The Fed just might be a little less dovish

Today’s report: The Fed just might be a little less dovish

As we come into the new week, we’re looking at a market that continues to push for investor friendly monetary policy around the globe. This was clearly evident through last week’s wave of central bank meetings.

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Wake-up call

Chart talk: Technical & fundamental highlights

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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 1.1000 – Psychological – Medium
  • R1 1.0982 - 8 March high – Medium
  • S1 1.0800 - Figure – Medium
  • S2 1.0695 – 14 February/2024 low – Strong

EURUSD – fundamental overview

German Ifo reads came out on the positive side this past Friday, though the Euro was mostly weighed down on this latest round of dovish ECB comments. Key standouts on Monday’s calendar come from the BOJ Minutes, Aussie consumer inflation expectations, Canada manufacturing sales, the Chicago Fed national activity index, US new home sales, Dallas Fed manufacturing, and US building permits.

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 latest push to a fresh 2024 high beyond 1.2830 confirms the outlook and opens the door for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should now be well supported ahead of 1.2500.

  • R2 1.2804 – 21 March high – Strong
  • R1 1.2700 – Figure – Medium
  • S1 1.2575 – 22 March low – Medium
  • S2 1.2518 – 5 February low – Strong

GBPUSD – fundamental overview

The latest UK confidence and retail sales prints came in on the softer side, while BOE Bailey was out with a little more of a dovish tint. This factored into some of the GBP weakness into the end of the week. Key standouts on Monday’s calendar come from the BOJ Minutes, Aussie consumer inflation expectations, Canada manufacturing sales, the Chicago Fed national activity index, US new home sales, Dallas Fed manufacturing, and US building permits.

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 146.48, with only a weekly close below to delay the constructive outlook.

  • R2 151.95 – 2022/Multi-Year high – Strong
  • R1 151.87 – 22 March/2024 high – Medium
  • S1 148.91 – 18 March low – Medium
  • S2 146.48 – 8 March low – Strong

USDJPY – fundamental overview

The Yen remains under intense pressure in 2024, though has found some minor relief on the back of  Japan CPI readings that show a reacceleration. Key standouts on Monday’s calendar come from the BOJ Minutes, Aussie consumer inflation expectations, Canada manufacturing sales, the Chicago Fed national activity index, US new home sales, Dallas Fed manufacturing, and US building permits.

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 0.6668– 8 March high – Strong
  • R2 0.6624 – 21 March high – Medium
  • S1 0.6504– 19 March low – Medium
  • S2 0.6500 – Psychological – Medium

AUDUSD – fundamental overview

The Australian Dollar came under added pressure into the end of last week on the back of weakness in the RMB. We also got to take a look at the RBA Financial Stability Review which concluded Aussie banks were prepared to an expected rise in losses ahead. Key standouts on Monday’s calendar come from the BOJ Minutes, Aussie consumer inflation expectations, Canada manufacturing sales, the Chicago Fed national activity index, US new home sales, Dallas Fed manufacturing, and US building permits.

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 1.3614 – 19 March/2024 high – Strong
  • R1 1.3600 – Figure – Medium
  • S1 1.3482 – 20 March low – Medium
  • S2 1.3459 – 13 March low – Strong

USDCAD – fundamental overview

The latest dump in Canada retail sales and a round of selling in the oil market have contributed to a fresh round of Canadian Dollar selling. Key standouts on Monday’s calendar come from the BOJ Minutes, Aussie consumer inflation expectations, Canada manufacturing sales, the Chicago Fed national activity index, US new home sales, Dallas Fed manufacturing, and US building permits.

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 0.6132 – 15 March high– Strong
  • R1 0.6100 – Figure – Medium
  • S1 0.5999 – 22 March 2024 low – Medium
  • S2 0.5940 – 17 November low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar is trading at yearly lows as it contends with last week's discouraging Kiwi growth data, and with a Federal Reserve sounding a lot less dovish than all of the other central banks. Key standouts on Monday’s calendar come from the BOJ Minutes, Aussie consumer inflation expectations, Canada manufacturing sales, the Chicago Fed national activity index, US new home sales, Dallas Fed manufacturing, and US building permits.

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. Next key support comes in at 5110.

  • R2 5300 – Figure – Strong
  • R1 5269 – 22 March high/Record – Medium
  • S1 5110– 15 March low – Strong
  • S2 5058 – 5 March 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 2300 – Round Number – Medium
  • R1 2223 – 21 March/Record high – Medium
  • S1 2146 – 18 March low – Strong
  • S2 2079 – 4 March low – Medium

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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