US Dollar retains bid despite Fed rate cut pricing

Next 24 hours: Hard to ignore Fed rate cut pricing

Today’s report: US Dollar retains bid despite Fed rate cut pricing

As we get going on Monday, we’re picking up with a market that continues to look to buy the US Dollar, despite an on the whole softer round of economic data out of the US last week. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI trends, Dallas Fed manufacturing, some ECB speak, and some Fed speak.

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 1.0853 – 12 June high – Strong
  • R1 1.0762 - 18 June high – Medium
  • S1 1.0668 - 14 June low– Strong
  • S2 1.0650 – 1 May low – Medium

EURUSD – fundamental overview

The Euro continues to struggle post a more hawkish Fed communication, unnerving European election results, and this latest run of softer than expected PMI readings. France PMIs have fallen deeper into contraction, while German PMIs are on the edge. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI trends, Dallas Fed manufacturing, some ECB speak, and some 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 door is now open for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should be well supported ahead of 1.2000.

  • R2 1.2894 – 8 March/2024 high – Strong
  • R1 1.2740 – 19 June high – Medium
  • S1 1.2622 – 21 June low – Medium
  • S2 1.2578 – 15 May low – Medium

GBPUSD – fundamental overview

The Pound has come under pressure since last week's more dovish leaning BOE communication. Meanwhile, softer UK PMI data has only added to the downside pressure. The local rate market now sees the BOE cutting slightly more than the Fed in 2024. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI trends, Dallas Fed manufacturing, some ECB speak, and some Fed speak.

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 160.21 – 29 April/2024 high – Strong
  • R1 159.93 – 24 June high – Medium
  • S1 157.52 – 18 June low – Medium
  • S2 156.57 – 13 June low – Medium

USDJPY – fundamental overview

There were no surprises from the BOJ Summary of Opinions. On the whole, while there have been comments about Yen weakness causing a possible revision to the inflation outlook, the central bank doesn't seem to be in any rush to move towards a more hawkish policy stance. This makes the yield differential between the Yen and US Dollar that much more pronounced, driving the Yen back to multi-year low levels. The usual rhetoric from FinMin Suzuki about excessive currency moves being undesirable has mostly fallen on deaf ears. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI trends, Dallas Fed manufacturing, some ECB speak, and some 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 0.6715– 16 May high – Strong
  • R2 0.6705 – 12 June high – Medium
  • S1 0.6576– 10 June low – Medium
  • S2 0.6558 – 8 May low – Strong

AUDUSD – fundamental overview

Aussie manufacturing PMIs have returned back to near post-pandemic lows, all while US equities start to show signs of rolling over. This has invited a wave of risk off flow which has weighed on the Australian Dollar. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI trends, Dallas Fed manufacturing, some ECB speak, and some 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 1.3847 – 16 April/2024 high – Strong
  • R1 1.3792 – 11 June high – Medium
  • S1 1.3662 – 7 June low – Medium
  • S2 1.3586 – 10 May low – Strong

USDCAD – fundamental overview

The Canadian Dollar has managed to outperform relative to its peers after Canada retail sales data came out better than expected on Friday. Better bid oil prices have also contributed to the recent outperformance. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI trends, Dallas Fed manufacturing, some ECB speak, and some 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 0.6222 – 12 June high – Strong
  • R1 0.6200 – Figure – Medium
  • S1 0.6083 – 22 May low – Medium
  • S2 0.6031 – 15 May low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar is holding relatively well on Monday when considering a round of risk off flow. The currency has been getting some offsetting demand from the better than expected Kiwi trade data. Key standouts on Monday’s calendar come from German Ifo reads, UK CBI trends, Dallas Fed manufacturing, some ECB speak, and some Fed speak.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended, begging for a deeper correction ahead. At the same time, the latest bullish breakout to a fresh record high beyond the 2024 high opens the door for the next measured move upside extension targeting the 5650 area. Key support comes in at 5194.

  • R2 5600 – Round Number – Strong
  • R1 5524 – 20 June/Record high – Medium
  • S1 5394 – 14 June low – Medium
  • S2 5321 – 7 June 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. Still, if there is a sense the Fed will need to be more sensitive towards erring on the side of higher rates, it could invite major disruption to the stock market.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2000 on a monthly close basis.

  • R2 2451 – 20 May Record high – Strong
  • R1 2388 –7 June high – Medium
  • S1 2277 – 3 May low – Strong
  • 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 (%)

Suggested reading

Daily Reports Global FX Insights   joelkruger  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.