Gold, Silver Technical Forecast: Price Action Setups Analysed

/0 Comments/in , /by

Gold (XAU/USD), Silver (XAG/USD) Analysis

Recommended by Richard Snow

Get Your Free Gold Forecast

Gold Retreats After Tagging 1.618 Fibonacci Extension

The weekly gold chart showcases gold’s bullish continuation, taking out numerous all-time highs with ease. The prospect of fewer rate cuts from the Fed and a stronger US dollar have hardly affected the high-flying commodity which continues to thrive on solid central bank buying and a pickup in retail purchases from Chinese citizens.

With gold breaking new ground, resistance targets are difficult to come by. Therefore, the 1.618% extension of the major 2020 to 2022 major decline helps project the next upside challenge at $2360. Price action does appear to have pulled away from the level but the move is minor at this juncture.

Gold Weekly Chart

image1.png

Source: TradingView, prepared by Richard Snow

Learn how to trade gold with our comprehensive Gold Trading Guide

Recommended by Richard Snow

How to Trade Gold

The daily chart portrays the extent to which this market is overheating, with the RSI continuing to trade in overbought territory. Prices trade well above both the 50 and 200-day simple moving averages, a bullish landscape for the metal.

Today, gold appears to be stabilizing after yesterday’s hot CPI data which propelled yields and the dollar higher – effectively adding a premium to the price of gold for overseas buyers.

The sheer pace of the advance suggests the invalidation levels for the bullish outlook appear at the prior all-time high of $2195. Even a move to the $2222 level wouldn’t necessarily rule out a further bullish move, but it may prompt a reassessment of the bullish bias.

Gold Daily Chart

image2.png

Source: TradingView, prepared by Richard Snow

Silver Hits a Prior, Longer-Term Zone of Resistance

Silver, like gold, continues its bullish advance but has recently hit a zone of resistance that appeared in late 2020, and early 2021. The zone appears around $28.40 and capped silver prices around the Covid boom. The next target to the upside is $30.10 which represents a full retracement of the 2021 to 2022 decline.

Should the level propel bulls from here, the 78.6% retracement comes into play at $27.41, followed by $26.10.

Silver Weekly Chart

image3.png

Source: TradingView, prepared by Richard Snow

The daily chart hones in on recent price action which appears to stabilise beneath the zone of resistance. Notably, the RSI flashes red as silver continues to trade in overbought territory, suggesting bulls may need to catch their breath.

Silver Daily Chart

image4.png

Source: TradingView, prepared by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX

ECB Leaves Rates Unchanged, Rate Cut Looms, EUR/USD Steady Ahead of Press Conference

/0 Comments/in , /by

EUR/USD Prices, Charts and Analysis

  • ECB edges further towards a June rate cut.
  • Will President Lagarde begin signaling further rate cuts?

For a comprehensive assessment of the euro‘s medium-term outlook, download our complimentary second-quarter forecast

Recommended by Nick Cawley

Get Your Free EUR Forecast

The ECB left all policy levers untouched as expected, but mentioned in the press statement that, ‘If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction.’ Last meeting the ECB mentioned June as a potential meeting for a policy decision, and today’s meeting adds to the view that the ECB will cut on June 6th.

For all market-moving economic data and events, see the real-time DailyFX Economic Calendar

Financial markets continue to price in a 25 basis point at the June meeting and have recently increased the probability of an additional cut at the July 18th meeting. It may well be that the ECB cuts twice before the Fed makes its first move.

EUR/USD fell sharply yesterday, due to post-CPI US dollar strength, leaving the Euro as the next driver of any move. Initial support is seen around 1.0698, a double-low made in early February, before the 1.0635 – May 31st swing-low – and 1.0610 – Fibonacci retracement – come into play.

EUR/USD Daily Price Chart

image1.png

Charts using TradingView

Retail trader data shows 68.14% of traders are net-long with the ratio of traders long to short at 2.14 to 1.The number of traders net-long is 51.05% higher than yesterday and 56.59% higher than last week, while the number of traders net-short is 42.48% lower than yesterday and 43.78% lower than last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall.

