Getting ready for first round of US inflation data

Today’s report: Getting ready for first round of US inflation data

Things have been relatively steady and calm at this stage early in the week, though we expect activity will pick up later today when we get the first round of anticipated US inflation data in the form of producer prices.

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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 1.0886 – 9 April high – Strong
  • R1 1.0813 - 3 May high – Medium
  • S1 1.0650 - 1 May low– Medium
  • S2 1.0601 – 16 April, 2024 low – Strong

EURUSD – fundamental overview

The big story for the Euro in otherwise quiet trade has been about the market finding value in the single currency after all of the downside risk is believed to have been priced in. Key standouts on Tuesday’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, Canada wholesale sales, US producer prices, and a Fed Powell speech.

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 1.2000.

  • R2 1.2635 – 3 May high – Medium
  • R1 1.2595 – 6 May high – Medium
  • S1 1.2446 – 9 May low – Medium
  • S2 1.2393 – 22 April high – Medium

GBPUSD – fundamental overview

The Pound continues to find bids from last week's solid run of UK data and a general feeling that most of the downside risk to the currency has already been priced in. Key standouts on Tuesday’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, Canada wholesale sales, US producer prices, and a Fed Powell speech.

USDJPY – technical overview

The market remains confined to a strong uptrend, most recently extending to a multi-year high through 160.00. Key support comes in at 151.95, with only a weekly close below to delay the constructive outlook.

  • R2 157.99 – 1 May high – Medium
  • R1 157.00 – Figure – Medium
  • S1 155.15 – 9 May low – Medium
  • S2 154.49 – 8 May low – Medium

USDJPY – fundamental overview

Japan Minister of Finance Suzuki was out on the wires echoing familiar sentiment around Yen weakness and intervention threats. Meanwhile, Japan producer prices rose at a steady pace. 20-year JGB yields have risen to their highest level since 2013, while 30-year JGB yields have risen to a 13 year peak. Key standouts on Tuesday’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, Canada wholesale sales, US producer prices, and a Fed Powell speech.

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 0.6649 – 3 May high – Medium
  • S1 0.6465– 1 May low low – Medium
  • S2 0.6362 – 19 April/2024 low – Strong

AUDUSD – fundamental overview

Things have been quiet for the Australian Dollar over the past 24 hours. There has however been a little talk around a large option expiry to the tune of Aussie $2.1 billion coming due today with a strike price of 0.6590. Key standouts on Tuesday’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, Canada wholesale sales, US producer prices, and a Fed Powell speech.

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 1.3847 – 16 April/2024 high – Strong
  • R1 1.3785 – 30 April high – Medium
  • S1 1.3586 – 10 May low – Medium
  • S2 1.3547 – 9 April low – Strong

USDCAD – fundamental overview

The Canadian Dollar came under mild pressure on Monday after Canada building permits came in much softer than expected at -11.7% versus an expectation of -4.3%. Key standouts on Tuesday’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, Canada wholesale sales, US producer prices, and a Fed Powell speech.

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 0.6083 – 10 April high – Strong
  • R1 0.6049 – 3 May high– Medium
  • S1 0.5852 – 19 April 2024 low – Medium
  • S2 0.5800 – Figure – Medium

NZDUSD – fundamental overview

We haven't seen much movement in the New Zealand Dollar in recent sessions, though we have seen some economic data. The retail component of New Zealand card spending continuing to decline reflecting downward pressure from higher rates, prices, and a loosening in labor market conditions. Migration data was also out and showed the pace of net immigration cooling off from its peak. Key standouts on Tuesday’s calendar come from German inflation, UK employment, Eurozone and German ZEW reads, Canada wholesale sales, US producer prices, and a Fed Powell speech.

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 4921.

  • R2 5287 – 1 April high/Record – Strong
  • R1 5242 – 10 April high – Medium
  • S1 5073 – 3 May low – Medium
  • S2 4928 – 19 April low – Strong

US SPX 500 – fundamental overview

Though we have seen a healthy adjustment of investor expectations towards the amount of rate cuts in 2024, the market still hopes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid into dips and consistently pushing record highs. The trouble right now is that inflation has been showing signs of ticking back up, all while the market contends with additional uncertainty around geopolitical risk.

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 2500 – Psychological – Medium
  • R1 2432 – 12 April/Record high – Medium
  • S1 2277 – 3 May low – Medium
  • S2 2223– 21 March high – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less 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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