Market shaken up on prospect of just one Fed rate cut in 2024

Special report: Considering the balance of risk into today's Fed decision

Today’s report: Market shaken up on prospect of just one Fed rate cut in 2024

The market simply can’t get away from needing to reprice Fed rate cut bets, and this ongoing repricing has been driving yield differentials further in the US Dollar’s favor while opening added downside pressure on stocks.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

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 1.0800 – Figure – Medium
  • R1 1.0753 - 26 April high – Medium
  • S1 1.0639 - 23 April low– Medium
  • S2 1.0601 – 16 April, 2024 low – Strong

EURUSD – fundamental overview

The Euro hasn't been able to do anything with Tuesday's better than expected Eurozone GDP data, instead tracking lower, focusing more on a further scaling back of Fed rate cut expectations on account of more hawkish leaning US economic data. Key standouts on Wednesday’s calendar come from US ADP employment, ISM manufacturing, JOLTs job openings, and the Fed decision late in the day.

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 1.2600 – Figure – Medium
  • R1 1.2570 – 29 April high – Medium
  • S1 1.2448 – 25 April low – Medium
  • S2 1.2393 – 22 April high – Medium

GBPUSD – fundamental overview

UK mortgage approvals came in strong, at the highest level since 2022, and yet, the Pound came under pressure on Tuesday after US economic data pointed to even less Fed rate cuts in 2024. Key standouts on Wednesday’s calendar come from US ADP employment, ISM manufacturing, JOLTs job openings, and the Fed decision late in the day.

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 160.20 – 29 April/Multi-Year high – Very Strong
  • R1 158.00 – Figure – Medium
  • S1 154.52 – 29 April low – Medium
  • S2 153.59 – 19 April low – Strong

USDJPY – fundamental overview

The Yen continues to trade on weaker footing on account of an intense monetary policy divergence between the Fed and BOJ,  and on account of no official confirmation of any intervention in the Yen despite the latest USDJPY push through 160.00. Key standouts on Wednesday’s calendar come from US ADP employment, ISM manufacturing, JOLTs job openings, and the Fed decision late in the day.

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 0.6587 – 29 April high – Medium
  • S1 0.6441– 23 April low – Medium
  • S2 0.6362 – 19 April/2024 low – Strong

AUDUSD – fundamental overview

The Australian Dollar has suffered on another scaled back adjustment in Fed rate cut bets and an accompanying downturn in sentiment that has weighed on risk assets. Key standouts on Wednesday’s calendar come from US ADP employment, ISM manufacturing, JOLTs job openings, and the Fed decision late in the day.

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 1.3900 – 1 November/2023 high – Strong
  • R1 1.3847 – 16 April/2024 high – Medium
  • S1 1.3632 – 29 April low – Medium
  • S2 1.3547 – 9 April low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been getting hit from all sides over the past 24 hours. We've seen a further scaling back of Fed rate cut bets, lower US equities, drop in the price of oil, and softer than expected Canada GDP data. Key standouts on Wednesday’s calendar come from US ADP employment, ISM manufacturing, JOLTs job openings, and the Fed decision late in the day.

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 0.6107 – 21 April high – Strong
  • R1 0.6083 – 10 April high – Medium
  • S1 0.5852 – 19 April 2024 low – Medium
  • S2 0.5800 – Figure – Medium

NZDUSD – fundamental overview

The New Zealand Dollar was already hit on the further hawkish repricing of Fed rate bets before taking another hit on some early Wednesday softer than expected New Zealand employment data. The unemployment rate surged to a three year high, also accompanied by an unexpected decline in job gains. Key standouts on Wednesday’s calendar come from US ADP employment, ISM manufacturing, JOLTs job openings, and the Fed decision late in the day.

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 5194 – 8 March high – Medium
  • S1 4928– 19 April low – Medium
  • S2 4921 – 13 February 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 2265 – 3 April 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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