Daily Markets

• The U.S. dollar fell Monday ahead of the latest Federal Reserve meeting, while the yen soared amid speculation Japanese authorities have been intervening to try and stem its seemingly relentless decline. The dollar has edged lower at the start of the new week, but was still stilling on strong gains of over 1% so far in April as traders have largely priced out most expectations of early rate cuts by the Fed. Friday’s PCE price index data, the Fed’s preferred inflation gauge, came in hotter than expected for March, pointing to rate cuts coming much later in the year than had been expected at the start of 2024. The focus this week is now squarely on a Fed meeting, which concludes on Wednesday. The central bank is expected to keep rates steady and potentially offer a hawkish outlook, given recent stickiness in U.S. inflation. The Fed meeting comes ahead of Friday’s monthly jobs report, which will give a fresh look at the strength of the U.S. labor market. Economists expect the economy to have added 243,000 jobs in April, moderating from 303,000 in March, while the unemployment rate is expected to remain steady at 3.8%. Most of the action in the foreign exchange market has been seen In Asia Monday, with USD/JPY slumping 1.8% to 155.56 after earlier climbing as high as 160.245 The sharp nature of the move has led many to look to the authorities for intervention, although Japan's top currency diplomat Masato Kanda declined to comment when asked if authorities had intervened. Forex markets have been on edge for weeks for any signs of action from Tokyo to prop up a currency that has plunged to 34-year lows against the dollar even though the central bank exited from negative interest rates last month. Spanish consumer prices rose 3.3% on the year in April, a monthly increase of 0.7%, slightly below expectations. A number of German states also released their April consumer figures, with the most populous state, North Rhine Westphalia, releasing numbers that remained slightly above the European Central Bank’s 2/0% medium-term target. The ECB is planning to cut interest rates in June but the outlook further out remains clouded by rising energy costs, stubbornly high services inflation and continued geopolitical tensions.
• Gold prices fell in Asian trade on Tuesday, remaining pinned well below recent peaks as fears of higher-for-longer U.S. interest rates grew before a Federal Reserve meeting this week. Waning safe haven demand also weighed, especially as recent reports showed renewed ceasefire talks between Israel and Hamas. This left gold even more vulnerable to rate-driven risks. But despite recent declines, gold prices were still trading up over 4% for April, extending stellar gains seen in March. Focus was now squarely on a Fed meeting later this week, where the central bank is widely expected to keep rates steady. But Fed Chair Jerome Powell is expected to offer a more hawkish outlook on rates, especially following a series of hot inflation readings. Signs of sticky inflation saw traders largely price out expectations of near-term interest rate cuts by the Fed. The central bank is now only expected to cut rates in September, or the fourth quarter, if at all this year. Higher-for-longer rates bode poorly for gold, given that they increase the opportunity cost of investing in the yellow metal. Strength in the dollar, on the prospect of steady rates, also pressured broader metal markets. Official PMI data from China showed manufacturing activity slowed a hair less than expected in April from March. But non-manufacturing activity slowed much more than expected.
• Oil edged down on Tuesday after Israel-Hamas ceasefire talks in Cairo helped quell market fears of an expanded conflict in the Middle East, while worries about the outlook for U.S. interest rates weighed on the market. Hamas negotiators left Cairo late on Monday to consult with the group's leadership after talks with Qatari and Egyptian mediators on a response to a phased truce proposal that Israel presented on the weekend. The delegation was expected to report back within two days, two Egyptian security sources said. While Hamas leaders visited Cairo, Israeli airstrikes killed dozens of Palestinians on Monday, with more than half the dead in the southern Gaza city of Rafah, which foreign leaders have urged Israel not to invade. Continued attacks by Yemen's Houthis on maritime traffic south of the key Suez Canal trading route have kept a floor under oil prices and could prompt higher risk premiums if players anticipate crude supply disruptions. Houthis targeted two U.S. destroyers and the vessel Cyclades in the Red Sea as well as the MSC Orion in the Indian Ocean, the Iran-aligned group's military spokesman Yahya Sarea said in a televised speech early on Tuesday. On the economic front, investors are on watch this week for the U.S. Federal Reserve's May 1 policy review, with stubborn inflation pushing out market expectations for any rate cuts, which could bolster the U.S. dollar and hamper oil demand. Some investors are cautiously pricing a higher probability that the Fed could hike interest rates by a quarter percentage point this year and next as inflation and the labor market remain resilient. Additionally, concerns over demand have also weighed on sentiment, ANZ analysts said in a research note, as premiums for diesel and heating oil over crude oil have fallen to their lowest level in months.