Want to gain an edge in the FX market? Learn how to harness IG client sentiment data to inform your trading decisions. Download our complimentary guide now!




of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily 60% -44% 2%
Weekly 75% -48% 3%

What is your view on the EURO – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

USD/JPY Outlook: Hot US Inflation Propels USD/JPY to Worrying Levels

/0 Comments/in , /by

Japanese Yen (USD/JPY) Analysis

  • Dollar response to hot CPI data sends USD/JPY higher
  • USD/JPY enters a danger zone as the FX intervention threat looms
  • Dollar yen breaks 152.00 and enters overbought territory
  • Elevate your trading skills and gain a competitive edge. Get your hands on the Japanese Yen Q2 outlook today for exclusive insights into key market catalysts that should be on every trader’s radar:

Recommended by Richard Snow

Get Your Free JPY Forecast

Dollar Response to Hot CPI Data Sends USD/JPY Higher

The disconnect between the dollar and US yields in recent trading sessions presented an opportunity for USD bulls to bridge the gap if inflationary pressures showed up in the March CPI report. Indeed, US CPI beat consensus estimates across the board with headline and core inflation surpassing expectations on both the year-on-year as well as month-on-month readings.

In the buildup to the data, US 10 and 2-year treasury yields had been rising steadily while the US dollar – via the US dollar basket (DXY) – was experiencing a decline. In response to the inflation data, US yields shot up even more, compelling the dollar to follow suit, resulting in a higher USD/JPY price. The chart below highlights the move in USD/JPY and the increasing yield differential between the US and Japan which is helping to drive the carry trade.

USD/JPY Daily Chart with the US/Japan 10-year yield differential

image1.png

Source: TradingView, prepared by Richard Snow

USD/JPY Enters a Danger Zone as the FX Intervention Threat Looms

With USD/JPY around 153.00, both the finance minister and deputy finance minister issued their displeasure at the unfavourable volatility associated with the yen’s recent decline. The messages echoed what we have heard before however, the finance minister Mr Suzuki addressed the levels of 152.00 and 153.00 when explaining it is not the level of dollar yen that is in focus, rather the background that has led to the weakness. Nevertheless, USDJPY trades above the prior intervention level (152.00) and appears to hold comfortably around 153.00.

The chart below provides context for the pair, charting a new path at such elevated levels. The blue and red rectangles have been used as guides based on the average price move exhibited over the last two quarters. The potential upside target appears unrealistic as the finance ministry and BoJ are likely to intervene well before prices get that high, while the downside level may come into play should FX intervention be deployed to strengthen the yen amid the prospect of another rate cut from the BoJ later this year. One thing that continues to work against the yen is the fact that the carry trade is still very appealing, borrowing yen at low interest rates to invest in the higher-yielding USD. Additionally, given strong economic, jobs and inflation data, the Fed is likely to consider fewer rate cuts this year and potentially deciding to hold rates at current levels.

USD/JPY Weekly Chart

image2.png

Source: TradingView, prepared by Richard Snow

The dollar yen pair is one of the most liquid, most highly trades pairs in the word. It has strong links to international trade and is well known for facilitating the ‘carry trade’ . Find out more by reading the DailyFX guide below:

Recommended by Richard Snow

How to Trade USD/JPY

USD/JPY Breaks 152.00 and Enters Overbought Territory

USD/JPY held the overnight level, around 153.00 as the pair enters overbought territory. Before the bullish catalyst, the pair had traded within a narrow range beneath the 152.00 marker. The risk-to-reward ratio of a bullish continuation appears highly unfavourable at such elevated levels. Keep an eye out for communication suggesting the BoJ/finance ministry has contacted banks looking for FX quotes – if the prior intervention playbook can be used.

USD/JPY Daily Chart

image3.png

Source: TradingView, prepared by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX

US Dollar Soars after US CPI Data; USD/JPY Stages Bullish Breakout. What Now?

/0 Comments/in , /by

Most Read: US Inflation Jumps, Rate Cut Expectations Pared Back Sharply, Gold Slides

The U.S. dollar rallied vigorously on Wednesday, fueled by hotter-than-expected U.S. inflation numbers. This upswing propelled USD/JPY to fresh 2024 highs and to its strongest level since 1990. For context, the March Consumer Price Index report revealed a persistent inflationary environment in the North American economy, diminishing hopes for a June FOMC rate cut.

