EUR Nears $1.07 Amid Easing Middle East Tensions

The euro moved closer to $1.07, recovering from a recent drop to its lowest point in over five months at $1.06 on April 16th. This change came as worries about increasing tensions in the Middle East began to ease. Investors also examined the differing attitudes of the European Central Bank (ECB), which is more cautious, and the Federal Reserve, which is more aggressive.

ECB officials indicated they might start lowering interest rates as early as June, with some predicting up to three rate cuts by the end of 2024. However, the overall market mood has slightly changed, with reduced expectations for rate decreases by both the ECB and the Federal Reserve. This shift is due to ongoing high inflation and signs of a strong economy in the US.

Navigating USDCAD's Bearish Momentum & Reversals

Solid ECN – The USDCAD price dipped below the bullish flag and the EMA 50. The pair is currently trading at about 1.372. This level coincides with the Ichimoku cloud resistance area, which is also close to the 38.2% Fibonacci level. While the RSI indicator hovers below the 50 level, it still has room to drop to 30 or become oversold. Therefore, it can be interpreted that the downward momentum will likely continue but might pause when it reaches the 38.2% Fibonacci level.

From a technical standpoint, going against the primary trend is risky. Traders should wait and monitor the price action around the 38.2% Fibonacci support level and the bearish flag in the 4-hour chart, depicted in black.

We suggest waiting patiently for the price to climb above the EMA 50 and the 23.6% Fibonacci level and join the bullish trend if there is a new breakout.

Oil Prices Dip as Middle East Tensions Ease

Solid ECN – On Monday, the price of WTI crude oil dropped below $81 per barrel, hitting a four-week low. This decrease came as tensions in the Middle East seemed to lessen. Iran minimized the impact of recent Israeli strikes on its land and announced it would not retaliate. Despite this, the region remains under close watch by investors since Iran, a major oil producer in OPEC, mainly exports its oil to China and countries outside the US financial system.

In the US, Congress approved an aid package for Ukraine and Israel. This package might include sanctions against Iran’s oil industry, although the exact implications are still unclear. Global economic worries and the possibility that the US Federal Reserve might maintain higher interest rates for an extended period dampen the oil market outlook. Additionally, recent figures revealed a significant increase in US crude oil stocks, with a rise of 2.7 million barrels—almost twice what was anticipated.

Bitcoin Faces Resistance: Can It Break the $67K Barrier?

Solid ECN – Bitcoin, often called digital gold, has reached a critical resistance level around the $67,236 mark. The upper band of the wide bearish flag and the 50% Fibonacci support level support this barrier.

Technical indicators are signaling the bull market will continue. The BTCUSD price is above the Ichimoku cloud, and the relative strength index and the awesome oscillator hover above 50.

For the uptrend to continue, the price must close and stabilize itself above the 50% Fibonacci level, a task it has failed to achieve in today's trading session. Interestingly, the BTCUSD 4-hour chart has formed a bearish engulfing pattern, a signal that suggests a shift in trend from a bull to a bear market.

Therefore, if the price remains below the flag, a dip in the Bitcoin price is still possible.

We suggest monitoring the price behavior around the 50% Fibonacci level and the EMA 50 in today's trading session.

GBPJPY Tests Resistance: Potential Bullish Breakout

Solid ECN – The GBPJPY currency pair rebounded from the lower band of the bullish flag today and is now testing the 192.8 barrier.

The technical indicators are bullish, and the pair will likely break out. If this scenario plays out, it would allow GBP buyers to reach the upper band of the flag against the Japanese Yen.

Euro Gains Amid Strong Europe PMI Data

Solid ECN – The euro's value increased to over $1.065, though it stayed near its lowest point since the beginning of November. This movement came as investors evaluated surprisingly strong preliminary PMI data from some of Europe's biggest economies. Recent surveys showed that business activity in the Eurozone increased more in April than in almost a year.

Germany saw economic growth for the first time in nine months. Regarding monetary policy, European Central Bank (ECB) officials indicated a readiness to start lowering borrowing costs possibly by June, with some predicting up to three rate cuts by the end of 2024. However, the overall market mood has changed slightly.

Expectations for rate reductions by the ECB and the U.S. Federal Reserve have lessened this year, driven by ongoing high inflation and signs of a sturdy economy in the U.S.