Gold – XAU

Gold on Monday made its intraday high of US$2346.64/oz and low of $2319.78/oz. Gold is up by 0.0218% at US$2335.20/oz.

Technicals in Focus:

On the daily charts, gold trades higher than 20DMA (2197). If it drops below this level, it could lead to 2,100. The MACD is currently above the zero line and the histograms are showing an increasing trend, indicating that there may be upward movement in the coming sessions. The RSI is currently at 83.04, which is in the overbought region, suggesting there may be selling pressure in the next 2 to 3 sessions. The Stochastic Oscillator is also in the overbought territory but has given a positive crossover, indicating a bullish stance for intraday trades, but rebound in expected in all the overbought indicators.

Trading Strategy: Sell on Strength

Sell below 2329-2380 keeping stop loss closing above 2400, targeting 2300-2280-2267. Buy in between 2310-2254 with risk below 2250 targeting 2325-2340-2351 and 2360-2369-2380.

Silver - XAG

Silver on Monday made its intraday high of US$27.41/oz and low of US$26.92/oz settle down by 0.092% at US$27.12/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 20MA (25.05), breakage above will lead to 23.73. MACD is below the zero line and histograms are increasing trend, bringing a bullish stance in the upcoming sessions. RSI is in the oversold region, indicating a sell signal for now. The Stochastic Oscillator is in the overbought region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 26.40-23.90, targeting 27.50-27.90-28.90 and 29.40-30.00-30.40-31.00 with stop loss should be placed on the breakage below 23.00. Sell in between 27.00-30.50 with a stop loss above 30.50 targeting 26.40-25.90 and 25.45-24.90 and 24.60-23.90-23.20.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US$83.61/bbl, an intraday low of US$82.16 /bbl, and settled down by 1.00% to close at US82.45/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 75.37, a support level, and breakage above will call for 77.48. MACD is above the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the overbought region, giving a negative crossover to confirm a bearish stance; while the RSI is in the neutral region, more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 82.90-89.65 with stop loss at 90.00; targeting 82.00-81.10-79.90. Buy above 82.00-75.00 with risk daily closing below 75.00, targeting 83.45-83.90-84.70 and 86.70-87.50-88.40.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.0688/EUR, a high of US$1.0733/EUR, and settled the day up by 0.295% to close at US$1.0719/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.0800), which becomes immediate support, a break below will target 1.0717. MACD is above the zero line and histograms are increasing mode, bringing a bullish view. Stochastic is in oversold territory, giving negative crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0740-1.1100, targeting 1.0775 and 1.0770-1.0640 with stop-loss at daily closing above 1.1100. Buy above 1.0690-1.0450 with risk below 1.0400 targeting 1.0845-1.0890 and 1.1020-1.1105-1.1145.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2568/GBP, a high of US$1.2568/GBP, and settled the day up by 0.762% to close at US$1.2561/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.2674) is becoming a resistance level. 14-D RSI is currently in a neutral region and direction is difficult to predict on an RSI basis. The Stochastic Oscillator is in oversold territory and gives a positive crossover to confirm a bullish stance. MACD is above the zero line but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.2430-1.2050 with a target of 1.2500-1.2540 and 1.2600-1.2690-1.2730 with a stop loss closing below 1.2050. Sell in between 1.2540-1.2700 with targets at 1.2360-1.2300-1.2240 and 1.2190-1.2100 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Monday made an intra‐day low of JPY154.52/USD an intraday high of 160.17/USD, and settled the day dwon by 1.73% at JPY156.30/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (137.57), major support on the daily chart. 14-D RSI is currently in the overbought region and chances of downward are expected based on RSI. MACD is above the zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is in overbought territory and signaling to sell as it has given a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 157.00-159.00 with risk above 159.00 targeting 153.10-152.60-151.00 and 150.60-149.90-149.30. Long positions above 156.00-149.90 with targets of 156.10-156.90-175.50 and 158.00-159.00 with stops below 149.90.