Focusing on today’s data, headline CPI climbed 3.5% year-over-year, exceeding forecasts and accelerating from February’s 3.2% reading. The core gauge, which strips out volatile energy and food costs, also surprised on the upside, clocking in at 3.8% versus the expected 3.7% – a sign that price pressures may be regaining momentum.

image1.png

Wall Street reacted swiftly, pushing U.S. Treasury yields upwards across the board on bets that the Federal Reserve may be compelled to maintain a restrictive position for an extended period. Against this backdrop, the U.S. 2-year yield jumped more than 20 basis points, coming within striking distance from recapturing the 5.0% psychological mark.

Want to know where the U.S. dollar may be headed over the coming months? Explore key insights in our second-quarter forecast. Request your free trading guide now!

Recommended by Diego Colman

Get Your Free USD Forecast


image2.png

Source: TradingView

Traders also adjusted their view on the FOMC’s trajectory, pushing back on the timing and magnitude of future reductions in borrowing costs. That said, futures contracts now price in less than 40 basis points of easing for the year, with the first potential cut likely occurring in September. The table below shows current meeting probabilities.

image3.png

Source: CME Group

Earlier this month, Fed Chair Powell downplayed concerns about inflation during a speech at the Stanford Business, Government, and Society Forum. However, three consecutive months of hotter-than-expected CPI figures may prompt a reassessment of the policy outlook. This could potentially lead to more hawkish rhetoric in the upcoming days and weeks – a bullish outcome for the U.S. dollar.

While the greenback may consolidate to the upside in the near term, it is uncertain whether it can continue to appreciate relentlessly against the yen, as Japanese authorities may soon step in to support the domestic currency, with USD/JPY trading at levels not seen in nearly 34 years.

Delve into how crowd psychology may influence FX market dynamics. Request our sentiment analysis guide to grasp the role of retail positioning in predicting USD/JPY’s near-term direction.




of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily 13% -7% -4%
Weekly 1% -6% -5%

USD/JPY TECHNICAL ANALYSIS

USD/JPY blasted past resistance at 152.00 on Wednesday, hitting its strongest mark since June 1990. If Tokyo doesn’t ramp up verbal intervention or move in quickly to contain the yen’s decline, speculators may feel emboldened to initiate an attack on the upper boundary of a medium-term ascending channel located near 155.70.

On the flip side, if prices turn lower and head back below 152.00, a possible support area emerges at 150.90. Bulls are likely to vigorously defend this area; failure to do so could spark a retracement towards the 50-day simple moving average at 150.00. Below this threshold, all eyes will be on channel support near 149.25.

USD/JPY PRICE ACTION CHART

A screen shot of a graph Description automatically generated

USD/JPY Chart Created Using TradingView

Trading Emerging Market Forex Pairs – USD/MXN, USD/BRL, USD/ZAR, USD/INR, USD/CNH

/0 Comments/in , /by

In the dynamic realm of forex trading, emerging market currency pairs have garnered significant attention from traders worldwide in recent years. These pairs, which involve currencies from developing economies, offer a unique blend of volatility and potential returns. Among the diverse array of options available, several emerging market forex pairs stand out for their popularity and trading opportunities against the US dollar. Let’s delve into strategies tailored for each of these prominent pairs.

Want to know where the U.S. dollar may be headed over the coming months? Explore all the insights available in our quarterly forecast. Request your complimentary guide today!

Recommended by Diego Colman

Get Your Free USD Forecast

Mexican Peso (USD/MXN):

USD/MXN, featuring the US dollar against the Mexican peso, is a cornerstone of emerging market forex trading. Mexico’s close economic ties with the United States and its status as a major exporter contribute to the pair’s volatility. When trading USD/MXN, it’s crucial to monitor US economic indicators, particularly those related to trade, as they often influence the peso’s performance.

Traders keen on USD/MXN often leverage technical analysis tools to identify key support and resistance levels. Additionally, staying informed about geopolitical developments in North America and Mexico can provide valuable insights into potential market movements. Given the pair’s volatility, implementing risk management strategies such as setting stop-loss orders and diversifying positions is essential to manage exposure effectively.

Brazilian Real (USD/BRL):

USD/BRL, featuring the US dollar against the Brazilian real, offers traders exposure to Brazil’s vibrant economy and its role as a major commodity exporter. Brazil’s economic policies, along with global trends in commodity markets, significantly influence the pair’s movements. When trading USD/BRL, it’s essential to monitor developments in Brazil’s agricultural and industrial sectors, as well as any regulatory changes impacting the economy.