Australian Dollar Peaks as Inflation Surprises

Solid ECN – Recently, the Australian dollar climbed above $0.65, reaching its highest point in nearly two weeks. This increase came after unexpectedly strong inflation data within Australia, suggesting that the Reserve Bank of Australia might keep interest rates stable. In the first quarter, Australia's consumer price index dropped to 3.6% from 4.1% in the previous quarter. Although this marks the fifth consecutive quarterly decline, it was still higher than the predicted 3.4%.

Additionally, Australia's monthly CPI rate rose to 3.5% in March, up from 3.4% in February, which was surprising as analysts expected it to remain unchanged. Earlier in the week, new data revealed that Australia's private sector growth hit a two-year high in April, driven by near-stable manufacturing and continued service growth.

Meanwhile, the Australian dollar also gained from a weakening US dollar, which fell as business activity in the US slowed in April, pointing towards a less aggressive monetary policy by the Federal Reserve.

Gold Prices Stable as Investors Eye US Economic Data

Solid ECN – Gold prices remained stable at around $2,320 per ounce last Thursday. Investors focused on upcoming U.S. economic updates to get more precise insights into the Federal Reserve's future actions. This interest grew after recent economic reports were reviewed. Orders for long-lasting goods slightly exceeded forecasts in March. However, data released on Tuesday showed a slowdown in growth in the U.S. private sector.

Now, traders are looking forward to the first quarter's GDP report and the March personal consumption expenditures (PCE) data, which will be released on Friday. These reports follow a period of higher-than-expected consumer inflation, which has altered the expectations for interest rate reductions. Federal Reserve officials have recently indicated no immediate plans to lower rates, with most market participants expecting a rate cut in September at the earliest.

As interest rates stay elevated, the appeal of gold, which does not yield interest, diminishes. Additionally, decreasing tensions in the Middle East have led investors to opt for riskier assets, further affecting gold prices.

Swiss Franc Recovers Amid Policy Changes and Low Inflation

The Swiss franc has stabilized around 0.91 against the USD, recovering from significant losses earlier in the year that pushed it to a six-month low. This happened due to major differences in the monetary policies anticipated for the U.S. and Switzerland. In March, Switzerland saw its lowest inflation in over two years, dropping to 1%. This supports the Swiss National Bank's (SNB) claim that inflation pressures are easing.

Amid low business confidence and falling retail sales, the SNB is expected to increase interest rates in its June meeting. After the SNB's surprising rate cut in March—the first central bank to do so amid global inflation concerns—the franc had fallen sharply.

Additionally, the lower inflation forecast has enabled the central bank to ease its support of the franc. Consequently, foreign currency reserves have grown for the third consecutive month since hitting a seven-year low in November.

WTI Oil Stabilizes at $82 Amid Rate Cut Delays

Solid ECN – WTI crude oil prices were stable at around $83 per barrel on Thursday. This followed a decrease in prices the day before. Investors are assessing how the delayed cuts in US interest rates might affect future oil demand. There is concern that the Federal Reserve might maintain higher rates longer due to strong recent inflation and job data.

Looking forward, markets are focused on Thursday's upcoming US GDP data and the Fed's preferred PCE price index report on Friday to get more clarity. Despite this, the latest official figures revealed a significant drop in US crude inventories, which fell by 6.37 million barrels last week, surprising many who had expected an increase of 1.6 million barrels.

On another note, concerns about supply have lessened as tensions in the Middle East have reduced. Iran and Israel have indicated that they will not take further military action against each other. Also, oil tankers, previously stopped due to disruptions in the Red Sea, have resumed their deliveries. This helps ease market tightness abroad and supports countries in stocking up on oil.

Euro Struggles Amid Varied Economic Signals

Solid ECN – The euro continues to struggle, hovering around $1.07, as investors examine a wide range of economic reports and their implications for the future actions of the ECB and the Federal Reserve. Recent data from the European Central Bank shows that inflation expectations dropped to their lowest point since December 2021, at 3.0%.

Furthermore, lending growth has not changed, leading analysts to believe that ECB officials may lower interest rates for the first time in June. On the other hand, the US dollar remains strong, driven by ongoing inflation concerns and robust consumer spending, indicating that the Fed may not reduce borrowing costs until at least September.