Bitcoin and gold taking the spotlight

Next 24 hours: China growth target met with skepticism

Today’s report: Bitcoin and gold taking the spotlight

A lot of the attention in financial markets has been away from FX and stocks, with store of value assets old and new taking center stage. It seems the explosion in US debt has inspired many a trader to be looking for alternatives and those alternatives come in the form of gold and bitcoin.

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Wake-up call

Chart talk: Technical & fundamental highlights

EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.0898 – 2 February high – Medium
  • R1 1.0889 - 22 February high – Medium
  • S1 1.0796 - 29 February low – Medium
  • S2 1.0695 – 14 February/2024 low – Strong

EURUSD – fundamental overview

The Euro has been getting its latest support from better Eurozone confidence data. ECB rate cut odds for a June meeting have dropped below 100% for the first time since October. Traders are now expecting a hawkish bias at Thursday's ECB meeting. Key standouts on Tuesday’s calendar come from German, Eurozone, and UK PMI reads, UK new car sales, Eurozone producer prices, Canada PMI reads, US PMI reads, US factory orders, and Fed speak.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.2849.

  • R2 1.2800 – Figure – Medium
  • R1 1.2710 – 20 February high – Medium
  • S1 1.2621 – 28 February low – Medium
  • S2 1.2518 – 5 February/2024 low – Strong

GBPUSD – fundamental overview

The Pound is coming off its best daily close in a month and the currency is now looking ahead to the UK Budget later in the week. Hunt has come out downplaying spending expectations, though traders are fearing a boost in inflation. Key standouts on Tuesday’s calendar come from German, Eurozone, and UK PMI reads, UK new car sales, Eurozone producer prices, Canada PMI reads, US PMI reads, US factory orders, and Fed speak.

USDJPY – technical overview

The market remains confined to a strong uptrend, with sights set on a retest and break of the multi-year high from 2022 at 151.95. A push through this level will open the next major upside extension towards 155.00. Key support comes in at 145.90, with only a weekly close below to delay the constructive outlook.

  • R2 151.00 – Figure – Medium
  • R1 150.89 – 13 February/2024 high – Medium
  • S1 149.21 – 29 February low – Strong
  • S2 147.62– 7 February low – Strong

USDJPY – fundamental overview

Little change to the Yen after Tokyo CPI showed an acceleration in February, slightly beating expectations. Core CPI came out as expected. Meanwhile, FinMin Suzuki was out denying weekend reports that the BOJ was declaring an official end to deflation. Key standouts on Tuesday’s calendar come from German, Eurozone, and UK PMI reads, UK new car sales, Eurozone producer prices, Canada PMI reads, US PMI reads, US factory orders, and Fed speak.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.6625– 30 January high – Strong
  • R2 0.6595 – 22 February high – Medium
  • S1 0.6442– 13 February/2024 low – Strong
  • S2 0.6400 – Figure – Medium

AUDUSD – fundamental overview

The Australian Dollar continues to slide on Tuesday despite a solid Aussie current account showing. The market has been more focused on a downturn in sentiment and positioning into tomorrow's Aussie GDP number. Key standouts on Tuesday’s calendar come from German, Eurozone, and UK PMI reads, UK new car sales, Eurozone producer prices, Canada PMI reads, US PMI reads, US factory orders, and Fed speak.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3627 – 30 November high – Strong
  • R1 1.3607 – 28 February/2024 high – Medium
  • S1 1.3441 – 22 February  low – Medium
  • S2 1.3358 – 31 January low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been feeling some downside on the back of the latest slide in oil prices. The Bank of Canada is out tomorrow and no change is expected on rates. Odds for a rate cut in April sit at around 40%. Key standouts on Tuesday’s calendar come from German, Eurozone, and UK PMI reads, UK new car sales, Eurozone producer prices, Canada PMI reads, US PMI reads, US factory orders, and Fed speak.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

  • R2 0.6223 – 4 December high– Strong
  • R1 0.6218 – 22 February high – Medium
  • S1 0.6050 – 13 February low– Medium
  • S2 0.6000 – 5 February/2024 low – Strong

NZDUSD – fundamental overview

Comments from New Zealand FinMin Willis that the economy will be weaker than forecast have not been a help to the New Zealand Dollar on Tuesday. On the data side, the ANZ commodity price index came out higher, rising for a third straight month and at its fastest pace since March 2022. Key standouts on Tuesday’s calendar come from German, Eurozone, and UK PMI reads, UK new car sales, Eurozone producer prices, Canada PMI reads, US PMI reads, US factory orders, and Fed speak.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended after pushing to fresh record highs, begging for a deeper correction ahead. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close above 5100 will be required to delay the outlook. Next key support comes in at 4842.

  • R2 5200 – Figure – Strong
  • R1 5150 – 4 March/Record – Medium
  • S1 4920– 13 February low – Strong
  • S2 4842 – 31 January low – Medium

US SPX 500 – fundamental overview

Though we have seen an adjustment of investor expectations towards the amount of rate cuts in 2024, the market still believes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid and pushing record highs. Still, it's important to highlight the fact that the Fed has yet to declare a victory over inflation and could disappoint investors with less accommodative policy than desired going forward. If this happens, stocks could be in for a nasty bearish reversal.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1900 on a monthly close basis ahead of the next major upside extension towards 2500.

  • R2 2175 – 4 December/Record high– Strong
  • R1 2120 – 4 March high – Medium
  • S1 1984 – 14 February/2024 low– Medium
  • S2 1973 – 13 December low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less stable and upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an end.

Peformance chart: 30-Day Performance vs. US dollar (%)

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