Traders often employ a combination of technical and fundamental analysis to navigate the USD/BRL pair’s volatility. Trend-following strategies, such as moving average crossovers, can help identify potential entry and exit points. Moreover, keeping abreast of Brazil’s monetary policy decisions and political developments can provide valuable insights for trading. Robust risk management practices, including position sizing and using trailing stops, are imperative when trading USD/BRL.

South African Rand (USD/ZAR):

USD/ZAR, featuring the US dollar against the South African rand, attracts traders with its volatility and exposure to South Africa’s commodity-driven economy. Factors such as commodity prices, South Africa’s fiscal policies, and geopolitical developments influence the pair’s movements. When trading USD/ZAR, it’s essential to monitor global trends in commodity markets, as well as South Africa’s economic indicators and political landscape.

Traders often utilize a combination of technical analysis indicators, such as RSI and MACD, to identify potential trading opportunities in USD/ZAR. Additionally, staying informed about South Africa’s economic reforms and any shifts in investor sentiment towards emerging markets can help guide trading decisions. Implementing risk management strategies, such as setting stop-loss orders based on volatility levels, is crucial given the pair’s propensity for sharp price movements.

Indian Rupee (USD/INR):

USD/INR, featuring the US dollar against the Indian rupee, offers traders exposure to India’s rapidly growing economy and its role as a major player in the global market. India’s fiscal and monetary policies, along with geopolitical developments, influence the pair’s movements. When trading USD/INR, it’s essential to monitor India’s economic indicators, such as GDP growth and inflation rates, as well as global factors impacting investor sentiment towards emerging markets.

Traders often employ a range of technical analysis tools, such as Fibonacci retracements and pivot points, to identify potential entry and exit points USD/INR. Moreover, staying informed about India’s structural reforms and any shifts in its trade policies can provide valuable insights for trading. Given the pair’s volatility, implementing risk management strategies, such as using trailing stops and diversifying positions across multiple currency pairs, is essential for prudent trading.

Chinese Yuan (USD/CNH):

USD/CNH, featuring the US dollar against the offshore Chinese yuan, offers traders exposure to China’s rapidly evolving economy and its role as a global economic powerhouse. China’s monetary policies, trade relations, and geopolitical developments influence the pair’s movements. When trading USD/CNH, it’s essential to monitor China’s economic indicators, such as GDP growth and industrial production, as well as any regulatory changes impacting the offshore yuan market.

Traders often leverage technical analysis techniques, such as trendlines and chart patterns, to identify potential trading opportunities in USD/CNH. Additionally, staying informed about developments in US-China trade relations and any shifts in market sentiment towards the Chinese yuan can provide valuable insights for trading. Implementing risk management strategies, such as setting stop-loss orders based on volatility levels and closely monitoring position sizes, is crucial given the pair’s sensitivity to external factors.

To learn how to trade currencies, download our introductory guide to Forex trading. It is completely free!

Recommended by Diego Colman

Forex for Beginners

In conclusion, trading popular emerging market forex pairs against the US dollar offers traders ample opportunities for attractive setups albeit with inherent volatility and risks. By staying informed about economic indicators, and geopolitical developments, and employing a combination of technical and fundamental analysis, traders can navigate these pairs with confidence and consistency. Implementing robust risk management strategies is imperative to safeguard against unexpected market movements and ensure sustainable trading success.

Euro Outlook: EUR/USD, EUR/GBP Price Setups Ahead of the ECB

/0 Comments/in , /by

Euro (EUR/USD, EUR/GBP) Analysis

  • US CPI forces markets to recalibrate rate cut expectations
  • US CPI beat sends EUR/USD lower – next level of support at 1.0700
  • EUR/GBP trades within familiar range
  • Get your hands on the EURO Q2 outlook today for exclusive insights into key market catalysts that should be on every trader’s radar:

Recommended by Richard Snow

Get Your Free EUR Forecast

US CPI Forces Markets to Recalibrate Rate Cut Expectations

US CPI beat estimates across all major measures in March. Headline inflation rose from 3.2% to 3.5% with the month-on-month measure beating estimates to come in at 0.4%. Core inflation remained at 3.8% but beat estimates of 3.7%, also rising 0.4% on the month.

