, still maintaining a bullish trend. The significant decline in prices is merely a technical correction from the previous overbought condition, relatively speaking, it remains weak temporarily, but the trend hasn't changed.

Looking at the technical aspect, yesterday's rebound followed the oversold condition, further breaking through the $2,319-$2,324 range during the night session. The market hasn't completely reversed the absolute weakness previously seen, suggesting the possibility of a continued rebound during the day, with temporary resistance seen around the $2,350 level.

Analyzing from the 1-hour candlestick chart, a golden cross occurs in the MACD, gradually widening the gap and returning to near the zero line, departing the previous oversold zone. Bullish momentum is being released, and based on inertia, there is still room for bullish momentum release. Resistance around the $2,350 area is noted on the upside, while support is observed around the $2,292-$2,300 area on the downside. In the 4-hour chart, a death cross occurs in the MACD, entering the oversold zone, and there may be signs of a golden cross forming at any time. Focus should be placed on the intraday 1-hour chart trend. While looking at the daily chart, a death cross occurs in the severely overbought zone in the MACD and is beginning to widen. As expected, the market has started a correction, with bearish momentum still being released. From a larger timeframe view, there is still room for a pullback in the daily timeframe. However, yesterday's close with a small bearish candle with a long lower shadow also indicates a slight easing of the short-term downtrend, with support gradually manifesting. Looking ahead, further fundamental catalysts will be crucial. The focus remains on Thursday's GDP and Friday's PCE data, which may provide additional direction for short-term trends.

It's important to emphasize that technical indicators are typically used as references during normal market conditions. In extreme market conditions, these indicators can become distorted, and the same applies to any indicator.

The intraday trading range can be considered between $2,291 and $2,350. Aggressive traders can buy low and sell high within this range.

Trading Direction: Long

Entry Price: 2291

Target Price: 2350

Stop Loss: 2286

Support: 2280.000, 2250.000

Resistance: 2331.000, 2350.000