Successive month-on-month rises in inflation makes it difficult for the Fed to point to seasonality in the data as the reason for the rise now that we’ve received three months’ worth of data already.

image1.png

Customize and filter live economic data via our DailyFX economic calendar

The ECB is largely expected to use the platform of the April meeting to point towards the start of the rate cutting process in June. Notable ECB officials have already communicated this timeline and therefore tomorrow’s announcement carries the risk that it may not be a huge market mover.

Market Implied Probabilities of rate cuts (shown in basis points, bps)

image2.png

Source: Refinitiv

Instead, markets may look for subtle clues on future policy via questions fielded to Christine Lagarde in the press conference following the announcement.

The June meeting will also come with updated staff projections which is likely to provide greater confidence to the governing council about the rate cut. Recent progress on inflation aligns with the notion of policy normalization and serves to motivate the committee to cut rates sooner than later.

US CPI Beat Sends EUR/USD Lower – Next Level of Support at 1.0700

EUR/USD sank immediately after the hot CPI print as markets reigned in Fed cut odds, strengthening the dollar and weighing on EUR/USD. The euro has traded in a fairly robust manner despite recent drops in EU inflation – adding pressure on the ECB to cut rates.

EUR/USD tests the 38.2% Fibonacci retracement of the 2023 decline at 1.0765, with a potential to head towards the psychological 1.0700 level. The bearish impulse follows the more medium-term move that began when the pair found resistance around 1.0950.

EUR/USD Daily Chart

image3.png

Source: TradingView, prepared by Richard Snow

EUR/USD is the leader amongst the top three most liquid FX pairs in the world, Find out why these pairs are so popular and how you should approach them:

Recommended by Richard Snow

Recommended by Richard Snow

How To Trade The Top Three Most Liquid Forex Pairs

EUR/GBP Trades Within Familiar Range

EUR/GBP pushed lower after attempting to break above the trading range (orange rectangle). FX volatility has been lacking in 2024, meaning breakout attempts have failed to receive the necessary follow through to make a move stick.

However, recent inflation dynamics and nearing interest rate cuts may change that. Divergence is appearing in economic data between the US and Europe but also the UK. With the EU and the UK expecting similar paths of lower inflation, the two are likely to continue to oscillate without a clear directional move for now.

Immediate support appears at 0.8560 followed by 0.8515. Resistance lies back at 0.8578 – the upper bound of the range.

EUR/GBP Daily Chart

image4.png

Source: TradingView, prepared by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX

US Inflation Jumps, Rate Cut Expectations Pared Back Sharply, Gold Slides

/0 Comments/in , /by

US Dollar Analysis and Charts

  • US headline inflation y/y rises to 3.5% in March from 3.2%.
  • June rate cut priced out, July cut now just seen at 40%.

For all major central bank meeting dates, see the DailyFX Central Bank Calendar

You can download our free Q2 US Dollar Technical and Fundamental Forecasts below

Recommended by Nick Cawley

Get Your Free USD Forecast

US inflation turned higher in March with the annual headline figure now seen at 3.5%, above forecasts of 3.4% and February’s 3.2%. Monthly inflation rose by 0.4%.

image1.png

For all economic data releases and events see the DailyFX Economic Calendar

According to the US Bureau of Labor Statistics, ‘Over the last 12 months, the all items index increased 3.5 percent before seasonal adjustment. The index for shelter rose in March, as did the index for gasoline. Combined, these two indexes contributed over half of the monthly increase in the index for all items. The energy index rose 1.1 percent over the month. The food index rose 0.1 percent in March. The food at home index was unchanged, while the food away from home index rose 0.3 percent over the month.’

US rate cut expectations were pared back sharply after the inflation release. Going into the numbers, the June 12th meeting was shown as a 50/50 chance of a 25bp rate cut, this has now been downgraded to just 22%. The July meeting is now showing just a 40% chance of a rate cut.

image2.png

The US dollar index jumped by around 60 pips post-release…

US Dollar Index Daily Chart

image3.png

…the yield on interest rate-sensitive UST 2-year soared by 18 basis points to a multi-month high of 4.93%…

UST 2-Year Yield

image4.png

…while gold shed $10/oz.

Gold Daily Price Chart

image5.png

Gold Rally Continues, US Inflation Data the Next Obstacle to Clear

All Charts via TradingView

What are your views on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

Navigating Volatile Markets: Strategies and Tools for Traders

/0 Comments/in , /by

Navigating Volatile Markets

Financial market traders often embrace volatility because it presents opportunities for significant profits, albeit with higher risks. Volatility refers to the degree of variation in the price of a financial instrument over time. When markets are volatile, prices fluctuate rapidly, creating potential for traders to capitalize on short-term price movements. Here’s a closer look at why traders like volatility and how they follow and trade it:

Profit potential: Volatile markets may offer traders the chance to make profits in a short time. Rapid price swings allow traders to buy low and sell high within a compressed timeframe, amplifying potential returns. The larger the price movements, the greater the potential for traders who can accurately predict market direction.

Increased trading opportunities: Volatility creates more trading opportunities as prices move more frequently and with greater magnitude. Traders can take advantage of these price swings by employing various strategies, such as scalping, day trading, or swing trading. More volatility means more chances to enter and exit positions, potentially increasing the number of profitable trades.

Master the Three Most Important Market Conditions with our Complimentary Guides

Recommended by Nick Cawley

Recommended by Nick Cawley

Master The Three Market Conditions

Enhanced liquidity: Volatile markets often attract more market participants, including traders and investors. Increased participation leads to higher volumes and improved liquidity. With more buyers and sellers in the market, traders can execute their trades more easily and with tighter spreads, reducing transaction costs.

To follow and trade volatility, traders can use several tools and techniques:

Volatility indicators: Traders employ technical indicators specifically designed to measure and track volatility. Popular indicators include the Average True Range (ATR), Bollinger Bands, and the Volatility Index (VIX). These indicators help traders gauge the level of volatility in the market and make informed trading decisions.

What is the VIX? A Guide to the S&P 500 Volatility Index

Using Average True Range (ATR) to Measure Volatility in Financial Markets

Chart patterns: Traders analyze price charts to identify patterns that indicate potential volatility. Certain chart patterns, such as breakouts, trend lines, and support/resistance levels, can signal impending volatility. By recognizing these patterns, traders can prepare for potential price movements and adjust their strategies accordingly.

Gold Chart with Simple Moving Averages, Support and Resistance Levels, and ATR

image1.png

Economic calendar: Traders closely monitor the economic calendar for high-impact events that can trigger volatility. Events, such as central bank meetings, interest rate decisions, GDP releases, and geopolitical developments can significantly impact financial markets. Traders often position themselves ahead of these events or react quickly to the resulting market moves.

For all market-moving economic data and events, use the DailyFX Economic Calendar

Risk management: While volatility presents opportunities, it also carries increased risk. Traders must employ robust risk management techniques to navigate volatile markets effectively. This includes setting appropriate stop-loss orders, managing position sizes, and diversifying their trading portfolio. Proper risk management helps traders protect their capital during periods of heightened volatility.

Risk Management Techniques for Trading

Adaptive strategies: Successful traders adapt their strategies to changing market conditions. They may employ different trading approaches depending on the level of volatility. For example, during high volatility, traders might focus on shorter-term trades and use wider stop-loss levels. Conversely, during low volatility, they may pursue longer-term positions and employ tighter risk controls.

In conclusion, by utilizing volatility indicators, analyzing chart patterns, monitoring economic events, and employing adaptive strategies, traders can navigate the challenges and opportunities presented by volatile markets.

Recommended by Nick Cawley

Building Confidence in Trading

Gold Rally Continues, US Inflation Data the Next Obstacle to Clear

/0 Comments/in , /by

Gold Price Analysis and Chart

  • Gold rally continues, fresh highs underpinned by geopolitical fears.
  • US CPI may stall the precious metal’s rally in the short-term.

Download our Free Technical and Fundamental Q2 Gold Analysis below:

Recommended by Nick Cawley

Get Your Free Gold Forecast

Most Read: Understanding Inflation and its Global Impact

The volatile situation in the Middle East remains unchanged as fears that the war of words between Israel and Iran escalates further. According to a range of news outlets, Iran’s Supreme Leader Ayatollah Ali Khamenei has vowed a strong response against Israel over the recent deaths of Iranian guard members in Syria. Israeli Foreign Minister Israel Katz responded on X (formerly Twitter) that ‘if Iran attacks Israel from its territory, we will attack Iran.’ With a further escalation seemingly likely, investors are looking at haven assets to hedge against future risks.

While gold is currently benefitting from the geopolitical risk-off bid, US data will likely become the new, short-term, driver of price action. At 13:30 UK today the latest US inflation data hits the screens, followed later in the session by the minutes of the last FOMC meeting. US inflation remains uncomfortably high for the Federal Reserve with several members recently paring back interest rate cut expectations. According to market pricing, the probability of a rate cut at the June 12th FOMC meeting is now seen at a fraction over 50%, down from 61% one week ago. Headline US inflation is seen increasing to 3.4% from 3.2% on an annual basis and falling to 0.3% from 0.4% on a month-on-month basis. Any move higher in either headline or core readings will see rate cut expectations pared back further, and this will weigh on gold at its current elevated levels.

image1.png

While a short-term move lower is likely to occur on any higher-than-expected US inflation readings, the precious metal will remain supported by the current geopolitical backdrop. Initial support is likely around the $2,280/oz. level

Gold Daily Price Chart – April 10th, 2024

image2.png

Chart via TradingView

Retail trader data shows 46.69% of traders are net-long with the ratio of traders short to long at 1.14 to 1.The number of traders net-long is 4.88% higher than yesterday and 13.88% higher from last week, while the number of traders net-short is 0.13% higher than yesterday and 0.76% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Gold prices may continue to rise.




of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily 6% -4% 0%
Weekly 12% -1% 5%

What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or contact the author via Twitter @nickcawley1.

US Inflation Preview: US Dollar & Stocks on Edge. How to Trade this Risk Event?

/0 Comments/in , /by
  • The U.S. Bureau of Labor Statistics will release March CPI data on Wednesday morning
  • Another hot inflation report could shake the Fed’s monetary policy outlook, delaying rate cuts
  • The U.S. dollar and stocks will be very sensitive to consumer price index results

Most Read: Gold Price Outlook – Drivers Behind Market Boom, Reversal or New Record Ahead?

With inflation in the U.S. economy struggling to downshift this year, all eyes will be on the U.S. Bureau of Labor Statistics’ release of March CPI numbers on Wednesday. This report holds the potential to cause significant volatility across assets, so traders should prepare for the possibility of treacherous market conditions, especially if incoming data surprises to the upside.

In terms of estimates, headline CPI is forecast to have increased by 0.3% monthly, lifting the yearly reading to 3.4% from 3.2% previously. The core gauge, which excludes food and energy, is also expected to rise by 0.3% on a seasonally adjusted basis, though the 12-month rate is projected to ease to 3.7% from 3.8% prior, a small but welcome step in the right direction.

EVOLUTION OF US CPI

image1.png

Source: BLS

UPCOMING US DATA

image2.png

Source: DailyFX Economic Calendar

While Fed interest rate expectations have shifted in a more hawkish direction over the past few weeks on the back of hotter-than-anticipated CPI and employment figures, investors still see a greater than 50% chance that policymakers will ease their stance at the June meeting. This, however, could change if price pressures reaccelerate, bringing the disinflation progress to a screeching halt.

FOMC MEETING PROBABILITIES

image3.png

Source: CME Group

Want to know where the U.S. dollar may be headed over the coming months? Explore all the insights available in our quarterly forecast. Request your complimentary guide today!

Recommended by Diego Colman

Get Your Free USD Forecast

POTENTIAL SCENARIOS

The CPI report tops projections: Traders are likely to interpret this result as a sign that inflation is regaining momentum. This would dispel the notion that recent price spikes earlier in the year were temporary, reinforcing the likelihood of a longer battle to restore price stability. In response, the Fed could reassess its policy outlook, potentially delaying the start of its easing cycle. This scenario should be bullish for the U.S. dollar, but negative for risk assets such as equities.

Inflation numbers come below expectations: Markets are likely to celebrate this outcome, especially if the downside surprise is significant. This scenario could prompt traders to bolster their bets on the Fed initiating rate cuts in June, with the potential for at least 75 basis points of easing this year, in line with the central bank’s previous dot plot projections. A dovish repricing of interest rate expectations should weigh on Treasury yields, dragging down the U.S. dollar and boosting risk assets in the process.

If you’re looking for an in-depth analysis of U.S. equity indices, our Q2 stock market trading forecast is packed with great fundamental and technical insights. Request a free copy now!

Recommended by Diego Colman

Get Your Free Equities Forecast